The short answer
Treat the instrument and the revenue model as separate decisions. A concession transfers operating rights while the public body keeps ownership of the asset, so it suits infrastructure such as parking systems and rental stations; kiosks and small rentals can run as shorter concessions or leases. Then choose the fee structure: fixed periodic payments suit stable, low-capital operations, while a percentage of gross revenue — or a minimum guarantee plus a percentage above a threshold — suits uncertain demand and heavier investment. In a user-pay parking concession, the operator typically recovers capital from user fees before the asset reverts to the public owner.
Key takeaways
- A concession grants operating rights but not ownership; legal ownership stays with the public authority and assets revert at term end.
- The main revenue models are fixed periodic fees, a percentage of gross revenue, and hybrids that pair a minimum annual guarantee with a revenue share.
- User-pay structures place demand risk on the operator, so they fit assets with predictable or growing traffic and meaningful capital needs.
- Parking deals built on revenue sharing can lift public income through better enforcement and meter uptime, not only through higher rates.
- Short-term kiosk and plaza concessions sometimes forgo cash rent entirely, asking for maintenance and place activation instead.
Separate the instrument from the fee model
Before comparing percentages, decide which legal form the asset allows. A concession transfers the right to operate and, in a brownfield concession, to collect user fees, while the public sector retains ownership of the underlying asset and takes it back at the end of the term. A long-term lease, by contrast, gives the private party rights as a lessee of the site and is typically constrained to a specific use. Operations-and-maintenance concessions sit in between: they involve no expansion obligation and therefore lower development risk for the operator.
The distinction matters because the fee structure must match the risk profile the instrument creates. Kiosks, bike parking and rental stations are often handled as short or medium concessions or leases rather than full brownfield concessions, precisely because they carry little construction risk. Municipal programs commonly offer both short-term agreements for testing new uses and longer-term concessions, selected through requests for proposals, for structures such as kiosks and bicycle parking.
- Brownfield concession: operate and develop an existing asset, pay for the right, ownership stays public.
- O&M concession: operate and maintain without expansion, lower risk.
- Long-term lease: private lessee runs a defined function on the site.
- Short kiosk/plaza agreement: activate a space, often in exchange for maintenance.
Three core revenue models
The first model is a fixed periodic or lump-sum fee. It is simple to administer and predictable for the budget, and it suits operations with stable, well-understood demand and modest capital investment. Its weakness is that the operator carries nearly all the demand risk: if traffic falls short, the fixed payment does not adjust, and bidders will price that uncertainty into their offers.
The second model is a percentage of gross revenue. Because the fee rises and falls with actual takings, it shares demand risk, lowers the barrier to entry and aligns the operator's incentive to grow revenue. In exchange, the public owner accepts variable income and must be able to verify declared turnover. The third and usually most balanced option is a hybrid: a minimum guaranteed payment plus a percentage of revenue above an agreed threshold. The guarantee protects the budget floor, while the revenue share lets the public share in upside.
- Fixed fee: budget certainty, operator carries demand risk.
- Revenue share: shared risk, needs reliable revenue data and auditing.
- Minimum guarantee plus percentage: floor for the budget, upside sharing.
- Match the model to capital intensity and demand predictability, not habit.
Parking: from lump-sum to revenue sharing
Parking has produced the clearest contrast in revenue models. Chicago's well-known parking-meter transaction traded a very long concession for a large upfront lump-sum payment, giving the city cash early but surrendering a long future income stream. Indianapolis illustrates the opposite design: a 50-year concession of thousands of meters with a $20 million upfront payment combined with an ongoing two-tier revenue share, in which the city receives about 30% of revenue up to a threshold and a larger share beyond it. In practice that deal lifted net revenue to the city substantially, and the gains came largely from better meter uptime, data-driven enforcement and wider payment options rather than from aggressive rate increases.
The lesson is that a parking model is customizable around each city's goals. If the priority is funding near-term infrastructure, an upfront payment makes sense; if the goal is a durable stream and better service, a revenue share rewards operational discipline. Because parking is a user-pay business, the operator typically collects from drivers and carries demand risk, and performance standards protect the public interest over the long term.
- Upfront lump-sum: immediate cash, gives up future revenue.
- Revenue share: durable public income, aligns service incentives.
- Two-tier share: low share below a threshold, higher share above it.
- Meter uptime and smart enforcement often drive more gain than higher rates.
Kiosks and rentals: fees for smaller footprints
For kiosks, rental stations and small plaza concessions, the revenue model follows the size and duration of the footprint. Short-term agreements of up to a few weeks allow municipalities and operators to test a concept without committing to rent; some programs deliberately waive a cash fee in exchange for the operator maintaining the public space. This trade of cash for care lowers the entry barrier for small businesses and keeps the space vibrant while the owner learns what the market will bear.
Longer-term concessions for kiosks, cafés or rental facilities are better structured around a guaranteed base fee plus a percentage of gross sales, because a successful location can be very profitable and the public should share in that upside. A minimum annual guarantee plus percentage is common in commercial concessions for exactly this reason: the base covers the owner's costs and the percentage captures growth. For seasonal rentals such as bikes or watercraft, tie payments to months of actual operation and build in a reserve for maintenance, since utilization varies sharply across the year.
