The Issue
Despite long-running efforts to improve Indianapolis’ downtown parking system, City leaders believed there were still numerous opportunities to enhance operational and financial performance. The City’s parking meters were often broken or inoperable, and the parking system lacked up-to-date technology. In addition, the system’s financial performance was below par due to a variety of operational inefficiencies and a lack of high-quality management data. The City decided to embark on a comprehensive Parking Modernization Project that began with a competitive Request for Proposals (RFP) for a parking management partner.
The Team
FaegreBD Consulting senior director Skip Stitt helped lead the winning partner team for the Parking Modernization Project. He was instrumental in program design, the RFP response, the due diligence process and developing the terms and structure of the final agreement.
The Strategy
After the competitive RFP process, the City engaged an outside parking management partner to help it rapidly improve performance, reduce operational risks and transfer the obligations associated with funding future capital improvements. The partner team, in collaboration with the City, developed and implemented a series of industry-leading operational strategies to reduce costs, increased revenue and improve services. Those strategies included:
- Improved meter operability (99.8 percent meter uptime) and time limit optimization, such as longer hours on nights, weekends and in underutilized areas
- Improved meter compliance using data analytics for predictive enforcement
- Pay-by-phone applications and improved meter bagging/un-bagging for construction, special events and street cleaning
- Rate increases and longer overall hours of operation (which accounted for only 20 percent of the improvements in financial performance) as Indianapolis had rates well below peer cities
The Impact
Engaging a parking management partner to operate the City’s 3,700 parking meters resulted in new technology, improved infrastructure and optimized financial returns. During the last year of direct City operations, parking generated about $340,000 in net meter revenue. After three years of partner management, the City received about $3.1M in revenue. The contract also included an up-front payment of $28 million, and enhanced revenue over the entire term of the agreement is projected to be between $300M and $600M. A very significant portion of the partner’s scope of work went to local women and minority-owned businesses. The City of Indianapolis Parking Modernization Project’s success was the result of the highly customized agreement between the City and its parking management partner. The two-tiered revenue sharing structure and detailed key performance indicators ensure the City and its partner remain goal-congruent with respect to parking systems operations.