by Bradley Parsons
Staff Writer
The Downtown Development Authority approved a plan Tuesday to secure $50 million in low–interest loans for a private group to build, own and operate three downtown parking garages. The plan would bring about 2,900 spaces downtown, 1,600 of them in time for the 2005 Super Bowl.
The plan calls for the City to convey several acres of downtown land to Metropolitan Parking Solutions for a dollar. In turn, MPS will build and manage garages near the new Duval County Courthouse site, Veterans Memorial Arena and the Sports Complex and take over management of the City’s Main Library garage. The City would spend millions to run the garages itself, according to Jacksonville Economic Development Commission officials and an MPS spokesman. The JEDC board will vote on the proposal tomorrow.
“It’s the difference between the City losing $32 million [over 30 years] to run the garages itself, or netting $18.3 million,” said MPS spokesperson Michael Munz of the Dalton Agency.
By conveying the land and turning over operations to MPS, the JEDC’s finance chief, Steve Emery, told the DDA the City would dodge the $50 million debt associated with building and start–up. The unique structure of the deal keeps the property on the City’s tax rolls, Emery said, an arrangement that should pay the City $26 million.
The plan calls for the construction costs to be covered by a bond issuance. Because the development would take place inside the City’s federally designated Empowerment Zone, Emery said the City would not take liability for the bonds. He said the JEDC would merely act as a conduit for the tax–exempt bonds, leaving MPS responsible for their repayment.
The City would subsidize the garages for the first 14 years of operation, according to JEDC estimates. JEDC director Kirk Wendland said the City would likely pay MPS $1.4 million in the first year. That number would drop as MPS paid off its construction and start–up debt. Wendland estimated the City’s contribution would shrink to about $24,000 by year 14, after which the garages would be self–sufficient.
Emery called those projections conservative. Accounting for property tax revenue and increased revenue from the City’s library garage under MPS management, he said City incentives may not extend past year four or five.
Emery said he expected MPS would pay its debt by
year 25.
MPS projects the garages to turn a profit by year 11. According to the same projections, the garages, under City management, would lose money until year 25. Wendland said garages are notorious money losers because of huge start–up costs.
“Most people build a garage because they own a building or property,” said Wendland. “People think they earn money because they see people paying at the front, but the majority of the time they lose.
“But if we want to have a safe, viable downtown we need the garages to be a component. You can’t build a courthouse and then have no place to park.”
To fit into downtown’s master plan, the garages would include first–floor retail space. Wendland said the resulting revenue would offset operating expenses somewhat, but said including retail would make the garages more expensive.
“It’s a decision we’ve thought about, and we’ve decided we want parking garages that don’t look like parking garages,” said Wendland. “It’s a good decision, but to include it, you have to raise the first–floor ceiling and you lose a level of parking.”
If the agreement moves quickly through the JEDC and the City Council, Emery said the Sports Complex and arena garages should be built in time for the Super Bowl. The courthouse garage is scheduled for completion in March 2007.
MPS comprises The Haskell Company, to handle construction; Republic Parking System, in charge of operations; Jana Enterprises, LLC, financial consulting; Realistic Transportation Alternatives, management services; and Carl Walker, Inc., in charge of design.