A parking garage is once again proposed for downtown Butler.

City officials Tuesday night agreed to seek 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 proposed Marriott Springhill Suites hotel and a Rite Aid Pharmacy, which is expected to open soon.

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.

“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 that is cost of the garage, 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 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 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 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 the garage will cost.

But he said he could build the city a garage for less than the $19,600 figure.

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.

Donaldson said it is possible J.S. Capitol will 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.