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Memo to the Mayor: do your homework

Mon Nov 12, 2007 Miss Vicky 

Apparently Mayor Larry paid consultant Gord Hunter (not councillor Gord Hunter) $80,000 to help him develop his plan for the city budget. Miss Vicky is thinking about getting into the consulting business now, since it seems you don't actually have to do a lot of homework and still get paid a whack of money.

There were few concrete ideas in last week's speech, but one of the specifics the Mayor seemed to be considering is outsourcing parking enforcement. Here's what he said:

So why, for example, do we own our parking meters?

The city currently maintains over 3,700 on-street parking meters with an annual cost to operate the system of approximately $5 million dollars.

The City of Hamilton entered into a partnership with Parksmart and increased net revenues 122% the first year while cutting the number of illegally parked vehicles by over 50%.

I believe the citizens of Ottawa do not spend too much time worrying about who manages the parking meters.

If we were to follow Hamilton’s example we could potentially save $3 million a year with this one initiative alone.


Miss Vicky's readers, apparently, seem to do better homework than Mayor Larry's expensive consultants. Thanks to a tip from reader alf (see here), Miss Vicky has done some searching and made some inquiries. A call to Hamilton's Municipal Parking System confirmed that they are, indeed, a department of the city. They do, indeed, own their own parking meters. They have contracted a couple dozen commissionaires to help with issuing tickets, but that's it.

And it wasn't the city of Hamilton that did the contracting out. It was the municipality of Dundas, which was recently amalgamated with Hamilton. The contract with Parksmart was for 8 years, and the recommendation of the report alf helpfully pointed us toward was to bring parking enforcement back in house, the advantages of which would be:

1. Unencumbered control over enforcement policies and procedures, which allows for more flexible and timely responses to the needs of the community.

2. Greater latitude in the assignment of enforcement officers and their duties, which provides for:
(a) The development of efficiencies to implement cost reductions;
(b) A means to address shifting enforcement priorities;
(c) An opportunity to re-organize based on an effective service delivery model;
(d) Greater control over public relations and an opportunity to dispel the perception of “profit driven” enforcement; and,
(e) Enhanced control respecting policy and procedure development to promote enforcement consistency throughout the City, i.e., enforcement practices that are consistent with the other City Business Improvement Areas.

3. Direct management of parking operations, which provides for:
(a) Better control over parking fee rates;
(b) Enhanced cost recovery opportunities, e.g., increases in interest on revenues;
(c) Greater control and accountability respecting accounting practices and outcomes;
(d) A direct relationship with customers and other stakeholders, improving customer service and reducing client confusion;
(e) An enhanced ability to implement parking programs and special provisions in partnership with the local business community;
(f) A more streamlined decision-making process with respect to implementing infrastructure and equipment improvements by rolling the Dundas program into the city-wide comprehensive Parking Asset Management Program; and,
(g) “Hands on” management of equipment maintenance and customer service staff


And contrary to our Mayor's claim that no one really cares who owns the parking meters, the proposal to bring Dundas parking back in house had the support of both the business community and local residents.

Miss Vicky is a little surprised that the Mayor's claim about the city of Hamilton's "successful" outsourcing of parking enforcement has not been questioned by the media or councillors. Miss Vicky's suggestion: when the Mayor actually brings forward his more detailed plan(if indeed he has one), we'd all better go through it with a fine toothed comb. Especially before we start selling off the city's assets to satisfy his Honour's evangelical commitment to privatization and outsourcing.

Some people were moved to reply

accidental altruist Nov 12, 2007 05:03 PM said:

Good work! Was this sleuthing accomplished by mere Googling - as in: were the holes so obvious that we should ask this 'consultant' to pay us our money back!??!!

Miss Vicky Nov 12, 2007 05:29 PM said:

yes. much of it was achieved by googling. and a phone call. simple research, really. I am convinced that Gord Hunter's "research" consisted of a glance at this document, an out-of-date report of the "top 100 P3s", with no actual follow up investigation as to whether those projects succeeded in the long term.

Doesn't bode well, does it?

liss76 Nov 12, 2007 06:01 PM said:

Yikes.

How many more years of him are we to suffer through?

Wait. Scratch that.. don't remind me. At this point I think I'd rather stick my head in the sand and wait until he goes away..

amckay Nov 12, 2007 06:07 PM said:

Was there a cost estimate in the report to indicate how much more or less it would cost bringing it back in house? I'd give up 1, 2 and 3 if it were a substantial proven savings.

Mind you, it is pretty pathetic as you note, that some guy got paid $80K to come up with this stuff. Holy friggin' crap!

Wheatsheaf Nov 12, 2007 06:08 PM said:

Excellent work.

As for the Mayor, I am hoping that the criminal investigation will force him out early or that he will "become bored" running the city like a business and retreat early. Slim chances, but I have to maintain that hope.

