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Waverley Borough Council Committee System - Committee Document

Meeting of the Environment and Leisure Overview and Scrutiny Committee held on 15/09/2003
Car Parking Tariffs Review - Supplementary Report



Summary & Purpose
The purpose of this report is to consider various options for car park charges and to provide information in response to comments and questions by non-Executive Members at the meeting of the Executive on 1st September 2003.

ANNEXE 2
WAVERLEY BOROUGH COUNCIL

ENVIRONMENT AND LEISURE OVERVIEW AND SCRUTINY COMMITTEE
15TH SEPTEMBER 2003
CORPORATE OVERVIEW AND SCRUTINY COMMITTEE
23RD SEPTEMBER 2003

Title:
CAR PARKING TARIFFS REVIEW – SUPPLEMENTARY REPORT

[Wards Affected: All ]

Summary and Purpose

The purpose of this report is to consider various options for car park charges and to provide information in response to comments and questions by non-Executive Members at the meeting of the Executive on 1st September 2003.

Introduction

1. A report on proposed increases to car parking charges in the Council’s Pay and Display car parks was presented to the Executive at its meeting of 1st September 2003. The Executive decided to refer the report to the Environment and Leisure and Corporate Overview and Scrutiny Committees, and that they be advised of the Executive’s view that charges should be increased with effect from 1st November 2003. It was agreed that the Committees be asked for their proposals on parking tariffs.

Resources

2. The Revenue Budget for 2003/4 includes 474,000 use of balances and reserves to keep the level of Council Tax down. This is not sustainable indefinitely. As part of Waverley’s Financial Strategy the Council will have to consider a range of options in setting the 2004/5 Budget. They include:

Increasing spending on priority areas

Reducing spending on non-priority areas

Achieving further efficiency savings

Securing additional sources of finance

Reviewing charges to ensure an appropriate return on assets

Deciding on the appropriate use of balances

Determining an acceptable level of Council Tax

In reaching a conclusion, the decision on car park charges is an important consideration that will influence spending choices and Council Tax levels.

Comments and Questions

3. A number of observations on the report were made by non-Executive Members present at the Executive who had notified their wish to speak on the matter. Those comments and questions are listed below with officer responses for the information of the Overview and Scrutiny Committees in their deliberations.

Question 1 : The report determines the proposals as “Positive” for the local economy. Increases in charges cannot be described as aiding the local economy.

Answer 1 : Customer surveys conducted in the development of the Council’s Car Parking Strategy revealed that the ready availability of space in the Borough’s town centre car parks was the principal determinant in the decision to visit that particular town centre. The surveys revealed that, generally, the cost of that space was a secondary consideration. The proposals are designed to achieve a modest increase the availability of spaces for shoppers in the town centre car parks in support of retail activity.

Question 2 : Has the projected outcome of the tariff restructure been arrived at after a detailed calculation of the effects of that restructure?

Answer 2 : Yes; the effect of each tariff change has been carefully modelled based on long experience of previous price changes and allowing for the element of “fall-off” in use and changes to customer practices in parking purchases, which have been observed following previous increases.

Question 3 : The progressive increase in parking revenue income, between 1999 and 2003 totalling 28%, is a demonstration of the effective use of the Council’s assets and answers the comments of its Auditors.

Answer 3 : The increase in parking revenue income reflects the popularity of the car parks, the increased retail vitality of our towns and more effective enforcement regime introduced during this period. The freezing of charges for an extended period equates to a price cut, in real terms, which could well be viewed by the Auditors as inappropriate given the growing demand for town centre space.

Question 4 : The rejection of Pay on Exit charging for the East Street, Farnham redevelopment, on the grounds of increased capital and revenue costs which would need to be passed on to the parking customers in increased charges, appears inconsistent with this proposal to increase charges.

Answer 4 : The proposed tariff changes are principally designed to restore the effects of inflation on short-stay charges. It is accepted that the outcome is likely to increase the level of car parking revenue income.

Question 5 : The withdrawal of Surrey Police from on-street parking enforcement with effect from April 2004 might encourage some current car park users to desert the car parks in favour of illegal on-street parking. Increased off-street parking charges might further encourage this practice. Has this been considered in this proposal?

