Tony Davis spends $50 to fuel up his SUV and pays about $8 in tolls on the Garden State Parkway to make the trip from his Jersey City home to Atlantic City.
Once he arrives in the resort, he’s confronted with another expense: the casino parking fee.
On weekdays, the parking charge is usually $5 at most casinos. On weekends, it is often raised to $10. During holidays or special events, such as the annual Atlantic City Airshow, some casinos charge $25, even $30.
“I feel it’s not proper to have to pay for parking, because we’re already spending money in the casino,” said Davis, who visits Atlantic City about once a month. “It’s simply not right.”
As the unpopular parking fee marks its 20th anniversary this July, there is renewed debate about whether it has outlived its usefulness. Some see it as a deterrent to tourism. Others say they believe it might be time to abolish it, although financial obligations tied to the parking revenue would make that difficult.
Michael Pollock, managing director of Spectrum Gaming Group, a Linwood casino-consulting firm, said the mandatory parking fee appeared unique to Atlantic City. He knows of no other casino market that has one.
“The parking tax was established in a different era, when Atlantic City faced significantly less competition than it does now,” Pollock said of the start of the fee in 1993.
In recent years, casino gambling has exploded throughout the Northeast. Atlantic City had little competition in 1993, but it now finds itself surrounded by rival casino markets. As casino competition has grown, Atlantic City’s gambling revenue has plummeted — from a peak of $5.2 billion in 2006 to $3 billion last year.
Pollock said he was certain the parking fee discourages some customers from visiting Atlantic City, especially when it is combined with the highway tolls travelers must pay to get to the resort. He suggested that the state study the possibility of ending the parking fee as part of a comprehensive analysis of all government costs and regulations imposed on the casino industry.
“You can’t look at it in isolation,” Pollock said. “While the parking tax may be a deterrent to an undetermined level and may discourage visitation to an undetermined level, the flip side is, what do you lose if you get rid of it? You’ve got to look at the bigger picture. What do you lose, and what do you gain?”
Originally, a mandatory $2 casino parking fee was approved by the state Legislature in 1993. It was intended to finance construction of a grand new entryway into town to replace the then-blighted corridor at the foot of the Atlantic City Expressway.
In 2003, the fee was increased to $3, creating even more revenue for Atlantic City’s revitalization. Casinos, though, have the leeway to charge more than $3, depending on what the market will bear.
Of the mandatory $3 fee, $2.50 goes to the Casino Reinvestment Development Authority, the state agency that oversees the city’s redevelopment projects and Tourism District. The remaining 50 cents is funneled into New Jersey’s Casino Revenue Fund to help pay for social programs benefiting senior citizens and disabled residents. Casinos also fund the CRDA by contributing 1.25 percent of their annual gross revenue to the agency.
There are $236 million in CRDA construction bonds backed by the parking fee, including $30.1 million in annual interest and principal payments, the authority said.
“It says to the market that those bonds are viable. It makes it a lot easier for us to talk to Moody’s and Standard and Poor’s,” said John Palmieri, the CRDA’s executive director, explaining how the Wall Street credit-ratings firms view the parking revenue.
State law does not allow the $3 parking charge to be abolished or reduced as long as the CRDA’s parking-fee bonds are outstanding. Those bonds don’t mature until June 1, 2025. If the Legislature repealed that law, another source of funding would be needed to offset the loss of parking revenue.
CRDA officials have pointed to some big-ticket attractions funded by the parking fee to justify its existence. Most visible are the improvements off the Atlantic City Expressway entrance. This formerly run-down section of town has been transformed into a landscaped boulevard connecting the expressway with the Boardwalk. Revenue generated by the parking fee was also used by the CRDA to acquire land for The Walk, the outdoor shopping and entertainment district at the base of the expressway.
Besides providing financial benefits, Palmieri said, the parking-tax revenue is a barometer of Atlantic City tourism. Parking revenue increased slightly in 2012, breaking a five-year decline.
“It is a sign of the economic health of the community,” Palmieri said of last year’s increase.
On an annual basis, parking revenue peaked at $37.1 million in 2006. Five straight years of declines followed. By 2011, parking revenue had sunk to $28.4 million. But for 2012, the figure rose to $28.8 million.
Although the mandatory parking charge is $3, the casinos have the luxury of charging whatever they want as long as customers are willing to pay the higher cost. Anything above $3 goes to the casinos. Most of the time, the market rate is $5. However, it not uncommon for casinos to increase the rate to take advantage of busy days or holiday weekends. At Caesars Atlantic City, for instance, the rate was raised from the normal $5 to $20 for the Memorial Day weekend.
“We did raise our parking fees over the weekend, simply because demand was very high,” Gary Thompson, a spokesman for Caesars Entertainment Corp., said of the Memorial Day crush. “It’s something businesses do — raise their prices — when demand is high. I don’t think we were the only ones to do that.”
Some casinos kept the charge at $5 during the holiday weekend, while others raised it. Casinos argue they must raise the rates at times to discourage noncasino customers, such as beachgoers, from monopolizing the parking spaces that gambling patrons would normally use.
Atlantic Club Casino Hotel, which had been the only casino to offer unlimited free parking, ended that policy at the start of the Memorial Day weekend to protect its parking spaces for its guests. If a casino allows customers to park for free, the casino must still pay the mandatory $3 fee to the state out of its own pocket.
“(It) was prompted by the surge of traffic expected by the height of the season,” said Holly Campano, Atlantic Club’s vice president of marketing. “There was a fair amount of parking at Atlantic Club by those not patronizing the casino hotel — going to the beach or elsewhere — and creating difficulty for our loyal customers.”
Atlantic Club’s new parking policy is similar to what other casinos do. Now, Atlantic Club will allow its cardholders to park for free.
“Our loyal customers and casino guests have a great appreciation for the free parking the Atlantic Club provides,” Campano said.
Customers at all 12 Atlantic City casinos can usually avoid having to pay parking fees if they belong to a player-rewards program, particularly if they have premium-level membership cards. If they don’t have a casino card, they’re hit with a parking fee.
Dave and Diane Menicucci, tourists from Reinholds, Pa., object to the parking fees even though their casino cards allow them to use the casino garages for free. Most galling to them are the higher rates that casinos charge during peak periods.
“It should be a set rate all year-round,” Dave Menicucci said. “Don’t take advantage of customers and gouge them for a special event. Sometimes I see $10; sometimes I see $20.”
The Menicuccis occasionally gamble at the Pennsylvania casinos. They said customers aren’t bothered by parking charges in Pennsylvania, which could give casinos there an edge over Atlantic City.
“If you have to pay a lot for parking, then people won’t want to come to the Boardwalk,” Dave Menicucci said.
Mitchell Etess, chief executive officer of Connecticut-based Mohegan Sun, oversees two casinos that don’t have parking fees and one that does. Last year, Mohegan Sun became the operator and minority owner of Resorts Casino Hotel in Atlantic City. Mohegan Sun also owns casinos in Connecticut and Pennsylvania. Etess said Atlantic City’s parking fee had simply become a part of the market over the years.
“I’m not sure that in the grand scheme of things it will stop people coming to Atlantic City,” he said. “But what we do find in Connecticut is that people enjoy coming to our casino and not having to worry about paying a parking fee.”
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