Review of Airport Employee Parking Lot Costs

Transcription

1 Review of Airport Employee Parking Lot Costs August 20, 2007 Report No Office of the County Auditor Evan A. Lukic, CPA County Auditor

2 Table of Contents Topic Page Purpose and Scope...2 Methodology...2 Background... 3 Findings and Recommendations... 7 Appendix I Appendix II Appendix III Office of the County Auditor 1

3 Executive Summary This report summarizes our review of the Airport employee parking lot costs at the Fort Lauderdale-Hollywood International Airport (FLL). Our objectives were to: Evaluate the methodology for allocating cost to the employee parking lot operation, Confirm the costs of the employee parking lot operation, and Identify opportunities for reducing operating costs. We concluded that: Substantial cost savings may be achieved by relocating employee parking, The methodology used to allocate costs to the employee parking lot is not supported by sufficient data analysis and contains errors and omissions, Due to the deficiencies in the allocation of costs, we were not able to confirm the actual operating cost of the employee lot. However, we confirmed that the employee parking lot is operated at a substantial loss principally due to transportation costs, and FLL employee parking lot fees are the second lowest of the five largest Florida airports. Our report includes recommendations (pages 12, 13 & 14) for management to develop interim and long term plans to reduce parking system costs through relocation of the employee parking lot and to address deficiencies in parking system signage and automation. Purpose and Scope The purposes of our review were to: Evaluate the methodology for cost allocation to the employee lot operation, Confirm employee lot operation costs reported to the Board on June 26, 2007, and Identify opportunities for reducing operating costs Methodology To accomplish our objectives, we: Reviewed: Parking Revenue & Expense Schedules for Fiscal Year 2006 Methodology for allocating parking expenses Compared and analyzed revenues and expenditures to Broward County s financial accounting records Toured the parking garages and the remote parking lots at the FLL Interviewed: Office of the County Auditor 2

4 Broward County Aviation Department (BCAD) Finance, Operations and Maintenance Staff Broward Sheriff Office s Airport Operation s Chief ShuttlePort Florida, LLC s (ShuttlePort) general manager USA Parking Associate III s (USA Parking) President and CEO and general manager Surveyed the five largest Florida airports and eight largest airports nationwide Compiled and analyzed parking system utilization data for the period from August 2006 through July Background Employee Parking Lot History The employee parking lot opened on October 1, 1999 with 1,172 spaces to provide parking for the airline, concessionaire and other persons employed at the airport. The lot is located on Ravenswood Road, contiguous to the Park-N-Save parking lot. Since 2000, the number of spaces assigned to the employee parking lot expanded to accommodate the growth in employees serving the airport. As of July 2007, the employee parking lot contained a total of 2,779 spaces. The additional spaces for employee parking were obtained by expansion into the adjacent Park-N-Save lot. As a result spaces available in the Park-N-Save lot have declined from 2,852 in October 1999 to the current level of 1,248. Application Process, Employee and Parking Lot Use Statistics Employee parking is subject to an application process administered by USA Parking. New employees complete an application form which is authorized by the employer who specifies whether the employee is a based or non-based employee. 1 The completed application with photocopies of the applicant s driver s license and vehicle registration are reviewed by USA Parking personnel for completeness. USA Parking verifies the authorized signer for the employer to the signature on file and, if applicable, collects the appropriate parking fees and issues the parking decal. Parking decals are $10 per month for employees based at FLL and $35 per month for non-based employees. Approximately 71% of decals are paid by employers. Parking fees can be paid for by cash, check, charge, or billed to the employer. Decals can be purchased for one to twelve months and are not refundable if the employee terminates prior to expiration. Decals must be permanently affixed to the inside front windshield of the vehicle. There were 6,909 employees that had valid parking decals as of July 31, A summary of employee decals by employer group is presented in Table 1 below: 1 Based employees are assigned to Fort Lauderdale International Airport (FLL) on a permanent basis and non-based employees are employed by a company doing business at FLL who do not meet the criteria of a based employee. Office of the County Auditor 3

