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Parking tax hurts airport-related revenues more

Dear City Council,

This letter is being written to formally oppose the council’s vote

on increasing the Transient Parking Tax (TPT) from 10% to 12%.

I represent VSP Parking near the Burbank-Glendale- Pasadena

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Airport. As all of you are aware, “airport- related” parking revenues

generated by VSP, the Burbank Airport Hilton, Star Park, and the

airport’s own services contribute over 92% of the TPT collected

(based on fiscal year 2002-03). Of course, increasing the tax rate

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from 10% to 12% would increase some of the collections by the city

(office buildings, etc.), yet until the issues surrounding the

airport are resolved or settled, and the travel industry rebounds

from a nearly two-year slump, 92% of your TPT tax revenues are sure

to continue to decline. Over the past two years, several different

effects and unforeseen incidents have taken place to dramatically

impact the parking revenues collected:

* September 2001 -- The 9-11 tragedy. An obvious impact to the

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travel industry, and most parts of the industry have yet to fully

recover from that incident.

* June 2002 -- The airport imposes its own access fees on all

private parking operators.

* December 2002 -- Despite Measure A, which supposedly forbids

airport growth, the city allows and approves Star Park, a 2,200-space

parking lot to open. In doing so, it created a price war between all

airport parking lots to retain their declining customer base within a

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declining travel market.

* December 2002 -- The airport reduces rates to compete, and in

doing so, reduces the Transient Parking Tax collected to levels

unanticipated by the city.

* January through March 2003 -- Operation Iraqi Freedom. Never a

positive sign for a struggling economy, but even tougher on a

sensitive travel industry.

* March through May 2003 -- All airport parking lots lower rates

substantially and/or run specials. All of this is happening during a

period in which the economy is wavering on a recession, travel

industry giants (AMR, United) enter or approach bankruptcy, and

travel fears (terrorism, SARS) are on the rise and on everyone’s

mind.

To myself, and even the uninitiated, it does not seem like a

“booming” industry, one that could absorb higher taxes.

Most realize that increased costs to the city over the past few

years have strapped the budget. It is now clearly evident that

similar inflationary pressures have not materialized in the form of

higher travel costs, and have been unable to translate into higher

parking charges, from which the city would tremendously benefit. The

only price pressures VSP Parking has been seeing are in the form of

higher fees imposed by governmental agencies (city of Burbank, the

airport), incredibly higher insurance costs (terrorism, worker’s

compensation), coupled with substantially lower parking rates.

Please reconsider your position on increasing the Transient

Parking Tax. Burbank has long prided itself on being business

friendly, and any type of tax increase can never be considered

business friendly.

If city efforts were redirected to eliminating the ever continuing

fight between the airport and the city, or even helping resolve the

Zelman issue, maybe business at the airport could increase slightly.

Then, prices can return to equilibrium and let “friendly” competition

set the market rates, and the TPT can realize some substantial

increases from increased (reasonable) parking rates. Unlike the

excessively low parking rates we are seeing currently at the airport,

which are forcing competitors to match prices just to survive.

Sincerely,

DEREK R. SWEET

Vice President

VSP Parking


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