City paves way for its 7th garage downtown.

Byline: Edward Russo The Register-Guard

Downtown parking is big business for Eugene city government. And it's a business that's about to get even bigger.

Eugene officials are preparing to sign a development agreement for the seventh city-owned downtown parking garage. The $10.5 million structure is to be built along East Eighth Avenue, between Mill and High streets next to the proposed Whole Foods Market.

Parking garages are expensive to build. And they're sometimes controversial, as shown by community debate that flared earlier this year about the Whole Foods project.

Some critics say it can be inappropriate for the city to build the garages, and that existing downtown parking garages are underused.

So why does the city bother to keep building these costly and often unsightly behemoths?

The main answer is that city officials and downtown boosters believe that the garages help attract businesses and private investment to downtown.

Private developers won't build garages because the structures don't generate enough profit.

And once the garages are built and their debt paid off, the structures make some money for the city.

In the next fiscal year, profits from the city's overall parking operations, including parking garages and surface parking, are expected to provide $547,000 to the city's general fund.

`It's been our practice for many years to send dividends to the (city's) general fund,' said George Jessie, who recently retired as Eugene's parking services manager and still works on a contract basis for the city.

The city's financial strategy with the garages is relatively straightforward. The city takes on debt to build parking structures, then typically uses taxpayer dollars to pay off the debt over time. The city uses daily parking receipts to pay garage overhead, such as maintenance and repairs. Each year, the city collects about $4 million from downtown parkers.

Because the city has already paid off the construction debt on all but the newest of its downtown garages, there's usually a hefty surplus from annual revenues.

The parking system's only big debt at the moment is the loan it took on to build the latest downtown parking structures, the Broadway Place garages, at Broadway and Charnelton Street. The city is paying about $640,000 a year on the debt for those garages.

A similar financial picture is true for Lane County, which owns several downtown parking lots and the old butterfly parking structure near the Lane County Courthouse. After expenses, the county last year cleared $285,400 from parking fees.

The city garages cost more than $30 million total to build. They provide more than half the city's 4,000-plus public parking spaces downtown, which includes on-street metered places.

Construction could start soon

The City Council cleared the way for the latest garage and the Whole Foods store in March. Construction could start this fall and take more than a year.

City planners said the new garage will help meet parking needs in the east end of downtown, including the developing federal courthouse area.

But is there a public demand for this new garage?

City officials acknowledge that downtown parking is easy to find, especially for people willing to walk a few blocks.

"Parking is relatively easy through the downtown area, but there are specific locations, such as around Eighth Avenue and Pearl Street, where demand is high," Jessie said.

The Whole Foods store will include 200 parking spaces of its own. Critics argued that some Whole Foods shoppers will use the new public garage instead, so that the city garage will amount to a public subsidy to the Texas-based retailer.

Eben Fodor, a Eugene resident and community planning consultant, thinks the new garage is unnecessary for another reason.

During the city's fight over the Whole Foods garage proposal, Fodor walked through city garages and found many empty stalls.

The city's latest garage survey, taken last spring, supports his observation. On average the city's garages were 52 percent full, Jessie said.

At 74 percent full, Overpark was the busiest garage. The emptiest is Broadway Place, at 30 percent full.

The occupancy rate at Broadway Place dropped dramatically four years ago, when Symantec, a former large downtown employer, moved to Springfield. Until recently, Symantec continued to pay rent on 550 spaces in the 729-space garage, even though many were unused.

Site swap criticized

The city will build the latest public garage on land it will acquire via a land swap next to Whole Foods.

Fodor said that instead of building parking garages, the city should create open spaces downtown.

He liked the ideas of Mark Gillem, an architect and University of Oregon assistant professor, who advocated extending the Park Blocks green space to the Willamette River.

The new garage will break the potential green-space link between the Park Blocks and the river, Fodor said. Also, by trading city-owned downtown land for the site next to Whole Foods, the city is limiting its siting options for a new City Hall, he said.

"That's what disappointed us the most," Fodor said.

`That (the garage) will be right next to City Hall, and it would preclude a host of options for downtown redevelopment.'

For most of the financing for the new garage next to Whole Foods, Eugene will rely on its ability to use future property tax revenue increases from its Riverfront urban renewal district.

Urban renewal districts amass money by taking the taxes generated by increases in the assessed value of properties in the district and placing that money in a special fund to pay for public improvements in the district.

