May 2—TRAVERSE CITY — Parking services in Traverse City could use some financial tweaks as city leaders look to move the department from the Downtown Development Authority directly to the city.

City commissioners recently agreed they need to re-examine how much depreciation costs Traverse City Parking Services pays into a fund to eventually replace the city's parking decks. It was one of several discussion points during their study session this week as Nicole VanNess, who oversees TCPS as the DDA's transportation mobility director, laid out the steps required to transfer parking oversight from DDA to the city.

Currently, the city pays TCPS $825,000 to manage parking for the year, documents show. That funding comes from three enterprise funds into which the city collects parking revenues. Like other enterprise funds, parking services pays a slice into the city general fund each year, totaling $1.9 million between 2018 and 2023. That rate dropped to 5 percent in July 2023 for the current budget.

Those mainly come from parking meters, permits, garage fees and fines, VanNess said. It's a contractual agreement that has changed considerably since its 2003 start, although the DDA originally took over parking management for its district from the city in 1991.

Now, parking services handles day-to-day operations throughout the city, both within the boundaries of the DDA, at metered zones around town, in residential areas where parking is time-limited and at Northwestern Michigan College under contract, VanNess said.

While parking services manages the system, Traverse City itself collects all the revenue and is ultimately responsible for the expenses, according to city Manager Elizabeth Vogel.

The city also owns all the parking system's assets, from Hardy and Old Town garages to enforcement vehicles to meter equipment and more.

Maintaining those assets, especially the garages, is becoming more expensive all the time. VanNess referenced a recent contract for some preventative maintenance projects that are supposed to be good for five years. That cost $670,807.50 for the Hardy parking ramp and $329,290.50 for the Old Town parking ramp.

The city will pay for that work out of the same parking money surplus that, in theory, is supposed to pay for a new parking ramp when one of the city's reaches the end of its useful life, VanNess said.

Parking services budgets each year to pay depreciation costs for each garage — $87,830 for Old Town deck, and $207,250 for Hardy deck, both for the budget year that wrapped in 2023.

As of June 30, 2022, the parking fund had $8,600,900 on hand, in both cash and $5 million in certificates of deposit, budget data shows. In comparison, estimates put a parking garage for the city's west end at $32.4 million, including a mixed-use component of housing and retail space.

VanNess agreed with Commissioner Tim Werner that these depreciation funds won't be able to do what they were intended to do — sock away enough money over 50 years for a major repair or replacement.

That's likely because the amounts being saved reflect an era when building a parking ramp cost $9 million, VanNess said.

"So I think we also need to consider a maintenance fund that is specific to these restoration and repairs, so we're not having to budget for them three years, five years out," she said.

Parking rate increases might be necessary as well, since revenues are still below pre-pandemic levels, VanNess said. That reflects the fact that many offices still sit empty as employees work from home.

Transferring that decision directly to the city commission (or a subcommittee of its forming) might lead to more "shrewd" decisions on rates, Mayor Amy Shamroe said.

Commissioners agreed they want to take a vote on the parking oversight issue at their May 20 meeting. City Manager Elizabeth Vogel told commissioners their resolving to terminate the contract would trigger a 60-day clause. It would also set in motion some further planning needed to determine how to fold the department into city operations.

Meanwhile, DDA board members will meet Friday and discuss the transfer of parking services to the city, meeting materials show. The execution of that transfer is already assumed in the DDA's draft budget, interim DDA CEO Harry Burkholder said in a memo.