Jacksonville paying millions to cover losses for parking garages

[fieldafm]

Via Times Union....

http://jacksonville.com/business/2010-08-09/story/jacksonville-paying-millions-cover-losses-parking-garages

By David Bauerlein
Jacksonville has paid $12.2 million to cover financial losses for the owner of three downtown garages, and the cost will likely continue to rise at a rate of $4 million a year until the new county courthouse opens in 2012.

The payments are part of an agreement that the city reached with Metropolitan Parking Solutions to build a parking garage that opened in 2007 next to the future county courthouse and two garages completed in 2006 near Veterans Memorial Arena.

The deal always anticipated the garages would operate at a loss for several years, requiring the city to fill the gap by providing loans that Metropolitan Parking Solutions would repay when the garages turned profitable. But on an annual basis, the city's subsidy is running four times higher than the original projections.

In addition to $12.2 million in "development loans" that plugged shortfalls and guaranteed the owners a return on their investment, the city also holds a $5.7 million promissory note that Metropolitan Parking Solutions agreed to pay for land where the garages stand.

The combined $17.9 million in loans broke through the $16 million threshold at which the city can buy out Metropolitan Parking Solutions and take over ownership. But city officials said the cost of the buyout would be too much, particularly when the city is in such tough shape financially.

"Right now, we really don't have that option," Chief Financial Officer Mickey Miller said.

The financial outlook will brighten after the new courthouse opens, said Kenneth Krismanth, an owner of Metropolitan Parking Solutions.

"That will have a big, dramatic swing," he said. "I think it's going to have an immediate impact."

The need for loan subsidies would drop to less than $1.87 million a year after the courthouse opens, according to Metropolitan Parking Solutions. The courthouse will attract visitors who park by the hour, which is a more lucrative market for garages than monthly parkers. The city expects to transfer employees into the new courthouse in spring or summer 2012.

Krismanth said there needs to be increased attendance at the arena and a recovery in downtown's office market to make the garages profitable and enable repayment of the loans. He said those conditions will occur at some point in the future but there are "too many variables" to predict how many years it will take.

The drain on the city's budget is a far cry from how city officials envisioned the agreement unfolding when it was reached in 2003.

The city viewed the deal as a way to build garages for two Better Jacksonville Plan projects - the courthouse and the arena - without tapping the Better Jacksonville Plan's budget. Voters approved the wide-ranging Better Jacksonville Plan in 2000 with a half-cent sales tax increase.

In addition to keeping the debt for building the garages off the city's books, the deal meant private ownership would pay property taxes and eventually share profits with the city. The city picked Metropolitan Parking Solutions from a handful of groups proposing to build and operate the garages. Metropolitan Parking Solutions is owned by Krismanth, Tony Manna and Mark Corr, all of Signet Development. Signet has offices in Jacksonville and Akron, Ohio.

The city agreed to make loans covering operating losses for the garages and an 8 percent return on $3 million the owners invested into the project. Some council members criticized the deal on grounds that taxpayers, rather than the owners, would take the hit if the garages weren't successful.

Metropolitan Parking Solutions used $50 million in tax-exempt bonds to get the garages built.

The original financial projection for the garages showed in the first 10 years the city would need to loan about $7 million for the subsidies. The biggest annual cost to the city would be roughly $1 million. After a decade, the garages would turn a profit and Metropolitan Parking Solutions would start repaying the loans, according to the projections.

In actuality, the city expects to fork over about $4 million in loans in the next fiscal year, an amount four times greater than the original projection for any single year.

When construction of the courthouse garage started in 2006, construction of the new courthouse hadn't begun and its completion date was slated for 2010. Metropolitan Parking Solutions and the city pressed forward anyway, banking on downtown workers and residents generating customers. Delays continued to plague the courthouse and the recession slashed downtown's workforce.
A 2008 report by the City Council Auditor's office recommended the city buy out Metropolitan Parking Solutions when the city's loans exceed $16 million, which happened this year.

"Every year, we're going to look at it and see if it's advantageous," Council Auditor Kirk Sherman said. He said the city already has a parking division and it could operate the garages at a lower cost by eliminating the various management fees associated with private ownership.

Krismanth said Metropolitan Parking's costs are comparable to the city's public parking division. He said if the city owned the garages, it would still be faced with the same parking market, and it wouldn't have the flexibility a private company has to offer rates that bring in monthly customers.

Miller said a big hurdle for a city buyout involves the terms of the bonds that financed construction of the garage. The bonds require bondholders to be paid interest through at least 2016, so if the city wanted to take ownership of the garages, the city would have to put about $56.5 million into an escrow account, guaranteeing bondholders would get their interest payments on top of retiring the loan. The city would also have to pay $3 million to Metropolitan Parking for its investment in the project.