Answer 5 : Unless and until Decriminalised Parking Enforcement (DPE) is introduced into the Borough, parking on-street in contravention of the Traffic Regulation Orders (TROs) remains a criminal offence. The Police may still prosecute for obstruction offences. The County Council, as the Traffic Authority, will be responsible for enforcement of the TROs and will need to make interim arrangements with the Police until they have introduced an enforcement mechanism under the DPE powers. In practice, current on-street parking enforcement is already at a very low level. It is not, therefore, anticipated that significant numbers of parkers will resort to illegal parking.

Question 6 : What consultation has been undertaken on the Council’s proposed tariff changes?

Answer 6 : When the Executive has determined a range of proposals, on tariff changes these will be advertised in the local press and in the Council’s car parks, offering interested parties the opportunity to respond. Representations in response to those proposals will be given due consideration and, if justified, may need to be referred to the Executive. Furthermore, the proposals are in accordance with the Council’s adopted Car Parking Strategy which itself was the subject of a comprehensive consultation exercise.

Question 7 : Members questioned the calculation of the inflation indexation used to determine the required uplift in short stay charges.

Answer 7 : The 50p 2-hour charge has remained unchanged since 1st April 1997. The 45 minute charge was set at the existing level of 35p on 1st April 1998, together with the 50p hourly rate for prime-sites. The Retail Prices Index (all items) has increased by 12.8% since 1st April 1998 and 16.7% since 1st April 1997. For simplicity, the report expresses this as an average level of approximately 15%.

Question 8 : Members questioned the proposed variable increases in Season Ticket charges which are well above the inflation index.

Answer 8 : The Council’s Car Parking Strategy (2000-2005) pledges (Objective 2.5):-

“The Council will standardise the rate of discount for all Season Tickets issued throughout the Borough and will progressively reduce the level of discount”.

The report proposes harmonising the Season Ticket discount across the Borough at 10% of the cost of the equivalent Pay and Display charge based on a five day week, eight hour day. Tickets are, however, valid for use all day Saturday at no extra cost. The Council has already been agreed in principle in February 2002.

Review of Car Parking Charges – Further Options

Introduction

4. The report presented to the Executive on 1st September is in line with Waverley’s Car Parking Strategy and, in particular, restricts the increases in shoppers’ charges to levels broadly equivalent to inflation since the current structure was adopted. This is referred to as Option A. However, officers have been asked to present the Overview and Scrutiny Committees with various other options. These include restricting the increases exclusively to inflation on those shoppers’ charges that have remained frozen (Option B) and also the option of considerably larger increases within town-centre car parks (Options C and D).

Background

5. The hourly rate for most of Waverley’s town-centre car parks reached a peak on 1st April 1991 when it was increased to 40p. Although income increased, greater resistance than expected to the charge was experienced, with an overall reduction in use of some 20%. Subsequently, the charge was reduced to 30p per hour on 1st April 1994 and a 20p 30 mins short-stay charge introduced. The current pricing structure was introduced on 1st April 1997, with charges for the first 3 hours and prime-sites remaining unchanged since 1st April 1998.

6. The objective of the current pricing structure was to improve the management of Waverley’s car parks by increasing their use for shopping and also the income to the Council. The increase from 1996 to 1998 was 400,000. The joint objectives of achieving a good rate of return on Waverley’s assets on behalf of the Council Taxpayer and offering attractive packages to the car park users is embedded in Waverley’s Car Parking Strategy and the report presented to the Executive reflects this policy.

7. As explained previously, inflation on the short-stay ‘shoppers’ charges as frozen since 1998-9 is around 15%. It is also a fact that the Retail Prices Index (all items) has increased by 38% since 1st April 1991, when the 40p per hour charge was introduced.

8. For comparative purposes, it may be noted that Waverley’s element of Council tax has increased from 82.42 when it was first introduced in 1993/4 to 124.56 in the current year; this represents an increase of over 50%. Car Parking is one consideration that needs to be taken into account in the Council Tax setting process.

Inflation on Frozen Charges (Option B)

9. This Option restricts the increases at this stage to restore the effects of inflation on those charges that have been frozen since 1997 and 1998. It excludes the increases in long –stay car parks and the reduction in discount on season tickets. The estimated increase in income would be restricted to 225,000 as detailed at Annexe 1.

