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Monday, March 29, 2004

Paying to Park

At a glance: Anatomy of a decision

The decision: The 1996 hiring of Walker Parking Consultants for $20,000 to conduct an economic analysis of an expanded parking garage for River Park Square wasn't controversial at the time.

  • Who made it: The city hired Walker. The city had used Walker in the 1980s to study a garage for a Davenport Hotel remodeling, but that project evaporated.
  • Why it became controversial: The companies renovating the mall had also used Walker to do preliminary work for the project. A two-page pro-forma study of the garage in 1995 estimated it would collect $1.7 million in its first full year. The 65-page study Walker produced for the city used what the company described as a national model to project revenues for the enlarged garage -- more than $4 million in its first full year of operation. Those 1996 projections would prove much higher than the facility's actual performance: Walker thought the garage would earn $4.6 million in its first full year of operation; it actually earned about $1.8 million.

    Critics would also say that Walker's previous connection to the developer represented a potential conflict of interest.

  • What went wrong: The consulting firm, the city and the developer would later disagree on who came up with the hourly rate of $1.50, which was used to estimate revenues. At the time, the mall's garage charged 75 cents an hour, and few downtown parking spaces charged more than $1 an hour. Yet the Walker report claimed the average cost of downtown parking was $1.36.

    A series of memos between consultants and the developer show the rate was raised several times before $1.50 an hour was established. Critics later charged they were working backward -- starting with an amount of revenue they believed they needed, and setting a rate to get it, rather than establishing a reasonable rate and determining how much that would generate.

    The $1.50-an-hour rate later had to be lowered for evenings and long-term parking. Each adjustment moved the garage farther away from its revenue projections.

    When the mall opened, estimates for the number of customers and the amount of time they would stay also proved too high.-

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