The Webgeek Nov 12, 2007 06:17 PM said:

It took some backtracking to figure out, but it was really just a few Google searches. Once we had a link to theressons for Hamilton's "re-sourcing" of parking meters, a search for "Hamilton Parksmart Agreement" brought us to a report of 100 "successful" Public-private partnerships. (warining -- big pdf file. Here's Google's HTML version) The Dundas/Parksmart deal is # 89 on the list apperently -- complete with the numbers Larry quoted in his speech. Of course, this document was published back in 2000/2001 and, obviously, things have changes since those "heady days".

It would be really interesting to see how many of these "hot 100" are still going, and how the numbers match up today. It will also be interesting to see how many of these p3's become proposed by mayor Larry as time goes on.

Nat Nov 12, 2007 07:38 PM said:

Nice, wanna go into business?

Miss Vicky Nov 12, 2007 07:49 PM said:

I will accept any and all offers, especially ones that involve no work and five-figure salaries.

knitnut Nov 12, 2007 08:06 PM said:

Nice work. It's kind of pathetic though that he paid $80,000 of our money for sloppy research, and that he doesn't expect any of the citizens of Ottawa to do any fact-checking. I think he's new to the concept of accountability.

The Webgeek Nov 12, 2007 08:20 PM said:

Was there a cost estimate in the report to indicate how much more or less it would cost bringing it back in house?

If you *ahem* go and read the report, you will see that the report starts with the financials, makes recommendations and the goes into more financials to show how bringing the parking meters back in-house will make more money.

Specifically:
... staff conservatively estimates that annual net HMPS revenues will be increased by approximately $28,000 as a result of bringing the parking operations and enforcement programs “in-house” and providing an enforcement program consistent with the other Business Improvement Areas in the City.

and

The recommendation would require an increase in Parking Operations staff by two FTE, ... however the two part-time officers employed by ParkSmart Inc. would be replaced with one full-time Commissionaire under our existing contract with the Corps, resulting in a savings of $30,500.

Richgold Nov 12, 2007 10:12 PM said:

OMG Thank you Miss Vicky and Webgeek for that WHOOP of laughter that almost awakened the child units and sent DH running to find out why I was having so much fun when he wasn't any where near!

Zing zing. Keep 'em coming. You're a home grown version of the Mercer Report.

Blake Nov 13, 2007 08:54 AM said:

To quote a good friend… “Oh puleeeese!”

Miss Vicky and Alf, with all due respect, please read the document to which you are referring and not just the headlines. The report to re-patronize the parking meters in Hamilton to City Hall control says specifically that they are doing so because they believe the city can do a better job and therefore realize all the revenue that the outsourcing company, ParkSmart Inc. makes and not have to share it.

“It should be noted at the outset of this analysis that ParkSmart Inc. has, without question, fulfilled all requirements of the Agreement and that the recommendation that the contract not be renewed is not, in any way, a result of non-performance. Having said that, staff would advise that there are numerous advantages associated with providing parking operations and enforcement services “in-house”, which are normally the result of a “direct chain of command”.” - City of Hamilton, Planning and Economic Development Department

The report basically states that the outsourcing contract generated more revenue than the City previously did but now if the City took over the job again, they would in turn reap the higher revenue that ParkSmart enjoys. This is a money grab and nothing more.

The report actually supports what Mayor O’Brien is saying and that is that the Ottawa can reap more revenue through outsourcing while reducing our overhead cost – money that can then be spent on other priorities.

Miss Vicky Nov 13, 2007 09:29 AM said:

Huh? I'm not sure how you get to that conclusion. My interpretation is a little different.... the city didn't need to outsource its operations to realize extra revenue. Outsourcing meant lost revenue to the city, not to mention a loss of accountability and the ability to control operations. Thus the decision to bring it back in house. Sure parking enforcement happened, but Parksmart profited when it could have been the city reaping the benefits and putting the money back into operations or enhancing parking infrastructure.

The Webgeek Nov 13, 2007 10:03 AM said:

Blake said: The report basically states that the outsourcing contract generated more revenue than the City previously did but now if the City took over the job again, they would in turn reap the higher revenue that ParkSmart enjoys. This is a money grab and nothing more.

The way I see it, there were three steps taken by the Township of Dundas and the city of Hamilton.
1) Some short term cost savings by cutting (or at he very least not hiring) staff to a point where parking meter infractions were unenforceable, therefore not making the money they could off the meters.
2) Again going for some short term staff cut savings by letting a private third party do the enforcement; making them some money, but not as much as possible, therefore forcing the city to find extra revenue sources; and them finally
3) Doing the math and then bringing it back in-house and actually hiring the staff required who would pay for themselves (and then some) by properly enforcing the parking fines -- in the same manner as the private firm -- thereby maximizing revenue to the city.

Ottawa has spent years whittling away at staff doing step #1, and are now eying step #2, instead of looking at the (entire!) example set out by the city of Hamilton and just jumping straight to step #3, which would result in the maximum revenue to the city in the long run. That is what's called "long term thinking" and "learning from others mistakes". Slashing staff and selling off resources for marginal revenue increases isn't. And it certainly isn't "innovative thinking".

