City to purchase new site for parking garage

But city doesn’t have money to build a garage any time soon

 

Larry Farr, former chair of the parking commission, said the city needs to continue raising parking rates in order to build a new facility. Currently, all city parking facilities are at capacity.

 

A New Year’s resolution for the city of Bellingham — find space for a new parking garage.

The city is in the process of doing just that by issuing a purchase-and-sale agreement for a $2 million downtown lot on the northeast corner of Cornwall Avenue and Maple Street. The kicker? The city has the money to buy the land, but not to build a parking structure.

With downtown parking facilities at or above capacity, the need for a new garage has loomed for years.

But city parking experts say it will be a good while before one can be built, and will require raising rates — both for monthly permits and for downtown meters and fines — in order to recoup the cost of issuing a parking revenue bond to build the project.

Experts differ over the reasons why the city does not have enough money to fund a new facility now. Some say past mistakes on the city’s part have led to a broken parking system, while others insist there wasn’t enough money to spare.

 

The Cornwall and Maple site

The parking commission voted in November to authorize an appraisal of the 30,928-square-foot site, owned by Cornwall Properties LLC, which came in at just over the asking price of $2 million.

At the beginning of the month, the city’s legal staff sent a purchase and sale agreement to the owner. The agreement is still contingent on a feasibility study and City Council approval, said Clark Williams, city superintendent of transportation and communications.

The site, located across the street from the Opportunity Council and behind Boundary Bay Brewery & Bistro, was once slated to become a 15-story tower called Cornwall Place.

In May 2006, the BBJ reported the property’s owner, Bill Maris, owner of Cabochon Construction and Skagit County-based Transform, had submitted a pre-application to the city’s planning department to build a condo high rise there. Maris did not respond to requests for an interview.

The next step is for the parking commission to authorize the purchase-and-sale agreement and make a recommendation to the City Council for final approval.

“It’s a good spot for 10 years from now, because down below it is all New Whatcom,” said Larry Farr, who’s 10-year term as the parking commission chair ended in December. “It’s not the best spot (now) because the activity is still more (in the civic center).”

 

Parking downtown at capacity

Ten years might be the most likely timeframe, but downtown might not be able to wait that long.

The city’s current downtown parking facilities are at capacity, said Williams, and a 2004 study showed that the downtown core would have a deficit of 2,033 parking spots by 2022.

The study, however, should be taken with a grain of salt, said Opal Mahoney, manager of the city’s parking services, because the study was conducted before rates rose in 2006 and made assumptions based on future development.

The discussion of whether to build a new garage has volleyed for years, and the City Council has asked the parking commission to investigate possible locations.

Farr, who is leaving the commission this year and handing over the reins as chair to commissioner Frank Ordway, said the downtown is badly in need of a new facility in order to encourage economic development.

“There are lots of small businesses (downtown), but for bigger corporations, parking is a big incentive, and we haven’t had a big employer come downtown in a while,” he said. “To bring in a big company is hard, and they go to Barkley, now, because parking is free.”

In the past year, the parking commission identified and considered 12 downtown sites for acquisition, (see sidebar), none of which have panned out so far, except Maris’ lot.

The commission has discussed the possibility of the city partnering with private developers to jointly build parking, but this scenario seems a distant possibility because of liability and cost issues.

 

Lack of funds to build

The city’s parking enterprise fund has $1.9 million set aside to purchase the property in 2008, but does not have additional funds to build a facility any time soon, Williams said. The city wants to secure the land now before downtown properties become scarce, he said.

“The city is not in a position to fund a parking garage right now via a parking revenue bond,” he said. “The rates we charge are not sufficient to pay back a revenue bond.”

A report commissioned by the city in February 2007 and conducted by an independent financial analyst found that the city’s parking system does not generate enough income to pay back the bonding needed to build a new garage. The report stated the city would need to raise rates in order to do so, even though meter rates and ticket fines will have doubled from 2006 to 2010.

The estimated cost to build a parking garage runs between $33,000 and $38,000 per spot, Farr said, which would make a 100-stall garage cost about $3.3 million to $3.8 million to build. Based on those values, the new garage would need to charge customers roughly $130 to $150 a month per stall in order to pay back the debt service on the bonds.

