Please see the below document to better understand the paid parking proposal City Council will be considering in February.

Paid Parking Questions and Answers

Questions & Answers

Paid Parking

Q: Where is the City proposing to have paid parking?

A: The proposed paid parking areas include most of the Commercial Business District. Please see the map in the above link.

Q: Is the City proposing year-round paid parking?

A: No. The current proposal is to create paid parking for six months, from May 1 through October 31, when there is the greatest demand for downtown parking spaces.

Q: What days and hours would people have to pay to park?

A: Sunday through Saturday from 9 AM to 9 PM, excluding holidays.

Q: What is the proposed parking time limit?

The proposed time limit is 3 hours per 6-hour block of time. A person could park his car for up to 3 hours between 9 AM and 3 PM, and again for up to 3 hours between 3 PM and 9 PM.

Q: Is the City proposing parking meters?

A: No. The City’s plan includes 15-20 parking kiosks (pay stations) that would accept coin and credit/debit card. People would also be able to pay via the mobile Passport app. Parkers would need to know and type in their license plate numbers to begin a parking session.

Q: Would I have to stay in the same parking space during my parking session?

No. You would be able move your car to any other parking space during your parking session without having to reenter your license plate.

Q: What rate would the City charge?

The City is proposing a rate of $1/hour.

Q: Are there any convenience fees to the customer?

Yes. If the customer chooses to pay via the mobile app, then there would be a $0.25 fee per transaction, no matter your session length.

Q: Where will employees be able to park?

Employees will be able to park where there is free parking in the City. Proposed free parking areas within a 5 to 10 minute walking distance of downtown businesses include: most of West Main Street; most of West Bay Street; City Beach parking lot; the public Depot Lot; the public New York Lot; West Third Street; East Third Street east of Gardner; Traverse Street; and the Methodist Church Lot. Please see the map in the above link. There are other public lots throughout town that are 10-15 minute walks to downtown.

Q: What is the upfront installation cost of the paid parking system?

Between $150,000 and $200,000, depending on the type and number of kiosks.

Q: How much revenue can the City expect annually?

A: Conservatively, the City can expect about $150,000 annually. Realistically, the City could see between $200,000 and $300,000 annually. Very optimistically, the City could see above $400,000.

Q: How is the City calculating annual revenue?

Annual revenue projections are based on possible parking space occupancy rates. Please see the chart below (the current plan is bolded ):

Q: Won’t enforcement and administrative costs increase?

Police officers currently enforce the 3-hour parking limits downtown. The new paid parking enforcement system would increase enforcement efficiency because police officers would be able to search an electronic system for cars that have paid. The City does not anticipate needing to hire additional staff to oversee the administration and enforcement of paid parking.

Q: What kind of monthly costs would be associated with paid parking?

Under the current plan, approximately $1,000 per month for the kiosks, but only during the months they are being used for paid parking (May through October).

Q: Are there any other costs to the City?

The City would have to pay a merchant processing fee for credit card payments.

Q: What other expenses will be covered by paid parking revenues?

The revenue from paid parking would cover expenditures in the City’s General Fund. Primarily, it makes sense for the revenue to cover expenses related to police enforcement, parking lot / space maintenance, downtown parks maintenance and improvements, and other infrastructure needs.

Q: I’m afraid of ruining the esthetics of the town by cluttering it with signs. How many signs would the City put up?

The City plans on putting up enough signs to ensure people know that they are in a paid parking zone and that they can pay via a mobile app. We do not anticipate needing many new sign posts. Council will review sign placements when it decides on the final paid parking proposal.

Q: Why is the City considering paid parking?

Paid parking will create a new revenue stream that is not based on taxes. This would help diversify the City’s General Fund revenue streams. It will also shift the burden of paying for certain expenditures (such as police, parking, infrastructure, parks, etc.) away from the taxpayer and to the user. Paid parking can also help alleviate summertime parking congestion downtown and regularly free up spaces for visitors to our downtown merchants. Further, paid parking will make parking enforcement easier and more efficient for police officers now that chalking tires has been ruled unconstitutional.

Q: Why is paid parking being discussed in the winter when summer residents aren’t in town?

City Council addresses a variety of issues all year long, and the City’s business does not end when summer residents leave. Election and budgeting seasons take place in the fall and early winter. Paid parking was discussed as a revenue-generating option in November 2021 during budgeting season after the Headlee Override vote failed and Council directed staff to present a paid parking plan.

