POINT OF VIEW


Sewickley, LaLa Land and Landlords


BY JOHN VAN HORN L


ASTYEAR,THETOWNOFSEWICKLEY, PA, collected $92,000 during a two month or so period in May/June. This year, they stopped charging for Saturdays


(at the behest of merchants, who wanted to attract more customers). This year during the same period, they collected the same amount of money, even though they reduced their charging period by 20%. Hmmmmm ....


They were ecstatic, and the town decided to continue as


long as revenues didn’t decrease. But how could that happen? One would have thunk that Saturday would have been a big income day for parking.But assuming itwas the same as the five weekdays, then how could the income have been the same? No one seemed to be concerned about that question or,more impor- tant, its answer. My correspondentMark muses that, all things being equal,


theymust have experienced a 20%increase during the other five days. Where did that come from? Maybe parking wasn’t the problemall along. I note that if business did increase on theweekends, could it


possibly have been due to the increased promotion put on by the Chamber of Commerce and not the free parking? Increases in customer numbers on Saturdaymay have nothing to dowith free parking. If you build it, they will come. As for the increase in parking revenue for the other five


days, I have an idea.What if, due to the free parking on Satur- day, and the resulting decrease in available parking, some people began to change their habits (the Costco effect, where a busy Saturday trains people to come on other days of the week) and began parking on other days, when parking wasn’t free, but it wasmore available?


*** The City of LosAngeles FinanceDepartment has published


its top debtors list, as of the middle of July. I have been asked to comment on why 10 of the top 30, and the highest amounts owed, are from parking companies.Ah, in fact, I can turn a tale on this topic. The city charges a tax on the monies collected by private


parking operators. This 10% tax is determined just as your income tax is computed. They “trust” the businesses to report their income and then attach a check. The problem is that with parking, it is extremely easy to “adjust” the total collected and under-report themonies due. A few years ago, the city realized that this was a potential


problem and hired an outside firm to audit parking companies and provide the finance department with the results. I have been tracking this process and find that the auditing firm has


6 SEPTEMBER 2009 • PARKING TODAY • www.parkingtoday.com


found hundreds of millions in under-reported revenue and thus under-reported tax. The problem is that it’s now the city’s problem to collect


the back taxes, and in that task they have been incredibly remiss. For a number of years the city’s finance department has


basically ignored the problem. The audits would be turned in, bills sent, and the companies owing the money – many of whom had close relationships with the city powers that be – would simply ignore the bills or negotiate with the city and set- tle for as little as 10 cents on the dollar. (In one case, the city employee responsible for reviewing


the tax forms of a parking company actually worked – moon- lighting – for that parking company filling out their tax forms, but I digress.) Recently, a number of individuals in the f inance


department retired, and the new group is attempting to get a handle on the problem. The debtors list shows the magni- tude of the issue. The top 50 tax cheats in LosAngeles (not all parking) owe


more than $100 million in back taxes.What’s with that? If I didn’t pay my taxes, there would be a big sheriff at my door with a chain and I would be out of business. I’m sure the city could use that $100 million.Where are the sheriffs when you need them? Remember, parking is a cash business. If you are a crook,


it’s not difficult to under-report your income. It’s easy: Collect $1,000, report $200.Who is to challenge you?Who is to know? Someone would have to go out and look at your operation. Let’s see.You run a lot in downtown LA, near the Halls of


Justice where all the lawyers park.You charge $25 a day.You park 250 cars a day. That’s $6,250 a day in cash, or $1.5 mil- lion a year.You owe $150,000 in taxes. What if you run 10 lots like this? The numbers go up fast.


If the city ignores you, you simply report a quarter of that amount, or less, and pocket the rest. (Some report nothing. It boggles the mind.) This process puts legitimate parking operators at a tremen-


dous disadvantage. The crooked operators can under-bid park- ing operations because they don’t have any intention of paying the taxes. The legit companies bid a fair price, but they don’t play on a level playing field. Most operators I talked to about this problem say that the


best thing the city can do is enforce its laws and force these back-street operators to pay their legitimate tax bills. The city would benefit (more income) and the parking business would benefit, as all would be bidding by the same set of rules. Hopefully that’s beginning to happen.


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