After three months of having a private operator oversee its two parking decks, Cobb County has seen more year-over-year revenues in the short term. But Cobb’s finance director says it will take more months of such collections to significantly reduce or even eliminate the county’s subsidy to the parking facilities.
In March, county commissioners approved a three-year contract with LAZ Parking that will see the county pay $128,000 annually to LAZ for operation of the decks, or about $10,667 per month, with the fee increasing 3% annually for each year of the contract.
When asked during a sit-down interview Monday how LAZ’s operations were going, Cobb Chairman Mike Boyce said, “Doing great,” and when asked if the county was breaking even, he responded affirmatively.
“We’re in the black,” he said. “They know what they’re doing. Imagine that.”
But Finance Director Bill Volckmann says that despite “significant improvement” in parking deck revenues under LAZ, “For 2019, you’re still going to see a deficit for the year because you have several months where we didn’t have LAZ running it and the adjusted (rate) structure, but for the months we’ve had, we are seeing positive growth without a doubt. That’s what we’re really focusing on.
“Will there still be a subsidy in FY19? Absolutely, because most of the year we didn’t have this in place,” Volckmann added.
County officials previously said LAZ’s proposed changes, which included increased parking rates, would amount to an estimated increase of $492,863 in annual revenue, an amount that would cover the county’s $300,000-plus annual subsidy to cover deck costs not covered by current deck revenues. The changes would also cover the $128,000 annual management fee to LAZ and any incentive management fees, according to county documents.
“These parking decks have been money losers for the county and taxpayers in recent years. LAZ (Parking) believes they have the metrics, management and marketing to turn these losers into winners,” county spokesperson Ross Cavitt said of the changes in a video posted prior to LAZ’s takeover.
BY THE NUMBERS
The county last year transferred more than $329,000 from its general fund to cover parking deck expenses not covered by parking fee revenue. A general fund subsidy has yet to be sent in fiscal 2019, Volckmann says, as the county is waiting to see how its operational changeover to LAZ impacts revenues.
After the first 10 months of fiscal 2019, Volckmann said, collected revenues have exceeded the same amount of time the previous year by more than $66,500. That variance over last year’s collections has grown, with revenues through May favorable compared to the previous year by $7,230, while the positive difference increased to $29,337 at the end of June as LAZ finished its second month of operating the decks.
“That’s only for a few months of operations because LAZ didn’t do this all year,” Volckmann said. “So we are seeing significant growth in those areas.”
The county has also reduced personnel costs related to the decks, spending this year nearly $16,600 compared to more than double that amount through the same length of time in fiscal 2018. The reduction is due to LAZ taking over all personnel responsibilities related to deck operations upon its takeover.
Volckmann said the increased revenues and decreased expenses thus far would reduce this year’s general fund subsidy.
“If we closed the (fiscal) year as of the end of July, we would’ve sent $301,000 (in general fund monies) to the parking deck versus what you saw in transfers in for 2018, which was $329,000, so as we continue to improve on this. That number will go down and continue to go down, and that’s where we’re really wanting to be,” he said.
The county’s next fiscal year, which gets underway in October, will also see some subsidy paid to allow the parking decks to break even, but a ballpark figure of that cost is tough to determine, Volckmann says, due to having only three months of revenue data under LAZ.
When asked about Boyce’s statement that the decks were “in the black,” Volckmann responded, “I think what he meant, or what we’re looking at, is we’re definitely seeing increased revenue, it’s definitely improving. Are we 100 percent there yet? No, not yet, but we only have three months of data to go on.
“The only thing I can say for certain is the subsidy is definitely going to be reduced in 2019,” he added, “and significantly reduced in 2020 if not eliminated altogether.”