The Consultant’s Role i W
BY DAVID TAXMAN
ITH THE RECENT FINAN- cial crisis, many cities and institutions (universities, air- ports, hospitals, etc.) are look- ing for creative ways to gener-
ate revenue to pay off debt, to fund projects and to pay pension liabilities. This has led some to consider pri- vatizing their parking systems over a defined lease period in exchange for periodic or an upfront lump sumpayment.
Privatization not only provides the opportunity for needed
funds, it also allows cities and institutions to get out of the park- ing business and have a specialized and expert private operator manage the system. In the process of privatizing a parking system, consultants
are brought in to advise either the seller or the buyer.Whether serving the buyer (investment firm/parking operator) or seller (city or institution), a parking consultant serves a crucial role in the process, which is to determine the overall value of the park- ing system over the course of the lease period.
This financial analysis is performed before any deal is
agreed upon, and is essential to help prevent the buyer from overpaying or the seller from accepting a low offer. In perform- ing a financial assessment of a parking system, a parking con- sultant needs to consider a few major issues. These include future revenue potential, capital expenses and necessary upgrades in parking technology for the system. In determining the future revenue potential, it is essential
to understand the market factors that can affect the system’s future parking demand. For any city or institution, there are a number of unique
factors to consider, such as population/employment growth, economic factors (GDP, median income, etc.), journey to work data, alternative modes of transportation, existing utilization of the parking system, available capacity of the parking system, future development projects and the competing parkingmarket. Anothermajor factor related to the future revenue potential is
parking rates. The consultant should perform a parking rate mar- ket study to assess the capacity to raise rates. If a consultant is advising the seller, such a study will help determine how the city or institution’s parking rates compare with similar cities. This can be used to develop and justify a fair future parking rate schedule.
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www.acs-inc.com Copyright 2008 ACS.
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