City council Tuesday night finalized an agreement to have the developer of the proposed Marriott Springhill Suites hotel guarantee to contribute more than $100,000 per year for parking spaces in the proposed parking garage.

Mayor Tom Donaldson said representatives from J.S. Capitol Construction, the developer of the hotel, signed an agreement Tuesday saying the company will rent 50 spaces per day in the garage at a rate of $5.50 per space. If the hotel has more than 50 guests in a day, the developer would pay for the additional parking used.

The 225-space garage is to be built near the corner of South McKean and East Cunningham streets next to a proposed hotel.

The two structures are part of the Centre City project, which includes the finished Rite Aid Pharmacy on South Main Street, which J.S. Capitol also developed.

The council Thursday will have the second reading of an ordinance allowing it to spend up to $7 million on the garage through a PNC Bank bond issue.

Council hopes to pay for the estimated $4.4 million parking garage through the bond issue. The city would take over the parking authority’s current debt and add it into the bond, which would total about $5.8 million.

The city also is looking to add about $500,000 to the bond to pay for flood control projects, which will be completed this year.

“This will allow us to proceed with the bond issue,” Mayor Tom Donaldson said of the agreement.

However, there is still work to be done before bonds are sold.

Solicitor Jim Coulter said PNC still must work with investors before the bonds are ready to be sold.

Once that is done, the city will have to coordinate with J.S. Capitol to figure out the construction of the hotel and garage.

The garage’s design will need to be approved by the city.

“There’s still process after process to go through,” Coulter said, saying construction likely wouldn’t begin until sometime after April.

The city would be required to only make interest payments on the bond for at least the first year of the issue. The interest only payments will allow the proposed parking garage to be built and begin generating revenue before the city starts paying down its debt on the garage.

The annual debt service based on the estimated price would eventually be $345,000, about $133,000 more than the parking authority’s current debt service.

The guarantee from the developer would leave the city with a $33,000 shortfall it would need to make up through possible parking rate increases.

The city expects those increases would be $5 to $10 for monthly parking permits citywide. Most city permits now cost $30 to $50 per month.

The parking authority issues about 450 permits per month.

The expected cost of the garage is based on the an industry standard of $19,500 per space, council said. The final cost will be determined when the project is put out for bid.