Henry Hudson Paid to Park; His Legacy Survives Today
This year, Albany, NY, will celebrate the 400th anniversary of being founded by Capt. Henry Hudson as he sailed up what would become his namesake river in the Dutch East India Co. ship, the Half Moon.
Rumor has it that Hudson was charged to park his ship on the riverside while trading furs with the Native Americans.
This way, the slips were maintained at 90% occupancy, and time and trouble looking for a place to tie up were kept to a minimum. Naturally, a portion of this revenue went to support the development of Fort Orange; otherwise, local merchants would be unhappy with the parking charges.
A few hundred years later, the automobile was invented, and this brought us Park-O-Meter (POM), PARCS, robotic parking and even our own TV show, “Parking Wars.”
Sure, a lot has changed during the four centuries that separate these eras, but the river remains an important part of Albany Mayor Gerald Jennings’ vision of waterfront development. And the mayor is fortunate to have a well-run independent parking authority to collect fees that facilitate access for people to live, work, shop and enjoy vibrant downtown Albany. This separation of the parking function from the city administration makes for a positive relationship between a parking authority and a city administration.
In general, there are six areas of opportunity for an authority to provide parking services, rather than having a city or private entity do so. These relate to finance, business efficiency, tax exposure, procurement, service delivery, and the tradeoff between business and “political” decisions.
One important benefit of having an independent parking authority is to provide a financial framework that takes parking off the city ledger, as this eliminates the city’s need to take on debt service to invest in parking infrastructure. Also, this allows the city to use its debt service for other purposes and avoids potential pitfalls associated with parking having a negative impact on a city’s bond rating.
This would be particularly true if a city subsidized parking at below-market rates, a not uncommon practice when parking falls under the city banner. In Albany’s case, Standard & Poor’s November 2008 rating on its general obligation debt was raised to AA- from A, reflecting the city’s stable economy and strong financial position.
The city’s overall debt burden, including county and school debt, is moderate at $2,484 per capita and 4.5% of market value. The city’s moderate capital needs and debt profile further stabilize the credit. If parking debt were on this ledger, it would add about 10% to the debt burden.
When the business of parking is properly managed by an authority, it is reasonable to achieve investment-grade ratings by S&P or other rating agencies. Parking authorities at small cities such as Albany (with a population of about 100,000) may have ratings of BBB+ and larger-city authorities may move one or two notches higher than that.
When achieving investment-grade ratings, the cost of debt service may result in savings of about 150 to 200 basis points as compared with what would be charged to private developers. On top of this is the same tax-exempt status as a city (as long as the parking is offered to the public in a non-exclusionary way), provided savings for both capital and operating costs.
With a minimum of red tape, an authority can buy goods and services either under state contracts or in the private marketplace, whichever is more favorable. This yields a lower cost of business, which allows savings to be passed on to the customer. Ultimately, parking infrastructure is created and operated efficiently to support parking demand.
It is often helpful for city officials to be distanced from parking issues. When people complain about parking costs or availability, this can create adversarial relationships between elected officials and the citizens they serve. It is a benefit to be distanced from the old parking bugaboo, and be able to direct inquiries to a parking professional at the helm of an independent authority.
At the same time, it is typical to have the authority staff report to a board of directors that is made up of community volunteers selected and approved by elected leaders. This just-close-enough but not-too-close relationship between elected leaders and the administration of a parking program ensures that the parking authority will function in the best interests of the citizenry and elected officials, while avoiding becoming embroiled in political issues that may interfere with effective and efficient service delivery.
City departments are tasked with myriad responsibilities in order to provide a good quality of life to the people, and when independent authorities take on tasks such as parking, transportation, water and housing, these operations no longer place a burden on city services. Then the city government may focus on its raison d’etre and be streamlined and have a reduced tax burden on the people.
We’ve all read about the “high cost of free parking.” Under the authority framework, market prices support effective and efficient parking systems, and supply and demand set price. When this occurs, if an authority is less than optimally managed, private business may compete effectively, and when private parking organizations flourish in a competitive environment, this better addresses parking capacity needs.
Similarly, when the authority is well-run, this provides a brake against excessive pricing by private business. This kind of system automatically maintains a level of equilibrium, and this self-regulation is yet another reason that such a good relationship is maintained between city officials and authority staff.
So come on up to Albany via the Hudson River (the old-fashioned way), or travel to the city in a more modern mode by plane, train or automobile. It’s a wonderful city, and good parking is available and priced right.
Michael Klein is the Executive Director of the Albany Parking Authority. He can be reached at email@example.com.