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HomeMy WebLinkAboutSupplemental Communications from Council Member Steele 1 Paid Parking is Good for Business Analysis: Seal Beach Main Street Curb Parking by City Councilman Nathan Steele Introduc*on If Main Street Seal Beach were a sleepy downtown shopping area with light traffic and plenty of empty parking places, paid parking wouldn’t be necessary. There would be only occasional congesFon and traffic problems, there would be plenty of parking to go around for the visitors that come to town. But Seal Beach is not Mayberry RFD. Seal Beach is a congested Southern California beach town visited by thousands of people. On any given day, especially postcard-perfect warm-weather beach days, virtually every curb parking space is occupied. Main Street curb parking is frequently over 85% occupied during peak demand hours. “85%” is significant because it is the occupancy level industry experts consider “full”. Make room at the curb for paying customers. This analysis is focused on this quesFon: Should Seal Beach charge for curb parking on Main Street? Seal Beach already has paid off-street parking in the lots next to Main Street. Seal Beach also has paid parking in the beach lots. What Seal Beach does not do is charge for curb parking on Main Street. As parking management goes, the most expensive parking in Seal Beach should be curb parking on Main Street. But it’s free. There are many people who believe that free curb parking on Main Street is central to the “small town charm” character of our city. They believe that we will lose our beloved “small town charm” if we charge for parking on Main Street. This analysis will demonstrate that free curb parking on Main Street is an enemy of “small town charm”. This analysis will also show that free curb parking is bad for the businesses on Main Street. The conclusions that are supported by this analysis will be clear. First, there is a congesFon problem on Main Street that free curb parking causes and paid curb parking will solve. Next, charging for curb parking will improve business acFvity on Main Street. And finally, revenue from paid curb parking will be a very good start at solving the financial crisis facing Seal Beach, it will be a very big step in assuring Seal Beach’s financial security. 2 Is Free Parking Good for Business? It seems to be intuiFvely true: of course, free parking is good for business. How can free parking be bad for business? Doesn’t a free parking space allow customers to pull up in front of their favorite business and walk in without shuffling for quarters and plugging a meter? How is that not good for business? But, like other things in life, what seems intuiFvely true can someFmes be wrong. Seal Beach has been successful in a[racFng 100’s of thousands, perhaps millions of visitors every year. Every good-weather day brings a constant stream of cars to Main Street on their way to our beauFful beach. With all these cars, curb parking frequently fills up to capacity. Traffic, traffic, traffic... Here's the reason why free parking for Seal Beach is bad for business. There are 174 curb parking spaces on Main Street. The price to park in those spaces is $0.00. The demand for those parking spaces is frequently greater than the supply*. Demand for curb parking is not affected by price because the price is $0.00. Demand for curb parking is hindered only by the supply of curb parking spaces. Therefore, curb parking on Main Street in Seal Beach is first-come, first-served. If the first to arrive is a beachgoer, then a potenFal customer of a Main Street business would have to conFnue to look for a space. If the first to arrive is an employee of a Main Street business, then a potenFal customer would have to conFnue to look for a space. When the hassle of finding a parking space becomes too great, customers are lost forever to the businesses on Main Street, they never come back. “Streets are a city’s blood vessels, and overcrowded free curb parking is like plaque on the vessel walls, leading to a stroke. Market prices for curb parking prevent this urban plaque.” Dr, Donald Shoup Journal of Planning EducaCon and Research “Market prices for curb parking exemplify what Jaime Lerner (2013) called urban acupuncture: a simple touch at a criCcal point (in this case, the curb lane) can benefit the whole city.” Journal of Planning EducaCon and Research 3 How oAen does demand