5 Table 1 Employee Decal Statistics - July 31, 2007 Based Employees Non-based Employees Total Percent Signatory Airlines % Non-Signatory Airlines % Rental Car % Transportation Security Agency (TSA) % Others % Total % Source: USA Parking Although 6,909 decals were issued, an average of approximately 2,200 employees utilized the parking lot during the period August 1, July 31, Graph 1 below shows the daily utilization of the employee lot for the twelve months ending July 31, The employee parking lot has 71-80% utilization for 255 days of the year. 300 Graph 1 Daily Percentage Utilization Employee Lots 1 & 2 for the twelve months ended July 2007 Number of Days to 70% 71 to 80 % 81 to 87% Daily Percentage Utilization Source: Office of the County Auditor Office of the County Auditor 4

6 Employee Parking Lot Costs Transportation of Employees to and from terminals Employees are transported between the employee lot and the terminals by the airport shuttle service, ShuttlePort. Shuttle service is provided 24 hours a day, seven days a week. Table 2 below summarizes the shuttle services provided at the FLL during fiscal year Table 2: ShuttlePort Annual Service Report- Fiscal Year 2006 ShuttlePort - Ft Lauderdale FLL Shuttle Services 2006 FY/YTD Totals Service Number of Passengers Total Average Total Round- From Service Headways To Airport Total Trips Airport Hours (in minutes) Employee 1 698, ,988 1,350,153 40,518 80,838 7 Employee 2 333, , ,001 32,824 63,165 8 Rental Car Facility 1,353,240 1,388,908 2,742, , ,395 2 Port 33,311 26,454 59,765 3,565 3,566 0 Park-n-Save Lot 119, , ,166 24,907 44, Tower Lot 64,491 77, ,131 19,135 38, Holiday Lot 41,802 39,436 81,238 12,100 22, Garage Tram 212, , ,921 17,351 97,280 5 Loop 216, ,739 5,874 26, Red Dot Lot Purple/Orange 5,456 4,230 9, ,443 0 Brown Lot Specials Totals 3,079,370 2,903,865 5,983, ,953 Source: ShuttlePort Florida, LLC. Shuttle expenses are allocated based on actual service hours. Total shuttle service cost for 2006 approximated $16 million of which $4.4 million were allocated to employee parking. Security The employee lot is patrolled by Wackenhut security guards on bicycles approximately 16 hours a day; one guard from 4 pm to 12 am and another guard from 12 am to 7:30 am. In addition, BSO patrols Federal Highway, the airport perimeter and the employee parking lot and responds to traffic incidents and business calls. Office of the County Auditor 5

7 BCAD reported actual Wackenhut security costs related to the employee parking lot of $57,392 for fiscal year BSO expenses for the entire airport approximated $15 million for fiscal year One-sixth of these expenses ($2.5 million) were allocated to parking operations. These charges were then allocated between the various parking garages and lots based on the number of weighted average spaces. 2 For 2006 the employee parking lot was allocated 17% ($415,992) of BSO parking costs. Maintenance Maintenance for the airport consists of janitorial, trash collection, landscaping, and electrical, building and runway maintenance. Maintenance expenses, exclusive of utilities and janitorial costs were approximately $15 million for One-sixth of these expenses ($2.5 million) are allocated to parking operations. These maintenance expenses are then allocated to each of the parking garages and lots based on the weighted average parking spaces. For fiscal year 2006 maintenance expenditures allocated to employee parking totaled $423,524. BCAD Landside Operations Responsibilities of the Landside Operations section of BCAD include contract administration of the shuttle services and parking lot management contracts and staffing gate access to the employee parking lots. Seventy-five percent of Landside Operations expenses of $1.3 million were allocated to parking operations. These expenses were then allocated to the various garages and lots based on the weighted average parking spaces. The cost allocated to employee parking lot operations for fiscal year 2006 was $212,615. Cost Recovery Cost Recovery includes depreciation on improvements to the employee lot and an allocation of the cost of land. The revenue and expense schedule provided by BCAD staff included $537,982 of cost recovery for fiscal year USA Parking Costs USA Parking manages airport parking operations, processes employee decal applications, and assists with controlling gate access to the employee parking lots during hours that County and Wackenhut staff are not scheduled. Parking costs which totaled $5.8 million in fiscal year 2006 were allocated based on the percentage of net revenues from parking operations. The amount allocated to the employee parking lot was $72, Weighted average space represents an annualized number of spaces available for employee parking. Weighted average space calculation is the number of days the parking space is available divided by 365, multiplied by the number of parking spaces. Office of the County Auditor 6