All meetings are open to the public and the City livestreams its Council meetings on YouTube and Zoom, where anyone may comment on agenda items. This enables summer residents to observe and participate in Council meetings whenever (and from wherever) they choose.

Q: Shouldn’t this decision go to a vote of the people?

A: The City Charter and State law permit Council to make this decision at the Council level.

Q: Paid parking came up so fast! Why are you trying to rush this through?

Paid parking has been discussed at Council over the course of several years. While initial conversations about serious parking concerns in Harbor Springs began in the 1980s, City Council began charging transient boaters to park in the Marina (Harbormaster) parking lot in 2009. In the spring of 2015, City staff, Council and the DDA began discussing options for raising revenue to make downtown and infrastructure improvements. Some of these options included paid parking and increased taxes/assessments. In December of 2015, the DDA officially asked City Council to explore a pay-for-parking system in downtown Harbor Springs to manage parking and to fund improvements to the City.

In response, Council formed a Parking Committee to explore downtown parking issues and policies. Some Committee recommendations included encouraging downtown employees to park in more remote locations, stricter time limit enforcement, and reworking requirements on businesses for off-street parking. In the spring of 2016, paid parking was explored and discussed, but not pursued. In September of 2017, a paid parking consultant provided City staff with a paid parking plan, which included parking kiosks on Main Street and Third Street. Those options were discussed but ultimately not pursued. In 2020 and 2021, Council and the DDA discussed the possibility of a paid parking lot (Spring Street lot), but Council ultimately rejected that proposal.

After the November general election, Council directed staff to present options for revenue generation and cost reduction. One revenue option included paid parking. Staff prepared and presented a paid parking report to Council on January 17. Council then voted for staff to present a finalized plan in February.

Q: Have you considered that paid parking will be an inconvenience for people, especially seniors?

A: Paid parking will be a minor inconvenience for most people. We are exploring options to make an adjustment to paid parking easier, such as by providing seniors with license plate cards for their wallets, an enforcement grace period, keeping handicap spaces free, training sessions for kiosks and mobile app payments, as well as other ideas.

Q: Won’t people stop coming downtown if we have paid parking?

Most studies and data suggest that paid parking does not harm downtown businesses.

Q: Do we really have a parking problem in Harbor Springs?

During select busy summer weeks, downtown parking can become scarce. However, in general, Harbor Springs does not have a year-round parking problem.

Harbor Springs Government, Budget & Taxes Questions

Q: Why can’t the City reduce expenditures?

Council considered reducing General Fund expenditures by about $120,000 to present a balanced budget. There was significant opposition to many of the proposed cuts. Council instead decided to utilize some reserve monies from the museum fund to avoid making cuts for 2022, while acknowledging that the City must find ways to raise revenue.

Q: Doesn’t the City see a lot of money from sales tax and other State taxes?

Most of the money that the City receives from the State is for our streets, which are paid for by our Major and Local Street funds and not the General Fund. The State does share revenue from sales tax with the City, but it is a small amount, covering about 3% of our General Fund expenditures. The vast majority of revenue from sales tax goes to the State and not the City.

Q: The City’s legal expenditures have skyrocketed – someone said up to $300,000 annually. Is this true, and why have they gone up?

While the City’s legal expenditures have doubled in recent years, they are about or under $120,000 annually. The most significant reason for increased legal expenses has been due to three lawsuits brought against the City for the new Irish Boat Shop building construction.

Q: I read that the City Manager makes $227,000 annually with benefits. Is this true?

No. The City Manager was hired at $96,000 annually. In May of 2021, the City Manager’s salary was increased to $110,000 to bring his pay up to the median salary for northern Michigan city managers. The City Manager receives the same retirement and healthcare benefits as all other employees.

Q: I read that the City Manager will be able to retire at age 40 with a lifetime pension paid by the taxpayers. Is this true?

No. A City employee can collect retirement benefits from the City if he retires at 65 and has worked fulltime for the City for 10 years, or if he retires at age 55 and has worked for the City fulltime for 20 years.

Q: How much have salaries increased for City employees?

The City pays its employees an annual increase of about 3% to keep up with inflation and cost of living. Pay increases, salaries and benefits for most employees are subject to union agreements.

Q: Why can’t the City cut employee benefits, like healthcare and pensions?

Cutting or reducing employee benefits would make the City of Harbor Springs significantly less competitive, as many employees choose to work for government specifically for the benefits. It is currently an employees’ job market and the City would find it difficult to attract and retain quality employees.

