Nervous about high credit-card fees associated with a program that allows motorists to use their cellphones to pay for city parking meters, the Frederick Board of Aldermen has delayed entering into a three-year contract for the service.
The pilot program, administered by ParkMobile USA Inc., an Atlanta-based company, charges credit card users a 35-cent fee for each transaction using the service, according to Steve Johnson, Superintendent of the city’s Parking Department.
To use ParkMobile, customers either download a free application on their smartphones, or call a number listed on the meter and pay with a credit card. Each meter has been assigned a unique number for payment purposes.
The cellphone payment system is only needed for parking meters because the city parking garages are configured to accept credit cards at their payment centers.
The program, which has been in use since last fall, has quickly grown in popularity. In October, when it started, there were 695 transactions with the service, a number that was up to 2,115 in February, Johnson said.
But several of the board’s five members at a meeting Thursday balked at the 18 percent credit card fees the city is responsible for covering.
Gerry Kolbfleisch, the city director of finance, said the 18 percent fee is from the total of fees paid to credit card and banking institutions to cover the costs of processing the transactions, but doesn’t include the 35 cents paid to ParkMobile.
With the fees, the city pays 18 cents for every dollar earned at the meter to the credit card companies, but keeps all of that revenue with a coin payment.
Alderman Shelley Aloi (R), who said she was concerned that the city is paying 18 percent in fees to credit card companies, asked why the company wasn’t covering those charges.
Johnson said the company doesn’t pay the credit card fees in any city where it operates except for New York City. There, it collects all the revenue and pays the city compared with an arrangement such as Frederick’s in which the city pays the vendor.
Alderman Karen Young (D), who used to work for American Express, said she had never heard of fees higher than 5 percent for businesses and restaurants, but noted that she wasn’t familiar with the fees associated with a program like ParkMobile’s.
Alderman Michael O’Connor (D) also said he’d like to see more information about the fees the city pays, but pointed out that paying a fee is part of the necessity of bringing in the program.
“I understand, and for me, the processing charge is the cost of doing business,” he said. “That’s the convenience of being able to take these kinds of payments. I think long term, we’ll take more and be able to make more.”
Johnson said the program has been a tremendous boon for people parking downtown by making it easier to pay for parking, while helping to bring more traffic to downtown businesses.
Johnson pulled the item from the agenda following the discussion. The aldermen will discuss the program and its fees again at a work session whose date has not yet been set.
The aldermen Thursday also unanimously approved a change to the city’s Land Management Code that will allow a small-scale craft distillery to locate in the city, in addition to small-scale breweries and wineries.
It now permits a distillery to manufacture spirits in a space of up to 10,000 square feet within the city limits, while allowing for tours and tastings.
The change was prompted by a request from Swordfish Partners LLC and Jonathan Staples, one of the partners in that group, which owns the building that houses the Family Meal restaurant.
Laurie Mills, the project manager for Swordfish Partners, said the group would be leasing the space to a company to make rye whiskey, but declined to name the firm because, as the landlord of the space, they didn’t want to speak on its behalf.
She said the partners are working on finishing updates to the building, and that the decision by the aldermen was just the first step toward a distillery inhabiting the building.
At a workshop in February, Rand Weinberg, the lawyer for the group, told the board the request came after Staples was able to convince a company looking to locate a distillery in Maryland to look at Frederick.
He said the company would have to acquire the necessary permits, including those from the Bureau of Alcohol, Tobacco and Firearms before distilling the whiskey.
The Frederick Planning Commission unanimously recommended the change in January.