Jacksonville paying millions to cover losses for parking garages

[thelakelander]

One of the major reasons Modis left downtown was because of the cost associated with parking.  It's one thing to pay higher prices for something that has nothing to do with your line of business if the surrounding environment makes up for it.  However, if you have hundreds of employees, and you're in the business of making money, it does make sense to locate in areas where public subsidies make it cheaper to operate.

[fsquid]

it doesn't matter if parking is cheap compared to other cities.  it matters if a company is willing to pay that cost to be downtown.

[simms3]

^^^Yes.  And let's do the quick math here.

Modis had what around 400 employees in there?  Let's assume they parked 300 people at an average of $80/mo per person.  I believe they occupied around 115,000 SF.  That works out to an additional $2.50/sf.  In the grand scheme of things that's chump change, especially for a large parent such as MPS group.

The spread in rent between Deerwood and Modis Tower is a couple bucks at most, if there is even a spread - it's basically the same rent, so the largest difference is probably parking, which is not that great of a difference.  Call it a $5 spread ($20 base in Deerwood, $25 base in DT).  A 1.25x with parking included.  They had signage downtown, as well.  When in the grand scheme of your balance sheet your Jacksonville rent is negligible, does it really warrant an expensive move, especially when the difference isn't that great??  It's one thing to leave $60 rents in Manhattan to pay $35-$40 rents elsewhere, thus over 115,000 SF saving nearly $3M/year in rent, not to mention a parking rate going from $500+ to maybe $250, which is a much larger difference than going from $80 to $0.  In Jax they are saving at the same SF with a $5psf spread including parking at most $575,000/year.  Is that worth the move for a company the size of MPS???

I would have to bet that given the cost to move locations, especially a major change of formats (multi-floor, multitenant high rise to large floorplate, possibly single-tenant building), there are other driving reasons for the move.

Perhaps they're simply downsizing space?  There could be host of reasons why they left (didn't they go from 115,000 SF to 80,000 SF?).  It wasn't the LL, who actually appears to have more than backfilled the space with a better credit profile tenant.  If Modis sees no reason to be DT and takes the easy excuse out by calling "parking", I think city leaders need to ask themselves more questions, which it seems as if they have been.  There's no reason why a large office user such as Modis should not in fact be downtown.  In Jax, given the lack of a major spread between SS/Baymeadows office space and DT office space, there should be an easier excuse TO BE downtown.

[thelakelander]

From 2010:

From what I've heard... the financials were all around better with Flagler.  Parking is one thing, but that coupled with a more flexible and cheaper lease term with comparable facilities made it an easy deal to make.

And, not everyone that works in the Modis building has access to the parking garage.  Some employees still pay for outside parking.

http://www.metrojacksonville.com/forum/index.php/topic,9268.msg167025.html#msg167025

[vicupstate]

I thought this was an interesting article that relates to this topic. 

Charlotte Center City Partners President Michael Smith believes it’s time to add some skyscrapers to uptown’s skyline.

Last year, vacancy rates in uptown dropped 2.3 percent for prime office space â€" called “Class A” in real estate parlance. Vacancies now have fallen below 9 percent, an encouraging trend as companies buoyed by the economic recovery add workers.

But to make the new skyscrapers happen, Smith told City Council earlier this month, city leaders might need to subsidize the attendant parking garages.

That idea didn’t exactly make council members leap for joy. They’re already getting an earful from residents annoyed by a newly approved 7.25 percent city tax hike and the city’s $87.5 million contribution toward the Panthers’ renovation of Bank of America stadium.

But when I circled back to Smith last week, he elaborated on why the city might want to at least give the concept some thought.

Before the banking crisis, Smith said, the amount of office space in uptown kept growing because Bank of America and the former Wachovia kept growing.

In the 1990s, uptown added 5 million square feet of office space. In the first decade of the 21st century, it added 6 million square feet. But since 2010, no new space has come online.

According to Center City Partners, 118,000 square feet of space is available in the Fifth Third Center, 100,000 at 101 Independence Center and 90,000 at 525 North Tryon.

Vacancy rates above the 15th floor in all of uptown’s towers are down to 2 percent to 3 percent.

When insurance giant MetLife earlier this year announced it was coming to Charlotte and bringing 1,300-plus jobs, it chose 340,000 square feet of space at Ballantyne Corporate Park.

Uptown lost out.

So who’ll do the building now that the big banks are no longer in aggressive expansion mode? It appears the job might fall to more traditional developers. And for them, the calculus of launching a major office tower project uptown isn’t the same as it is for a big bank.

While the banks built towers to expand their operations and increase their long-term profits, a traditional developer comes in asking a more urgent set of questions.

