Third Coast Has Two Strikes

June 20, 2007
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GRAND RAPIDS — The Parking Commission joined the Downtown Development Authority last week as not being in favor of selling most of the public downtown parking system to a private owner.

"I feel strongly that the Parking Commission should communicate back to the City Commission that the proposed bundled sale of city assets is not in the best interest of the city," said David Leonard, parking commissioner.

"We are open to offers on individual pieces," added Commission Chairman Jack Hoffman

A few months ago, Third Coast Development Partners offered the city from $35 million to $45 million for 10 lots and four ramps that make up two-thirds of the city's downtown parking. The city and the DDA each own properties in the system, and the downtown board made its feeling known in April.

But ThirdCoast principles David Leavitt and Brad Rosely have also offered to negotiate another sales price and said they would consider a long-term lease of the properties. They said they made their offer because they wanted to be in the parking business and wanted to help the city out of its financial jam.

With the Parking Commission and the DDA having chimed in, the fate of the deal now rests solely with city commissioners. Commissioners Rick Tormala and James White initially supported the sale, while at least four others were less than enthusiastic about the deal. And the commission has received a lot of input on what it should do.

Axios Inc. CEO Daniel Barcheski, who also served as a parking commissioner and was an advocate for privatization while on that board, didn't support a "bundled" sale to a solo private owner like ThirdCoast

"In those historic examples, almost 100 percent fail to produce the results they are seeking, but instead cause even more damage to the common citizen. Taking a current 'government/private' parking oligopoly and turning it into a 'duo-private' oligopoly will clearly do no good for anyone except for the new and remaining private owners," he said.

Barcheski also warned city officials not to see Parking Services as a "cash cow" to fund future activities. He said the city needs to create a fair and reasonable fund to support the department so parking rates can be lowered to encourage more businesses to locate in the district.

Todd Schaal, a principal in the development firm The Estes Group Cos., said it made no sense and would be irresponsible to sell city assets to pay for operating costs. At some point in time, he said the city would run out of assets but still have bills to pay.

Schaal also said the city wouldn't play as big a role in fostering economic development downtown without the properties, a position he felt was worth more tax revenue to the city than it could get from selling the parking system.

"Lastly, if the properties were to be sold, it should be done so to the highest bidder on a level playing field with ample time to obtain proposals. No one should get an advantage and no one should be compensated because it was their idea," he said.

Downtown Alliance Executive Director Sharon Evoy urged the commission to continue using the downtown system as an incentive for economic development.

"This availability of parking has been a vital component that has given developers the assurance to proceed with projects. Small businesses in particular rely on the assurance that parking is available," she said.

Evoy said downtown constantly fights an "inaccurate perception" that parking is scarce, and talk of selling the system reinforces that perception. She said it discourages people from going downtown, which hurts the business owners who depend on the traffic.

Peter Varga, CEO of The Rapid, didn't favor a sale, either. One reason he cited was that a sale could disrupt the plan to relocate the Amtrak station. Rockford Construction and Grubb & Ellis|Paramount Commerce have already told the city a bundled sale is a bad idea.

Parking commissioners also supported a transfer of the revenue that Parking Services collects from violations to the city's general operating fund to help fill the account's deficit, after they learned from City Attorney Philip Balkema that it is legal to do so.

"We can accommodate the transfer," said Pam Ritsema, director of Parking Services.

Parking Services expects to collect $1.26 million from fines during the coming fiscal year that starts on July 1 and spend about $975,000 to do that. So a transfer of the net revenue from fines to the general operating fund would amount to $290,000. The city expects to use about $5 million from its dwindling reserve account to balance the fund next year.     

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