And I'm not entirely sure where you you get that this is just a "money grab" by the city. If it's OK for a private company to maximize their revenue, then why isn't it OK for the city to do so. By bringing it in house, they're cutting out a middle man and ensuring that fines and meter costs don't need to be increased. Isn't that "fiscally responsible"?

[Edited By The Webgeek Nov 13, 2007 10:04 AM]

Blake Nov 13, 2007 11:05 AM said:

Let me try to make my point another way.

You have to first buy into the idea that the City can do the job better than ParkSmart.

I'm not too sure if they can. ParkSmart only make money if they find efficencies and if they make sure their fines are collected. The City is not driven by the profit, therefore, the same incentives are not there.

Anyway, I don't want to beat this issue to death. My point has always been that Ottawa City Council needs to find new ways to deliver all the services they are being asked to provide. They simplely can't just keep adding staff and management. Outsourcing is not always the answer but it sometimes works.

Miss Vicky Nov 13, 2007 11:31 AM said:

Parking is a revenue-generating department for the city. According to the Universal Program review documents, it "has gross expenditures of $10.7 million and total revenue of $25.9 million."

Why on earth would we sell off a revenue generating service?

[Edited By Miss Vicky Nov 13, 2007 11:31 AM]

The Webgeek Nov 13, 2007 11:41 AM said:

You have to first buy into the idea that the City can do the job better than ParkSmart.
No you have to buy into the idea that the City can do *the same* job that ParkSmart can, and not pay ParkSmart their cut.

The City is not driven by the profit, therefore, the same incentives are not there.
Really? You don't think that *this* council, faced with a mayor that is blindly insisting on a tax freeze above all else, isn't motivated to try and find as much money as possible.

Outsourcing is not always the answer but it sometimes works.
In this case, it was pretty much proven that it didn't work -- or at least, it would have been more efficient to just hire more staff.

In selling off the services, you have the cost and overhead of putting out a bid to tender. Waiting for and awarding the contract, terminating or relocating the staff. Unionized staff -- so that means nice juicy "early retirement" and/or "severence" cheques, or even worse, keeping them on and shoehorning them into other positions/departments, depending on the terms of their collective agreement. Then you have to pay for "integration" of ParkSmart and the city's financial systems.

Yes, you get to sell off the assets (parking meters, vehicles, etc..) but more than likely at a fraction of the cost of what you paid for them, in reality at a net loss.

So you have those "one time capital expenditures" that will eat into the first year, or so of city revenue. All to have ParkSmart (or whoever wins the bid) pretty much just hire staff and hit the bricks harder than current staff are able to.

Then, at some in determinant time later, once ParkSmart has maximized revenue for you, you can do the math, realize that it's cheaper to do the same thing in house, and have another "one time capital expense" to buy back equipment, and re-hire staff to do the job.

Or, you skip to the last step, buy a couple of extra smart cars (slap on some "support our troops" stickers to keep Glenn Brooks happy), hire two or three extra guys. Spend a week or two devising more efficient routes, and see what happens. Hell, start with that last step, then add the extra staff and cars as needed later.

[Edited By The Webgeek Nov 13, 2007 11:42 AM]

amckay Nov 13, 2007 11:49 AM said:

Yes, if it's currently operating at a $15M profit it does seem pretty stupid to outsource it. Hard to believe that this was a key point in his speech.

One comment on "hitting the bricks harder than current staff are able to" juxtapositioned against the comment on unions : good luck getting any more brick-hitting out of them :-)

But as already noted, if it's already generating a $15M surplus, it's hard to imagine how someone can recommend outsourcing it. So it would seem that no more brick-hitting is required.

Has anyone taken this thread to the mayor for comment? Or the media?

The Webgeek Nov 13, 2007 12:10 PM said:

Has anyone taken this thread to the mayor for comment? Or the media?
Mmmmmmaybe

accidental altruist Nov 13, 2007 12:16 PM said:

I dunno about the media, and Lex Luthor might not listen unless confronted in public:

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Miss Vicky Nov 13, 2007 12:21 PM said:

damn, aa - that was going to be my blog entry for today!!!

Blake Nov 13, 2007 01:18 PM said:

LOL - Enough about parking meters...I fold!

After tomorrow...we'll have a lot to write about and DISCUSS.

Looking forward to it.

Miss Vicky Nov 13, 2007 01:38 PM said:

No kidding!

accidental altruist Nov 13, 2007 02:58 PM said:

OOPS! sorry 'bout that.
uh... I didn't use the bubble bath bomb from that shop beside Heavens to Betsy.... Tuesday *something*? So I'd offer content in return but I don't got none! Nice to see ya wearing the 'miss vicky gloves' in real life yesterday!

Miss Vicky Nov 13, 2007 03:04 PM said:

well, I look forward to the report for my Xmas shopping post... And don't worry about it!

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