Eugene and other cities use this so-called tax-increment financing to raise money for acquiring land and building parking garages, plazas and other public amenities to entice private developers to downtowns.

Tax-increment financing can be controversial. The pro argument: It's a way to fund public improvements in a geographic area that needs a boost. The con argument: The tax money collected in the district cannot be used for public services elsewhere in the city.

Two downtown developers assert that the network of garages play a vital role in the city center.

Broadway Place, the private housing and commercial complex that sits on top of the city-owned Broadway Place garages, wouldn't have been built without the city creating the parking garage, said co-developer Hugh Prichard of Eugene.

It would have been too expensive for the private developers to create parking of their own, he said. "We not only couldn't have built structured parking, we couldn't have built surface parking because of the cost of the land," Prichard said.

Broadway Place tenants pay $35 a month to park in the city-owned garage.

On the east side of downtown, members of the Downtown Athletic Club, at East 10th Avenue and Willamette Street, park at the adjacent city-owned Overpark garage, and use a skywalk to get to the club. The garage, the city's oldest, existed before the club opened in 1985.

The club rents 125 spaces from the city for $56 a month apiece.

About a third of club members live or work downtown, so they don't necessarily need the garage, said athletic club owner Rob Bennett.

"But we knew that in order to succeed we needed to be able to attract people who use their cars," he said.

Putting together the money

The new garage next to Whole Foods is expected to cost $8 million, plus $2.5 million in debt interest, bringing its total price to $10.5 million.

The city had to dip into numerous sources to assemble the cash.

Of the total, $8 million is to come from revenue bonds and cash raised by tax-increment financing.

The city plans to use other sources to pay for the balance: $1.8 million from a building replacement fund, $475,000 from the library's debt service fund, and $250,000 in storm water funds.

Meanwhile, city officials are finalizing the agreement with the Whole Foods developers and the grocery-store site owners, including Eugene businessman Dan Giustina, who will lease the store to Whole Foods.

The agreement is expected to be signed in the next several weeks, said Nan Laurence, Eugene's community development planner.

City officials are working with the Portland-based architects who also are designing the Whole Foods store to make sure the garage will be more attractive than some of the city's hulking parking structures, such as the Overpark and the Parcade.

"We are working with building materials and textures, landscape treatments and overall design concepts that will add to the pedestrian environment," Laurence said.

"The garage has to be a building that people will choose to walk alongside."

DOWNTOWN PARKING GARAGES

Since 1969, the city has spent $28.6 million, excluding interest, to build six downtown parking garages. The city plans to build another in 2007 or 2008.

Overpark: Year built: 1969; spaces: 598; cost: $2.4 million. Financed with bonds paid off by 64 property owners in assessment district.

Parcade: Year built: 1976; spaces: 438; cost: $4 million. Financed by urban renewal agency bonds paid off by taxpayers.

Hult Center garage: Year built: 1979; spaces: 520; cost: $3.5 million. Financed by general obligation bonds paid off by city taxpayers.

Hilton Conference Center garage: Year built: 1981; spaces: 246; cost: $2 million. Financed by urban renewal agency bonds paid off by taxpayers.

Pearl Street: Year built: 1997; spaces: 262; cost: $3.9 million. Financed by urban renewal agency and Lane Transit District funds.

Broadway Place garages:Year built: 1999; spaces: 729; cost: $12.8 million. Paid for by parking revenue bonds, city parking reserves, downtown urban renewal reserves, sewer funds and developer payments.

East Eighth Avenue (proposed): To be built: 2007 or 2008; spaces: 262; cost: $10.5 million, including interest. To be paid for by urban renewal bonds, building reserves and other city funds.

PARKING FINANCE

Outstanding debt: The city has paid off construction debt on all its downtown parking garages, except the debt on the Broadway Place garages, built in 1999. The city borrowed about $7 million through revenue bonds to fund the structures. The city makes an average annual debt payment of about $640,000, and will make its final payment on the debt in 2018.

GARAGE OCCUPANCY RATES Occupancy rates of downtown parking garages: Overpark: 74 percent full Pearl Street: 65 percent Hult Center: 58 percent Parcade: 54 percent Broadway Place: 30 percent Hilton garage: Rate not available. Garage managed by Hilton.