Higher Increases (Option C)

10. Officers have considered various alternatives that should increase the income to the Council further and ensure that space is readily available. The most simple increase based on the current structure put forward for consideration would be to increase the charge for 45 mins from 35p to 50p and to increase the charge for 2-hours from 50p to 1, with the charge thereafter being 50p per hour.

11. This level of charge could be justified on a historical basis as explained above. Additionally, there is very high usage of the three designated Prime-Sites, where the current hourly rate of 50p is readily paid. Nevertheless, it would clearly represent a substantial increase. Officers have modelled the likely effect on income, but would emphasise that this is difficult to predict with increases of this level.

12. Prior to the current structure, where the 2-hour charge clearly represents excellent value-for-money, the majority of purchases were for the shortest (cheapest) available period; this even applied in the case of the 20p 30-mins charge that applied from 1994 to 1997. Therefore, it is estimated that 40 % of current 2-hour purchases will change to purchases for 45mins, with 60% continuing to purchase 2-hours at the increased rate of 1.

13. Additionally, the higher charges will result in a reduction in use. Officers consider that this is likely to be around 10%. This compares with a general allowance of 5% associated with the proposals presented to the Executive.

14. This Option is detailed at Annexe 2 and, based on the above assumptions, shows an overall increase in income of some 500,000; which is 200,000 in excess of the proposals presented to the Executive (Option A). However, officers consider that there is a significant risk of use declining by 20%, in which case the additional income would decline to 350,000 pa.

Further Options (Option D)

15. Officers have also been asked to model a number of further options based on the charge of 1 for two hours but with various approaches to the shorter period of stay. Clearly, the more these depart from the current charges the greater is the difficulty in estimating the likely financial effect with any degree of accuracy. The most favourable option to emerge is an increase in the 45 minute charge to 70p. This has the advantage that the existing differential between the 45 minute charge and the 2-hour charge is maintained.

16. The financial model of this option assumes that the existing pattern of use continues but with an overall decline of 20%. Based on these assumptions, this would generate additional income some 260,000 in excess of the proposals presented to the Executive.

Prime-Sites

17. The proposals presented to the Executive include the increase in the hourly rates for designated Prime-Sites from 50p to 60p. The charges at these car parks recognise their particularly attractive locations and aim to manage the demand and maximise income to the Council. Alternative car parks are available for those seeking to park at cheaper rates. The higher charges suggested at options C and D erode the differential with the Prime-Sites and will increase pressure on them. It would therefore be appropriate to consider increases beyond the 60p per hour proposed. If Option D were to be adopted the 60p per hour charge for prime-sites would clearly be illogical. It is suggested that within this option the charge be increased on the following basis:

80p for 1 hour
1.50 for 2 hours
2.00 for 3 hours and
1.00 per hour thereafter 18. Annexe 3 shows the effect of the financial model of Option D and the higher increases in charges for Prime-Sites. Total additional income from this option could approach 600,000.

19. As stated previously, this is based on a 20% reduction in use; if use declined by 30% the additional income would be around 400,000; whereas, if use declined by only 15% the additional income would be around 700,000.

Car Park Usage

20. Information on the usage of Waverley’s main car parks is attached at Annexe 4 for the information of this Committee.

Comparisons with other Towns

21. Schedules of car park charges for neighbouring authorities and towns are attached at Annexe 5 for the information of this Committee

Conclusion

22. There is little doubt that the suggested alternatives would generate significant additional income for the Council. However, they are not in line with Waverley’s existing Car Parking Strategy and would reduce car park use. If this reduction in use represented better-planned longer-stay shopping trips rather than a decline in trade, this in itself could be considered advantageous.

23. Officers consider that the proposals presented to the Executive, representing an inflationary catch-up for shoppers and the usual review of long-stay parking, will generate significant income at minimal risk. If the resultant income is in line with or better than expectations, further increases could be contemplated by building on this higher base. This further fundamental review should take effect no later than the 31st March 2005, when the existing Car Parking Strategy expires.

Background Papers (DoE&L)

Car Parking Strategy

CONTACT OFFICERS:

Name: Robin Ellks Telephone: 01483 523411
E-mail: rellks@waverley.gov.uk

Brian Long Telephone: 01483 523253 E-mail: blong@waverley.gov.uk

Comms/o&s3/03-04/029