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Unintended Consequences of Revenue Enhancements

Alan Imhoff

July 26, 2004

At what point does a good thing become a bad thing?

On July 1st the current administration in the City of Frederick did a good thing: they raised the rates on the parking meters, increased fines on parking tickets, installed new meters and required city rank and file to give up some of their "perks" in the parking decks.

Save for the few big bosses, everyone else has been adjusting to these "good things." I am sure the administration believes it will free up much needed parking in the downtown area. It will produce revenue to cover the new costs of the meters and provide for the subsidy of the parking shuttle until it becomes self-sufficient.

While the program is just about a month old, what has been observed so far?

I travel downtown almost once a day, sometimes two or three times and my unofficial observation is that yes, there are more parking spaces available where there are meters. As an aside, there are also more spaces available where the new 2-hour limit signs have been posted.

So for tourists, maybe some residents, and business people just coming in for a short meeting, these open spaces work fine. But is there something else at work here?

Where have all those cars gone that use to park all day at a meter because it was located near where they work? Where did those cars go that used to park along un-metered and un-restricted open parking spaces?

Some have bitten the bullet and go to one of the three parking decks. But most are probably like the balloon filled with water, as you press down in one space, another pops up. So it is with parking, as the areas that have been "pressed" with new rates and new signs have opened up, other areas are now seeing increased parking.

I have watched on several occasions as employees from City Hall now trek an extra two, three or four blocks to work. I assume the shuttle doesn't work for them and must assume they either cannot afford or cannot obtain long-term parking passes in the decks.

I have observed individuals pull into a parking spot, read the sign, back up and drive off. Did they try somewhere else, or just get frustrated and leave? I know when the signs first went up, their wording could be misconstrued and as a result a lot of $10 tickets were handed out.

Then there is the intriguing question that really cannot be analyzed until next year; did the change in meter rates garner the anticipated revenue? If the current observation is that a high percentage of spaces are open at any given time, how will there be an increase in revenue? The doubling of the hourly rate will be offset to some degree by the growth in empty spaces.

If more monthly passes for the parking decks are issued at a discount, will they offset the lost revenue from the formerly occupied hourly spaces?

It will be interesting to see in one year's time if the city makes as much money as it had hoped?

Then there is the softer side, the one that is harder to measure, but the one that could have "bad" effects. That is the perception that it is too costly to do businesses downtown. Imagine what a small business owner must do to offset a loss in "walk-by" customers because of higher cost to park downtown.

At what point will employees continue to work for any business where the inconvenience of having to park a considerable distance from their employer affects their work.

At what point will the entry-level employee find it difficult to pay these rising costs without a commensurate increase in pay?

Did the city even look at some common sense alternatives before hitting the downtown with this heavy-handed approach? Things like adding two hours to the meters making them 8 a.m. to 6 p.m., if the purpose was to raise revenue.

Perhaps with these newer meters, the city could have changed the hourly rate to 30 cents a half hour this year, 35 cents next year, etc. This would have given all the businesses a chance to adjust to the effects, not to mention the employees.

In the year ahead, I hope that the city achieves its goals with this program but more importantly, I hope there is no adverse long-term reaction to the momentum that has been building in the downtown area. I guess we will just have to wait and see whether this good thing has any bad consequences.


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