Can the financing be arranged? How much will it cost? Are tenants lined up? How long before the initial investment can be recouped?

In short, the question of risk looms larger.

And since the city’s zoning code requires parking spaces for new office buildings of a certain size uptown, some say city-subsidized parking becomes a quick risk reducer.

“The uptown space is more expensive just due to the fact that you have to pay for parking,” said John Culbertson of Cardinal Real Estate Partners. “If you subsidize parking, it levels the playing field.”
Parking isn’t generally something most people think of as an economic development lever.

But cities around the country commonly build parking garages as a way to attract office space and jobs, said Casey Jones, immediate past chairman of the International Parking Institute, a trade group representing the parking industry.

“If the city is able to partner with the private sector and create opportunities for the office environment to grow, then retail will follow that and restaurants and service industries will follow both,” he said.

City planners are thinking about parking as they look for ways to keep uptown growing. Laura Harmon, assistant director of the Charlotte-Mecklenburg Planning Department, told me her department is talking with a consultant now about parking rules.

If the city doesn’t like the idea of subsidizing garages for developers, why not just eliminate the off-street parking requirements? After all, don’t they just encourage car driving in a city that’s spending heavily on light rail and trolleys?

“We’d be fine if (developers) would build in uptown without parking,” Harmon said. “But I don’t know that it would work. An office worker usually wants parking.”

Bryan Howell of Parkway Properties said parking is a key piece of the puzzle when it comes to building office space uptown. But he’s not convinced the time is right for more towers.

While he sees the point some are making about vacancy rates uptown, when he digs down into the data, he sees enough space coming available uptown over the next year or so to accommodate a major corporate relocation.

Plus, when it comes to building a new tower, he says, there’s always the question of whether you can get financing.

He’d like to see the occupancy rates squeeze even tighter.

“The underwriting of the fundamental economics has got to be in place. I’m not sure the market has those underwriting fundamentals in place yet,” he said.

That doesn’t mean uptown’s not a great market, he added. It’s still got the advantage of being home to the big bank headquarters and the networking opportunities that brings.

Smith said that while he’d welcome another bank-built tower, he also believes the current state of affairs represents an opportunity for Charlotte’s economy to evolve, to diversify.

He said he’s working with developers on multiple sites.

“We are a maturing market,” he said. “We do believe the demand is there.”

Read more here: http://www.charlotteobserver.com/2013/06/22/4121843/to-build-next-skyscraper-must.html#storylink=cpy

[Noone]

Just  happened to stumble on this and given the recent urban construction update any thoughts? Is the new DIA or is it OED that is overseeing parking?

 

Published Tuesday, December 16, 2003

Duval courthouse parking privatization would bring big rate hike


By DAVID BAUERLEIN
The Times-Union,

Privatizing the parking garage for the new Duval County Courthouse could be a big moneymaker for City Hall, but visitors and employees would pay the price in sharply higher parking rates, according to documents for the proposed deal.

City Council will consider giving land to Metropolitan Parking Solutions for a new 1,300-space courthouse parking garage, plus a 600-space garage next to the new arena and a neighboring 1,000-space garage at the sports complex.

The privatized courthouse parking proposal would include a 1,300-space garage, plus other garages for the arena and nearby for the sports complex. -- Rendering provided by the Metropolitan Parking Solution

The Jacksonville Economic Development Commission calculates that a combination of property taxes from the three garages and profit-sharing with the developers will pump more than $18 million into City Hall coffers over a 30-year period.

The flip side of privatization is people will pay market-based rates at the courthouse garage.

Currently, visitors pay 80 cents an hour to park in the 400-space lot behind the existing courthouse. The first half-hour is free. Metropolitan Parking Solutions' proposed rates for the new courthouse garage would be $3 for the first hour and $2 for each additional hour, reflecting the current rate for downtown garages. The rates would apply to all courthouse visitors, including jurors, who use the garage.

"That's excessive," said Jacksonville resident Harold Felder, who was doing research at the law library. "We pay taxes as it stands now and that should provide us with some kind of benefit. I don't expect taxes to cover everything so I expect to pay some charge. But $3 for the first hour is excessive."

"I think they're entitled to make a little bit of profit, but not make it so it costs you an arm and a leg to park there," said Jacksonville resident Thomas Mangan, who was looking up county clerk records.

Monthly rates for the new courthouse garage would be $80 for non-reserved spaces and $120 for reserved spaces, compared with $25 a month at the current courthouse lot. However, monthly parking is scarce because of the lot's small size.

The $2.2 billion Better Jacksonville Plan, approved by voters with a half-cent sales tax increase in 2000, contains funding for construction of the new county courthouse, which is slated to open in 2007, and for the new arena and baseball park. The Better Jacksonville Plan contained no money for parking garages at the new buildings.

