The developer estimates that the upper (public) parking deck will cost approximately $3.5 million. Table 1 provides a breakdown of this figure; Attachment A to this document provides a detailed project budget.

The AdPark Committee has proposed that the City provide approximately $3.5 million to the developer for construction of the upper (public) parking deck. The Mayor’s proposal calls for a debt-financed City buyback of the completed parking deck, coupled with shared responsibility for debt service on the City-issued bonds.

The substance of the Mayor’s proposal is summarized in the following points.

• The developer of a 72-unit condominium project at 2331 42^nd Avenue SW will provide underground private parking for his tenants. He is willing to add another level of public parking if reasonable assurances of the City’s adequate financial participation are made to him by July when construction bids are anticipated to be solicited.
• Upon completion of parking garage construction, estimated to be the fall of 2001, the City will purchase the top layer of the parking garage through the sale of City-issued Limited Term General Obligation (LTGO or Councilmanic) bonds at a total cost of $3.5 million.
• The City will be responsible for no more than one-half of the annual debt service on these bonds over a 20-year period or until the bonds are retired, whichever occurs first. The annual cost of 50% of the debt service is estimated to be $152,573.
• The AdPark Committee and/or the developer will be responsible for paying the other half of the debt service and all operating expenses associated with the full garage. If parking revenues overperform, the AdPark Committee may apply the proceeds to their half of the debt repayment providing operating expenses are fully covered. The AdPark Committee will assume the risk of increased liabilities if parking revenues underperform.
• The AdPark Committee may provide their contributions through a Parking Business Improvement Area (PBIA) and/or through private entities. The contributing entity must be formed and allocation agreements among contributing parties achieved in order for the City to participate in the funding arrangement.
• Creation of a PBIA is contingent on City Council approval. The mechanism for such approval is a petition. The petition must specify the expected minimum contribution rate associated with each property owner. Moreover, the PBIA must be supported by property owners holding 60% of the assessments within the PBIA boundary. No final commitment to fund the project will be made until the petition is received and the PBIA is recognized by the City Council.
• An independent parking operator will manage the operation of the full parking garage. The fees and rate structure will be established to encourage parking by short-term customers of the businesses in the Admiral business district.

The revenues collected from the parking customers minus the operations costs would be applied to the non-City portion of the debt service. The City received two opinions concerning projected revenues – one from Diamond Parking on behalf of the neighborhood and the other from Ampco, an independent consultant contracted by the City’s Executive Services Department. Diamond established the rates shown in Table 2 and Ampco agreed that the fees charged to the garage customers are reasonable for this neighborhood. Note that these rates are not necessarily what would be charged, but rather are planning assumptions about what would be reasonable for this neighborhood. Actual rates could vary. For example, the City might want to have a rate structure that discourages commuter parking.

The following graph, Exhibit 1, reflects a range of projected net revenues. The principal difference between these projections is the baseline – that is, the net revenue attained in year 1. The other differences include assumed operating costs and the revenues generated by the garage. Diamond’s estimates reflect a very optimistic projection with starting revenues at approximately $47,000. Ampco shows beginning net revenues around $2,260. The details on garage utilization and expenses for operation and maintenance are expected to be provided to the City by the end of May. The low revenues estimate represents an extreme "worst case" perspective, for which no net revenues are projected. In all cases the City assumes an estimated 4% annual escalation in net revenues. Diamond Parking concurred with the 4% rate, but expressed to the AdPark Committee that the actual increase is likely to be higher.

While the Mayor’s proposal centers on the use of limited tax general obligation bonds to fund the purchase of the upper parking deck, the Mayor also considered an array of other potential funding options. These are discussed in Attachment D to this document.