Retail sales remain stuck in neutral, and the economy is still struggling to get out of first gear.

But that hasn't discouraged leaders of cash-strapped Harrisburg from grinding the business community's gears with a series of proposed parking changes they hope will generate hundreds of thousands of dollars in revenue.

The changes could drive customers out and leave Harrisburg businesses in the dust, local leaders and a community branding professional said.

The proposals call for:
• Increasing parking meter rates $1 an hour, to $2 and $2.50.
• Extending enforcement hours from 5 p.m. to 8 p.m., maybe later, and including Saturday hours.
• Increasing the tax on parking operators from 15 to 20 percent.
• Adding 88 two-hour meters in Midtown along Third Street between Verbeke and Harris streets, and 
along Reily Street between William and Susquehanna streets.
• Doubling new residential parking permits to $30 per year; increasing renewals to $25 per year.

"How does this make this city better?" asked Ralph Vartan, CEO of Susquehanna Township-based Vartan Group Inc., developer of the 1500 Project condominium building under construction in Midtown. "Clearly, it doesn't."

Government makes money when businesses pay taxes on the revenue they earn from customers. Like many cities across the country, Harrisburg is struggling with vacant and blighted properties.

Investments are few and far between, and they are often driven by tax abatement and other incentives that slowly have been drying up.

Expanding the scope of paid parking could push the evening and weekend visitors to the suburbs where parking is usually free, causing city businesses to lose revenue, Vartan said.

"People have the option of going home and staying home and not coming back downtown," he said.

If the recommendations were part of a larger fiscal recovery plan for Harrisburg, which is burdened by at least $310 million of incinerator debt and awaiting state takeover, the business community would be more accepting, said David Black, president and CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corp.

"It looks like a money grab," he said of the parking proposals. "I think it will have a very negative impact."

The suggested rate increase is the bigger issue, Black said. One compromise could include extending enforcement hours, but maintaining current fees, he said.

Robert Philbin, a spokesman for Mayor Linda Thompson, who recommended the changes, said they are competitive in the local market.

"People come to downtown Harrisburg for different reasons than they do in York or Lancaster," he said. "People who come to Harrisburg to conduct business are not concerned with parking meter rates; these are tax-deductible expenses as a cost of business."

People who plan to spend leisure time in the city typically use garages, Philbin said.

"Any increase in any fee can be construed as impacting business," he said. "But we are all about business. Everything is business, and costs in the city are going up while revenue is going down, so revenue streams have to expand wherever possible."

The mayor's recommendations would generate more than $700,000 per year, Philbin said.

According to several city businesses, as well as the Harrisburg Downtown Improvement District, the chamber and developers based in the city, there was no dialogue with business owners before the proposals were announced.

"This sounds like a substitute for a commuter tax," said Brad Jones, vice president of Harristown Development Corp., referring to the tool municipalities in the state's Act 47 distressed cities program can use to generate additional revenue.

Under an amended state takeover bill that will go before the Senate for concurrence later this month, a commuter tax, or additional tax levy on nonresidents who work in the city, would be prohibited. If the Senate passes Senate Bill 1151, it goes on to Gov. Tom Corbett, who supports the legislation.
Harristown owns Strawberry Square, a mixed-use retail and commercial complex in the heart of downtown Harrisburg that blends upscale and specialty shops, eateries, offices and educational institutions.

"We've done well with office and institutional uses, but the retail still continues to be a difficult struggle in this economy," Jones said. "If (parking meter) hours are extended, I think there is real potential for pretty significant impacts because (people) have plenty of other options. Just drive out to the suburbs."

Business owners in Strawberry Square and others who operate in the downtown gathered at the Gamut Theatre Group on Sept. 30 to draft a petition opposing the parking bills.

"If I tighten up my belt, I die and the rest of the city dies," said Clark Nicholson, artistic director and co-founder of the nonprofit theater.

Nicholson said he relies on many part-time actors who get paid in small stipends to put on about 225 shows per year. The bulk of the rehearsals are after 5 p.m. and on Saturdays.

If the city increases enforcement to 8 p.m. and expands to Saturday hours, Nicholson said, his actors are going to be shelling out nearly $50 per week to rehearse.

