City agrees to parking garage
A parking garage is once again proposed to come to Butler.
City officials Tuesday night agreed to secure financing for a 225-space parking garage along South McKean Street as part of the Centre City project.
The decision was made at a joint meeting between city council and the city parking and redevelopment authorities.
“We are going to build a parking garage,” Mayor Tom Donaldson said after council approved a motion to renew its credit rating to get a bond issue. “We are going to move forward with this.”
The Centre City project also includes a Rite Aid Pharmacy, which is expected to open soon, and a proposed Marriott Springhill Suites hotel.
City auditor Tim Morgus and city treasurer Jeff Smith met with Donaldson and Councilwoman Cheri Readie Monday night to discuss financing for the garage.
Morgus said they used a figure of $19,600 per space to calculate an estimated cost of $4.41 million for a 225-space garage. That includes all design work.
Morgus said the per rate cost was determined by consulting with an independent engineer, who used a cost median construction guide to provide an average cost of parking garages.
“There is no set price at this time,” he said. “This is an estimate. An exact price can't be known until the project goes out to bid.”
Assuming the cost of the garage fits the estimate, Morgus said the city could refinance $1.265 million worth of the parking authority's existing debt to have a total cost of $5.775 million for the project. Under the scenario, the parking authority would contribute $500,000 up front to reduce part of its existing debt service.
The annual debt service based on that estimated price would be $345,000, about $133,000 more than the parking authority's current debt service.To help bridge the gap, J.S. Capitol Construction, developer of the rest of the Centre City project, will guarantee 50 spaces per day for the hotel at a rate of $5.50 per space.That would give the authority about $100,000 in guaranteed income a year. If the hotel has more than 50 guests in a given day, the developer would pay for the additional parking used.The guarantee would leave the city with a $33,000 shortfall it would need to make up through possible parking rate increases.Jeff Smith, treasurer for the city and parking authority, said those increases would be $5 to $10 for monthly parking permits citywide. Most city permits now cost $30 to $50 per month.Smith said the authority issues about 450 permits per month.While rate increases may increase for parking permit holders, Donaldson said the city's debt service tax will not increase.Morgus said it would take the city a couple weeks and about $7,500 to renew the credit rating it had done a year ago. He said it is expected the rating will remain the same and that the city will be offered the same terms for a bond issue through PNC Bank.The city last year authorized to spend up to $6.5 million through the bond issue on the parking garage.Developer weighs inWhile the city is moving forward with the garage, the actual cost of the structure and who will build it still must be determined.Jeff Schmitz, owner of the J.S. Capitol, said there is no firm number on how much it costs to build a parking garage.“That's like asking how much it costs to buy a car,” he said.Schmitz said he could build the city a garage for less than the $19,600 figure Morgus used. He also said he knows of a pre-cast garage that was intended to be used in Cleveland that is available.“It's sitting there, waiting to be used,” he said.When asked about how much that structure would cost, Schmitz said “less.”Schmitz said the city should set its limit on how much it can spend and find a developer to build for around that number rather than moving along with a predetermined number of spaces.“That's what I would suggest,” he said.Donaldson said J.S. Capitol must begin construction of the hotel before any construction of the parking garage will begin.Schmitz said he expects to break ground on the hotel early next year if the garage project is ready. He said it would take about 12 months to build the hotel, but expressed more concern on how long it may take the city to build its garage.“If they build it, it could be 10 years,” he said. “We could be right back here next year.”Donaldson said it is possible J.S. Capitol will still construct the garage, but he said the city may find another firm to build it.“We're going to take the best deal for the city,” he said.Schmitz said his group is ready to build the garage for the city if selected.City engineer Joe Gray, who also is on the redevelopment authority, said the cost of a garage varies greatly.“It depends on a lot of factors,” he said. “If contractors are hungry, (the bid) could come in at a lower cost. If they're filled up with other work, it could be higher.”End of debateDonaldson said he was adamant to reach a conclusion on the parking garage Tuesday night to end the ongoing debate on the project.“We've spent enough time talking about this,” he said.The garage had been a topic of conversation for city officials since the parking authority voted Sept. 24 to replace the proposed structure with a surface lot of about 70 spaces for use only by the hotel.The authority made that decision due to concerns about financing the garage.However, the authority rescinded that motion Oct. 22, citing state law that dictates public parking authorities can only build primarily public structures.The parking authority's initial decision to build the surface lot angered downtown business owners. Nearly 650 people signed a petition, organized by the Butler Downtown Main Street Program, calling for the city to build the garage.The parking authority originally projected a net loss of $100,000 per year for the garage. The authority used a 50 percent occupancy rate on both public and hotel parking in the garage.Smith at the parking authority's meeting estimated a $20 per month citywide rate increase or a 2-mill property tax hike on the city's debt service tax to bridge the gap in financing.Smith said Donaldson helped the project move forward by setting a firm guaranteed number of spaces from J.S. Capitol.“The mayor deserves a lot of credit in making this work,” Smith said.There are no plans for the city redevelopment authority to contribute to the garage, although Donaldson said that is not yet out of the question.The parking authority suggested the redevelopment authority pay for a portion of the garage due to a 2007 city resolution that deeded over parking authority property at the corner of East Jefferson and South McKean streets.The parking authority said it was owed 137 parking spaces from the agreement, and earlier this month it asked Donaldson to intervene and request the redevelopment authority pay $65,000 for the garage.Art Cordwell, the executive director of the redevelopment authority, said in an emailed response to Donaldson that his authority would become insolvent if it had to pay for parking.The redevelopment authority is struggling to pay its debts, notably on the Penn Theater and Kelly Automotive Park.Cordwell said Tuesday night after the meeting he was happy with the decision to build the garage, but expressed concern with delays in the process.“We're in the same place we were a year ago,” he said, referencing that the city had previously approved a bond issue through PNC Bank. “Every day that passes it costs more money.”Cordwell said the garage is a key part of the overall project and is vital to development downtown.“It's a hard decision to make, but it has to be made in the best interest of the community,” he said. “And we have to do what's best for the community.”Donaldson said it is important for the city and the parking authority to be cautious in financing the garage so that it doesn't result in a similar financial situation as the ballpark.Donaldson said the city has no money to spare in covering the cost of the garage should it fail. He said the city is already looking at as much as a $400,000 shortfall in the 2015 budget.Donaldson said the parking garage carries some risk to the city, but said it is too important to development downtown not to proceed.“There are risks in anything you do in life,” he said.