exceed the supply of parking spaces on Main Street? According to the city’s parking database, in 2023, in the months of April through September, between the hours of 10AM and 6PM, Main Street experienced curb parking occupancy greater than 85%, 81.3% of the Fme. * What problems are created by the scarcity of curb parking on Main Street? • CongesFon caused by “cruising” for empty parking spaces. Cars going extremely slow down Main in the hopes that a parking space opens in front of them. The slow cars create a line of traffic, inching down Main Street. • Beachgoers know that they can save $14 beach lot parking fees if they can park on the curb on Main Street. • Employees of Main Street businesses take up curb parking spaces. • Illegal U-turns to jump into an empty space on the opposite side of the street. • Frequent U-turns on Ocean of cars going back to Main Street to cruise again. • PolluFon caused by the increased Fme it takes for cars to find a curb parking space. • “Missing customers”, customers who stay away from Main Street and do business elsewhere because of the congesFon and the lack of parking. Main Street curb parking spaces were 85% occupied or higher, 81% of the >me. 122/150 days = 81% There is nothing “charming” about free parking in congested shopping areas. 4 Academic Literature: 100% Pro Paid Parking Parking is an area of academic study and research. People earn their Doctorates and Master’s degrees in Parking, doing in-depth studies, research and wriFng peer-reviewed dissertaFons. There are online searchable data bases of the dissertaFons and research. Parking is a recognized area of study, usually inside the departments of Urban Planning, at many presFgious universiFes. While parking is more complex than our Main Street curb parking issues, the academic literature is clear about one single point: CiFes all over North America and around the world have dramaFcally turned around shopping districts by insFtuFng parking programs including paid curb parking. In addiFon to parking fees, businesses see revenues increase; ciFes see sales tax income increase. There is more money coming in to invest in those shopping areas creaFng a much be[er shopping experience. Whole shopping areas have seen dramaFc improvement in business and quality of life. Following the lead of industry guru, UCLA DisFnguished Research Professor in the Department of Urban Planning, Dr. Donald Shoup, and his book “The High Cost of Free Parking”, I examined dozens of papers, summaries and extracts concerning the issues of curb parking in congested business areas. “Right prices will eliminate the cruising that congests traffic, wastes drivers’ 9me, exhausts nonrenewable resources, endangers pedestrians and cyclists and pollutes the air.” “Free curb parking in a congested city gives a small, temporary benefit to a few drivers who happen to be lucky on a par<cular day, but it imposes large social costs on everyone else every day.” “One or two open spaces on every block will ensure that curb parking is both well-used (most spaces are occupied) and readily available (a few spaces are open). Bal9more, Md.; Boston, Mass.; Los Angeles, Calif.; San Francisco, Calif.; SeaMle, Wash.; Washington, D.C.; and several other ci9es have begun to price parking by demand so finding a space no longer resembles winning the loMery.” Dr. Donald Shoup, PhD “Pricing the Curb” 5 The main conclusion is this: none of these books or research papers or studies concluded that paid parking is bad for business. Quite the opposite, paid parking in city ajer city was a catalyst for turning around business districts and improving business acFvity. None of the papers or studies made the claim that free curb parking in a congested shopping area is good for business. If ci>es with congested shopping areas want to improve the shopping/dining experience, they must get control of curb parking. “Consider an older business district where few stores have off-street parking, and vacant curb spaces are hard to find. Cruising for curb parking congests the streets, and everyone complains about a parking shortage. Parking meters would create a few curb vacancies, and these vacancies would aMract customers willing to pay for parking if they don’t have to spend 9me hun9ng for it. “Nevertheless, merchants fear that charging for parking would keep some customers away. Suppose in this case the city promises to use all the district’s meter