Drivers aren’t using the 140 West Franklin parking garage like town leaders planned, so the town now has to pay for it another way.
The town still owes $7.6 million on the $8.6 million, including interest, it borrowed to build the public level of the two-level underground garage. The 154 spaces cost roughly $55,000 each.
The town used bonds to finance the project and expected to repay the debt with its Parking Fund and future garage revenues. The town’s payments on the garage average $422,000 a year for the next 18 years.
But the garage is earning less than expected, business management director Ken Pennoyer told the Town Council last week. He recommended Plan B: tapping the town’s debt-service fund, which the town uses to pay for construction projects.
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There is a possibility that could delay another planned project, he said.
Vacancy rates for 140 West were not available, but the town’s Parking Services budget shows the garage added $151,150 to the Parking Fund between July 2013 and June 2014, documents show.
That’s about half the $285,000 that the site’s former surface lot’s 103 spaces brought in a year before closing in 2011.
The town’s Parking Fund contributed $908,331 to the debt fund for 140 West and Wallace Parking Facility payments last year and had a $845,979 balance as of June 30.
The town collected roughly $2.1 million in fees for the Parking Fund last year and used $224,991 from savings to cover a parking budget shortfall.
The town also uses the fund to pay roughly $445,000 in annual debt payments toward the Wallace parking deck on East Rosemary Street. That deck, which has 309 spaces and earned $616,500 last year, will need an extra $500,000 from the Parking Fund for roof repairs, Pennoyer said.
The Parking Fund pays for maintenance, personnel and operations of Chapel Hill’s two parking garages and 11 downtown surface lots. The town wants to get the fund back on solid financial footing, Pennoyer said, and stop using its savings, or fund balance, which eventually could run out.
Lower the rate?
Town Council members, including Councilman Lee Storrow, suggested lowering or even eliminating the $1 hourly rate for a time to encourage more parking in the 140 West Franklin garage. If on-street parking is more expensive, Mayor Mark Kleinschmidt said, drivers may be willing to try the garage.
The garage may be slow to take off for a number of reasons, he said. Drivers may just prefer surface lots more, he said, but they also might not be aware the garage is available or understand how to use the “Pay-on-Foot” automated pay station.
The station requires drivers to pay their tickets at the machine before getting in their cars and leaving. There is no attendant on duty.
That may be a factor, said Bobby Funk, assistant director of the Chapel Hill Downtown Partnership. Drivers also may not have realized the garage is available to the public yet, he said.
The town hung new signs to help drivers find the garage, parking Superintendent Brenda Jones said. The office still gets complaints that there’s no parking downtown, she said, despite increasing the number of on- and off-street spaces to nearly 1,200.
“Business is picking up. There definitely were some logistical things that could have been handled better,” she said, such as including a second garage entrance.
One option other communities are turning to is demand-based pricing, Funk said, which sets rates lower for less-used parking lots.
Still a good deal
The 140 West garage was a town investment in parking and economic development, Town Manager Roger Stancil said. The development is earning much more revenue than the town is paying in debt for the garage, he said.
County tax records show the property generated nearly $900,000 in town, county and schools property taxes last year. It also contributes an undetermined amount of sales tax revenues.
“It’s very significant revenue the town would not have gotten should that not have happened,” Stancil said.