It's a Legendary Parking Industry Story

April, 2004

It sounds like a typical parking story: Theft is discovered. Owner blames operator. Operator at fault. Operator pays. But is that the total story?
If you haven't been paying attention to the Washington Post, here's the story in a nutshell.
About 10 years ago, the Washington (DC) Metropolitan Area Transit Authority (WMATA) hired Penn Parking to run its parking operation. WMATA has 52 locations (consisting of 59 pay lanes). These are basically commuter lots, feeding the DC-area transportation system.
Over the years, Penn and WMATA have had numerous discussions concerning the ability of Penn to provide good revenue control. Penn has asked for both equipment and administrative changes to aid in policing the revenue, but most have been either denied or ignored. The contract to run these facilities has been awarded to Penn on three successive occasions. It has always been the low bidder.
In the past month or so, the front page news in the Washington Post has been that the WMATA auditor early last year reported that between half a million and 1 million dollars per year has gone missing, stolen by Penn employees. It seems that the audit was triggered by a call on a "tipster" line that went directly to the auditing department.
Earlier complaints from the same tipster (a senior official in the parking office) had been made through normal channels at WMATA, but had seemingly been ignored. According to the Post, the agency's director of parking at the time took early retirement. Since the audit turned up heat on the problem, 31 or so cashiers have been fired. Their union, of course, is protesting.
Lisa Renshaw, Penn Parking founder and president, says that good revenue control is impossible without the tools she requested. WMATA CEO Richard White says, "This is a contractor who is able to hide behind equipment issues to play these games."
WMATA officials are quoted as being "embarrassed," but also as feeling that their operator should have done more. Renshaw has documents dating to 1994 that back up her position.
Who is right? Who is at fault?
I guess it has to do with what we see as the role of the operator. Is that role one of taking total fiscal responsibility for the parking operation? Or is it one of simply supplying people, training them and doing some basic auditing?
It seems to me that if an operator is to take full responsibility for the collection of the money, that requirement needs to be spelled out in the contract. If that is done, then the operator can charge the amount necessary to ensure that it can in fact handle that responsibility.
From a reading of all the documentation, it can be seen that WMATA has a complete parking department and auditing department. WMATA acknowledges that Penn is still there because it isn't technically in violation of the contract. However, if the owner places requirements on the operator that prevent the operator from doing its job properly, then how can the owner expect anything more than mediocre results?
So what is the case here? Naturally, there are two sides and some modicum of truth in each. However, WMATA did hire Penn Parking three successive times. If WMATA had a problem with Penn, why rehire it? Renshaw was low bid. It would be interesting to research what the bids were from the other parking companies. Were they 10 percent more, or were they 40 percent more? If it was the former, so be it; if it was the latter, then shame on WMATA. It bought the low number and is paying the price.
Renshaw wanted this deal and she bid it to get it. She also knew how much of her resources that she could commit to the job based on that price. That seemed to be good enough for WMATA for the past three bidding cycles. WMATA had been told from almost day one that there were problems, and it had elected to ignore the issue.
There is a quote in the Post that is interesting. One WMATA official said the "agency didn't know it had a problem because revenue was meeting budgeted projections year after year." In other words, since we were getting as much as we had projected, everything had to be all right. So when your operator comes in and says that there are problems, just ignore them. Makes sense to me.
As for Penn, of course it could have done more. Any company at any point in time could do more. According to some of Penn's competitors, of course it could. However, the question I might ask is: Did Penn Parking meet the obligations of the contract it has with WMATA? If it did, then it is off the hook. If it didn't, then it should pay the price.
One might say that Renshaw shouldn't have bid so low. I do believe, however, that WMATA is at fault in the first case by not having its specs written tightly enough to weed her out or to force a higher bid; and in the second case by simply ignoring and dismissing out-of-hand her suggestions and complaints. (Check out Renshaw's Web site and look at the documents she has from WMATA.)
After all, this problem has been going on for nearly a decade, and WMATA has rehired her twice. If Renshaw was doing such a bad job, why didn't WMATA simply not allow her to rebid. Placing all the blame at the operator's door is not appropriate. The owner deserves its share.
As you see from what we print virtually monthly in PT the Auditor, we normally hold the feet of the operator to the fire and feel that it is the operator's fault when problems arise. By the same token, I know of a large number of cases where the operator and even independent auditors have reported problems and solutions to the owners and the owners have said "Thank you very much" and ignored the recommendations. The managers simply didn't want to acknowledge that problems occurred on their watch, so they pushed it under the rug. The Washington Post kept that from happening in this case.

For more information, log on to www.pennparking.com or to the Washington Post's Web site
www.washingtonpost.com and put "parking" in its "search" box.

John Van Horn is editor of Parking Today. He can be reached at
editor@parkingtoday.com.