The city is now authorized to fund a new 225-space parking garage downtown.

City council approved at its meeting Thursday an ordinance allowing the city to spend up to $6.5 million on the project through a 25-year bond through PNC Bank.

If built, the garage would join a Marriott Springhill Suites hotel and a new Rite Aid pharmacy as part of the Centre City project.

While the ordinance allows for up to $6.5 million to be spent, it is unlikely the city will approach that amount.

Representatives from J.S. Capitol Construction, the developer of the hotel and pharmacy, estimated last month the total price of the garage to be around $4.1 million. The estimated bond issue to cover that cost, along with refinancing part of the parking authority’s debt, would be $5.3 million to $5.8 million.

While the city is now authorized to move forward with the project, there is still a ways to go before construction will begin on the garage.

Either the city or the parking authority will need to seek bids on the project. Assuming the bids come back at a price the city is comfortable paying, council would then proceed to move forward and issue the bonds through PNC Bank.

Should the bids be too high for council, it would then likely move onto backup plans for the garage, such as lowering the number of spaces in the structure to cut costs.

Because the ordinance is written as “not to exceed” $6.5 million, the city can back out of issuing a bond at any time.

Once a contract is awarded to a developer, the city can then authorize the actual bond issue through PNC Bank. At that point the city would be locked into the financing for the project.

City solicitor James Coulter said that process likely would take at least six to eight weeks.

“We’re quite a ways away from that,” he said.

While the project is only just beginning, both the city and the developer of the hotel and pharmacy are happy with the progress.

“It’s been a long time coming,” said Mayor Maggie Stock.

Paul Dunn, the project manager for J.S. Construction, said he was thrilled to see the city council support the project and that he looks forward to working with it in the future.

“We have a good working relationship,” he said. “And we have total faith in the city with this project.”

To pay for the added expenses of the garage, the city and parking authority will depend heavily on parking revenues.

An estimated debt service on the bond, which would include a current parking authority bond, is expected to be around $286,000 per year. The parking authority currently is paying about $211,000 per year on its two previous bonds. After the city refinances one of those bonds with the garage, for the purpose of better interest rates, the authority would be responsible for an annual service of about $73,000 on its remaining bond.

The garage will not have designated parking zones for hotel guests, but both council and the developer are confident the time difference in which guests and the public will use the garage will prevent any problems with parking.

Night rates at the garage, the time hotel guests are expected to use it, are expected to be either $6 or $7 per night.

Assuming the hotel maintains its projected 68 percent occupancy rate, hotel guests would contribute $118,000 to $138,000 per year to the debt service.

The remaining money will be raised by the traditional daytime users of the garage. To meet the remaining gap, the city possibly will need to increase parking rates in the garage to more than the rates in the current surface lot on the block.

The current rates for parking in that 187-space lot are 50 cents per hour or $50 for a monthly permit. The parking authority estimates 60 percent of those spaces are used.