Correction: Downtown Parking
Posted on 6 April 2012
Earlier, I posted about downtown parking costs and suggested that the city might have actually been making money off of downtown parking. Here’s what I wrote:
“Bad debt refers to tickets that have been issued but not paid. This is not money the city had and then spent. Instead, it is money the city could have but doesn’t because people aren’t paying their tickets. I would argue that this is an opportunity cost, rather than an actual cost.
So let’s get rid of money that never falls into city hands and talk only about real money. This would be the money that the city spends on downtown parking, and the money that the city makes from downtown parking. People who don’t pay their tickets are not a real cost, but an opportunity cost, and so are not factored in here.
After doing this, the net revenue of downtown parking in 2007 rises from $80,054 to $139,011 ($80,054 + $58,967). But perhaps more significantly, the net revenue of the downtown parking program in 2011 changes from a loss of $81,193 to a profit of $23,232 ([-$81,193] + $104,425). Free parking is still not generating as much money as paid parking, but it’s no longer costing the city money– at least not real money, just money that it could be making that it isn’t otherwise. “
I was wrong. As pointed out in the comments section:
“The “cost” of bad debts (in most accounting procedures) accounts for money that was recorded as revenue, but will never be received. While it may not be *this* year’s revenue that is now a “bad debt”, it was, at some point, recorded as money that had been earned (revenue), but will not be showing up in the bank account.
Therefore, in order for the books to balance, it must be “removed” from the system as an expense.”
Having learned this, I contacted city staff to find out what each of these items actually mean. Here’s what I’ve learned (quotation marks mean I’m quoting precisely what was told to me):
Revenue:
- Parking permit revenue: money made from people feeding metres. Note its disappearance in 2010, when free two-hour parking is put in place
- Parking metre fines: The face value of all tickets issued for on-street parking offences throughout the city (not just those that have actually been paid, as I originally assumed).
- Misc recoveries: “This is primarily revenue received for reserving space/stalls on the street for a specific purpose (eg. construction company wants X number of spaces for so many months for their equipment, etc.. during the construction). The city charges in these situations as the street parking is no longer available for its intended use and it is hoped that charging for the space will encourage the person/company renting the space to minimize their request.”
- Collection agency: ” This is revenue that is returned to the city by the collection agency when they have collected parking ticket notices that have been forwarded to that office for collection. There is a percentage of the revenue that is retained by the collection agency and the remainder is returned to the city.”
- Invoicing recoveries: “This is generally meant to accommodate repayment of invoices that the City had issued for work of some sort.
Costs:
- Labour and benefits: paying people who work to enforce and manage downtown parking
- Bad debt: “Bad debt is basically ticket/fine/notice revenue (face value of the ticket) that has gone unpaid and been referred to the Collection Agency for collection. If the money is eventually collected it will show up in the appropriate revenue column depending on who collected it (there are cases where the fees are paid directly to the city).”
- Other expenses: “This is all the other expenses that any work unit would need to function (fleet expenses, supplies, equipment, phones, uniforms, printing, etc..).”
Of course, this doesn’t necessarily mean free downtown parking has to cost money. Without those bad debts, the city would be running a profit. Not that they haven’t thought of this– in my message from city staff explaining these costs, it’s said that there will likely be a review of how debts are collected.
So there’s the costs and revenues of downtown parking as it stands now. It will be interesting to see how these are calculated going forward.
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