8 Findings and Recommendations Finding 1 Opportunities exist for substantial cost savings in the employee parking lot operation As indicated in the Summary of Employee Parking Lot Operating Costs at Appendix I (page15), the employee parking lot operates at a substantial loss. Our review noted the following relative to the operating costs of the employee lot. Shuttle bus service costs The shuttle bus service used to transport employees between the parking lot and their destinations is 71% ($4.4 million) of total employee parking lot operating costs. The cost of shuttle bus service is driven by the frequency of bus service, the distance of the routes and the internal efficiency of the bus operation. In reviewing these cost elements we noted: The frequency of bus service to the employee lots appears to be excessive o current headways average between 7 and 8 minutes, 24 hours per day, 7 days per week for fiscal year o Shuttle service levels are not adjusted based on actual demand (usage) (e.g. headways are maintained during non-peak hours). o Passenger loads ranged from 0 to 37 and averaged 7 passengers; well below the bus capacity of 35 for the two weeks sampled in our review. o The employee lot is served by two separate shuttle routes o BCAD maintains a separate bus shuttle service to the adjacent Park-N-Save lot with fifteen minute headways 24 hours a day, seven days a week. Although detail records reflecting the number of bus trips and passengers per trip are created, summary reports are not routinely generated to periodically evaluate the efficiency and effectiveness of the shuttle operations. The available data was not collected electronically, therefore, we were unable to complete a comprehensive study of traffic patterns and bus service including route frequency and schedules. Shuttle bus service costs increase dramatically with increases in the length (distance) of the bus routes. Therefore, remote parking operations are inherently more expensive. The employee lot is 4 miles from the airport terminals. Our survey of 12 other airport employee parking operations indicates that the FLL operation has the most remote employee parking facility. Office of the County Auditor 7

9 Other operating costs The balance of employee parking lot costs include security, maintenance, administration, electricity and an allocation for capital costs. As noted in Finding 2 below, the allocated costs for security and maintenance to the employee lot appear to be significantly overstated. The remaining cost elements were either direct costs of the employee lot site (e.g., electricity and cost recovery) or were insignificant to total costs and therefore were excluded from our analysis. However, we noted USA Parking staff are stationed at the employee parking lot to receive parking applications, distribute decals and monitor gate access at an annual cost exceeding $72,796 representing more than 10% of net revenues. Employee parking lot operations are an integral component of the airport s parking system The airport has three garages and twelve surface lots as shown in Appendix III (page 17) consisting of 21,466 spaces as of July 31, The airport parking facilities include garage, remote, overflow, and employee parking. Appendix II (page 16) depicts the location of the parking facilities within the airport. The employee parking operation is an integral part of the entire parking system at FLL, therefore, we analyzed parking capacity and usage records for the parking system for the period from August 2006 to July Our analysis identified: Underutilization of the Employee Parking Lot An Operating Loss at the Park-N-Save Lot Underutilization of the Cypress Garage Unresolved Parking Signage and Automation Issues Office of the County Auditor 8

10 Parking System Capacity and Utilization A review of parking lot data maintained by the Parking System Manager, USA Parking indicates an average utilization of existing parking spaces of 11,721 or 70% of capacity. Graph 2 below depicts total space utilization from August 2006 to July The Graph does not include the use of overflow lots which represent another 4,682 spaces. 180 Graph 2 Daily Percentage Utilization All Garages and Lots (Excluding Overflow Lots) for the twelve months ended July Number of Days % 61-70% 71-80% 81-90% 91-97% Daily Precentage Utilization Source: Office of the County Auditor Underutilization of the Employee Parking Lot As previously indicated in Graph 1 on page 4, the existing employee parking lot is underutilized. The employee lot consists of 2,779 spaces. Our review of the employee parking lot statistics for August 2006 through July 2007 maintained by USA Parking revealed the average number of spaces utilized during the period was 2,176. Therefore, on average, 603 spaces were not used during the period. The maximum number of spaces used on any single day was 2,423. As a result, 356 were not used at any time during the period. Office of the County Auditor 9

