Philly Parking Authority will kill pay-by-app system as firm mysteriously leaves town
The firm behind the failed app enjoyed strong political connections ranging from former Mayor Ed Rendell to a city ward leader who worked for the company.
The Philadelphia Parking Authority scrapped its parking app Tuesday, announcing it would be shut down because the company providing it couldn't pay the bills.
The MeterUP app built and managed by Pango USA will go offline at midnight, the PPA reported. About 20,000 people have the app, and it generates up to $15,000 a day in parking fees on workdays.
"Financial problems being experienced by its service provider, Pango USA, led us to conclude that we must suspend this payment option," said Clarena Tolson, the PPA's executive director, in a statement Tuesday afternoon.
Pango told the PPA it had revenue shortfalls, according to the PPA statement, that have left it unable to pay contractors, including the one responsible for processing credit card payments.
Shutting down the app won't affect other modes of paying for parking.
Pango's website states the company does business in 47 cities worldwide, with 700,000 customers.
The company came from Israel to Pennsylvania with high hopes and some political juice. Former Philadelphia mayor and former Gov. Ed Rendell joined Pango's board in 2011 to help the company reach out to municipalities. Another former mayor, Michael Nutter, praised Pango in 2015, while he was still in office, for locating offices in Philadelphia.
Pango's business development officer, Thomas Matkowski, is a Philadelphia Republican ward leader, a position also held by the PPA's former executive director, Vincent Fenerty.
PPA spokesman Martin O'Rourke said Matkowsk played no role in the PPA's granting Pango the contract to build and maintain the app. Matkowski began working with Pango after the contract was granted, a source with knowledge of the company said. Matkowski and Fenerty did not return calls for comment. Rendell said he left Pango's board in 2013, before the contract with the PPA, but did help arrange initial conversations between the company and city officials.
"That's always a risk, particularly with start-ups," he said of the app's collapse. "I was convinced the technology was good."
The PPA intends to issue a new RFP for a new parking app by the end of the week, but it may not be until this summer before paying for parking by app is available again.
Many of the data needed to operate an app were gathered by the PPA and are still available, officials said, but the MeterUP app uses proprietary software that won't be available when the PPA severs ties with Pango so a new app will have to be built.
The app contract required the contractor to shoulder the cost of building and maintaining the app, and rely on the additional fees for customers to bring in their own revenue. The PPA paid nothing for the feature.
When Pango bid for the contract in 2015, they offered just a 1-cent fee to customers for every parking transaction, much less than the other vendors competing for the project. Parkmobile offered 25 cents per transaction, and PassportParking offered 23 cents. The low fees, and the possibility of ad revenue for the PPA, were cited as reasons to award Pango the contract, according to a May 2015 recommendation from Fenerty to the authority's board.
The request for board action does not mention Pango's technical proficiency. O'Rourke said the PPA interviewed all bidders, checked their references, and reviewed their prior experience in the field before awarding the contract.
In retrospect, the deal may have been too good to be true.
Pango was acquired by Parking by Phone in October, and since then the company has sought other sources of revenue through the app. It became apparent that charging 1 cent per transaction wasn't sustainable, said a source within Parking by Phone.
"I would have never made this deal," he said of the original contract.
In the last year and a half, app parking never expanded much beyond Center City and University City. There were technical glitches, said an official with the PPA who asked not to be named, including slow response to complaints and missed meetings. Pango was supposed to obtain advertising for the app and give 20 percent of the revenue to the PPA, but the ads never materialized, he said.
Pango was recently late paying the PPA parking revenue, and two weeks ago it shut down its Philadelphia office without notification, the PPA official said. That office had opened specifically to maintain MeterUP for the PPA.
Pango, for its part, felt blocked by the PPA from seeking other forms of revenue beyond a fee for customers, according to a statement issued by the company Tuesday afternoon. The statement did not specify what those sources were, and the source with the company declined to elaborate. The office in Philadelphia closed because workers didn't need the space, the company official said. The PPA and Pango reached an impasse this week, according to the statement.
A year ago Pango had contracts with Harrisburg, Philadelphia, and Scranton, but now only Scranton is still using the company. The source from Parking by Phone said the problems in Philadelphia and Harrisburg were specific to those cities, and Pango would continue doing business in other American cities.
Claudia Vargas contributed to this report