He said he is concerned that Gamut will be pushed out of Harrisburg because his actors will lose too much money.

The parking proposals are only putting a Band-Aid on the bigger fiscal problem, said Todd Vander Woude, executive director of the Harrisburg Downtown Improvement District.

"We are asking (the city) to work with us and not against us," said Judy Hepford, Harristown's director of marketing and customer relations. She said she is concerned this might be the hurdle that breaks the backs of small business owners.

Calvin Johnson, owner of Cue-Nique Lottery II, a retailer for the Pennsylvania Lottery in Strawberry Square, said he believes the parking proposals will drive people away and keep future business out of the city.

Tom Scott, owner of McGrath's Pub on Locust Street, said he is worried that people who work in the city and typically patronize bars and restaurants on Second Street after work will take their discretionary money elsewhere.

"They will get out (of the city)," he said. "Definitely it's a worrisome thought. Little by little it's been a real challenge."

Parking is an economic development tool and should never be put in place just as a fundraising source, said Roger Brooks, CEO of Seattle-based Destination Development International Inc., a destination-marketing firm that helps communities across the globe with brand development.

"That's a good way to kill a downtown," he said. "(Parking) is an amenity to increase the tax base. Any revenue from parking should go back into the downtown."

Communities that are going to charge for parking should go no higher than $1 an hour, up to a maximum of three hours, he said. To grow the local tax base, communities need to offer parking incentives to keep people in their downtowns, Brooks said.

Tourism efforts are hindered by two-hour parking, unless there are signs that direct visitors to four-hour and all-day parking areas, Brooks said.

He said he also recommends free parking after 6 p.m. and on weekends.

"We may be slowly crawling out of the private sector recession, but we're just entering the public sector recession," he added. "Cities all over the country are hurting. Trying to get out of it through parking (revenue) is a way to make it backfire."

The parking operator tax increase is the only bill on the City Council's legislative agenda on Oct. 11, said Kirk Petroski, acting city clerk.

The Harrisburg Parking Authority is not planning a rate increase in city garages to cover a possible tax hike, said Executive Director Richard Kotz. Garage rates start at $5 for two hours or less (see "Local parking rate comparison" below).

The other proposals remain in committee and could come up for a vote as early as Oct. 25, he said.

Local parking rate comparison

Earlier this year, Lancaster opted to extend parking enforcement to Saturdays.

The decision wasn't made on a whim, but rather as part of a strategy driven by downtown merchants, said Larry Cohen, executive director of the Lancaster Parking Authority.

"It's a big shopping day, and the merchants wanted spaces to turn over," Cohen said.

The knee-jerk reaction is always that parking rate increases and extended enforcement will drive away business, he said. Free parking creates more problems than increasing fees because businesses fail to generate the traffic they need as spaces are parked full all day, he said.

The businesses would ask for enforcement if parking was free, Cohen said.

Meter rates should be higher than garages in the short term to passively control the flow of parking and traffic in the community, local parking authority officials said.

Patrick Rooney, chairman of the York City General Authority, said York regularly looks at hourly and monthly parking rates. The price is driven by usage and the authority's need to meet debt requirements, he said.

York also polls its businesses and evaluates rates in Lancaster to determine the comfort level of its parking, Rooney said.

"Clearly, you need to have a rate that turns folks over in the downtown," he said. "If we don't have turnover, we'd be in serious trouble."

Parking demand is different when you are talking about the county seat and a major courthouse, Rooney said.

In Cumberland County, several communities, including New Cumberland, Lemoyne and Mechanicsburg, do not have parking meters.

Parking rates are much cheaper in Carlisle compared with the cities in this area, but the fees are needed in the county seat, said Steve Hietsch, borough manager.

"It's not to make money. It's to ensure there is turnover of the vehicles," he said. "If people didn't have to pay, they might park there all week long. If we didn't have as much demand for parking, we could get away with not having the meters."

Carlisle's parking fund revenue covers the cost of maintenance and enforcement. It also helps finance the borough's Main Street program, which benefits downtown improvement activities.