11 Operating Loss at the Park-N-Save Lot The Park-N-Save lot operated at a loss of $764,000 in 2006 as a result of allocating more spaces to employee parking. The size of the Park-N-Save lot has been reduced over time from 2,852 to its current level of 1,248 spaces to accommodate the employee parking. At this level the Park-N-Save lot did not generate sufficient revenues to cover operating costs including $1.6 million in shuttle costs required to take customers to and from the terminals. Underutilization of the Cypress Garage The Cypress garage is substantially underutilized. The garage consists of 4,428 spaces on four floors above the Car Rental Facility. The average number of spaces used during the period reviewed was 1,347 spaces or thirty percent. The maximum number of spaces used at any time during the period reviewed was 4,298. Average daily use only exceeded 90% of capacity on 4 days during the year ended July 31, The Graph below depicts the daily percentage utilization for the twelve months ended July 31, 2007: 140 Graph 3 Cypress Garage Daily Percentage Utilization for the twelve months ended July Number of Days < 11% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70% Daily Percentage Utilization 71-80% 81-90% 91-97% Source: Office of the County Auditor In evaluating potential cost savings we considered availability of spaces in all the parking facilities and concluded that the upper most unused floors of Cypress Office of the County Auditor 10

12 garage may be an appropriate alternative site for the existing remote employee parking lot. Relocation to the Cypress garage would: Substantially reduce shuttle bus costs, Place many employees within walking distance of their work sites, and Utilize otherwise vacant spaces. Chart 1 below, depicts the average monthly utilization of the Cypress garage with the inclusion of employee parking based on actual parking use for the twelve months ended July 31, Chart 1 Average Monthly Utilization of Cypress Garage Including Employees August 2006 to July 2007 Utilization and Capacity 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Aug-06 Sep-06 Oct-06 Nov-06 Month Dec-06 Jan-07 Total Spaces Total Cypress Employee Spaces in Cypress Feb-07 Mar-07 Average Cypress Utilization Apr-07 May-07 Jun-07 Jul-07 Average Cypress Utilization Employee in Cypress Total Cypress Spaces Source: Office of the County Auditor We discussed our findings with management and staff of USA Parking, ShuttlePort and BCAD. USA Parking expressed a high level of support for relocating the employee lot operations until a more permanent location is identified. In this regard USA Parking provided valuable advice on the logistical details of moving into the Cypress garage and recommended adjusting the valet parking operation to facilitate the transition. BCAD staff recommended use of the Park-N-Save lot for parking of flight crews to mitigate any potential space shortage during peak periods. Office of the County Auditor 11

13 Unresolved Signage and Automation Issues BCAD managers and USA Parking personnel indicated that signage and delays in automation efforts within the parking system have hampered parking operations and may have contributed to the under utilization of the Cypress garage. Site visits confirmed a need for improved signage and that the garage location, on the top four floors of the Car Rental Facility, may have contributed to its low monthly utilization.. BCAD staff advised of a comprehensive signage plan dated January 30, 2006 developed by the Aviation Department which has not been fully implemented. Parking system automation has been stalled because of delays in completing elements of the Revenue Control System Upgrade under contract with CTR Systems, Inc. The automation program is designed to include electronic access controls, monitoring available spaces and reporting real time space availability to airport travelers. Recommendations: We recommend the Board of County Commissioners direct the County Administrator to: 1. Coordinate with ShuttlePort and USA Parking to develop a plan within the next thirty days which: a. On an interim basis, relocates the employee parking operation from the existing site into the Cypress garage and/or other appropriate parking facility(ies), b. Reduce the number of buses, bus routes and headways, to appropriate levels c. Maximizes the utilization and cost effectiveness of all existing parking facilities, and d. Includes a timetable for implementation. 2. Develop a conceptual plan for the permanent location of employee parking considering all existing parking facilities. 3. Direct BCAD management to routinely monitor, analyze and revise shuttle bus service and parking space availability to meet the peak and non-peak demands of airport travelers and employees. 4. Establish trip data collection and reporting standards to aid in the future analysis and management of shuttle bus operations. 5. Establish parking space utilization reporting standards to aid in the future management of parking system resources. Office of the County Auditor 12

