Council attempts to drive up car park profits

Doubts that change from a contract to lease deal will increase revenues

The Ilac Centre car park is being leased to a private operator for five years in a move which Dublin City Council hopes will increase its own income. Photograph: Matt Kavanagh.

The Ilac Centre car park is being leased to a private operator for five years in a move which Dublin City Council hopes will increase its own income. Photograph: Matt Kavanagh.

 

One of Dublin city centre’s largest car-parks, the Ilac Centre car-park, is being leased to a private operator for five years in a move which Dublin City Council hopes will increase its own income. Park Rite, an Irish company, is understood to be the preferred bidder.

Q Park Ireland currently manages the Ilac car-park on a month-to-month contract basis and has not yet been told when this arrangement will end. The council, in a statement, said: “A preferred bidder has just been identified. The terms and conditions of the lease will be finalised during the contract stage which is the next phase of the lease process.”

Some private car-park operators believe that a lease arrangement could cut the council’s income from car-parking. Up until now, the council’s three multi-storey car-parks – Ilac, Dawson (Schoolhouse Lane) and Drury – have been managed by private operators on a contract basis in return for an agreed management fee.

Under existing contract arrangements, says the council, all running costs, including the operator’s salary costs, are paid initially by the operator and recouped from the council, with all income going to the council. The drawback of this model, it says, is that there is no formal incentive for the operator to increase income or reduce expenditure. “A new leasing model has been devised which it is anticipated will result in greater levels of income and investment for the city council and at the same time be attractive to the operator,” it said in a statement.

Dublin City Council’s income from on and off-street parking is €29.1 million, with €4.6 million of this coming from its car-parks. The 1,000-space Ilac car-park is the most profitable, with an income of €2 million a year. Drury Street generates €1.4m, Dawson Street €991,000 and the car-park at the former fish market site in Dublin 7, €209,000. On-street parking generated €24.5 million in 2012.

The council owns four of the city’s car-parks, the three multi-storeys and the surface car-park, which it manages itself. Many local authority car-parks were built when there were few private car-park operators in Ireland says Keith Gavin, chairman of the Irish Parking Association, which represents all of the country’s car-park operators, both private and those owned by local authorities. But tax incentives for car park construction fuelled development of privately-run car-parks in the 1980s and 1990s.

Doubtful benefits
David Cullen, CEO of Euro Car parks, which did not win the Ilac car-park lease, queries why the council is changing from a contract to a lease arrangement: he believes that business over the next five years is likely to improve, and any increase in car-count will increase income for the private operator rather than the council. Ray Teers, MD of Q Park Ireland, says “if business goes up, the city will lose” under a lease arrangement.

Car-park revenues have been hit by the recession, says Cullen: “It’s been bumping along the bottom but we would expect traffic to rise. We have seen the end of the decline in numbers.”

Private operators believe that the council may next lease out the Dawson Street car-park: but the council says “no decision has been made on this matter yet”. Of more concern to private operators is a huge jump in rates proposed for many of the car-parks in the council’s area: Keith Gavin has heard of jumps as high as 310 per cent.

Five companies dominate the commercial car-parking sector – Q Park Ireland, Euro Car Parks, Park Rite, NCPS and APCOA. Ray Teers says that Q Park Ireland runs the biggest off-street car-park operation, with 33,000 spaces. It has just completed a €2 million refurbishment of the Setanta car park at Setanta Place, between Kildare Street and South Frederick Street.

Customers are demanding more in a rapidly changing sector, says Teers: “They want bigger spaces and they want to know before they go there if there is space for them, so demand for pre-booking facilities is rising. People don’t want to pay by the hour, so Q Park has introduced 15-minute parking.” Some like Park Rite have introduced reduced rates for seniors.

Keith Gavin agrees that business has been affected by the downturn, but that this has been location-dependent: massive car-parks like Dundrum Town Centre with 3,500 spaces, Dublin Airport, the largest in the country, and Ilac, the largest in the city centre, have not been so hard hit.

Technology is going to effect the way we pay for parking very soon: drivers will be able to get real-time parking information through apps. Already the council’s facility for paying through mobile phones has made on-street parking far easier. Drivers can now integrate electronic payment for parking with their toll tags. And wave-and-pay technology promised soon by credit card companies like Visa for small scale cash transactions will likely be used for on-street payments too, says Gavin. “It will appeal to local authorities for security reasons.”

Private car-park operators can set their own prices, so long as they abide by bye-laws that stipulate progressive pricing to discourage long-stay parking.

A study of the Irish car-parking sector carried out three years ago by DIT for the Irish Parking Association showed that across Ireland, local authorities owned 108,000 spaces, generating €115 million a year, while car park operators had 101,000 spaces generating €80 million a year.