One word: Privatize!
If that’s a very practical solution what follows is a summary of the ‘problem’ and an explanation of why a privatization solution makes sense.
The last couple of years has seen concern and controversy surrounding Parry Sound’s parking policies. It’s as close as I have ever seen the community turning up at a Council meeting with torches and pitchforks.
It started a couple of years ago with Staff suggesting that the Town increase parking meter rates to account for inflation and to generate additional revenue to cover costs. This was picked up by Council and quickly opposed by the Downtown Business Association (DBA) who suggested it would hurt business and countered with a proposal that all parking in the downtown should be free, at all times. This ended with Council eventually raising parking rates and parking ticket prices, but not as much as originally proposed. I offered my take on the situation at that time in a post that is linked here.
Earlier this year Council was presented with a by-law to install parking meters on Bay Street down towards the Stockey Centre. This was met with considerable opposition by businesses on that portion of Bay Street. What was free they contended should remain free or it would hurt business and reflect poorly on Parry Sound as a tourist destination. The result was that Council beat a hasty retreat and claimed that metering on Bay Street was only being considered even though they had previously budgeted for meter installation. To make amends Council said that not only would there be no meters but they would review the possibility of removing all paid parking in Parry Sound later in the year.
There is much academic and practical experience that suggests paid parking is not only a source of revenue to cover costs related to creating and providing the parking; surface maintenance, plowing, etc., but that it actually increases business and human traffic in a downtown. It’s too easy to avoid shopping downtown if it’s likely that there won’t be any parking available. A better argument though might be to turn to free market economics to address the challenge of parking in Parry Sound, and that suggests privatization as a reasonable solution.
Privatization offers a couple of obvious benefits. The first is that it helps ensure prices match demand. If parking prices are too high people will stop parking and there will be less revenue and profit. The operator of the parking service should, in a ‘rational’ world, reduce prices to gain more parking business and optimize revenue and profit. Without the need to have prices discussed and reviewed at Council meetings a fine balance can be practically implemented aligning the interests of the local merchants (more shopping traffic) and the parking operator (maximal revenue through optimal pricing and maximal parking).
The second benefit is that it relieves Council of having to deal with difficult situations that may reflect poorly on their popularity. How many parents with teenage children have had to balance popularity with doing the right thing? At least parents don’t need to run for re-election, although in some cases that might not be a bad idea. But I digress.
The Town recently experienced the liberation of privatizing what was essentially a Town service, the Town Dock and Big Sound Marina. For the last couple of decades the Chamber of Commerce managed this facility; pretty much as a breakeven operation. With the Chamber’s decision to forgo management of the facility this year the Town contracted the operation to a private company that has to date done a good job as far as I can tell. But the effective privatization of the Town Dock and Big Sound Marina has come with some changes; seasonal dockage is being offered and there is a charge for day usage, two sources of income that were not available to the Chamber of Commerce.
When I asked Staff about the impact of these changes on local businesses they simply shrugged and suggested that it was up to the operator to make these decisions even though it may well negatively impact local business by reducing day boating traffic (similar to the argument against parking meters on Bay Street) and competing with local businesses (subsidized seasonal dockage).
That led to the Bingo moment. Let’s privatize the Town’s parking business! Privatization would permit the market to decide the right price for parking and avoid tough decisions for Council.
What about the mechanics you ask. Well here are some early thoughts:
- The right to receive revenue from public parking in Parry Sound would be offered on a Request for Proposal (RFP) basis for an initial five-year period. Thereafter the Town would open the RFP for a further five years.
- The winning bidder (WB) would need to guarantee the Town a certain fixed amount of annual income plus an upside for any new parking spaces installed.
- The WB would have the sole right to adjust prices as they felt was appropriate.
- The WB would also be able to change the hours of paid parking. Free after 5:30, weekends and all December? Well that might not really be optimal, so perhaps that would be tweaked to have free parking only on Sundays and after 9:00 PM.
- The WB would also be able to create additional paid parking sites in Town, but at their cost. I could well imagine there might be profit in charging for parking at the Stockey Centre, Waubuno Beach, and the Bobby Orr Community Centre. Bay Street seems pretty darn obvious as well. How about boat trailer parking fees at the Champaigne Street dock?
- The WB would be responsible for keeping these properties clear of snow and for any damage to the parking areas. I expect the Town would still be responsible for general maintenance of the properties, most notably the paving of the areas.
- I’m not so sure about ticketing. Perhaps the WB could have their own personnel monitor compliance and ticket as required, or contract with the Town for these services.
Pretty simple isn’t it. It’s all about letting the market decide when, where and how much parking should cost.
Is this a real business and would anyone be interested?
I suspect that there would be significant interest by private businesses. It might even appeal to the Downtown Business Association; they would be able to manage the parking rates directly so as to optimize their business. They could even choose to make parking free everywhere, at all times. And the Town would have no issue because they would continue to receive the same income they might have expected by operating the parking business themselves without the headaches regarding the parking rates.
The winning bidder for the parking RFP could certainly make money. Revenue could be increased by about 10% through elimination of the December free parking. Saturdays could add an additional 15%. Metering Bay Street and the Stockey Centre could increase revenue by another 10-20%.
It could be a virtual goldmine for the Town and a private operator. It might even have the benefit of getting people close to the downtown walking to events at the Town Dock, the Stockey Centre and the Bobby Orr Community Centre.
But most importantly it would relieve Parry Sound Town Council and Staff from the need to make necessary but unpopular decisions, or taking responsibility for these decisions. It’s as simple as the decision to in effect ‘privatize’ the Town Dock and Big Sound Marina. Don’t blame us; it’s a business decision that’s out of our hands.
So, am I serious? Or am I pulling your leg? The short answer is yes. The long answer will follow in a second post.
To be continued……
Worth Privatizing? (Parry Sound in Black & White)