- Short test phase: waive cash, request maintenance and activation.
- Longer kiosk deal: base fee plus percentage of gross revenue.
- Seasonal rental: payments tied to operating months, repair reserve included.
- Sub-concessions can let the primary operator bring in vendors under one agreement.
Choosing a model: decision criteria
Reduce the choice to a few questions: How predictable is demand? How large are the capital outlays? Who sets prices and service standards, and how reliable is revenue collection? Predictable demand with modest capital points to a fixed fee; high uncertainty and real investment call for a revenue share or a user-pay structure. Where a public authority regulates tariffs, the operator's revenue ceiling is capped by policy, so a pure percentage may be thin unless the owner also contributes through a service payment or another mechanism.
In every case define what happens at hand-back: the asset returns to the public owner, and the agreement should state the required condition and who covers maintenance in the final period. Revenue-based models also need an audit clause and access to transaction data. Finally, treat this as general background, not legal advice — jurisdictions differ on what a concession may include, how selection must run and how tariffs are set, so verify local law and procurement rules before structuring a deal.
- Predictable demand, low capital → fixed fee.
- Uncertain demand, real capital → revenue share or user-pay.
- Regulated tariffs → check whether revenue share alone is viable.
- Always define hand-back condition and audit rights.
Put it into practice
Revenue-model selector for parking, kiosks and rentals
Use this quick decision matrix before drafting terms. It ties the asset type, legal form and fee structure together so the model is reasoned rather than copied from another city.
- Is the asset real property with creation or reconstruction? Only then a full concession or brownfield deal applies; otherwise use a lease or a short concession.
- Rate demand predictability: stable traffic points to a fixed fee; variable traffic to a revenue share.
- Estimate capital intensity: a large upfront build needs user-pay or a minimum-guarantee-plus-percentage to recover investment.
- Check who sets prices: regulated tariffs cap the operator's revenue and may shrink a pure percentage.
- Identify the share of income from fines or penalties and stress-test collection realism.
- Decide whether the priority is upfront cash (lump-sum) or a durable public stream (revenue share).
- For kiosks and rentals, compare a short no-rent maintenance deal against a long base-plus-percentage concession.
- State who maintains the asset and the space, and who pays for repairs in the final period.
- Write the hand-back clause: asset condition and ownership reversion at term end.
- Add an audit clause and operator access to transaction data for any revenue-based fee.
- For seasonal rental operations, tie payments to actual operating months and hold a maintenance reserve.
Questions people ask
What is the difference between a concession and a lease of a public asset?
A concession grants the right to operate an asset or service for a defined period while the public body keeps ownership, and the asset typically reverts to it at term end; a brownfield concession may also require the operator to develop or expand the asset. A long-term lease gives the private party rights as a lessee of a site and is usually restricted to a specific use. Both are used to monetize public assets, but they differ in ownership, obligation and the fee structure they support.
What are the main revenue models for concessions, and how do they shift risk?
The main models are a fixed periodic or lump-sum fee, a percentage of gross revenue, and a hybrid with a minimum guaranteed payment plus a percentage above a threshold. A fixed fee gives budget certainty but puts demand risk on the operator. A revenue share divides that risk and lowers the entry barrier, but requires reliable revenue reporting. The hybrid protects the public floor while letting both sides share upside.
Why did Indianapolis favor revenue sharing over Chicago's upfront parking deal?
Chicago structured its metered-parking concession around a large upfront lump-sum payment, giving the city cash early at the cost of a long future revenue stream. Indianapolis instead combined a $20 million upfront payment with an ongoing two-tier revenue share — about 30% of revenue up to a threshold and a higher share beyond it. That design produced durable public income, and most of the growth came from better meter uptime, smart enforcement and wider payment methods, not from big rate rises.
When does a minimum annual guarantee plus a percentage fee make sense?
A minimum guarantee plus a percentage suits commercial concessions where the location can be highly profitable but outcomes are uncertain — for example long-term kiosks, cafés or rental facilities. The guarantee covers the owner's baseline costs and protects the budget, while the percentage lets the public share in revenue above the threshold. It is especially appropriate when the operator has real capital at risk and when revenue can be verified through transaction data and audit rights.
Do kiosk and plaza concessions always require cash rent?
No. Short-term agreements of up to about a month are often granted without a cash fee, with the operator instead providing maintenance and activation of the public space; this lets communities test different vendors and uses. Longer-term kiosk and bicycle-parking concessions are typically awarded through requests for proposals and can support a sustainable revenue model, sometimes by allowing the primary operator to bring in vendors under a sub-concession agreement.
Sources and further reading
Sources were checked when this page was generated. Confirm changing dates, rules and prices with the original publisher.
- Федеральный закон от 21.07.2005 N 115-ФЗ "О концессионных соглашениях"ГАРАНТ
- Статья 7. Плата по концессионному соглашению (115-ФЗ)ГАРАНТ
- Парковаться научили: платные парковки УфыКоммерсантъ
- Михаил Якимов о муниципальных парковкахЭксперт Юг / Общественный совет при Ространснадзоре
- Direct Contractual Agreements (asset monetization models)World Bank PPP Group
- Privatized Parking a Win-Win in IndianapolisReason Foundation
- Concessions (NYC DOT public space programming)NYC Department of Transportation