San Francisco parking lot ordinance

November, 2003

Will Other Cities Follow in S.F.'s Footsteps

Editor's note: This is one in a series on San Francisco's new parking ordinance, which requires that specific equipment be installed in off-street parking.

More than two years after the San Francisco Board of Supervisors enacted an ordinance designed to address consumer complaints and root out suspected fraud in parking-lot tax payments to the city, the system is now much closer to being fully implemented. But the implementation has not been without hiccups. The main issue is that many lot operators have been reluctant to meet the ordinance requirements.
However, progress has been made. So far, a number of pay-and-display manufacturers have modified their parking machines in order to attain certification to the city's ordinance standards, thus making these available for city lot operators. In fact, some operators have purchased the machines and are in compliance.
But, according to David Frieders, director of San Francisco's Department of Consumer Assurance (DCA, the city department charged with enforcing the ordinance), numerous operators are still not cooperating. These individuals have been served with appropriate legal notice before instituting penalties of $2,500 per day per violation. Fines like these can add up quickly, and will, when operators are taken to court by the city's lawyers. Frieders suspects that full compliance is not far off.
The job of our department specifically is to enforce ordinances enacted in the interests of San Francisco consumers, and that's what we will continue to do," Frieders says. "A number of operators have installed machines that are certified to deliver the auditing and data security features the ordinance requires, and have found that these do the job perfectly well," Frieders says. "Now it's time for everyone to get on board."
One concern Frieders has is lot operators ordering and using noncertified equipment. "To save themselves the trouble, they should order only from companies whose equipment has been certified to deliver the requirements demanded by our ordinance," Frieders says. "It doesn't matter if you just bought new equipment; if you're not in compliance, you'll find yourself with a problem."
Other cities closely following S.F. progress
Mike Rodger of Digital Pioneer Technologies has some concerns about other cities adopting similar legislation for their own lot-management systems. "We're fortunate in that our technology is easy to upgrade, so we can adapt our machines to whatever standards other cities adopt," Rodger says. "If the cities stayed close to one particular model such as San Francisco's, that would be easier on the lot operators and manufacturers."
"We continue to receive calls from other cities to see how we're making out," Frieders says. "They like the fact that S.F. is laying all their groundwork. I expect many to follow in the city's footsteps."
The benefits to other cities could be enormous, as they appear to be in San Francisco. While no one really knows how much revenue is being under-reported in this predominantly cash business -- in a Pacific Coast city where parking is at a premium -- guesses range anywhere from $50 million to $125 million per year. That can translate into a loss of $10 million to $25 million to the city government from its 25 percent parking tax on the operator's revenue (20 percent of the consumer price). In the fiscal crisis faced by many local administrators, ensuring collection of these missing taxes is becoming a priority.
As a result, evidence of criminal fraud by parking-lot owners has district attorneys in San Francisco looking to step in with charges. Notes Frieders: "The D.A.'s office is part of the implementation team and is observing the whole process very closely. This tax money goes to important social initiatives that citizens are concerned about."
In San Francisco's case, the taxes also help support the city's seniors' programs in which the elderly are fed, clothed and provided with shelter. It's unlikely city council will back down from collecting the taxes owed to it and used to fund these important social endeavors. Down the road, it will be interesting to see if there is a significant spike in tax recovered once the system is fully up and running.
Lot revenues increasing with new ordinance?
"Frankly, we don't know exactly what goes unaccounted for, but the city treasury department will get a better idea of revenue and size of the industry once they're compliant" Frieders says. "Understanding the revenue totals will be complicated by the fact that using the compliant parking machines appears to be actually helping to increase revenue for operators. That's another reason to install the new equipment."
One of San Francisco's largest parking lot operators, City Park, has seen its revenue bump up and its costs go down. "In the lots where we installed Digital Pioneer products, we have seen our labor costs drop, both in attendant time and the cost of picking up and counting the money," confirms Chris Leonoudakis, general manager of City Park, which manages 50 lots.
In one case, City Park added a machine to replace an attendant working 20 to 30 hours a week. Now, just five hours are needed to collect the money and download the credit card info into a Palm handheld device. "We're finding customers will park in our lot rather than one down the street because we have the credit card option," he says. "They'll come specifically to our lot knowing they can buy the exact parking they need. So it's helped increase revenue."
Industry observers believe it may be the multiple-pay option of these new machines that is the difference. Customers now have a different mindset when they approach a parking machine. Instead of seeing how much time they can buy with the coins they have, now they determine exactly how much time they really need and then use their credit cards to purchase the appropriate amount of time. On average, it appears people are tending to buy a little more than they need, just to be sure. This tends to result in extra revenue to the parking lot on a per-visit basis.
Rodger notes that the machines also improve the operator's bottom line by reducing the labor costs involved in staffing lots, the work involved in handling payments and providing receipts, and the time required to collect money from each machine.
One concern of the parking-lot operators is that enforcement is not discriminating between lot operators attempting to comply and those that aren't. While compliance can be done, it does require some effort to implement. They say the DCA should focus first on the operators who are ignoring the ordinance. That will give the others the extra time they need to get in compliance.
Another concern is the potentially onerous costs that small-lot operators (like a gas station with only two spots to rent out) must incur to comply with the ordinance. The cost of the machines can make the purchase difficult to justify for very small lots. As Frieders observes, few people see the value in forcing these operators to take their parking spaces off the market in this parking-short city, so it appears that some provision may be made to exempt small operators. However, there are no plans to make major modifications to the ordinance.
"Some minor fine tuning might be in order, but it seems extremely unlikely any major changes will be forthcoming," concludes Frieders
The group of city departments managing enforcement has been enlarged with representation from the Department of Parking and Traffic, which will be responsible for writing the regulations. It will join the DCA; the D.A.'s office (to prosecute cases in which criminal fraud is suspected); the city attorney's office (to prosecute lot operators civilly for noncompliance); and the treasurer administrator (to ensure appropriate tax acquisition for the city).
Full compliance appears to be just over the horizon. And given the interest shown by other cities, it could well be an idea that spreads to other jurisdictions.

Steve Campbell is a technical writer and public relations agent working out of Vancouver, British Columbia.
He can be reached at
scampbell@campbellpr.bc.ca