Millers said that's too big a price for the city to pay.

A buyout also would eliminate the city's prospects for getting repayment of its loans. But there's no guarantee Metropolitan Parking Solutions will repay the loans in the current agreement, either. Until the garages start generating profits, the city will continue to pump more money into the garages, even at a time when many day-to-day service are facing budget cuts.

[Jerry Moran]

Another illustration of just how incompetent Downtown Vision is.  Please, DVI, get off our backs and out of town. We don't need you.  We don't want you, and as sure as hell, we don't want to pay for you and your fluffy nonsense.

[ChriswUfGator]

Where's Tufsu when you need him?

[tpot]

Jacksonville is the most mis managed city I believe I have ever lived in.....

[stjr]

The city agreed to make loans covering operating losses for the garages and an 8 percent return on $3 million the owners invested into the project. Some council members criticized the deal on grounds that taxpayers, rather than the owners, would take the hit if the garages weren't successful.

Hmmm... guaranteed 8% return.  Did Nelson Cuba negotiate this deal for the parking companies too?  

Really, it takes a lot of work to screw up the Shipyards, Cecil, the Courthouse, the Stadium, these garages, the Landing, Vestcor, Lavilla restaurant, etc.  Not sure its fair, but I expect to see more arrows flying over this when Mr. Mullaney advances toward the mayoral election.  All these deals happened on his watch.

Once again, the politicos were told these were awful deals and these consequences were warned about.  Why were these garages built when there was no existing or imminently clear demand for them?  I smell a rat and a grand jury needs to investigate.  Someone needs to see who represented/lobbied for the parking company on this.  Was it Paul Harden?

JTA and COJ are in a horse race for winning the Nobel Prize for incompetency.

[02roadking]

4 years ago....

http://www.metjax.com/forums/showthread.php?t=2220&highlight=Metropolitan+Parking+Solutions

[stjr]

Here are two good reasons why this deal was done:  Michael Munz and Preston Haskell.  See below.  Not only are we taxpayers being taken to the cleaners, but at some of the highest parking rates for this purpose in the State.

LOL when I saw the Police and Fire Pension fund also bid on this project.  Maybe that IS where the seed for the guaranteed 8% return was planted!  

Published Tuesday, December 23, 2003

Proposed courthouse parking garage would charge close to top-level rates

By DAVID BAUERLEIN
The Times-Union,

The proposed 1,300-space parking garage at the new Duval County Courthouse would charge the second-highest hourly rates for courthouse parking in Florida's largest counties, according to a Times-Union comparison.

Of the 12 most populous counties, only the Miami-Dade County Courthouse would charge a higher hourly rate for parking -- $4.

Parking garage proposals

The Jacksonville Economic Development Commission chose Metropolitan Parking Solutions to build parking garages at the new county courthouse, arena and sports complex after evaluating five developers. Earlier this year, the commission asked each developer to state the maximum amount of city financial support that would be needed for the garages. The figures are based on the assumption the garages will be privately owned and subject to property taxes. In further negotiations, Metropolitan Parking Solutions agreed any city support would be in the form of loans, not cash grants.

Metropolitan Parking Solutions

Maximum city support over a 30-year period -- $25.7 million

Courthouse rates -- $3 for first hour, $2 for each additional hour. Maximum daily rate of $10. Monthly reserved rate of $120, non-reserved rate of $80.

Arena and sports complex rates -- $5 flat rate, $8 concert rate and $20 for football games.

First Coast Parking Group

Maximum city support over 30 years -- $2.9 million

Courthouse rates -- $ 3 for the first hour, $4 for the second hour, and $7 daily maximum. Monthly rate of $95 for non-reserved spaces and $190 for reserved spaces.

Arena and sports complex rates -- $5 for special events, $20 for football games.

Jacksonville Police Fire and Pension Fund

Maximum city support over 30 years -- $25.4 million

Courthouse rates -- 80 cents per hour. Maximum daily rate of $5.60. Monthly parking would be $60.

Arena and sports complex rates -- $5 for events, $20 for Jaguars games.

McGurn Investment Co.

Maximum support over 30 years -- $43.5 million

Courthouse rates -- $2 for first hour. Each additional hour would cost 75 cents. Maximum daily rate of $10. Monthly rate of $75.

Arena and sports complex rates -- $5 per car

MedPark Inc.

Maximum city support over 30 years -- $10.5 million.

Courthouse rates -- $3 per hour. Monthly rates at $80.

Arena and sports complex rates -- Did not make a proposal.

