City and Downtown Investment Authority officials can spend $32.9 million to buy three parking garages owned and operated by Metropolitan Parking Solutions should the 4th Judicial Circuit Court find the company in default of its 2004 city contract.
The Jacksonville City Council approved Ordinance 2021-0179 on April 27 to authorize short-term or fixed-rate debt funding and to allow the DIA to exercise its contract option to buy the MPS parking garages at the Duval County Courthouse and VyStar Veterans Memorial Arena.
The vote was 18-0.
The 17-year-old redevelopment agreement has cost the city millions.
When the garages were built, the city agreed to make the payments in the form of development loans to cover MPS operating losses and to ensure a 6.75% annual return on the company’s $3 million required investment.
MPS has $71.66 million in outstanding city development loans including principal and interest as of June 30, according to an email from the city Office of General Counsel.
That breaks down to $58.85 million in principal with $12.81 million in interest, the email states. The Council Auditor’s Office says the loans are at a 2.85% annual interest rate.
According to DIA CEO Lori Boyer, the coronavirus pandemic has further decreased MPS parking garage revenue.
Council’s decision comes as attorneys for the city and MPS prepare for mediation in May in the 4th Judicial Circuit Court to try to settle the legal challenge first filed by MPS in September.
In its lawsuit, the company alleges the city and DIA were in breach of contract and in default when the city withheld portions of several development loan payments owed to the company for the parking garages.
City attorneys and the DIA filed a counterclaim in October alleging Jacksonville-based MPS is in default for failing to meet financial reporting obligations in some cases under the 26-year deal.
The city’s counterclaim cites a 2019 City Council Auditor’s review of the contract that found reports for the garages’ revenue provided by MPS were incomplete and not compliant with the redevelopment agreement.
Documents filed March 23 with Council said MPS has not paid property taxes on the garages after it acquired the properties from the city.
A March 30 memo from DIA CEO Lori Boyer to the DIA Finance and Budget Committee says city officials have reconciled the city’s loan obligations for the fiscal year 2020-21, which the General Counsel’s Office said was $2.18 million from July-December 2020.
A judge issued an order April 12 granting MPS uncontested motions for mediation.
An earlier notice filed in February scheduled a mediation conference between the two parties at 9:30 a.m. May 5 via Zoom videoconference.
During the April 20 Council Finance Committee meeting, Vice Chair Randy DeFoor and others praised Boyer’s work to resolve the MPS dispute and urged the city to not use this deal structure in future redevelopment agreements.
Council members had no debate before the vote April 27. Council President Tommy Hazouri was absent for the vote.