May 4, 1998

 To:East York Community Council

 From:Richard Z. Tomaszewicz

 Subject:East York Agreement with APCOA Parking Development & Management Ltd.

Ward 1

 Purpose:

 To report to the May 6, 1998 East York Community Council regarding the relative costs of using existing municipal staff rather than extending the current agreement with APCOA Parking & Management Ltd. (APCAO) which expires on May 31, 1998.

 Financial Implications:

 The 1998 Operating Budget estimates provided $61,600 to cover the costs associated with the APCOA agreement until May 31, 1998. Should City Council decided to extend the agreement, additional funds in the amount of $100,000 would have to be added to the 1998 Operating Budget.

 Recommendations:

 That this report be received for information.

 Background:

 The East York Community Council requested the Interim Functional Lead for Transportation to report to the May 6, 1998, meeting of the East York Community Council on an analysis comparing the City of Toronto and APCOA Parking Development & Management Ltd.=s costs to undertake parking operations within the East York community.

 Discussion:

 This report will outline the previous reports that had been considered by the Council of the former Borough of East York regarding the costs associated with the agreement between the Borough and APCOA, for the provision of parking management services. The report will also review the revenue projections provided to East York Community Council by APCOA at its meeting held on April 1, 1998.

In accordance with the agreement with APCOA, all costs associated with the operation of the East York Parking Office are paid for by the municipality. In addition, there is a monthly management fee of $750.00 paid for by the municipality.

 The costs associated with the APCOA agreement have been reviewed twice in the past. Each time, it was clearly proven by staff, that doing the work in-house was more cost effective. Despite these recommendations the former Borough of East York Council decided to extend the APCOA=s contract.

 The first review in September 1995 showed that in-house costs would be approximately $86,000 less than the annual APCOA costs. It was proposed that the work be done by existing municipal staff with additional contract staff. A copy of the report dated September 18, 1995 is attached as Appendix B.

 Council requested a further report dated October 18, 1995, attached as Appendix C, which was dealt with by Council at its meeting held on November 6, 1995. A motion to terminate the agreement lost on a tie vote (Minute 1.463, forwarded under separate cover). Some Councillors at the time were reluctant to terminate the agreement early, even though the agreement was specifically structured to allow this. APCOA had not invested any of its money into the project and all costs were paid by the Borough. APCOA also proposed to reduce the services provided and reduce its costs so that the difference between their costs and the cost for municipal staff doing the work was $55,000. This was reported to Council in a report dated November 8, 1995 from the Commissioner of Development Services, attached as Appendix D.

 In April 22, 1997 the Commissioner of Development Services and the Treasurer and Director of Finance recommended that APCOA=s agreement be allowed to expire on May 31, 1997. It was estimated that there would be a savings of $41,500 for the remainder of 1997 if the agreement were allowed to expire and the work be done by existing municipal staff with additional contract staff, the report is attached as Appendix E. However, Council did not want to make a change at that time given the impending amalgamation. Therefore, the agreement was extended for a one-year period to May 31, 1998.

 Current Proposal

 All APCOA costs are paid for by the municipality. These costs can be grouped into three categories:

• staff costs associated with the East York Parking Office at 900 Coxwell Avenue;

• operating cost for stationary costs, printing, mileage etc; and,

• management fees, bookkeeping costs, banking costs etc..

 Given that East York currently pays management fees, bookkeeping costs and banking costs to APCOA, even if staff from the East York Parking Office, or the equivalent were to be hired, bringing the work in-house would reduce costs by APCOA=s fees. It is estimated that these costs for the remainder of 1998 would be in the order of $ 17,500. However, this is not the current staff proposal.

APCOA currently has 1 full-time and 2 part-time staff working out of the East York Parking Office. This is supplemented occasionally with other staff from APCOA. One of the part time staff essentially deals with processing the parking meter collections which take place over two days. Municipal staff collect the money from the meters and used to deliver it to the East York Parking Office for processing. As indicated in our March 16, 1998 report to East York Community Council (report forwarded under separate cover), City Council has passed the by-law establishing the Toronto Parking Authority and has assigned the administration of on-street parking meters to the Authority. Therefore, East York staff now deliver the meter money to them rather than to the East York Parking Office. There would be less than two full-time staff at the East York Parking Office dealing with parking matters.

 It is proposed that existing municipal staff absorb the functions currently performed by APCOA staff at the East York Parking Office. Therefore, there would be a savings of salaries and benefits.

 It is important to note:

• that existing staff currently provide significant management and policy direction to East York Parking Office staff;

• that the functions currently done by APCOA, were previously done by municipal staff. There was no reduction in staff at that time;

• municipal staff already provide counter service, cashiers service to the public and can accommodate the additional work; and,

• the permit parking system across the city is being reviewed with a view to amalgamating and streamlining processes.

 Historical Revenue Projections

 Mickey Narun, President and CEO of APCOA provided Community Council with a table showing the historical revenue stream. This table has been reproduced in Appendix A.

 In this table, the last column indicated potential revenue for 1998. It projects an increase of $114,000 over actual 1997 revenue. This projection should be viewed with caution. APCOA has never once achieved its revenue projections in East York. In fact, over the past 3 years there has been a continuous revision to revenue projections. The following table compares budget vs actual revenues. This information has been taken from the annual and monthly statements prepared by APCOA. Although APCOA may provide a rationale for these historical shortfalls, the fact remains that their projections have not been met.