Source: Company proposals filed with JEDC

Next month, the Jacksonville City Council will begin debate on whether a private company should finance, construct, own and operate a parking garage at the new county courthouse, scheduled to open in 2007. The developer, Metropolitan Parking Solutions, also would build a 600-space garage at the new arena and a 1,000-space garage in the Alltel Stadium sports complex.

The city would give land valued at $5.2 million to Metropolitan Parking Solutions for the three garages. Metropolitan Parking Solutions would then charge market-based rates for parking. For instance, the proposed rates for the county courthouse garage would be $3 for the first hour and $2 for each additional hour.

Jurors will park free, said Heather Murphy, spokeswoman in Mayor John Peyton's office.

Other Florida counties have built government-owned garages and charge below-market parking rates. For instance, visitors at the Orange County Courthouse pay $1 per hour to park in a 1,500-space garage that was recently built by the city of Orlando.

On the other hand, the proposed Duval County Courthouse garage would generate several hundred thousand dollars in annual property taxes for City Hall, the schools and other local entities -- revenue that government-owned structures don't pay.

"Really, the main difference boils down to the property taxes," said Martin Stein, executive director of the National Parking Association, an industry group based in Washington.

Stein said the advantage of a government-owned facility is it can charge lower parking rates because the government doesn't have property taxes as part of its cost of doing business.

He said the advantage of a privately owned garage is it can benefit all taxpayers by generating property taxes.

"If you simply look at the parking rates, that's one thing," Stein said. "But that's more of a limited number of users that would benefit from that [lower parking rates], whereas all taxpayers benefit from a revenue-generating development."

Other large Florida counties have opted to emphasize below-market rates for parking at courthouses, even though it means giving up property tax revenue.

"Our goal is not to make money," said Carol Easterling, access manager for Palm Beach County's parking operation. "Our goal is to provide parking."

At the existing Duval County Courthouse, the hourly rate is 80 cents in the 400-space lot. The first half-hour is free. The proposed rates for new courthouse garage would triple that rate.

City Council Vice President Elaine Brown said she's not convinced that the higher rates are reasonable.

"At first blush, it really looks like people would be paying so much more than what we charge now that we need to take another look at it," Brown said.

City Council President Lad Daniels and Finance Committee Chairman Warren Alvarez said they support privatization in philosophy. They said charging market-based rates at the courthouse garage could persuade people to use the Skyway, the elevated downtown train that has economy-priced parking at its lots on the outer edge of downtown. Increased use of the Skyway would reduce the multimillion-dollar annual taxpayer subsidy for the service, Daniels said.

"We tend to want it both ways -- we want to have cheap parking and cheap transit," Daniels said. "I don't think we can have it both ways."

"Sometimes you have to force people to make choices and that might be a way to help the Skyway do a little better than it is," Alvarez said.

But Daniels and Alvarez said they question whether the proposed privatization goes far enough in putting the investment risk on Metropolitan Parking Solutions.

In the proposed deal, the city would issue $50 million in tax-exempt bonds on behalf of Metropolitan Parking Solutions, which would be responsible for paying off the debt. In addition, the city would agree to make semi-annual loans to Metropolitan Parking to insure the company has enough money to cover its debt payments, operating expenses and a 10 percent return on the company's $3 million investment in the project.

"If we're going to privatization, I don't want to guarantee them a profit," Alvarez said.

"It sounds to me like the city has the risk," Daniels said. "That's not the way the game is supposed to be played."

Michael Munz, a spokesman for Metropolitan Parking, said that even with the city's loans, the company would be earning less than the typical amount for a real estate venture. He said the city will have the option of stepping in and taking over ownership of the garages if the city decides the loans are becoming too big.

According to Jacksonville Economic Development Commission forecasts, the garages will be profitable. Over a 30-year period, the three garages will actually make $18 million for the city from property taxes and sharing profits.

Metropolitan Parking Solutions, based in Jacksonville, comprises Janna Enterprises and Realistic Transportation Alternatives, Munz said. The company would use The Haskell Co. to build the garages and Republic Parking System for daily management.

Metropolitan Parking was formed when the JEDC asked developers for proposals on how they would finance and manage the parking garages. In May, the commission staff picked Metropolitan Parking over four other companies and entered into negotiations. JEDC Executive Director Kirk Wendland has said Metropolitan Parking was most willing to shoulder the financial risks for the garages and the members of its project team had solid track records.

The JEDC board voted Dec. 4 to recommend the negotiated deal for City Council approval.

[Timkin]

Amazing

[stjr]

^ Stephen, just saw your similar post.  Maybe great minds do think alike - once in a while!  LOL.

