WPCNR THE PARKING NEWS. By John F. Bailey. March 12, 2009: Paul Wood, City Executive Officer told WPCNR Wednesday evening the city is discussing a lease sale of the Galleria and Library parking garages to any of four parking management companies, for an estimated $30 Million. Wood described  one of the firms as the managing company for all Chicago parking garages and New York City’s leading parking garage operator (which would be Central Parking Systems). CPS, based in Nashville did not return WPCNR calls for confirmation.

Paul Wood, City Executive Officer Exploring the leasing of City Municipal Garages for Cash

Galleria Municipal Parking Garage, being eyed for lease to private operators.

Wood said the Common Council was informed of this lease plan in Executive Session two weeks ago prior to the Urban Renewal Agency meeting of last Friday morning. At that meeting, the Urban Renewal Agency voted to add The Galleria Municipal Garage and the area occupied by The Galleria itself,  and the Library garage  to the Urban Renewal area.

Wood told WPCR  this allows the Agency to lease or sell the properties in efforts to develop those areas. He acknowledged the city has been in preliminary talks with potential operators of the garage which in return for a lease fee would operate the garages, keep the revenues or possibly split them with the city (no arrangement had been worked out as of yet).  CPC collects parking exclusives.

Just for example, last year CPC  signed a five year extension with Broward County in Florida to continue to manage the Fort Lauderdale/Hollywood Airport where they have increased revenue from $9 Million to $37 Million in five years. They recently purchased and operate garages in Hoboken, New Jersey, where they charge as much as $3 an hour.  White Plains charges about $1 an hour at present rates. The agency can also service parking meters and gives out summonses as part of their operation services.

ImPark, another private company, based in Vancouver, Canada, operates the White Plains Mall Parking facility which charges the highest parking rates in the city. They, too,  may be in play.

Wood said the Common Council would be asked to consider such a leaseback or a purchase agreement. Asked by WPCNR if the city could expect money upfront in such a purchase, Wood said yes. Asked how much, Wood estimated about $15 Million  of a possible $30 Million which could be used to fill the anticipated holes in the 2009-10 city budget that the Mayor described last night as a “financial emergency,” last night.

Wood said such a down payment anticipated to be received in the 2009-10 budget year could replace fund balance he anticipated would be depleted by the anticipated $9.3 and up deficit the city is currently running according to Mayor Delfino last night. WPCNR notes this windfall would also allow funding union raises for 2009-10 currently held hostage to revenue shortfalls.

Asked why the city was considering such sale or leaseback arrangement, Wood said the city was following Governor David Paterson’s suggestion to municipalities that towns and cities outsource operations to the private sector to save expenses. “We’re just following the governor’s suggestion,” Wood said.

Another incentive for the city to sell or lease the two garages was both garages were at the stage where the city had to invest in major capital improvements such as resurfacing,

Asked for the engineering report detailing the flaws in the garage, Wood said it was being worked on by an independent firm, and that Commissioner of Public Works Joseph Nicoletti had not completed his personal report.

Wood said the city needed an indication that the Common Council was interested in such a lease agreement, because the firms the city has received initial interest in leasing the garages did not want to invest dollars in doing extensive “due diligence” evaluating the garages if  the Common Council was not inclined to dispose of the municipal garages. Wood said one firm was interested in purchasing all the municipal lots, “but we decided we’d take some baby steps first,” Wood added.

The White Plains Library Parking Garage -- also in play for private operator lease or other arrangement.

Asked if the garages were safe, Wood said they were, and said WPCNR needed to talk to Commissioner Nicoletti on what the garages needed. Recently,  WPCNR readers will recall capital project monies have been allotted to repair city parking lots and garages.

WPCNR asked why the garages in question needed capital investment since the Parking Authority, (the organization which previously managed all city-owned parking facilities and also paid for any capital improvements needed), used to handle that as a matter of course and manage the garages at a profit. Wood said the garages were profitable, but had reached a point where major, expensive maintenance was needed which the private firms, one of which was described as a smaller firm with local persons, would undertake at no expense to the city.

Rod Johnson, Deputy Commissioner of Planning, told WPCNR (which was on assignment at the time of the Urban Renewal Meeting), said the resolution moving the garages into the urban renewal area was a first step, and gave the city a number of options on the land to redevelop it, lease it, sell the properties – even to small local firms whose principals the city might know in order to redevelop the area. He said the city really did not know what it was going to do with the properties at the present time.

Asked if the owners of  The Galleria could prevent the city from selling or leasing the two assets to a private management firm, Wood said they could not, the city retains the right to change operators of the garage.

The possible lease of sale of the assets of the municipal garages for an upfront down payment in the near future the city could use to plug a budget shortfall in 2009-10  is remarkably similar to the LCOR 55 Bank Street project of 2006 where the city sold  municipal parking lot land to LCOR for a rental/affordable housing complex for $16.5 Million, for which the city has received some $11 Million to date. That sum helped to balance last year’s budget. The LCOR project is currently stalled because of the lack of availability of financing. LCOR, readers will recall negotiated a delay of the final approximate  $5 Million in payment until after the project is completed.

The sale of assets is similar to the sale of Railside Avenue lots several years ago to plug a smaller budget gap.