Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO: Standing Committee on City Services and Budgets
FROM: The General Manager of Engineering Services, in Consultation with the General Manager of Corporate Services
SUBJECT: Parking Corporation of Vancouver - 2000 Budget Review
 

RECOMMENDATION

A. THAT Council receive for information, the summary of the Parking Corporation of Vancouver (VPC) 1999 Operating and Capital Actual Financial Figures, with the Audited Financial Statements available through the offices of the General Managers of Engineering and Corporate Services.

B. THAT Council receive for information the summary of the Parking Corporation of Vancouver (VPC) 2000 Operating Budget, with the complete 2000 Operating Budget available through the offices of the General Managers of Engineering and Corporate Services.

C. THAT Council approve the Parking Corporation of Vancouver (VPC) 2000 Capital Budget, to be funded by off-street parking revenues collected by the VPC as follows:

D. THAT Council approve in principle the Parking Corporation of Vancouver (VPC) 2000 Marketing and Communications Plan and conditionally approve the initial budget of $150,000 to be funded by off-street parking revenues collected by the VPC, subject to review and approval of the financial projections, the financial arrangements, the specific contract details, and the implications of the City’s Corporate Sponsorship Policies, all to the satisfaction of the General Managers of Engineering and Corporate Services.

COUNCIL POLICY

On May 29, 1997, the Standing Committee on City Services and Budgets approved the Council Report titled “New Operating Agreement - Parking Corporation of Vancouver”, which detailed the mission, goals, and operating principles for the VPC. Council also authorized the Director of Legal Services to approve the new operating agreement on behalf of the City, if approved by the VPC and the General Managers of Engineering and Corporate Services.

PURPOSE

The purpose of this report is to seek Council’s approval for the 2000 VPC Capital Budget, the 2000 Marketing and Communications Plan and to provide the VPC 2000 Operating Budget, 1999 Actual Financial Figures, to Council for information.

BACKGROUND

Consistent with the new management agreement, the VPC has delivered to the City its year 2000 Budget Submission. This includes the audited 1999 financial figures for the VPC, the Operating Budget for the year 2000, and the 2000 Capital Budget. In support of this budget submission, the VPC has also submitted the Capital Assets and Fleet Management Plan, a Maintenance Plan, a Security Plan, and a Performance Report. Staff have reviewed the budget and have provided comments to the VPC for adjustments to the budget.

As part of the new Management Agreement and consistent with Council direction, the VPC has been granted greater responsibilities and more independent operations of the City’s off-street parking facilities. The VPC is to be more accountable for its Operating Budget, which maximizes the City’s return on its parking investment consistent with City Policy
Under the Management Agreement the City retains the right to tender all or a part of the operation. This is intended to ensure accountability and to “test the market” as and when appropriate.

DISCUSSION

The VPC has submitted to the City, the 1999 audited financial report prepared by the VPC's auditors, KPMG, reporting the revenues and costs for all facilities operated by the VPC. This report is available through the offices of the General Managers of Engineering and Corporate Services for Council information. The VPC has also submitted the Operating Budget for the year 2000. These figures are summarized in the Table 1 below:

Table 1

1999 Actual Financial Figures

In 1999, the VPC collected total Gross Revenues of approximately $14.98 Million. These revenues include those monies collected by the VPC for third party private operations and those collected for our joint-venture partners. After Operating Costs, Administrative Costs, Capital Costs, and transfers to third parties, the VPC remits Net Revenues of $7.7 Million to the City. The parking operations also contributes property taxes for the facilities, as well as lease payments associated with various facilities. After these payments, there are Net Revenues of $3.83 Million earned by the Property Endowment Fund (Parking Sites Reserve).
In its performance report, the VPC attributes the increase in gross revenues in Actual 1999 over Budgeted 1999 to a variety of factors which include:

… increased film industry activity;
… enforcement system effectiveness;
… improvement of security in problem areas;
… rate changes in certain areas.