[Timkin]

Maybe

[thelakelander]

Wow. So Jax is paying more a year on subsidizing half empty downtown parking garages than JTA pays for the skyway?  I wonder why no one has ever mentioned this before?

[Timkin]

Well ,,,Jax would be " WE" the taxpayers.  No offense.. Are you really shocked to learn they would not tell us this ?

[stjr]

Janna Enterprises is a front company for Signet Enterprises per the Secretary of State.  On Signet's web site, I found this connection posted on one of Signet's pages.  EVP of Dalton Agency is.... Michael Munz.

Image Is Everything

In today’s environment, doing business means communicating effectively. That’s why Signet Enterprises has formed a strategic alliance with The Dalton Agency of Jacksonville.

The Dalton Agency offers a comprehensive range of marketing and public relations services that strengthen the resources Signet Enterprises offers to its partners and portfolio companies.

The award-winning agency has assembled a team of experienced strategic planners and creative talent that is nationally recognized and respected for its excellence. With a fully integrated array of services, the agency offers brand development, media planning and placement, market-research analysis, creative development and execution and public affairs counseling.

The Dalton Agency’s comprehensive in-house Internet/Web communications and film- and video-production facilities offer Signet Enterprises’ clients access to a full range of multimedia services. The agency’s technological expertise is enhanced by sophisticated and innovative design capabilities deployed to create a powerful multimedia presence for its clients. Webcasts, DVDs and other interactive media enhance the tools available to clients.

The Dalton Agency Public Relations +

The Dalton Agency’s PR + department views traditional and non-traditional public relationsâ€"from media relations, public affairs and lobbying to crisis management, internal communications, community outreach and partnership buildingâ€"as important components of an integrated program. This approach to strategic program development brings diverse elements together in multi-faceted projects and campaigns designed to support and significantly contribute to our clients’ overall business goals. There is tremendous power in combining the best of public relations and public-affairs disciplines, which our programs are designed to maximize.

A sampling of the Dalton Agency’s strategic communication capabilities include:

   * Government Affairs
   * Message development
   * Spokesperson training
   * Strategic media relations
   * Executive-visibility programs
   * Conference and trade-show support
   * Sponsorship programs
   * Special-event planning
   * Internal communications
   * Crisis and reputation management

For complete information, please visit the Dalton Agency Website at www.daltonagency.com.
http://www.signet-enterprises.com/public_affairs/dalton.html

Here is the law firm connection also posted at Signet's web site:

Our affiliation with the business law firm of Brennan Manna & Diamond provides Signet Enterprises with the expertise of a full-service law firm concentrating on real estate, financing and business transactions.  With a proven track record for the understanding and creative problem solving required for complex, innovative approaches to project structuring, BMD has provided counsel for each of Signet Enterprises’ transactions, allowing proven response and the ability to perform quickly.

[stjr]

Realistic Transportation Alternatives is led by Robert Mark Rimmer per the Secretary of State.

[stjr]

Here is who to send those "thank you" notes to.  Looks like Kevin Hyde had some connections since he expressed a conflict of interest in not voting.

Published Wednesday, February 25, 2004

City Council gives OK to developer of parking garages


By MATT GALNOR
The Times-Union,

Jacksonville will sell downtown land to a developer to build three parking garages and guarantee the company at least an 8 percent annual return on its investment.

The City Council voted 15-2 Tuesday night to approve the $50 million deal with Metropolitan Parking Solutions for garages near the planned Duval County Courthouse, the Veterans Memorial Arena and elsewhere in the sports complex.

"It's a deal I can live with," council President Lad Daniels said.

The city will sell the land for $5.7 million, which will be paid back toward the end of the 30-year contract.

The city will issue $50 million in tax-exempt bonds from the project, which the developer will be responsible for paying back.

The city will make semi-annual payments to the developer to make sure it can cover its debt payments and operating expenses, as well as a guaranteed 8 percent return on the company's $3 million investment.

The city will not have any control over the parking fees and Metropolitan Parking Solutions will charge market rates at all three. Rates at the courthouse are projected to be $3 for the first hour and $2 each additional hour, said Mark Rimmer, a partner in the development group.

Jurors would park free off-site, and Peyton's office is negotiating to add some parking-validation options and to make the first half-hour free.

The project has been in the works since October 2002, when the city asked for proposals from companies to build and run the garages. The council has sat on it since December, while city auditors negotiated to get what they felt was a better deal for taxpayers.

Voting against the proposal Tuesday night were Art Graham and Jerry Holland. Kevin Hyde did not vote after declaring a conflict of interest. Elaine Brown was absent.

http://jacksonville.com/tu-online/stories/022504/met_14912317.shtml