Paid Beach Parking – Making Good $ense – An Opinion

Submitted by     

 Dave Lott

In an article published in the Fernandina Observer earlier this month, Malcolm Noden raised a number of important questions across a wide range about the rationale and impact should the City implement a paid parking program along the beach area. As a private citizen asked to be a participant in the last beach parking committee, I thought it would be beneficial to Fernandina Observer readers to address some of Mr. Noden’s questions as well as provide additional information and provide some additional perspectives to some of Mr. Noden’s conclusions. All opinions and points-of-view being expressed in this article are my own and should not be taken as any type of “official” POV from the City or the Beach Parking Committee.

Besides myself, the last Beach Parking Committee consisted of Mayor Filkoff and six City staff members representing the Police, Fire-Rescue, Maintenance, Project Management and Finance departments – the primary departments that would be impacted should such a program be implemented. The mission of the Committee was clearly established solely as a fact-finding group: first, determine what the current expenses are related to the operations and maintenance of our beach areas; and, second, look at the various the fee collection systems used by other municipalities and determine which ones, if any, would provide the best solution for Fernandina Beach. The Committee met numerous times during the last half of 2011 before suspending its work after it became clear the City Commission was not going to move forward with the consideration of paid beach parking after the 2011-12 budget process concluded. While no official report was presented, a 100+ page draft PowerPoint presentation was developed by the Committee and it was a summary of that draft report that was presented to the City Commission at their July 17^th meeting.

It is important to keep in mind that the underlying rationale for implementing such a program was to shift some of the financial burden from City taxpayers to the larger group of beach going users.  The Committee gathered data from City financial records to show that in excess of $500,000 per year is spent on average for the maintenance and operations of the City’s beaches and related facilities. This total includes the cost of lifeguards, specialized beach rescue equipment, allocated cost of beach renourishment, engineering and monitoring and restroom facility maintenance/repair. I don’t believe there was ever any expectation in the minds of the Commissioners or the Committee members that a paid beach parking fee structure would ever generate enough net revenue to cover more than one-third of the beach operating costs.

The Committee examined a total of 6 parking payment systems in addition to the option of retaining the present environment of no parking fee. These systems ranged from honor boxes to attendants with varying types of technology for the self-service systems.  Each of these methods was evaluated on a variety of attributes primarily centered on operational and financial impact. Statistics were gathered during the last two weeks of July 2011 as to the occupancy levels of each of the City’s beach parking areas including all the beach accesses that provided designated parking. Additionally, the Committee identified a number of issues that were relevant to some or all of the payment methods including legality and taxes; impact on tourism, businesses and residential areas; and, community reaction.

Mr. Noden has raised the question about research and gathering consumer research data in order to develop a “localized econometric model”.  While I certainly agree that the more data you can gather the better, having been involved professionally for over 30 years in the development of consumer products and services, consumer research especially related to pricing is directional at best.  How many consumers are going to volunteer a willingness to pay for a product/service that they were used to getting for free in a simple yes/no question format?  Instead researchers use a variety of more complex research methodologies such as adaptive conjoint research to better understand the importance of the different variables involved in a user’s final decision making process.  While informative and valuable, such research methodologies are quite expensive and were beyond the scope of the Committee.

Mr. Noden totally discounts the substantial empirical evidence provided by numerous other beach communities in our immediate area that have implemented beach parking fees with no lasting harmful effects. Yes, growing up I often heard the admonition from my Mom that “just because so-and-so did it doesn’t make it right”.  The Committee talked with representatives of communities throughout Florida that had implemented beach parking programs to gain knowledge from their experience. While many said they could improve their parking plan implementation if they had to do it all over again, not a single community has terminated their beach parking program. Yes, just because other communities have implemented a paid beach parking program doesn’t make it necessarily right for Fernandina Beach; but to ignore the true marketplace reality of similar communities having implemented such programs over the last ten or more years with their conclusion that the advantages far outweighed the negatives cannot be discounted. I fully understand the counter-argument that not charging to park at the beach could be used as a point of competitive differentiation for the City showing us to be more “visitor friendly”.  However, to be meaningful, that feature must play an important part in the destination selection process of the potential visitor.  Again, empirical evidence has not shown that to be the case in other coastal communities after they imposed a beach parking fee.