Q: How come the City has added several new full time positions in the past few years?

The City has not added a new full time position (funded by General Fund tax dollars) in several years. The City restructured and replaced the Assistant to the City Manager position with a Parks Director position in 2021. In 2018, the City added a fulltime DPW employee (mostly covered by other funds), and prior to that the police department added a full time position and reduced overtime and part time pay.

Q: But why did the City hire a Downtown Development Director (DDA) director?

The DDA Director is not supported by General Fund tax dollars. The DDA Director’s salary is paid for by the DDA, which is through special assessments and tax capture in the downtown district. Prior to 2020, the DDA contracted out the DDA Director’s responsibilities and duties with a nonprofit organization. In 2020, the DDA decided to stop contracting out those responsibilities and instead hired a part time director.

Q: What services and amenities does my tax money go toward?

The City levies a general operating millage. This money goes toward many operations, services and amenities, including but not limited to: police, zoning, assessing, parking lots, parks, leaf and brush pick up, recycling, legal fees, elections, accounting, buildings and grounds, fire department, trees and vegetation management, and City Hall staff salaries.

In addition, the City collects a millage for street and sidewalk maintenance and improvements.

Q: How much tax revenue does the City capture for General Fund operations?

The City estimates it will collect about $1.7 million dollars in tax monies for its General Fund in 2022. About $1.3 million will come in from other revenue sources. Most of those other revenue sources include transferring monies from City enterprise funds into our General Fund to keep it afloat. For example, the City annually transfers about $300,000 from the Electric Fund into the General Fund. While this has allowed the City to maintain many General Fund operations and services, it has prevented the City from saving the necessary monies in our Electric Fund. The City is now faced with significant multi-million dollar improvements to our Electric Fund, for which we will have to borrow money.

Q: How come the City has seen deficits in the last few years in its General Fund?

The City was burdened with a FEMA project in order to remove City properties from the floodplain. This million-dollar project reduced the City’s General Fund reserve balance by about a third. Further, the Headlee Amendment passed in 1978 and, combined with the passage of Proposal A in 1994, it has reduced the City’s ability to increase its millage rate.

Q: What is the Headlee Amendment and Proposal A, and why did the City seek a Headlee Override vote in November 2021?

With Headlee and Proposal A, the overall City millage rate is reduced when the City sees additions or expansions of structures and transfers of ownership of properties. This means the City cannot capture any more revenue in tax monies in 2022 compared to 2021 (except for some inflationary increases).  Transfers of ownership impact the millage rate reduction the most. When a house is uncapped after being sold, the new property owner will pay a higher tax rate and that taxable value is added to the tax roll. However, the city’s overall tax rate is then reduced so that the City does not capture any more money overall than it was capturing before that property was uncapped.

Even though we see significant new construction and remodeling in our City, we cannot enjoy new tax dollars from those increases because our revenue from property taxes cannot increase more than the inflation rate.

Further, Proposal A prevents a city from raising its millage rate after the millage rate has been rolled back by Headlee. In order to raise its millage rate, the electors must vote to uncap the millage rate. Currently, Headlee has rolled back the City’s millage rate to about 5.7 mills. If property values increase, then the City’s millage rate in 2023 will be reduced to some lower number (such as 5.55, for example) so that the City is not capturing any more revenue in 2023 than it was capturing in 2022. However, if property values decrease in 2022, the City will not be able to raise its millage rate to ensure that it is capturing the same amount of money in 2023 as it captured in 2022. Therefore, the City would be forced to make significant cuts (depending on the severity of the property value decrease) and/or find alternate sources of revenue.

Q: What was the purpose of “20 years” in the Headlee Amendment Override ballot question?

The 20 years language had one main effect: to prevent the elected body from raising the millage rate by more than 0.5 mills per year. It also had the effect of resetting the millage rate to the Charter authorized maximum rate of 15 mils each year for 20 years. After 20 years, the millage rate would still remain uncapped, but would again be subject to Headlee. So, even if the millage language would have stated “1 year”, the millage would have remained uncapped at 15 mills. The only difference is that the maximum cap would be subject to Headlee’s rollback effects after 1 year and not after 20 years.

Q: So, the City was going to raise our millage rate to 15 mills?

A: No. In the last three decades, the City has generally levied between 6 and 8 mills. Please see the graph in the above link showing the City’s millage rate in the last three decades.

