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EUGENE <br />MEMORANDUM <br />Date: August 14, 2008 <br />To: Johnny Medlin, Parks & Open Space Director <br />Joyce Berman, Chair, Board of Directors for Science Factory <br />From: Becky Carlson, CPA, Administration Division Manager, City of Eugene <br />Public Works <br />Administration <br />City of Eugene <br />101 E. Broadway <br />Eugene, Oregon 97401 <br />(541) 682 -8421 <br />(541) 682 -6826 FAX <br />www.ci.eugene.or.us <br />Subject: Analysis and Recommendations — Alternative Methodologies for Allocation of Indirect Costs <br />and Parking Income for the Duck Football Parking Program <br />At the request of Johnny Medlin, Parks & Open Space Director, we analyzed the current practices for the <br />allocation of indirect overhead costs and parking net income for the Duck football parking program operated by <br />the Science Factory for City of Eugene parking lots. In doing so, our purpose was to determine whether these <br />practices met the following criteria and to make recommendations as to how they could be improved: <br />• Defensible/Formalized <br />o Are we able to articulate and explain these practices to City Council and other vendors? <br />o Have the practices been formalized in a written agreement? <br />• Consistent/Comparable <br />o Are these practices consistent and comparable with agreements the City has with other parking <br />contractors? If not, can we justify why there are differences? <br />o Are these practices consistent with other overhead allocation methodologies used by the City? <br />• Transparent <br />o Do these practices represent an "arms - length" relationship? <br />o Do the current practices reflect an objective and accurate view of the parking program activity? <br />o Are there other goals, such as providing City financial support, which need to be acknowledged <br />and reflected appropriately (e.g., as an explicit donation)? <br />Some of the key facts and assumptions upon which our analysis and recommendations are based are as follows: <br />• The Science Factory currently pays to the City 20% of the net income from the game day parking <br />program operated on city parking lots. <br />• The Science Factory allocates overhead at 22% of gross income and staffing costs at 17 %. It does not <br />appear that there is supporting documentation for either of these allocation percentages used. <br />• None of the income - sharing formula, the overhead cost allocation methodology nor the staffing cost <br />allocation seem to have been formalized in any sort of written agreement between the parties. <br />Other relevant information we learned in talking with the City's Parking Program Manager and the Airport <br />Finance Manager is that: <br />• The external parking contractor at the Eugene Airport retains 8.15% of gross parking revenues, in <br />contrast to the Science Factory, which currently retains approximately 89.8% of gross parking revenues <br />earned from city parking lots. <br />• The City's Parking Program Manager opined that the City's share of net income earned fr om city parking <br />assets should not be less than 50 %. <br />Page 1 of 2 <br />