The city government of Jacksonville is straining under a lopsided deal to finance the operator of three privately owned parking garages.
Under the 2004 deal, the city initially expected to lend about $13.3 million to Metropolitan Parking Solutions to cover the operator’s losses on the downtown garages through 2019.
But so far, the city has loaned $47.4 million to Metropolitan Parking under their 2004 agreement. Set to expire in 2030, the open-ended deal has no limit on the total amount the city is required to lend to the company, which would start repaying the loans when the parking garages become profitable.
Under their deal, the city would stop lending money to Metropolitan Parking when the company’s parking garages become profitable. The city had expected the garages to break even by 2019.
But Metropolitan Parking has lost money on the parking garages since they opened more than a decade ago, and the company’s below-forecast parking revenue is expected to persist. A proposed 2018-19 budget for the city includes $4.2 million to cover its obligation to finance Metropolitan Parking.
Kenneth Krismanth, a representative of Metropolitan Parking, told the Times-Union the primary reason the garages lose money is “revenue-related.”
The city authorized a municipal bond issue on behalf of Metropolitan Parking to finance construction of the parking garages. Metropolitan Parking also borrowed $5.7 million from the city to acquire the land for the parking garages.
The company invested $3 million of its own capital in the three-garage development. One garage has 1,357 parking spaces for the Duval County Courthouse, and two next to Jacksonville Veterans Memorial Arena have a total of 1,480 spaces. The parking garages opened in 2006 and 2007.
The company’s 2004 agreement with the city requires Jacksonville to lend Metropolitan Parking enough money to cover the cost of operating the parking garages, repaying the municipal bonds, and providing a guaranteed rate of return on the company’s $3 million investment.
The 6.75 percent guaranteed rate of return equates to approximately $200,000 a year. [Jacksonville Times-Union] – Mike Seemuth