In 1999, actual Operating Costs exceeded budgeted amounts by 12%, due primarily to overexpenditures in Wages and Benefits, and in Security Costs. These overexpenditures are attributed to the delayed implementation of automated systems in CP#3 and CP#32. The VPC also increased the security costs to deal with additional vandalism and criminal activity, resulting in a 27% overexpenditure or $168,500 overbudget.

  Budget 1999 Actual 1999 Increase Budget 2000 Increase
Operating Costs 3,857,331 4,308,687 451,356
12%		 4,119,876 262,545
6%
Salary, Wages and Benefits 1,739,369 1,978,665 239,296
14%		 1,793,122 53,753
3%
Security 633,900 802,437 168,537
27%		 696,705 62,805
10%

Table 2

2000 Operating Budget

The VPC 2000 Operating Budget is summarized in Table 1 above. Specific details of the budget as outlined in the VPC Budget submission are available through the offices of the General Managers of Engineering and Corporate Services for Council information. The Capital Assets and Fleet Management Plan, the Maintenance Plan, the Security Plan, and the Performance Report has also been submitted to the City, in accordance with the Management Agreement.

The VPC projects a further 2% increase in gross revenues in Budget 2000 over 1999 Actuals. The VPC attributes a relatively flat patronage to economic slowdown, and an oversupply of on-street and off-street parking supply in the majority of the downtown districts.

Carpark Operating Costs have increased $262,545 (6%) in Budget 2000 over Budget 1999. These increases are mainly attributable to salaries and benefits, increased equipment maintenance, and increased security costs. The VPC is proposing to automate 2 attended facilities in 2000, Carparks #2(Pender Street and Beatty Street) and #19(Hornby Street End), to reduce overall operating costs, and to redirect staff into customer service roles. The security costs for the year 2000 has increased 10% or $62,805 over budget 1999.

The VPC has increased Administrative Costs by $86,400 (7%) over Budget 1999, due primarily to increased salaries, bank charges, and the provision of uniforms for attendants.

Capital Budget

The VPC 1999 Capital Budget involved minor replacement of equipment, and Year 2000 compliance upgrades for the equipment within the facilities. The 1999 Actual Capital expenditures for 1999 totalled $267,241, which included direct and indirect capital expenses. Direct Capital Expenditures relate to capital improvements, such as equipment upgrades and painting, that are performed at each facility. Indirect Capital Expenditures relate to Head Office Capital Expenditures, such as the purchase of vehicles, office equipment, and computers. The 1999 Capital Budget to Actual figures are summarized in Table 3 below:

       

1999 CAPITAL BUDGET TO ACTUALS / 2000 CAPITAL
 

Budget 1999

Total 1999 Actuals

Budget 2000
Direct Capital Exp. $129,300 $144,235 $808,500
Indirect Capital Exp. $129,804 $123,006 $48,459
Total Capital Exp. $259,104 $267,241 $856,959

Table 3

With the year 2000 Capital Budget, the VPC would like to embark on another intensive equipment upgrade program. The direct capital budget, totalling $808,500, includes the purchase of 9 Pay-and-Display units, an additional Pay-on-Foot station for Pacific Centre, and the automation of 2 facilities, CP#2 and CP#19 with Pay-on-Foot technology. The indirect capital budget, totalling $48,459, includes computer equipment and other head office equipment. The details of the 2000 Capital Budget is detailed in Table 4 below:

Table 4

The VPC would like to automate 2 facilities in 2000, which are currently attended parkades:

… CP#2 - 150 W. Pender Street - 549 Stalls

… CP#19 - 900 W. Cordova Street - 410 Stalls

Pay-on-Foot technology involves a gate-controlled facility, where patrons pay for their parking by validating their tickets at Pay-on-Foot stations prior to leaving the facility. The validated ticket is accepted at the exit, and the gate is raised for exiting if the ticket has been properly paid for and validated. This system is similar to that found at the airport and at Pacific Centre, with the exception that these facilities have an attended cashier option for exiting.

