Parking Garage and the Shared Parking Program – The Main Article
January 31, 2013 § 2 Comments
D. ISSUE NO. 2 — TAX PAYERS’ ACTUAL SHARE Town of Herndon taxpayers will pay far more than the often-stated 40% share of the total costs. Over the last 13 or 14 years, the town has created 4 surface parking lots by purchasing downtown properties and resurfacing them with asphalt. In 2012, the value of the land committed to the program was about $2.7 million. In addition, it had paid about $300,000 to maintain the parking lots. Thus, by 2012, the Town had spent almost $3 million on the program. In comparison, the participants in the program had contributed about $1.6 million as their share of the capital and operating costs. The Town now has two options. It can construct a 311- space or a 570-space garage. They carry the following obligations for the Town.
1. 311-space garage
A 311-space garage would just meet the needs of the existing participants (assuming that 100 spaces would be reserved for a prospective Art Center). This means no additional businesses would be able to buy shared parking spaces from the Town. It would take an additional $5.6 million to construct a garage of this size. If we
“NO COUNCILMEMBER SHOWED THE POLITICAL COURAGE TO CONFRONT THE ACTUAL COSTS.”
include the $3.0 million dollars that have already been spent on creating and maintaining the parking lots, the Town would have committed $8.6 million program. Of this amount, the 9 business participants would have paid $1.6 million (or about 19%), but would have received $5.1 million in subsidies. In comparison, the Foundations for the Cultural Arts (or the Art Center) would have received a subsidy of about $1.8 million dollars (assuming they would not be able to pay any portion of their share). Thus, by spending a total of about $7 million of the taxpayers’ money, the Town it would have helped create about 30,000 sq. ft. in new commercial space and contribute to the renovation of about 17,000 sq. ft. of the old commercial space.
2. 570-space garage
A 570-space garage would cost an additional $10.2 million, or, $4.6 million more than the 311- space garage. The Town would have 259 extra spaces (=570 – 311) that have not been sold to anyone yet. And, there is no indication that existing property owners or new developers are ready to buy even a significant portion of them. Therefore, if the Town were to build the garage today, it would have to take the risk that, (1) businesses may not buy any spaces for a long time and (2) town residents may not use the extra spaces. Thus, the Town may not receive any immediate benefit for the additional $4.6 million it would spend to create the spaces. Under this scenario, business share of the total costs would reduce to 12% of the total costs. The Town’s share of the total costs would increase to $11.6 million. The analysis becomes more complex if the Town were to wait until the demand for additional 259 spaces realizes. Under this scenario, the Town faces a significant problem. It will have to spend an extra $2.5 million to construct 259 more surface parking spaces until a garage is built; however, the required land for this purpose is not available in the downtown area. If we assume that the land for surface parking would be available in the future, the total cost of constructing the garage would increase from $13.2 million to $15.7 million. The business share of the cost would rise to $3.88 million (or 25%) of the total costs. The businesses would receive a subsidy of $10.0 million. The Town’s share of the costs, including $1.8 million for the Art Center) would amount to $11.8 million. Thus, no matter what the assumption, the actual business share of the total costs would be far smaller than the purported share of 60%. In dollar terms, the taxpayers’ share of the costs will amount to $7.0 million for a 311-space garage and up to at least $11.8 million for a 570-space garage. These estimates prove that Mr. Nachman’s March 27th 2012 public claim that the garage would not cost the town anything was patently false and misleading. Note that the 2011 Downtown Master Plan (DMP) contemplates that eventually 1500 parking spaces would be constructed in Areas 1 & 2. If all of 1,500 spaces were brought under the shared parking program, then the Town’s share of the total costs would be at least $17.8 million. The town staff has communicated that the Town would not subsidized any additional spaces once a parking garage has been constructed. This policy, however, would create two categories of parking – subsidized and un-subsidized. It calls into question the stated objective of the shared parking program – to assist all downtown businesses. Perhaps, this was the not the primary objective after all. The unwritten and unstated objective was to assist the future Art Center.