City losing money on valet parking; rates to rise

The City of Austin is losing roughly $455,000 a year by allowing hotels and restaurants to use downtown parking spaces, that could be metered, for valet parking.

Council members last week took a step to recoup some of the lost revenue, approving an increase in fees paid by valet parking firms that staffers estimate will generate $137,000 next year. 

The city pulls in about $45,000 annually from its valet parking program through permits paid by valet companies. However, were the parking spots metered instead of used for valet parking they would generate about $500,000 annually, staffers estimate. That means the city forfeits roughly $455,000 a year.

To close the gap, Council unanimously approved an increase in fees staring Jan. 1 for valet parking. The increase is forecast to pull in $137,000 in 2013, and city officials plan to gradually increase the valet fees to recoup losses in the coming years.  

Specifically, Council members approved a 20-cent per spot, per hour, per year increase in the amount valet firms pay, with the ultimate goal a 60-cent increase, though the time frame has not been agreed upon.

Every year about 1 million cars move through the city’s 180 dedicated valet spots at restaurants and hotels. That breaks down to roughly 15 cars per spot, per day. In contrast, five to eight cars per day use metered spots. Restaurants and hotels currently pay $250 per year per valet spot.  

The two contested points in the discussion at Council’s meeting last Thursday were the time frame for recouping the losses (five years vs. three years) and if the valet system was going to be used as a profit-making venture.

Robert Spiller, director of the Austin Transportation Department, conceded that the valet parking system would not recover the full cost of the system any time soon, but they’re not trying to do that since the “valet system is a public benefit.” 

Skeeter Miller, owner of County Line Barbeque and president of Greater Austin Restaurant Association, and other representatives of restaurants and hotels affected by the increase, encouraged the implementation of a five-year plan.

Mayor Lee Leffingwell also spoke in support of the five-year plan. “I support and … I think that the consumers have agreed in principle, to the five-year increment.” Council Member Chris Riley also expressed support the five-year plan. 

However, Council Member Kathie Tovo expressed reservations about taking five years to recoup the lost revenue and advocated a three-year phase-in plan. It is what is “fiscally responsible with our spaces downtown,” Tovo said. “It’s in the city’s best interest to increase the price on (the permits) more quickly.”

Council Member Laura Morrison seemed to be reserving judgment, though she did note that she’d heard some discussion of the proposed valet fee increases as early July 2008. The fact is, she argued, “it’s actually been more like a four-year phase-in” to get the first increase implemented.