revenue to pay for public ameni9es that can aMract customers, such as cleaning the side- walks, plan9ng street trees, puTng overhead u9lity wires underground, improving store facades, and ensuring security. Using curb parking revenue to improve the metered area can therefore create a strong local interest in charging the right price for curb parking.” Douglas Kolozsvari Turning Small Change into Big Changes 6 Seal Beach 5-Year Forecast: $15,000,000 deficit • The 5-year forecast for Seal Beach shows a financial hole of $15+ million dollars. • Costs are forecast to increase 7% per year while revenues are forecast to increase 2% a year. • Seal Beach has 4 main sources of income. Property taxes, Sales Tax, UFlity User Tax and “TOT” or Tax on Transient/hotel tax. Property taxes are capped by Prop 13, and sales tax revenues are under pressure. • Seal Beach is 97% built-out with a populaFon of 25,282. The populaFon 50 years ago was 24,000. • In addiFon to paid parking, it is incumbent on us to find new revenue opportuniFes for Seal Beach before we are forced to start cunng city programs to balance the city budget. • City Finance expert and consultant Mark Moses in his book The Municipal Financial Crisis describes built-out ciFes in California as “zombie” ciFes – walking dead. The impact of inflaFon is an existenFal threat. There are no other opportuni>es comparable to paid parking to raise revenues for Seal Beach to solve the 5-year financial challenge. 7 Seal Beach Poll: 52% support Paid Parking • According to polling conducted in August 2023, 52% of Seal Beach residents support paid parking on Main Street in the context of the 5-year, $15 million dollar deficit forecast. ** • The same poll in March of 2023, before the $15 million dollar budget deficit was known, 71% of Seal Beach residents were opposed to paid parking on Main Street. 29% 52% 0% 10% 20% 30% 40% 50% 60% Initial support for paid parking Support when informed of budget deficit Paid parking support Consultant Jonathan Rich, PhD implemented the parking survey and analyzed the data. 8 28.8% 38.5% 27.1%26.7%28.0% 47.4% 55.9% 46.6% 56.5%59.3% 0% 10% 20% 30% 40% 50% 60% 70% D1 D2 D3 D4 D5 Support for Paid Parking by Council District, March vs August Survey March August 14.1% 30.0% 24.3% 28.7% 39.6% 35.7% 45.7% 53.7%55.5% 59.5% 0% 10% 20% 30% 40% 50% 60% 70% Under 40 40s 50s 60s 70+ Support for Paid Parking by Age Group March August In both the March and August surveys, support for paid parking was stronger among older residents. 9 Parking Revenue Forecast: $762,120 per year How much money would Seal Beach bring in implemenFng paid curb parking on Main Street? We can only guess, of course. But a reasonable esFmate could be as much as $762,120 per year in parking fees alone, not including improved sales tax revenue or fines. Of course, the actual numbers could be less, but they could also be more. Here’s the formula for the esFmate: • 365 days x 8 parking hours per day = 2,920 hours • 2,920 hours x 174 parking spaces = 508,080 parking hours • 508,080 parking hours x $1.50 esFmate per hour = $762,120 per year In fact, if our goal is to make Beach Parking more a[racFve than Main Street parking to discourage beachgoers from using Main Street curb parking, then the average price would have to be greater than $1.50/hour. Market Value of Main Street Parking: $9,145,440.00 If Main Street Parking were a business - which it is - owned by the ciFzens of Seal Beach – which it is - how much is the business worth? There are several ways to put a price on a business. One is to compare the real estate involved to the value of other real estate in Seal Beach and then add some factor for the cash flow and take out the operaFng costs of the business. Real estate values in Seal Beach are above average for Orange County and California overall, and the curb parking spaces are in high demand, so the value of the real estate alone could be greater than $10 million. Another way to come up with a value for Main Street Parking business is to look at the potenFal earnings that the business would create and then compare that with publicly traded companies Revenue forecast $762,120 per year, $3.8 million over 5 years. “The curb is more than just vehicle storage or a path of travel: it is there to serve people. It’s a vital community space and one of the most extensive and valuable assets in a city. A good curb design promotes access and