The VPC would like to automate these facilities to allow for savings in salaries and wages, and to allow staff to be re-diverted into customer service roles. The VPC favours Pay-on-Foot technology for automation since it is a gate controlled system, which would not require enforcement staff.

As part of the 1998 / 1999 Capital Budget the VPC completed the full Pay-on-Foot automation of CP#3 (535 Richards Street - 339 stalls) in September 1999. This would be the same system proposed for CP#2 and CP#19. With the large capital investment, and with the current equipment in these 2 facilities not requiring replacement at this time, the City will require a full benefit-cost business case analysis from the VPC to justify such expenditures at this time. In addition, other automation systems such as Pay-and-Display, should be investigated to determine whether they are more beneficial. The fully gated and automated facility in CP#3 has only been in operation for a few months, and a full reporting of its performance should be delivered to the City to support the use of this system in other locations.

Therefore, it is recommended that portions of the 2000 Capital Budget, totalling $256,959 which do not include the 2 proposed automations, be approved. It is further recommended that portions of the 2000 Capital Budget, totalling $600,000 for the automation of the 2 facilities, be conditionally approved, subject to the delivery of a benefit-cost analysis and reporting of the performance of CP#3, all to the satisfaction of the General Managers of Engineering and Corporate Services. All capital expenditures are to be funded from off-street parking revenues collected by the VPC. Details of the capital expenditures are available through the offices of the General Managers of Engineering and Corporate Services.

Marketing and Communications Plan

The VPC Board of Director’s Planning Committee have embarked on a new Marketing and Communications Plan, which they hope will raise the VPC profile, increase revenues, and build community partnerships. A copy of the VPC Marketing and Communications Plan is provided in Appendix A. The VPC Planning Committee would like to budget $150,000 seedmoney from the City for the development of a comprehensive marketing and communication strategy which will provide increased revenues exceeding the cost of the marketing program.

The keys initiatives outlined in the plan are as follows:

… Theme Parking: Improved wayfinding and information system within the facilities which would generate revenues from corporate sponsorships.

… Validation Parking Program: Partnerships with merchants and community partners to attract more patrons downtown and to the VPC facilities, while sharing cross-marketing opportunities.

… “Easy Park” Branding: Build a new corporation branding identity - “EasyPark” for the VPC facilities, as well as establishing strategic alliances and cooperative marketing and promotion initiatives with downtown business, entertainment and community organizations.

… VPC will undertake an extensive benchmark research to help shape value added services keyed to the priorities of our customers.

The marketing plan would be developed and implemented with consultants hired by the VPC. The projected revenues and costs of the program are outlined in the VPC’s plan in Appendix A. The VPC project that the proposed marketing plan would achieve an average annual increase in gross revenues of 5.75% over the following 4 years ending in 2004.

The marketing program would be funded from revenues collected from Theme Parking and other advertising revenue. The City would invest $150,000 seed money in the initial year, and over the following 4 years, commit approximately $600,000 of Capital Funding for “EasyPark” identity, signage, and wayfinding programs for the VPC facilities. These initiatives to create new revenue streams and to raise the profile of the VPC facilities with the EasyPark branding are worthwhile and promising ventures.

Staff recommend conditional approval of the initial $150,000, subject to review and approval of the financial projections, financial arrangements, specific terms of the contract, and the
implications of the City's Corporate Sponsorship policy, by the General Managers of Engineering and Corporate Services.

CONCLUSION

With the completion of the New Management Agreement between the City and the VPC, the City has adopted a new budget process. The VPC has been granted greater authority and responsibilities, but shall also be more accountable to the City in terms of providing cost-effective parking operations. As a part of this new process, staff are now presenting to Council for information the VPC 1999 audited financial statement and the VPC 2000 Operating Budget. Staff also recommend the approval of the VPC 2000 Capital Budget, and conditional approval of the VPC 2000 Marketing and Communication Plan.

* * * * *

Link to Appendix A

Link to Schedule A

cs000504.htm

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