“And that doesn’t include maintenance and operation,” Farr said.

That’s a far cry from the average rate of $50 a month charged for spots in city-owned parking facilities now, he said.

“There’s a problem,” Farr said.

 

The parking enterprise fund

In 2006, the city raised its parking rates for the first time since 1992 by increasing expired meter fines from $5 to $10, increasing parking meter rates from 25 cents an hour to 50 cents an hour, and to 75 cents an hour this year. In 2010, meters will cost $1 an hour. Other fines, such as parking in a permit area without a permit, or in a safety zone or fire lane, have also increased from $10 to $20 since 2006.

But Farr said the city shirked its parking responsibilities for years by diverting parking fines into the general fund, instead of the parking enterprise fund, which functions as a mechanism to issue parking revenue bonds to fund parking facilities.

The benefit of a parking revenue bond is that users of the system ultimately pay for parking facilities as the bonds are paid back through parking service revenue, rather than through a general obligation fund, which would force citywide taxpayers to fund a project they may not use.

Farr said if fine money had been going into the parking fund since it was started in 1968, the city would not be in the position it is in now.

According to Williams, the parking system hadn’t made enough revenue until recently, when parking rates went up, to put into the parking enterprise fund.

Before 2006, parking revenue made just enough to fund the municipal services that supported the parking system, including parking enforcement officers and court clerks collecting fine money, who were paid through the general fund, Williams said.

There was no excess revenue available for the parking revenue fund because the rates were so low, he said.

But Farr sees it differently. Before the recent change, parking revenue had been mismanaged, and there was a lack of political will to make the system functional, he said.

“It was a cash cow for the city,” he said. “There was no real governance over its management. In the last two years, accountability has been put into place, but there has been a lot of looseness.”

In 2005, the City Council passed an ordinance that ensured that starting in 2006, in addition to raising rates, excess revenue from fine money would go into the parking fund.

In June 2007, the City Council passed another ordinance that revamped the parking system so that all the ticket and fine revenue now goes into the parking fund, and the parking fund then pays the general fund for municipal services that support the parking system.

The city was unable to provide budget documents for a records request by the BBJ showing parking system expenses from 2003 to 2006.

Williams said that prior to 2007, when the rules changed, no documents are available to show parking expenses because costs for parking enforcement and municipal court services supporting the parking system were not specifically identified compared to other court expenses in the general fund budget documents.

Documents received from the same records request show the city has tracked 2007 ticket revenue and expenses.

The records show that projected revenue from 2007 parking tickets will total $927,998. Expenses for municipal staff and parking enforcement services total $593,838, leaving an excess of $334,160 in the parking fund. This money, along with the rest of the excess parking revenue in the fund from raised rates since 2006 will be used to purchase the site on Cornwall Avenue and Maple Street.

So when can downtown expect a new facility?

“I have no idea,” Williams said. “I honestly don’t think it is going to be any time soon if we build it solely on parking resources.”

Farr said in addition to fine money, the city could begin metering more areas downtown and could stop giving away free spots to some city employees. For example, the parking commission has identified 332 spaces that could generate an additional $425,292 a year if they were metered.

But the trend has actually been toward losing meters. In 2007, the downtown lost 26 metered spots to construction projects and streetscape improvements, and the district now has 1,347 meters, according to parking commission documents.

According to Farr, the city needs to continue incrementally raising its rates to fair market standards, expand metered areas and enforcement, and encourage alternatives to driving.

Farr also said the downtown parking situation would benefit from a recent proposal by City Councilwoman Barbara Ryan to replace the parking commission with a transportation commission that would look more holistically at transportation issues citywide.

Travis Holland, owner of the Horseshoe Café, said he doesn’t think the city should punish retail customers by raising meter rates in order to subsidize a new facility. He said he thinks the city should pursue a public-private parking facility.

Daylight Properties owner Bob Hall said the downtown wouldn’t be able to prosper and grow back into a viable business center until more affordable parking is available. He said the city’s purchase-and-sale agreement is a start, but that $150 per space in a new facility was too expensive.