14 Finding 2 6. Incorporate employee parking needs in all future airport master planning considering the cost associated with remote parking. 7. Reduce the administrative costs of decal issuance and fees collection by: automating decal renewals, selling decal directly to the employers, and consolidating these functions into existing BCAD or USA Parking operations at USA Offices. 8. Address the lack of adequate signage for parking facilities. 9. Address the delays in the Revenue Control System Upgrade. The methodology used to allocate certain costs to the employee parking lot is not documented and contains errors and omissions BCAD uses a two step methodology to allocate certain costs. First, BCAD allocates the following costs to parking operations: 16.6% of BSO security and BCAD maintenance 34% of BCAD Operations administrative costs, 75% of BCAD total Landside Operations costs. These amounts are subsequently allocated between each parking facility based on their relative weighted average number of spaces. BCAD staff did not provide adequate support for the percentages used in the first allocations. Further, our review disclosed apparent flaws in the allocation methodology for BSO costs and maintenance as follows: The allocation methodology for BSO costs is flawed in that the resultant charges are not representative of the actual cost of the road patrol services provided to the employee parking lot. Our interviews with BSO and BCAD staff suggest that actual costs would be substantially lower than the allocated charges of $415,922. Maintenance costs allocated based on the number of spaces is not valid given the structural differences between the parking facilities. The main parking garages are vertical structures which include significantly more mechanical components (e.g., elevators, fire suppressions systems, etc.) than the parking lots, which are principally paved areas with limited vertical structures. Given these differences, the allocation of maintenance costs based on parking spaces alone is not appropriate. As indicated in Sharpton & Brunson s report, Potential Methodologies for FY 2008 Office of the County Auditor 13

15 Terminal Electrical, Janitorial and Interior Maintenance Rates, issued on June 25, 2007: a review of maintenance work orders for 2006 indicated that $72,027 of personnel services and building and equipment maintenance should be allocated to the employee parking lot. The allocation submitted by BCAD included $423,524 in allocated maintenance costs. Our review also disclosed costs for USA Parking, Wackenhut security and electricity were understated by $20,381, $3,000 and $22,757, respectively, and general overhead costs were not included in the allocations. As a result of the deficiencies in the allocation methodology we were not able to confirm the actual operating cost of the employee lot. However, it is clear the employee parking lot is operated at a substantial loss principally due to transportation costs. We do not recommend undertaking efforts to correct the allocation methodology at this time. Such efforts would not likely result in any costs savings and should be deferred until management addresses the recommendations in Finding 1 on Pages 12 and 13. Finding 3 FLL employee parking lot fees are the second lowest of the five largest Florida airports FLL employee parking fees are the second lowest of the five largest Florida airports. The lowest price employee parking was found at West Palm Beach which has no shuttle bus costs. Costs to operate the FLL employee parking lot exceeded $5 million and revenues were only $671,000 during Recommendation: 10. We recommend the Board of County Commissioners approve the increase in employee parking lot fees as previously submitted by BCAD. Office of the County Auditor 14

16 Appendix I Summary of Employee Parking Lot Operating Costs For the year ended September 30, 2006 Allocation Method NET REVENUE $ 671,335 EXPENSES: USA Parking Allocated 72,796 ShuttlePort Allocated 4,401,572 Wackenhut Security Actual costs 57,392 BSO Allocated 415,922 BCAD Landside Ops Allocated 212,615 Electricity Actual costs 14,755 Maintenance Allocated 423,524 BCAD Operations Admin. Allocated 38,384 Subtotal 5,636,959 Net Loss before Depreciation and Cost Recovery (4,965,624) Depreciation on Improvements 403,527 Cost Recovery on Land 134,455 Subtotal 537,982 Net Loss ($5,503,606) Source: Excerpt from BCAD s Summary of Net Parking Revenues & Expenses for FY 2006 Office of the County Auditor 15

17 Appendix II Ft. Lauderdale-Hollywood International Airport Parking System Source: USA Parking Office of the County Auditor 16

18 Appendix III Fort Lauderdale International Airport Parking Capacity and Utilization by Facility August 1, 2006 to July 31, 2007 August 1, 2006 to July 31, 2007 Parking Facility Capacity July 31, 2007 Average Utilization Percentage Utilization Number of Days with Above 90% Utilization Palm Garage 2,694 2,519 94% 276 Hibiscus Garage 4,693 4,245 90% 229 Cypress Garage 4,428 1,347 30% 4 Total Garage Parking 11,815 Red Lot (Effective January 2007) % 34 Tower Lot % 116 Park N Save Lot 1,248 1,018 82% 149 Total Remote Parking 2,190 Employee Lot 2,779 2,176 78% 0 Total Employee Parking 2,779 Total Parking Capacity (excluding Overflow Parking) 16,784 11,721 70% Holiday Lot 896 Dollar Lot 500 Green Lot 900 Orange Lot 600 Brown Lot 366 Gold Lot 850 Blue Lot 420 Taylor Road & US1 Lot % 0 Total Overflow Parking 4,682 Total Parking Capacity 21,466 Source: Office of the County Auditor compilation of parking facilities and utilization Office of the County Auditor 17