Weighing two fee structures for taking over a 190-space paved lot

Before the gate question, ask him how long he intends to own it. Four blocks off the core, next to a hospital and a courthouse, is exactly the kind of parcel someone offers to buy for apartments or a medical office building. If his real horizon is three or four years and a land sale, $95k of gates and readers is money he'll write off at closing, and the buyer will be pricing the dirt anyway. If he's holding it twenty years and passing it to the nephew, different conversation. He may not have decided, and that's worth making him say out loud in front of you.

I read your baseline sentence three times because something bothered me about it. The incentive is measured against last year's gross. Your own numbers say transient swung from $3,900 to $11,400 a month, and you mention the hospital campus. If any part of last year included a period where a nearby garage or deck was closed for work, or a courthouse schedule that pushed people onto your lot, then the baseline includes a bump you had nothing to do with and cannot repeat. You'd be signing up to beat someone else's good luck.

The reverse is also possible and worse for him: if last year was soft, you get 20% of a recovery you didn't cause.

If I were countering, I'd want the baseline set on permit revenue only, because that's the number you actually control through renewals and rate letters, and I'd want the transient share paid on a percentage with no baseline at all. Also, who eats the 6.5% processing in the fee calculation? On $231k that's $15,000, and if your 4% is on gross collections before processing you're being paid on money that leaves the account the same day.

One question worth having answered in writing before January 1: whose insurance responds when someone claims their car was damaged or broken into on the lot, and are you named on his policy as an additional insured for the management work? On the apartment side you probably already have that sorted. Lots generate a steady trickle of small claims and the parking industry handles them differently from residential. How that plays out varies by state and by carrier, so have your own broker read the policy rather than taking his word for it.

On the plate readers, the pattern with automated enforcement at small scale is that the equipment works and the disputes are the cost. Every misread and every borrowed car turns into a phone call, and so does every permit holder who swapped vehicles and did not tell you. Budget real hours for that or it eats your flat fee. And orchard is right that you want his hold period on the table first. The counter to make is flat plus a permit only baseline like juniper says, one winter of your data, then revisit the gate spend next fall.