A year ago the JEDC invited private developer proposals for financing the garages. The JEDC chose Metropolitan Parking Solutions, which is a joint effort of The Haskell Co., Republic Parking System, Jana Enterprises, Realistic Transportation Alternatives and Carl Walker Inc.

The JEDC board voted Dec. 4 for the parking privatization plan. The city would issue $50 million in tax-exempt bonds on behalf of Metropolitan Parking Solutions, which would be solely responsible for paying off the debt. In addition, Metropolitan Parking Solutions would manage the 600-space garage being built with taxpayer money for the new downtown library.

This rendering shows what a 600-space arena parking structure would look under Metropolitan Parking Solutions' proposal. -- Rendering provided by the Metropolitan Parking Solution

Mayor John Peyton supports the proposed agreement, said Susan Wiles, his chief of special initiatives and communication.

However, Peyton is looking for ways in which City Hall will help pay the cost of parking for visitors at the courthouse and library, she said. For instance, she said the new library might have a validation program for patrons in which they could park free for the first hour. The city would set up a similar program to pick up some of the cost for short-term parking at the courthouse, she said.

In both cases, City Hall would make payments to Metropolitan Parking Solutions to help cover the cost of parking for courthouse and library visitors.

The city has not finalized details of the program or what it will cost City Hall to implement them.

"The overarching goal is to get people downtown and enable them to do business conveniently and at a minimum cost," Wiles said.

City Council Auditor Richard Wallace said the best way to curb parking rates might be for the city to own and operate the garages.

"All things being equal, the city can operate a garage less expensively than the private sector," Wallace said, noting the city doesn't need to turn a profit.

The JEDC did some rough calculations on what the city would have to charge for parking to break even if the city were to own and operate the garages. The monthly rate would need to be about $69 and the hourly rate would have to be about $1 "at a minimum," said Steve Emery, chief of finance and administration for JEDC.

City-owned garages wouldn't generate property tax revenue for City Hall or other entities, including the school district. But Wallace said there's an argument to be made that parking is part of the basic infrastructure of the courthouse, library and sports complex.

"Sure, we can privatize it with the idea that the private sector can charge what it wants to make a profit, but let's remember that our citizens are the ones who pay that [parking fee]," he said.

Many employees will hunt for cheaper parking because they can't afford the courthouse garage, said Chief Assistant State Attorney Jay Plotkin.

"You've got to charge what you've got to charge to do it financially," he said. "But it is an added burden."

Metropolitan Parking Solutions recognized when putting together its proposal that not everyone could or would pay market-based rates, said Mark Rimmer, a member of the development team. The JEDC originally called for 2,600 spaces at the courthouse, but that has been cut in half in the proposal pending before the City Council.

Rimmer said the city-approved downtown master plan and a series of parking studies have called on market-based parking prices in the core of downtown, with more affordable parking offered on the edge of downtown at park-and-ride locations.

For instance, the Jacksonville Transportation Authority's Trolley -- which is a bus that resembles a streetcar -- picks up downtown workers who park for $25 a month in a lot at the sports complex. The Skyway, which runs on elevated tracks through downtown, connects with the Kings Avenue Parking Garage on the Southbank and at parking lots next to the Prime Osborn Convention Center.

The JTA's rates for the monthly parking ranges from $28 to $33.

Metropolitan Parking Solutions' proposed rates for the parking garage at the arena and sports complex are based on a 2000 JEDC study that was done for the new arena and baseball stadium.

The proposed fee for special events is a $5 flat rate, $8 for concerts and $20 for football games. The 1,000-space garage, which is next to the trolley's park-and-ride lot, also will offer monthly parking for $25.

[tufsu1]

neither...there is an Office of Parking....but there has been some talk of moving downtown parking under the auspices of the DIA

[spuwho]

When I worked in the Loop in Chicago, you could buy discounted parking stickers from the company which allowed you to park in a nearby garage. But this was a private arrangement between my employer and the garage owner.

I rarely drove anyway and took Metra everyday because the State of Illinois cut a deal with the Feds to allow people to use tax free dollars as a payroll deduction to purchase monthly passes. That was hugely successful.

I don't think its right to be subsidizing parking garages. If anything let employers negotiate their own deals with the garages. They will have just as much leverage as the city because they can shop it.

Public garage subsidies should really be going into transit funding. If people used transit to reach employers downtown, then you don't need so much garage space. Then employers have even more leverage to negotiate for parking space.

Its a circle that needs to be broken. All it takes is some leadership and some reliable fixed transit options that people can rely on. And I am not talking about BRT.