Businesses to city: add ramp services,stop overbuilding

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May 2, 2005 // UPDATED 1:54 pm - April 26, 2007
By: Scott Russell
Scott Russell

Imagine driving to work Downtown, parking in the Orchestra Hall Ramp, 1111 Marquette Ave., dropping off your dry cleaning, signing up for an oil change and buying a cappuccino before heading to the skyway for your 8 a.m. meeting.

This summer, the city will seek proposals for a new five-year deal to run its parking empire, including approximately 25,000 stalls in 22 ramps. City Coordinator John Moir said staff would review the proposals with an eye towards how prospective operators would improve ramp-by-ramp marketing and add-on services, similar to what some of the more sophisticated public and private parking facilities already do.

The city received a laundry list of such suggestions from a 15-member study team from Project Excellence, a new partnership between the city and the City of Lakes Chamber of Commerce (an affiliate of the Greater Minneapolis Chamber of Commerce).

The report comes at a critical time: in recent years, the city has become more dependent on parking revenues to pay for basic services - police, fire and public works - as well as extras such as Target Center and the Holidazzle Parade. Although the ramps themselves make money, the cash drain has become so severe that the city's parking fund now has deficit. A 2004 fix included cuts to the city's General Fund, meaning less money for city services.

Meanwhile, the city has built more ramps to support development and ease parking congestion with the goal to at least break even if not make more money - only to be bedeviled by dropping demand.

Since 2000, Minneapolis has incurred $180 million in parking-related debt, and parking projects make up 20 percent of all city debt. At the same time, Moir said, the economy is down, more people live Downtown and walk to work, and suburban commuters increasingly use light rail and other transit. Together, these factors mean fewer cars parked in the city ramps.

By Moir's own admission, the city probably has overbuilt recent ramps. The question now is how to make the best of it.

Private advice

The Project Excellence parking report was presented to the City Council's Transportation and Public Works Committee April 19. Todd Klingel, president and CEO of the Greater Minneapolis Chamber, said the study group recommended that the city develop individual marketing plans for each ramp based on the facility's immediate environs.

"We said, 'Let's picture these ramps as individual ramps in the hands of a private-sector operator,'" he said. "If you do that, and you say - 'I have [the] Orchestra Hall ramp, that is my business and I have to make money on that' - then you would look at every possible asset opportunity and marketing opportunity."

A private-sector owner would do a pedestrian count and estimate what other businesses - from newspaper racks to dry cleaners - could prosper, he said.

Other revenue-boosting ideas include:

  • Working with neighboring businesses to run validated parking programs for special events or regular customers;

  • Selling advertising space inside or outside the ramp or even on the back of the time-stamped parking stubs;

  • Having automated swipe cards for ramps, similar to current parking meter cards - and marketing thembetter; and,

  • Investing in a rebranding campaign.

Addicted to concrete

The report cautioned that current city parking assumptions could result in building oversized ramps.

The report said the city's parking assumptions have not changed substantially since 2000, even though economic growth has slowed, light rail has arrived and more Downtown condos mean more people walking to work.

For example, Moir points to the new Walker Art Center parking ramp at 1750 Hennepin Ave. S. as "probably too big."

He noted, "Our calculations of parking demand - since they were out of date - we probably oversized it. The same might be true for the Guthrie. And it is certainly true for the underground ramp over at the Metrodome [LRT] stop."

The Project Excellence team noted just how expensive ramps are - $30,000 per stall for the new Guthrie ramp.

Moir said city staff was aware of the problem. ""We will be working on that right away. We have no ramps on the horizon right now. We have time to do our due diligence."

The city has conflicting goals for its parking system, the report said. The city builds ramps to make money, to support development and to manage Downtown traffic. The city needs to improve its decision-making before building more ramps.

For instance, the report concluded that the city is increasingly using parking ramps as a Downtown development incentive.

Councilmembers voting for a new ramp need to know that a "yes" vote means ramp subsidies will reduce the city's future ability to subsidize the General Fund and pay for more services, Klingel said.

Better accounting

The report also contended that the city's parking fund is so complex, it's hard to understand what works - or doesn't - using business principles.

The parking fund is a tangle of money, more than simply the sum of individual ramp revenues of more than $40 million a year, less expenses.

For instance, the parking fund subsidizes the General Fund (as much as $10.9 million a year, but dropping) and the Target Center ($1.5 million). It pays for traffic control agents ($2.4 million) and bus stop garbage collection ($146,000). It even contributes to marketing the Downtown Council's Holidazzle Parade ($727,000).

The fund also gets a financial bump from ramps built in tax increment financing districts and from the Convention Center sales tax ($13.5 million).

Project Excellence recommended getting a clearer picture of which individual ramps are profitable - and creating individual plans to address those that are not.

Make money or get demolished

The Project Excellence team considered whether the city should sell any money-losing ramps, Klingel said. The report made no recommendations to sell.

Klingel said the only ramp the group discussed was the 901-stall St. Anthony Main ramp, 210 2nd Ave. SE. He described it debt-free but hurting financially.

Moir said he didn't think selling ramps was a feasible solution.

"It's going to be hard to sell ramps and recover the dough that we have sunk into them," he said. "I don't know who is going to buy the losers."

Ramps could turn around with individual neighborhoods, he said. The University area's Seven Corners ramp used to lose money, until new student housing was built nearby, he said. The St. Anthony ramp is improving because of East Hennepin Avenue redevelopment.

Another option: Demolish underperforming ramps once they become run down, and redevelop the land, Moir said. As one example, he said the Government Center Ramp, 415 S. 5th St., would probably reach the end of its useful life in 10 years.

"We are thinking about getting rid of that, tearing it down and putting in a new city office building," he said.

The new building could replace city-owned office space in the Public Service Center, 250 S. 4th St., and the City of Lakes Building, 309 2nd Ave. S., both of which he said were "too small," "poorly laid out" and "obsolete."

The city started with a parking system review in part because of the upcoming parking contract renewal.

Moir said he expected to report back to the Council on the parking recommendations in June.

Want to know more?

A copy of the Project Excellence report is at tinyurl.com/dzre8, which will take you to the right place on the city's Web site.