ac9vity, drawing more customers for businesses.” Chrissy Mancini Nichols and Jonathan Wicks The Curb is One of the Most Valuable Assets California Mobility and Parking AssociaCon 10 involved in the same business. Using this method, the business could be valued $9.1 million dollars. *** Free parking on Main Street gives away - for free - one of the most valuable assets owned by the people of Seal Beach to a few business owners at the expense of all of us. Business valua>on $9.1 million owned by the taxpayers and ci>zens of Seal Beach. Current return on investment: 0% 11 The Objec*ve of Paid Parking The objecFve of paid parking on Main Street is to make room at the curb for paying customers of Main Street businesses. This can be done by implemenFng the following 4 recommendaFons. First, make parking on Main Street less aNracOve for beachgoers compared to the beach parking lots. Through trial and error, Seal Beach would find the right price for curb parking at which beachgoers would find the beach lots more a[racFve than Main Street curb parking. This will give business and restaurant customers a place to park near their preferred business. Second, provide a mechanism or program to encourage employees of Main Street businesses to park somewhere other than Main Street. This could be a simple tag system allowing them to park off Main Street for free, perhaps in the beach lots. Or maybe a free bus pass system that allows them to leave their cars outside of Seal Beach while they work and ride the bus to work for free. Third, provide a “Local’s Benefit” that allows residents whose cars are registered with the city to park on Main Street for free or some greatly reduced price. Fourth, use a porFon of parking revenue from Main Street parking to invest directly into Main Street improvements. Establish a Business Improvement District commiNee of Main Street business owners to work with the city direcFng parking revenue to fund projects they see as important to improve the shopping/dining experience. Objec>ve: make room at the curb for paying customers. Remember, the City of Seal Beach will be implemen?ng a “People Mover” system around Old Town and the Hill in April or May of this year. Beachgoers, employees, and other visitors could find that to be useful in parking away from Main Street curb. 12 Fiduciary Obliga*ons of Public Officials As City Council members, we take an oath that obligates us to operate from a posiFon of public trust. The standard we are held to is very high. We are required to place the public’s interest above our own poliFcal expediency. When presented with controversial issues, City Council is required to do what is necessary and right for all of Seal Beach, even in the face of vocal opposiOon. It is our sworn responsibility to ensure the smooth funcFoning of the City of Seal Beach. Your posiFon as a member of the Ad Hoc CiFzens Commission is also a posiFon of public trust. When the public interest collides with public sen>ment, we are obligated to do what is best in the public interest. If the Ad Hoc Parking Commission fails to support paid parking in this current endeavor, it will be years before City Council can take up the ques>on again. The financial impact on the city’s challenging 5-year outlook would be devasta>ng. “Doing the right thing is seldom easy. Doing the easy thing is seldom right.” Unknown “The city council has a fiduciary responsibility to the ci<zens, and as trustees, they are charged with managing valuable items for the sole purpose of benefi<ng the beneficiary of the trust. “The fiduciary role of mayors and council members includes oversight, sound financial budget policies, review and approval, seAng parameters, ensuring long- and short-term financial awareness, and seAng precedents and unintended consequences.” Vincent R. Johnson Fiduciary ObligaCons of Public Officials St. Mary’s University School of Law 13 Summary: Do the Right Thing These things are true: 85% capacity 81% of the 0me. 100% support from academic literature 5-Year Forecast: $15,000,000 deficit Seal Beach Poll: 52% support Parking Revenue Forecast: $762,120 per year Market Value of Main Street Parking: $9,145,440.00 Fiduciary Obliga0on Seal Beach has succeeded in a[racFng thousands of visitors to our town every week. Whether we choose to recognize it or not, the light-traffic that would make free parking “charming” is a relic of the past in Seal Beach. Those days are long gone