Q: What is the history of Headlee in the City of Harbor Springs?

The Headlee Amendment was passed in Michigan in 1978 and Proposal A was passed in 1994. Since 1978, the City’s millage rate of 15 mils (as authorized by Charter) has been rolled back to about 5.7 mils. The City’s first attempt to uncap the maximum authorized millage rate was in November of 2021 and that vote failed, approximately 66% to 34%.

Q: How does our tax rate compared to other Michigan cities?

Out of 275 Cities, City of Harbor Springs electors pay among the lowest tax rates in the State (98% of cities’ residents pay higher overall property taxes). Please see the above link for a graph on how Harbor Springs compares to other northern Michigan cities.

Q: Can we vote on a millage for specific items?

Yes. The City Council has expressed interest in pursuing a millage for specific items. A specific millage will also be subject to the effects of the Headlee Amendment rollback.

Q: What are some ways to raise revenue for the General Fund?

Council reviewed and discussed many revenue options in November of 2021. Many of the options were deemed not to be feasible. Still, some possible ways to raise revenue include: millages for specific operations, services or projects; special assessments; paid parking; zoning modifications; a vote to override the effects of Headlee; annexation of neighboring properties; income tax; and the sale of public resources.

Q: If we are in a tight financial position, why did the City purchase solar panels with taxpayer monies?

A: The solar panels were purchased by using fees from the electric fund and not with tax monies. Aside from the environmental benefits and producing local power to reduce reliance on the regional grid, the City is projected to bring about two hundred thousand dollars in long-term revenue after the City breaks even on the solar panel investment.

Further, the solar panels are on buildings that get relatively little use, and the City owns its electric system. Therefore, excess power generated by the solar panels is pumped back into the grid and sold to our electric customers at established rates.

Q: How long will it take to break-even on the solar panel investment?

The City estimates to break-even in 15-20 years.

Q: I heard that the solar panels are not even on south facing roofs?

About 70% of the City’s solar panels are on south-facing roofs, 18% are on west-facing roofs, and 12% are on east-facing roofs. While south-facing roofs are the most efficient, panels on east and west-facing roofs are not unreasonable placements so long as the roofs have decent exposure to the sun.

Q: I heard that the City wants to put an electric substation downtown. Is this true?

In 2006, the City’s electric system engineer presented a system study to Council that described the need to build a new electric substation near the center of the electric load. In 2021, the City’s electric system engineer emphasized this need. Due to increased stress on the system in summer, there’s a significantly heightened chance of brownouts and a significant decrease in efficiency (and increase in costs) by relying on one substation located at the very edge of the City’s electric grid. For this reason, it is proposed that the new substation be located within City limits. The City is considering a few locations, but has yet to explore those options in detail.

Q: Can’t we add more moorings and slips to increase revenue?

Any increase in revenue from more moorings/slips (or an increase in the costs of moorings/slips) goes into the City’s Waterfront Fund, which is an enterprise fund. Those monies are not intended to support General Fund taxpayer operations, services and amenities.

Q: Isn’t Emmet County withholding City monies due to a City Treasurer mistake?

No. Several years ago, the City established a Tax Increment Financing (TIF) district in our downtown district. Under that plan, the City’s Downtown Development Authority (DDA) is allowed to capture the tax revenue generated in the TIF district that would otherwise normally go to the County. However, for the last few years, the County does not believe it has to give that money to the City due to a different interpretation of the law.

Q: Many summer residents do not use recycling throughout most of the year. Why can’t the City just get rid of that service instead of paying for it?

In December 2021, City staff looked into the possibility of eliminating recycling services from the budget. However, the City’s contract with Emmet County Recycling expires on September 31, 2024.

Q: Isn’t the City’s budget an example of local government budget creep, where cities never budget a surplus so they can ask taxpayers for more money?

The City has a long history of budgeting surpluses and keeping tax rates low. However, due to the combination of the decades-long effects of the Headlee Amendment Rollback and Proposal A, along with the nearly million-dollar FEMA spillway project in 2019, the City cannot present a balanced budget without making modest cuts, dipping into our reserves, or raising new money.

Q: How does a City Council – City Manager form of government work?

The City Charter charges the Council with forming policy. The City Charter charges the City Manager with overseeing all of the City’s departments and administration, presenting a balanced budget along with the City Clerk, and with making policy recommendations to Council. The City Manager cannot vote on any issues and only the elected Councilmembers can vote on resolutions, contracts, policies, and ordinances.