‘Sweetheart’ Deal? Hudson Scores Guaranteed Amounts In St. Louis Parking Contract

COVID-19 IS DELIVERING A FINANCIAL GUT PUNCH to the city of St. Louis, and one of the places this is most apparent is the city’s Parking Division. With office buildings, sports venues, restaurants, hotels and theaters operating at limited capacity or shut altogether, the concurrent drop in parking demand has made the outlook bleak.

In April the division estimated the revenue hit from COVID would be at least $2.67 million during the current financial year. To help plug the resulting budget gap, officials on the staff of Treasurer Tishaura Jones, the city’s parking supervisor, froze salaries and eliminated travel. They also canceled plans to fill 10 full-time staff positions.

But one local company working for the treasurer’s office looks to be well-insulated from the financial storm: Hudson & Associates. In April, Jones and Hudson CEO Shelia Hudson signed a three-year, $7 million privatization agreement for the company to manage most of the city’s on-street parking operations. Those operations oversee about 7,700 metered parking spaces and write the bulk of the city’s 280,000 annual parking tickets.

What makes Hudson look well-positioned? An examination by McPherson of the company’s contract with the Parking Division reveals several noteworthy items. Among them:

• A little-noticed clause entitles Hudson to flat-rate payments, regardless of how many parking tickets Hudson’s enforcement officers actually issue. Hudson gets a guaranteed $195,600 per month, or about $2.35 million each year. (Of every dollar, 27 cents is related to writing and processing tickets; the rest comes from a separate flat fee based on maintaining meters and collecting money from them.) The payments can rise each year broadly in line with inflation.

• This compensation structure differs markedly from the one that Hudson’s predecessor agreed to under a previous privatization contract in 2015. That vendor, Conduent, earned a fee for each ticket its enforcement officers wrote. In addition, Conduent was paid a specified amount for each parking meter it maintained and collected money from, depending on the type of meter.

• The compensation structure for Hudson contravenes the terms laid out by Jones’s own team when they sought bids in April 2019. The treasurer’s request for proposals (RFP) specified that the vendor be paid a “processing fee” per parking ticket issued. The RFP also specified a rate to be paid “per metered space” for maintenance and collections. These terms are similar to the ones Conduent worked under.

Why did Jones and her team disregard the terms laid out in the RFP and instead provide Hudson with flat-rate payments that are guaranteed until April 2023?

And why did Jones proceed with signing the contract on April 10, several weeks after the region started locking down in response to COVID? The signing took place as Jones’s staff was preparing forecasts for a drop of 15% or more in revenue from meter collections and parking tickets during the current financial year.

“Sweetheart deal”

Officials in Jones’s office say awarding the contract to Hudson is in line with their efforts to improve technology and save money for the Parking Division. The Hudson agreement, along with a related contract with a different vendor for ticket-processing software, should save the city between $500,000 and $1 million after the first full year of implementation, Jones says.

The treasurer’s critics aren’t buying this.

“It’s absolutely not responsible at all,” said 22^nd Ward Alderman Jeffrey Boyd, a longtime political rival of Jones who chairs the aldermanic Streets, Traffic and Refuse Committee and sits on the city’s Parking Commission. Boyd called the contract a “sweetheart deal” for Shelia Hudson, who is a major donor to Jones. (The St. Louis Post-Dispatch reported in June that Hudson and her company have given more than $38,000 to Jones’s election campaigns.)

Boyd, who lost a bid to unseat Jones from the treasurer’s office in the August Democratic primary, added that he only learned on May 23 that the contract had been signed, several weeks after the fact. And this only happened because Boyd made a records request to the treasurer’s office, he said.

The Hudson contract – already tied to an ongoing court battle between Boyd and Jones over the powers exercised by the treasurer’s office – could become a high-profile issue this fall. In June the Board of Aldermen voted to give the streets committee subpoena power to compel testimony and written records concerning the bidding process from both Jones and Hudson. This came after a withering letter to the committee from City Counselor Julian Bush. He wrote that Jones’s team had failed to obtain the required approvals for the Hudson deal, and that “the purported contract is not a contract at all.”

Hudson’s contract could also raise fresh questions about privatization, which has been a big topic in St. Louis recently. Earlier this month renewed efforts to pave the way for an exponentially larger and more complex privatization deal involving St. Louis-Lambert International Airport fell apart after fierce opposition from some aldermen and city residents, and amid concerns about the ongoing economic effects of the pandemic.

“Transparency, fidelity, and integrity”

Jones’s team hasn’t released detailed information about how they calculated the projected cost savings from the new contracts. The RFP concerning the city’s on-street parking operations attracted 11 bids by the May 2019 deadline. Hudson became one of three finalists. Jones said at a parking meeting in September 2019 that Hudson had won the bulk of the outsourcing work, although the contract signing only took place this past April, nearly seven months later.

Regarding Hudson’s flat fee, Jones’s office said in a written statement to McPherson: “The Parking RFP requested pricing on a per unit basis as a means to calculate and compare the costs of competing proposals. While the previous contract included pricing on a per unit basis for meter collections, there was also a floor established for the number of units, 7,700 metered spaces.” This essentially fixed a minimum cost for Conduent’s services, the statement said.

The statement did not directly address Hudson’s separate flat fee for writing and processing tickets.

Regarding the pandemic, Jones’s office said: “We factored impact of COVID-19 into our current budget based upon what we knew as late as April 2020, including reducing full-time staffing by 9%. The entirety of the process was executed with transparency, fidelity, and integrity.”

In response to McPherson’s questions, Jones’s office said new projections for the Parking Division’s revenues are not yet available.

Boyd said he hopes his streets committee will be able to start investigating after the Board of Aldermen begins meeting again on Friday, its first meeting since the annual summer recess.

“We’re in the middle of a crisis over COVID-19,” said Boyd. “This was all known before April 10, that we had a problem in the Parking Division. The most responsible thing to do would be to re-evaluate the terms of the contract.”

Cheryl D.S. Walker, an attorney for Shelia Hudson, declined to answer questions about her client’s contract. “Ms. Hudson has no further responses or comments on this matter,” she wrote in an e-mail.

From subcontractor to prime contractor

Jones has fired back against her critics, which include the Post-Dispatch. The newspaper has questioned in its editorials why the treasurer began paying Hudson for its services in May, when Jones had already suspended parking enforcement regulations in response to the pandemic. The suspension lasted from mid-March until early June.

In a June guest column for the St. Louis American – a newspaper that has been one of Jones’s steadfast supporters – Jones detailed Shelia Hudson’s extensive experience with the Parking Division, first as an employee and later as a major subcontractor to Conduent. (Jones’s predecessor as treasurer, Larry Williams, began privatizing large chunks of the city’s on-street parking operations in 2009 through an outsourcing contract that caused several dozen city employees to lose their jobs.)

Hudson’s agreement does not cover software used to process parking tickets after they are issued. This requires a separate licensing contract with EDC Corp. of Syracuse, N.Y. Officials in the treasurer’s office said last September they expect a contract for EDC’s AIMS software to cost $127,000.

EDC declined to comment about the status of that contract, referring questions to Jones’s office. –McP–

[Like this story? Be notified by e-mail every time McPherson publishes a new item by dropping a note to editor Jack Grone at jgrone@mcphersonpublishing.com. There is no charge for McPherson’s content, and I will not sell or share your contact information.]