and never coming back. With paid parking, business would improve over Fme, as people become aware of the improved environment on Main Street. The city could afford to make capital improvements to Main Street making the shopping and dining experience even be[er. • Seal Beach of the Past – free parking made sense when the demand for parking is low. It harkens back to an era characterized by low-demand downtown shopping areas. • Seal Beach Present – the demand for curb parking overwhelms the supply of parking spaces. This leads to several inevitable results: congesFon, slow-moving traffic, cruising for parking, illegal U-turns, polluFon, chaos. • Seal Beach Future – Paying customers will be able to find a parking space close to their preferred business. The money from paid parking and improving sales tax revenue would be used to make capital improvements and be[er maintain Main Street. The enFre Main Street experience becomes more pleasant, a[racFng more paying customers and improving the business climate. “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introducCon of a new order of things.” “Because the innovator has for enemies all those who have done well under the old condiCons, and lukewarm defenders in those who may do well under the new.” Niccolò Machiavelli The Prince 14 Footnotes *Curb Parking Occupancy Rate Calcula*on • The occupancy data was pulled from the city’s parking database. • There are 183 days between April 1, 2023, and Sept 30 2023 • In the database sample, 16 dates are missing, no readings. • 17 days were under 30% occupancy due to weather, events or technical issues. • 183-16-17 = 150 sample days • There were 122 days measured at 85% or greater. • 122/150 = 81.3% **Polling source and method: A list of all Seal Beach registered voters as of 02/17/2023 was obtained from the OC Registrar of Voters, n = 19,113 Individuals who supplied email addresses were extracted from the list, n = 7,946. A survey was emailed to all these individuals. The survey was sent 8/15/2023 (Tuesday) and closed 8/17/2023 (Thursday). Completed surveys were returned by 833 Seal Beach residents, a response rate of 10%. N = 833, Age: 18 to 92, average 60 years old. MOE +/- 3.2% ***Industry Valua*on Model NAICS 81293 = Parking Lots and Garages (North American Industry ClassificaFon System) SICCODE 7521 = Automobile Parking ABM Inc. = P/E 12 Sector P/E 26.85 $762,080 x 12 = $9,145,440 15 Research and Reference: 1. Parking Reforms: Charge demand-based prices for on-street parking to create one or two open spaces on every block 2. Parkumentaries 3. Sun News 4. Informal Parking Markets: Turning Problems into SoluFons 5. Pricing the Curb 6. Turning Small Change into Big Changes 7. ResidenFal Parking Benefit Districts 8. The Curb is One of the Most Valuable Assets 9. EffecFve Management of the Curb Space AllocaFon in Urban TransportaFon System. 10. Framing a Complete Streets Checklist for Downtown Historic Districts and Character Neighborhoods 11. A Dissent with Donald Shoup on Curb Parking Use 12. Cruising for Parking 13. Pasadena Story 14. Parking Ma[ers in Old Pasadena 15. The Fiduciary ObligaFons of Public Officials 16. Financial ResponsibiliFes and City Revenues 17. Seal Beach Budget: 5-Year Forecast – page 324 Publica*ons 1. Journal of Planning EducaFon and Research 2. California Mobility and Parking AssociaFon 3. InternaFonal Parking and Mobility InsFtute 4. Parking Today Magazine Nathan Steele: Curricula Vitae • Academic: o Broadcas?ng major, John Brown University, o Economics major North Central College, o Post graduate studies in Corporate Finance Northern Illinois University. • Career: o 15 years in investment brokerage in Chicago holding 8 industry licenses working at Oppenheimer, Thompson McKinnon, Chicago Corp and Oberweis Securi?es. o Member Chicago Board Op?ons Exchange. o Consul?ng and Training with Holden Interna?onal and Strategic Clarity, Inc. working with Fortune 500 companies on a global scale, teaching strategy and strategic planning. o Clients included MicrosoY OEM Division, EDS, Ericsson, Siemens, Accenture. o Author “Strategic Clarity: The Essen?als of High-Level Selling” o Traveled 2.5 million miles working cross-cultural in 35 countries. Consulted and Trained over 20,000 people, including 100’s of senior execu?ves. • Current: o Business owner working in Chris?an Radio 16 o Missions work with Grace Bible Mission and Cameroon Biblical Seminary, Africa.