by Bradley Parsons
Staff Writer
After reviewing, at City Council request, the City’s $50 million parking garage development deal, the mayor has asked council critics to perform a review of their own.
Specifically, Mayor John Peyton asked the Council to review the reasons they voted 15-2 in favor of the deal three months ago. In a letter sent last Friday to Council President Lad Daniels, Peyton pointed out that the Council had about three months to examine the deal, which the mayor called “necessary” and “a good deal for the taxpayers.”
The letter noted that the original deal was altered at the request of Council members Warren Alvarez, the Finance Committee chairman, and Lad Daniels, the Council president. Daniels, Alvarez and Council auditors helped craft changes to the deal, which included charging the private development group $5.7 million for the land instead of giving it away.
Alvarez has since joined a chorus of Council members who say they made a mistake when they voted in favor of the deal. The Council voted 12-3 last week in favor of a resolution asking Peyton to revisit the deal, which calls for the City to issue $50 million in tax exempt bonds on behalf of the developer, Metropolitan Parking Solutions. Using City loans, the deal guarantees the developer an 8 percent annual return on their $3 million initial investment. Peyton’s letter was a response to that resolution. Mayor’s office spokesperson Heather Murphy said the General Counsel’s office would also review the contract.
Despite Peyton’s response, Alvarez said the deal is still a bad one for the City. He said the City doesn’t need two parking garages and 1,480 covered spaces around the sports complex. Surface lots could be built for half the price, he said.
“This is not a good business deal for the City,” said Alvarez. “The mayor agreed to this deal and he’s spent all of his time since defending it instead of looking at whether it made sense as a business deal.”
In his letter, Peyton said the arena was short about 2,000 spaces and said the garages would also provide commuter spaces at downtown’s periphery as called for in downtown’s master plan and in several subsequent parking studies.
Alvarez said he didn’t hear much new in Peyton’s letter: “He should have sent a one-page memo. He doesn’t need to write a book to tell the same old story,” and said he still questions why the City is guaranteeing profits to developers that will compete with City-managed lots around the arena. The Council learned after it approved the MPS deal that the garages would take business away from city lots. The manager of those lots estimated the City would have to pay $800,000 a year to make up for the lost business.
“We’re subsidizing SMG (the lot manager,) we’re guaranteeing MPS profits. Why don’t we just get in the parking garage business ourself for all the money we’re going to spend?” said Alvarez.
Peyton’s letter said the City would save $50 million over the deal’s 30-year term. Profit-sharing opportunities built into the contract would return $18.4 million to the City over 30 years, according to MPS. On the other hand, the City would lose $32 million trying to run the garages itself, said Peyton.
Peyton said turning the garages over to private developers would save the money millions in operating costs.
Alvarez didn’t think much of the projections.
“If you believe those numbers, I’ve got a bridge to sell you,” he said.