“One hundred and fifty dollars per space is much more than I pay in Spokane on a new lot that is entirely private, for profit and new,” he said.

Williams said the parking commission will discuss whether to raise permit fees and fines further this year.

“I imagine we would definitely see further increases before 2010,” he said.

 

Case studies of comparable market rates

 

Tacoma:

Meter rates: The city of Tacoma has no metered parking spaces, but is working on a plan to implement them to increase traffic flow, said Bruce Marshall, the city’s parking administrator.

Marshall is hoping to implement the new system next year, and the city is looking at charging a range of rates, from 50 cents to $1.50 per hour, depending on the area’s parking demand.

Permit fees: Tacoma also operates six parking garages and several parking lots. Rates average $125 per stall per month for the garages and $80 a month for the lots, he said. Some private garages in the city charge up to $170 a month, he said.

Fines: For parking overtime in a spot, fines are $15, and have been since the ‘90s.

 

Olympia:

Meter rates: According to Kip Dernovich, parking program manager, meter rates range from 35 cents an hour to 50 cents an hour, depending on the area.

Permit fees: Olympia owns three parking lots and charges between $30 and $50 a month. Some private companies charge up to $70 a month for downtown facilities, he said.

Fines: Vary. The most common overtime citation is for $15.

 

Potential Locations for New Parking Facility: Status of owner contacts as of April 2007

 

1. Commercial Street and Lottie Street, east side, south of Olympic Building

Owner: Whatcom County

Response: County would not sell but has some interest in partnering.

 

2. Grand and Central avenues, County parking lot

Owner: Whatcom County

Response: County would not sell but has some interest in partnering.

 

3. Northwest corner of Champion and Unity streets

Owner: Parcel A: Diamond Parking

Response: They do not wish to sell the property, but are “willing to look at options involving structured parking.”

Owner: Parcel B: Janice Ludke

Response: Property is leased until 8/31/09. No interest in selling, but would consider lease after 8/31/09.

 

4. Slope of hillside south of Bay and Holly streets

Owner: Thornberg Family Trust

Response: Not interested in selling, but is interested in having a parking garage sited next to his commercial building.

 

5. Northeast corner of Commercial and Chestnut streets

Owner: West One Bank of Washington

Response: Letter sent in March 2007, which was received back as undeliverable. Letter resent to new address in April 2007.

 

6. Northwest corner of Railroad Avenue and Chestnut Street

Owner: First States Investors 5000A LLC

Response: Property owner was slow to respond, but does have some interest. Discussions continue at a slow pace, but are ongoing.

 

7. 1200 block of Railroad Avenue (for underground parking below street)

Owner: City of Bellingham

 

8. Northwest Corner of Holly and State streets, near Banner Bank

Owner: Noffre LP

Response: Owner just signed a five-year lease with Horizon Bank. Will have to contact bank and get back to us.

 

9. Northeast corner of Magnolia and Forest streets

Owner: Delbert Needham

Response: No interest

 

10. 1300 block of Forest Street — mid-block, west side

Owner: Parcel A: Newill LLC

Response: Registered agent will contact owner and call back

Owner: Parcel B: Patrick Wheat

Response: No interest in selling, and very little, if any, interest in working with the city in a leasing situation.

 

11. Southwest corner of Cornwall Avenue and Chestnut Street

Owner: Flax Properties LLC

Response: Partners are very interested in working with the city to develop the site, They would like to develop condos with street-level retail. Property spokesperson David Hovde indicated a lot of engineering work has already been done and that there would not seem to be a problem with the development of additional parking on the site. He will submit a proposal.

 

12. Northeast corner of Cornwall Avenue and Maple Street — mid-block to corner

Owner: Parcel A: Cornwall Properties LLC

Status: City has sent a purchase and sale agreement to owner for review and signature (as of Jan. 8, 2007)

Owner: Parcel B: Catholic Community Service

Response: No interest in selling, but possible interest in partnering.

 

The city is looking to buy this site, on the corner of Cornwall Avenue and Maple Street, for a future parking facility.

 

 

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