By Doug Porter
Even as San Diego rolled out proposals reducing residential parking spaces, a City Council committee is set to approve up to $50 million in lease revenue bonds for construction of a 797 space parking garage in Balboa Park.
Just hours before the City Council was set to consider updated community plans for Golden Hill and North Park City, staff unveiled a plan aimed at encouraging commuters to curb their driving, including eliminating parking spaces, along with getting businesses to offer incentives for employees to walk, bike and take mass transit.
The driving disincentives were aimed at blunting opposition from environmental groups, who believe the community plans are at variance with the City’s plans to reduce its carbon footprint.
Plaza de Panama Lives On
The full Council approved a plan four years ago to remove cars and parking from the center of Balboa Park, but litigation halted its implementation. The City ultimately prevailed on appeal. Mayor Faulconer promised to revive the Plaza de Panama plan, which includes the garage, at a press conference in June.
At the same time, he also announced a ballot measure (J) shuffling the tax revenues from Mission Bay Park to include funding for Balboa and other city parks. Faulconer pledged that these revenues would not be part of the Plaza de Panama project.
In September Katherine Johnston, the mayor’s director of public infrastructure, told the City Council costs for the Plaza de Panama plan had risen by 88% ($40 million to $75 million) due to “various building code changes, such as storm-water control, higher wages required for city projects and a more competitive bidding environment.”
From the Union-Tribune:
Johnston said [Irwin] Jacobs’ Plaza de Panama Committee, which he chairs, is pledging to cover any city costs that would be capped at $45 million and paid back from parking revenues from the new garage at the city’s general fund. The committee has spent $14 million so far, including legal and planning costs, and is committing another $2.5 million to complete design documents. The committee previously pledged to raise $26 million to match the city’s original pledge, also $14 million, for the garage. The committee’s new commitment would take it to $30 million if $75 million is the ultimate cost.
Jim Kidrick, who heads the San Diego & Air Space Museum and chairs the Balboa Park United support group for the Jacobs plan, said the higher cost borne by the city likely reflects added costs for the garage and some of the linking roadways and landscaping, which Jacobs’ committee had previously indicated it would cover.
Undaunted, the City Council voted 8-1 to spend up to $1 million to finalize design details and generate new cost estimates.
The Revenue (Or Not) Bonds Explained
The actual bond amount projected by the city is currently at $44.5 million. Based on the assumed interest rate of 4.25% , this means the city’s General Fund is obligated to repay $80 million over the course of the loan.
The proposal being voted on by the Infrastructure Committee says the repayment source for the bonds will be the parking revenues from the garage.
“These are estimated to be $3.3 million beginning year 1 of the Parking Garage opening and annual debt service/lease payments for the Bonds after the capitalized interest period will commence beginning Fiscal Year 2021 and will be budgeted in a newly established fund within the Park and Recreation Department budget.”
“In addition to paying debt service on the Bonds, this fund will also be programmed to collect parking revenues, pay Parking Garage operating expenses, and maintain Internal Safety and Capital Reserve Funds. In the event that annual parking garage revenue is insufficient to pay debt service in any given year, funds will be drawn from the Internal Safety Fund.”
Because the parking garage will take years to build, there will be no revenue coming in until it is completed and open. To address that, the City plans to capitalize the interest for at least 2.5 years. (In other words, borrow money to make payments on the money they borrow.) That amount is projected to be $4.9 million.
“Based on the current expected construction timeline, the capitalized interest period is estimated to be 2.5 years, which covers the construction period, plus an additional six months to mitigate the risk of any construction delays (actual period to be determined at the time of pricing).”
The aforementioned Internal Safety Fund would be created using “excess revenues.”
“Upon the Parking Garage’s opening, a City-held Internal Safety Fund is recommended to be maintained from excess net parking revenues to serve as a buffer against any revenue volatility over the 30-year term of the Bonds. This is designed to mainly mitigate the potential need for the General Fund to front any shortfall in revenue for annual debt service.”
All of this language assumes parking revenues will be in line with the projections made by Parking Concepts, Inc.(PCI).
The proposed parking fees will be set at $2 for up to one hour, $4 for up to two hours and $8 all day on weekdays. On weekends and holidays, they would be $3, $6 and $12, respectively.
Officials believe the garage spaces would turn over three times per day, with occupancy during the day projected at 50% (weekdays) and 61% (weekends). Evening parking is projected at 36% and 49, respectively.
From the Union-Tribune:
According to a report from Lakshmi Kommi, director of the city’s debt management department, the parking garage revenue would total $4 million in the first full year, enough to cover $683,000 in operating expenses plus deposits into a capital reserve fund and an internal safety fund to cover any shortfalls.
And then there’s this little gem:
She said the city also plans to contribute $10 million from capital reserves toward the Jacobs plan on top of the $39 million cost of the garage.
A Risky Bet at Best
While City Councilman Todd Gloria says Community Plans can be revisited in 5 years for compliance with environmental goals, the parking lot is unlikely to get torn down if (and likely when) it proves to be a bad idea.
Meanwhile, technological changes are causing uncertainty among transportation planners.
Lyft’s president is making the bold prediction that personal car ownership will go the way of the DVD player by 2025.
Goldman Sachs says 35% of millennials are already willing to engage in car sharing arrangements.
And then there is the omnipresent reality of climate change. Helsinki, Finland has already committed to ending the need for private car ownership in the next decade, by creating a seamless and integrated private and public transportation system.
The San Diego City Council is making a big bet on the role of automobiles in the future. If they’re wrong, we’ll all be paying.
The full Council will be voting on the bonds and commitment to the Plaza de Panama project in mid-November. Construction is slated to begin next year.
On This Day: 1858 – Roland Macy opened Macy’s Department Store in New York City. It was Macy’s eighth business adventure, the other seven failed. 1951 – The National Labor Council was formed in Cincinnati to unite Black workers in the struggle for full economic, political and social equality. The group was to function for five years before disbanding, having forced many AFL and CIO unions to adopt non-discrimination 1975 – Bruce Springsteen was simultaneously on the cover of “Time” and “Newsweek.” This was the first time this happened for a rock star.
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