Parking Garage and the Shared Parking Program – The Main Article

January 31, 2013 § 2 Comments

E.  ISSUE NO. 3 — EFFECT ON REVITALIZATION OF THE DOWNTOWN  It can be argued that, so far, after spending more than $3.0 million in direct costs and millions more in staff time, only two properties (The TPI Center and the Ashley building) represent the real expansion of commercial space.  The TPI center, a new 26,000 sq. ft building, was built on a small gas station site.  The owners couldn’t have built a building of this size without the availability of 88 parking spaces under the shared parking program.  Thus, the program can be credited with creating about 26,000 square feet of office and commercial space in the downtown.

“ONLY TWO BUSINESSES HAVE BEEN THE REAL BENEFICIARIES OF THE PROGRAM SO FAR. THEY USED THE PROGRAM TO CONSTRUCT NEW BUILDINGS.”

“ONE IS TEMPTED TO ASK, “WHERE DID THE RESISTANCE TO HIGH COST ESTIMATES COME FROM?”

The owners of the Ashley building, located at 779 Station Street, owned a parking lot. The shared parking program permitted them to buy parking spaces from the town and use their own parking lot to build a 2,500 sq. ft addition of new office and commercial space.  But for the shared parking program, they could not have expanded their operations.  In contrast, available records suggest that the renovation of 6 other buildings would have taken place even in the absence of the shared parking program.  However, they would have found it difficult to renovate their buildings without the availability of PD-MU zoning also.  The PD-MU zoning, under which mixed uses such as office, retail, and restaurants can be provided in the same structure, reduced the business and financial risks of the downtown property owners and thereby promoted the revitalization of some of the existing buildings. Lets consider the particulars of some of the buildings participating in the program.

1.    James and Great Harvest Buildings

Both Mr. Mitchell and Mr. Corkey, who bought the James and Great Harvest buildings respectively from the town, had nothing to lose by participating in the program.  It is reasonable to reach this conclusion if we examine the price they paid for the parking and their buildings.  First, with respect to the cost of the parking, Mr. Mitchell paid $91,476 for 28 spaces and Mr. Corkey paid $19,602 for 6 spaces.  Together, they paid a total of $111,078.  If we consider the fact that the land had an assessed value of $244,000, the purchase was a rather excellent bargain. The location of the spaces, right next door, was an excellent advantage as well. Their customers and employees would have to walk only a few feet to reach their destinations after parking their vehicles. Second, both Mr. Mitchell and Mr. Corkey purchased the buildings at bargain prices.  Mr. Mitchell, for example, purchased the 5,900 sq. ft. building for $140,000, invested another $100,000 to renovate it in 1995-1996 (at a total cost of about $42/sq. ft.)  Compared to the then $100+/sq. ft cost of the new construction, this purchase was an exceptional bargain.  Even if we include the cost of the parking in this transaction, it still would have been a bargain.  Thus, the financial risks in these transactions were quite low. In addition, the mixed-use zoning (PD-MU) permitted Mr. Mitchell to attract a variety of businesses and diversify his revenue stream and, thereby, reduce his business risks substantially.  In other words, he would have purchased the building and the land for the parking spaces even in the absence of the shared parking program.[4]  It is worth noting that by 1997, assessed value of the James Building had risen to $917,000.

2.   Law Offices at 797 Center Street

This property, a converted residential building, is used by a 2-person law firm.  The owners bought the property in 2001 for about $400,000 and renovated it for office use.  The Town first reduced its on-site parking spaces.  Then, it conditioned the office use on the owners’ participation in the shared parking program, even though the program’s parking spaces were located too far away to be of any use to the firm’s employees and guests.  After agreeing to participate in the shared parking program, the firm seems to have reached a separate agreement with the Town that allows its employees and guests to park in the nearby Town parking garage.  Some of them park on the street whenever the spaces are available.[5]

3.   Upholstery Shop at 757 Elden Street

This property used to be an antique furniture shop before Mr. and Mrs. Colon bought it. They wanted to locate their show room at this location.  Their signed Note with the town suggests they were coerced into buying 10 spaces.   They claim that more than 3 or 4 clients very rarely come to their shop at the same time, and, when they do, they generally park on the street.  For this reason, they claim that they did not and do not need to participate in the shared parking program.

4.   Ahmed Property at the Corner of Station and Lynn Streets

Corner of Station and Lynn Streets – This property was a guinea pig for developing the shared-parking program.  It helped set lots of the parameters for administering the program.  Even though its application for the PD-MU zoning was approved in 1991, the property remains undeveloped. It seems the high cost of new construction is making it difficult to obtain financing.  Of the $223,200 proffered for 48 parking spaces, the owners have already paid about $100,000. In the meantime, they have allowed the approved site plan to lapse. The town is now looking to buy back some the spaces they have purchased.

“THE COUNCIL NEVER SHOWED ANY CURIOSITY ABOUT HOW THE PROGRAM WOULD BE IMPLEMENTED.”