COMPARISON OF BUDGET VS ACTUAL REVENUES

(000's)

 In 1996, the Commissioner of Development Services and the Treasurer and Director of Finance reported to Council on a net reduction in revenues of $175, 472. This report was prepared to alert Borough Council of the significant shortfall in revenue from what was used during the preparation of the 1996 Current Budget. Revenue projections for parking related activities were prepared by APCOA and were the basis of the budget figures. This report dated June 18, 1996, is attached as Appendix F. As a result of discussions with APCOA and additional staff report dated August 29, 1996 (Appendix G), Council authorized that hiring of additional staff by APCOA in an to attempt to increase revenues. At that time, it was forecast that 1997 revenues with the additional staff would be $ 729,865. As can be seen in the revenue table, revenues were actually $620,599.02 in 1997.

 While net revenues have remained essentially stagnant, other benefits have accrued as a result of the agreement with APCOA. These include; uniform enforcement of boulevard parking policies and by-laws, and although East York staff has remained at the 1994 level, they have been freed up to provide additional service to the residents.

 There are many reasons for the lack of hitting revenue targets. Some are totally outside the control of APCOA. These include Council decisions on enforcement policies for front yard parking and actions taken by property owners to remove the illegal parking pads rather than pay. Other reasons are related to APCOA. It is important to remember that APCOA was responsible for preparing the revenue estimates since they were most familiar with their experience in achieving their targets. They have had three to four years within which to refine their projections.

 While APCOA has sold Overnight Parking Permits and administered the parking meter monies, these functions were previously done by Borough staff. They major benefit to APCOA was in the boulevard parking areas. It is estimated that over the period 1995 to 1997 (3 full operating years), that total operating costs for the East York Parking Office, exceeded increased boulevard parking revenues (Commercial and Residential) by approximately $450,000. Staff are of the opinion that there are more cost effective ways of maintaining pro-active enforcement utilizing. We can, for example, use summer students every two or three years rather than continuing the APCOA contract.

 The above illustrates the fact that parking management in the municipal environment is influenced by many factors, which does not necessarily lend itself to contracting out.

 At this time, there can be no business case made for extending the current agreement with APCOA. Should City Council feel that parking management should be privatized, it should be done on a broader basis and other companies and the Parking Authority should be allowed to bid.

 Conclusions:

 In summary:

• staff have repeatedly demonstrated that it would be more cost effective to administer the East York parking program in-house;

• with the staff current proposal to let the agreement expire and carry on activities using existing staff, there would be no increase required in the 1998 Operating Budget;

• if City Council were to continue the agreement, the Operating Budget would have to be increased by $ 100,000;

• revenue projections have not been met for various reasons;

• parking meter revenue will be processed by the Toronto Parking Authority thereby reducing APCOA=s revenue projections significantly;

• the permit parking system is currently being reviewed on a city wide basis and a report will be submitted by the Interim Lead for Transportation to the Urban Environment and Development Committee; and,

• there is simply no business case to continue the privatization of the parking services in the East York District at this time.

  Contact Name:

 John W. Thomas, P.Eng., MBA

Director of Transportation and Engineering Services

778-2216

  Richard Z. Tomaszewicz

Commissioner of Development Services

TABLE OF APPENDICES

1. Appendix A - Table prepared for the April 1, 1998 Meeting of Community Council.

1. Appendix B - Report dated September 18, 1995 from the Commissioner of Development Services : Item 11, Report No. 5 of the REGULATORY AND DEVELOPMENT COMMITTEE, as adopted by Council at its meeting on October 2, 1995, without amendment;

1. Appendix C - Report dated October 18, 1995 from the Commissioner of Development Services: Item 5, Report No. 7 of the REGULATORY AND DEVELOPMENT COMMITTEE, as adopted by Council at its meeting on November 6, 1995, subject to the following amendment:

 By lifting this Item as it was dealt with under Minute No. 1.463;

1. Appendix D - Report dated November 8, 1995, from the Commissioner of Development Services: Item 13, Report No. 8 of the REGULATORY AND DEVELOPMENT COMMITTEE, as adopted by Council at its meeting held on November 20, 1995, subject to the following amendment:

 By lifting this item as it was dealt with under Minute No. 1.479;

1. Appendix E - Report dated April 22, 1997, from the Commissioner of Development Services and the Treasurer and Director of Finance: Item 1, Report No. 10, of the ADMINISTRATION AND OPERATIONS COMMITTEE, Council at its meeting held on May 5, 1997 requested a contract be negotiated with APCOA Parking and Management Ltd. for one year;

1. Appendix F - Report dated June 18, 1996 from the Commissioner of Development Services: Item 18, Report No. 15, of the ADMINISTRATION AND OPERATIONS COMMITTEE, as adopted by Council at its meeting on July 8, 1996, without amendment;

1. Appendix G - Report dated August 29, 1996, from the Commissioner of Development Services and the Treasurer and Director of Finance: Item 10, Report No. 16, of the ADMINISTRATION AND OPERATIONS COMMITTEE, as adopted by Council at its meeting on September 16, 1996, without amendment.

1. Appendix H - Report dated March 16, 1998, from the Commissioner of Development Services: Considered and deferred for a further report by East York Community Council at its meeting held on April 1, 1998.

APPENDIX A

 Table prepared by APCOA for the March meeting of East York Community Council

 Note:(A) Based on a Memo to the Transportation Committee dated July 27, 1993

(B) Based on 1993 actual

(C) Revenue from June 1994 to December 1994

(D) Revenue January 1998 and February 1998

APPENDIX B

 APPENDIX C

 APPENDIX D

APPENDIX E

APPENDIX F

APPENDIX G

APPENDIX H