In his discussion of “user fees” versus “taxes” Mr. Noden appears to characterize the City’s beach parking supply as inadequate to meet demand and such a fee system unfairly burdens local residents who are already paying taxes for the maintenance of the City’s infrastructure.  First, as the parking occupancy counts taken as part of the data collection effort showed, there is significant excess capacity of all City beach parking areas and access points, even during the prime usage time of summer, with the exception of Seaside Park /Sadler Road area which is often full. As to the unfair financial burden argument on the locals, Mr. Noden obviously was unaware of the assumption in the proposed programs that City residents would receive two permits annually at no charge so they would incur no additional fee for parking at the beach lots. The City has never had any plans of which I am aware to impose a “user fee” at the beaches. People can walk, bike, get dropped off, etc. at the beaches and they pay absolutely no fee to use the beach. The potential fee being evaluated is simply a parking fee for those that choose the convenience of driving and parking at one of the City’s beach access areas.

I’m afraid I don’t understand Mr. Noden’s logic differentiating the “entrance fees” paid at Florida’s state parks from the beach parking fees.  I see a perfect parallel.  Florida’s state parks are supported primarily by state tax revenue in the form of sales tax paid by residents and visitors through the State’s budgeting process.  These revenues are supplemented by entrance fees and additional fees for various services (i.e. camping, historical facility entrance).  Same is true for the City – most of the costs of beach maintenance are borne by the City taxpayers; but under a paid parking plan, part of the operating expense is paid by users of the beach.

I agree to some degree with Mr. Noden’s argument that charging hotel guests the full parking fee might be unfair since they are indirectly contributing to the beach maintenance costs through the tourism development tax or “bed tax” added to their hotel bill. The bed tax monies are paid to the Amelia Island Tourist Development Council (TDC) which is a county agency created in 1988 with the mission of assisting in the development and marketing of Amelia Island as a world-class tourism destination.  The City has two representatives on the nine-member TDC Board, but the City has no independent authority over the expenditure of any of the TDC’s funds. Bed tax revenues are approximately $3 million per year. While used primarily for advertising and marketing, under Florida statute a maximum of 10% is designated for beach operations/improvement. These funds are designated by the TDC to pay entirely for the City/County annual beach cleaning contract as well as assist in the cost of the City’s beach renourishment program.  Assuming a 30% rental rate of the roughly 4,000 total units available for rental (based on TDC’s latest published figures), this equates to an average contribution of $0.70 per rental night going to the beach operations fund. Certainly there is the option that the fees for the daily/weekly permits for lodging guests subject to the bed tax could be discounted $1/day to reflect this contribution.

Although the Committee made no such differentiation for Nassau County residents for purchasing an annual pass, a similar argument could be made for County residents.  Although the County has contributed to the City’s beach renourishment costs in the past, those contributions have been inconsistent despite the County Commission passing Resolution 60 in the year 2000 agreeing to serve as a co-sponsor for the City’s 50-year beach renourishment project. Depending on the contributions made by the County of non-bed tax money to beach operating costs such as the expensive beach renourishment program, a similar discount could be provided to County residents wishing to purchase an annual permit should such a program be implemented.

Mr. Noden concludes his article discussing the variations of usage levels of the beach across the year’s three usage seasons (peak, shoulder and low).  The Committee in its occupancy projections (that drive revenue projections) clearly took into account the lower occupancy rates outside of the prime summer season and divided the year into the three periods advocated by Mr. Noden. Additionally, the Committee created three scenario assumptions for each season (Optimistic, Most Likely and Pessimistic) to demonstrate the sensitivity of the fee revenue based on those varying assumptions. While I fully agree with Mr. Noden that the most effective fee collection system would vary fee rates based on demand levels even within a single day, such a system requires fee collection equipment with the technology able to support such dynamic pricing. While the trend of the vast majority of parking systems being implemented uses such self-service kiosk equipment with that capability, such equipment brings with it the highest financial risk of all the revenue collection systems evaluated. The City Commission was averse to undertaking such a risk. The Committee’s overall recommendation, if a paid beach parking program is to be introduced, was to use a permit based program that was projected to generate a net profit of $116,000 per year under the most likely conditions. If implemented, the Committee fully expected to make adjustments to the program as actual usage and reaction was obtained.

The idea of implementing a paid beach parking program is not intended to be punitive to non-residents but to serve to share some of the cost of maintaining our beautiful beaches with users that are not City residents. While there certainly are different points of view as to whether the potential revenue created by such a program is worth dealing with the issues that such a program would create, there is no question that the program will diversify the revenue streams available to the City. I believe the program warrants serious consideration and further discussion within the community.

Editor’s Note:  Dave Lott has been a management consultant specializing in consumer banking and payment systems for 30+ years.  A resident of the City for almost 11 years, Dave has served on numerous City advisory committees.  Most recently, Dave served as Interim City Manager and was appointed to the City’s Audit Committee.

July 24, 2012

3:25 p.m.