5.   Nachman Properties – 712-716, and 718 Lynn Street

Nachmans owned and operated a general store for decades. There was no garage nearby, but street parking in front and back of their store provided sufficient parking for their employees and clients.  By the end of 1980s, due to the declining customer base, the Nachmans needed to change their business model.  Since then, they have tried to attract a variety of businesses to their buildings.  The change over in any business is not easy and it was not going to be easy in this case either.  The Town should have expected that both the timing and the type of uses was likely to change over time and developed a policy to suit the changing circumstances. For instance, it should have asked such questions as the following:

    • How should changes in new uses be considered?
    • How should credit for existing spaces be given?
    • How should non-conformance (of the existing spaces) with new standards be made more flexible?
    • Should changes in the financial condition of the business be taken into consideration?

Neither the staff nor the Town Council asked such questions before the policy was promulgated in 1996.  At various times between 1997 and 2009, after several clarifications, the town determined that Nachmans needed to purchase 22, 20,18,17, 7, or 4 parking spaces.  Finally, in 2009, the Town decided that Nachmans needed only 8 parking spaces. Just before the cost of structured parking was increased to $14,700 in May 2009, the Nachmans purchased 8 spaces – spaces that were not even located in the town shared-parking lots.  To permit the Nachmans to participate in the program, on March 10, 2009, it declared 8 street-parking spaces in front of their building to be a part of the public-shared parking program.  Thus, it set a precedent of taking (public) street parking and including it in the shared parking program.  Once again, no councilmember asked any questions about the legality or precedent-setting importance of the new policy.  Thus, the absence of a carefully developed policy helped the Nachmans to delay purchasing the required spaces by 12 years. In the process the Town lost the interest it could have earned if the money that had been paid in 1997.  The Town also expended considerable staff time (probably worth more than $100,000) from 1997 until 2009 addressing various issues in the case.  A careful consideration of the economic and business facts before 1996 would have helped save these costs.  The Nachmans probably would have saved their resources also.  A carefully developed policy would have given Nachmans certainty about the rules and saved them considerable hassle over the 12 years.  No councilmember in the 1994-1996 period asked any question about the implementation of the program under changing economic or business conditions.

6.   Properties That Did Not Take Advantage of the Program

In addition to the TPI Center and the Ashley addition, only two properties – one located at 761 Monroe Street  (Rainer Holdings, LLC), and the other located at 795 Center Street were built within Areas 1 & 2.  Both of them were built using the CCD zoning.  They chose not to participate in the public shared parking, because they had built the required parking on-site.  They could have built taller and denser buildings under the PD-MU zoning, but that would have required them to take bigger financial risks.  Over the last 20 years, available records do not contain any discussion of development risks within the context of the shared parking program. Former Councilmember Downer and/or his family renovated the Old Church located at 718 Pine Street.  They converted the old church into offices for their insurance company under the CCD zoning.  They did not need to participate in the shared-parking program, because their property has sufficient surface parking.  It is not clear that Mr. Downer and/or his family could have taken advantage the PD-MU zoning given that the Old Church is a historic property.

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§ 2 Responses to Parking Garage and the Shared Parking Program – The Main Article

  • Howard DeFelice says:

    This is excellent information and should have been presented to the public a long time ago. I only became a resident of Herndon in 2008 so much of this is new to me. I came here from Long Island, NY and I have seen what this type of governmental omission of fact produces. Home ownership on Long Island has become impossible for young families and people on fixed incomes because of the tremendous property tax burden. Your blog describes how this happens, quietly and over long periods of time. Property taxes in Suffolk county where I used to live average over $1,000 a month and are still climbing. THIS COULD HAPPEN HERE ! Massive taxpayer expenditures that subsidize pet projects of a few board members is not acceptable. Trying to make downtown Herndon resemble Reston Town Center is ill conceived. Reston Town Center was planned and built from the ground up starting from a clean sheet of paper. Downtown Herndon is a historic site whose charm and attraction is it’s visual link to the past. Massive public works will destroy the very thing that makes it special.

    Like

  • Jeannette Gallup says:

    I thought this article was very informative, and surprising.
    I moved to Herndon as a young child in 1963, attended Herndon Elementary, Herndon Intermediate, and graduated from Herndon High.
    All of Herndon was historical to me, this is when the train was still running, farms were still being worked. There was something about downtown Herndon, it was special then as it is today. I bring my children down town, share with them about growing up here, they know how important it is to be able to go back and enjoy the things of historical value and beauty.
    I moved my business back to Herndon because of the love I have for it.
    We have developed so much around the town and down town, why more. Everyone that grew up in Northern Virginia could probably say they grew up were there is an historical down town, and would respond the same way. Please for all who enjoy the historical charm of downtown Herndon, and concerned tax payers, say something, do something.

    “Please do not let this massive project ruin Herndon’s downtown charm.”

    Like

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