City to talk parking takeover

Apr. 7—TRAVERSE CITY — Moving parking management from Traverse City's Downtown Development Authority to a department directly under city control would be a seamless move.

That's according to DDA Mobility and Transportation Director Nicole VanNess, who heads the self-contained parking services department under the DDA umbrella. While the authority has handled parking in its district since 1991, a later agreement both city and authority inked in 2003 put more public parking outside the downtown district under the department's charge.

Now, both city and DDA are reexamining that arrangement in light of several factors, not least of which is authority CEO Jean Derenzy's coming departure.

"I think just the timeframe is the right time to be looking at it, given all of the change that's happened from the city level and what has happened with the DDA level," VanNess said.

No other authority in the state operates parking quite on the same scale as Traverse City's, VanNess said.

Change and growth in the scope of parking services' assignment is one of the arguments for shifting the department from a component of the city with its own board, budget and taxing authority to one directly under the city manager and commission.

City Manager Elizabeth Vogel listed out the various aspects city commissioners will think about at their study session Monday. They won't make any decisions, but their direction to staff could help figure out what the cost would be to the city budget.

Should commissioners opt to terminate the parking services agreement at a later meeting, they'll have to give 60 days' notice, VanNess said.

Traverse City already pays $825,000 per year to the DDA under a parking services agreement, as previously reported. That covers operational costs plus salaries and benefits for 13 employees, about three-quarters of the authority's staff.

Personnel costs are one thing to consider in weighing how transitioning the department to city control would impact its budget, Vogel wrote in a memo. That's because those employees would become part of the city's union staff.

"So we would have to find the appropriate classification and (pay) grade, and then they would go into our healthcare and pension system," Vogel said.

Currently, DDA employees' retirement plans are what's called a 457(b) plan, city Human Resources Director Kristine Bosley said. They're similar to 401(k) retirement plans: both are referred to by their section in the tax code, have a defined contribution by both employee and employer and are invested in the financial markets.

Unlike 401(k) plans, 457(b) is for government employees, and has different rules for withdrawals and maximum contributions, among other differences, according to Bosley and John Hancock Retirement Plan Services.

If commissioners were to eventually terminate the parking services agreement and move the department under city control, its employees could also qualify for the city's defined benefit pension, Bosley said. That means eligible employees, once retired, would get a fixed monthly amount roughly equal to their years of service, multiplied by their final average compensation, then multiplied by 0.015.

That benefit is what's most often referred to as a city's pension liability, Bosley said.

"It's a bucket that we put money in and then, hypothetically at the end when the retirement program is closed, there's zero dollars," she said. "So we have to put enough money in to ensure that whatever benefit they've earned, they receive forever."

Combining defined benefit and contribution plans into a hybrid lets retirees benefit from investment growth, while also girding them somewhat against financial market downturns, Bosley agreed.

That could come at an extra cost, as could any necessary wage increases, Bosley said. She'll start reviewing job descriptions for parking employees to see where they would fall on the pay scale soon, depending on what city commissioners say at their upcoming study session.

By ordinance, Vogel's budget proposal is due May 6, and the commission must adopt it no later than June 3.