Butler moved another step closer Monday night to funding a proposed 225-space parking garage.

After a lengthy look into the financing of the garage, the city appears ready to approve a 25-year bond issue through PNC Bank for the $4.1 million project.

The total cost of the bond is expected to be $5.3 million.

“It’s going to work, and I’m excited about that,” Mayor Maggie Stock said of the bond.

City council will meet at 6:30 p.m. Dec. 5 at the city building to have the first reading of the bond ordinance.

That ordinance will be written as a “not to exceed” motion, which will not lock the city into any specific figures, according to Anthony Ditka, the bond council for the city with Dinsmore and Shoul law firm of Pittsburgh.

The inflated cap of the “not to exceed” ordinance will likely be about $5.8 million for the bond issue, though the actual issue almost certainly will not be that high.

Ditka said by making a “not to exceed” motion the city would be able to drop out of the deal up until the bank issues the bonds.

If the city were to approve an ordinance with specific terms, they would be locking into an agreement with the bank at that point.

The second reading of the ordinance, at which time it will be enacted, will be at council’s Dec. 19 meeting.

Council has been working for months to figure out if the city can afford the new garage, which would be part of the Centre City project that will bring an 80-room Marriott Springhill Suites hotel and a new Rite Aid pharmacy downtown.

J.S. Capitol Construction of Michigan is the developer for the project.

Councilman Richard Schontz Jr. said the project is the driving force behind economic development downtown.

“This project has to be a success,” he said. “This is our one opportunity to make this work.”

The debt service on the garage would be about $360,000 per year, or about $148,000 more than the debt service the parking authority currently pays.

While the city will refinance the parking authority’s debt and will ultimately be responsible for paying off the bond, the authority still will manage the garage and will need to figure out a way to raise funds.

Hotel guests will shoulder much of the burden in covering that gap.

Since hotel guests would mostly be using the garage at night, while the public would be using it during the day, the parking authority likely will have two separate parking rates for the garage.

Both the city and the developers agreed a $6 per night rate is reasonable.

Should the hotel maintain its 68 percent projected occupancy, which is the average rate of hotels in the area during the past five years, then parking for the hotel would contribute $118,260 per year to the debt service, according to Tim Morgus, the city’s auditor.

Morgus calculated a 50 percent occupancy rate would yield $87,600 per year, while an 80 percent rate would bring in $140,160.

It would be up to the parking authority to raise the additional $30,000 needed to bridge the gap.

Possible ways to increase revenues would be increasing the hourly rate of parking in the garage or increasing permit prices for the garage.

The current rates for parking in the 187-space lot on the block where the project will be built are 50 cents per hour or $50 for a monthly permit. The parking authority estimates 60 percent of those spaces are used.

City Treasurer Jeff Smith suggested the redevelopment authority, which is a 40 percent owner of the hotel, contribute some of its revenue from the hotel to pay for the parking.

Art Cordwell, the director of the authority, said he wouldn’t have a problem with that, but he is not sure if the authority, which has strict guidelines on how it uses funds through the state, would be permitted to do that.

Councilwoman Kathy Kline, who has been cautious of the city financing such an expensive project with little flexibility in its budget, seemed pleased with the progress of the bond issue.

“I think we’re all in favor of moving forward,” she said. “It sounds like it’s very feasible.”