Decision on parking ramp transfer eyed

March 15, 2010
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As a way to take a small bite out of a large projected budget deficit for the 2011 general fund, Grand Rapids city commissioners will decide soon whether to transfer ownership of the Government Center parking ramp to Parking Services.

The ramp, which has 921 spaces and is located beneath Calder Plaza, is owned by the city and has been appraised at $12.2 million. Parking Services, a separate city department that operates the city’s parking system and doesn’t receive tax dollars, will buy the facility for the appraised value minus the building’s remaining debt service of $383,143 from a 1983 obligation.

Parking Services will pay the purchase price of $11.8 million over nine years at an interest rate of 4 percent per year, for an annual payment to the general fund of roughly $1.36 million, or $12.28 million over the nine-year period.

Parking Services Director Pam Ritsema said the transfer is good for the city’s general fund because the yearly payment her department will make will exceed the ramp’s current net revenue from operations. Her department will also be financially responsible for the ramp’s maintenance and capital improvements.

For Parking Services, though, the transaction is more like a case of delayed gratification.

“The benefit to the Parking Services Enterprise Fund occurs after acquisition payments have been completed and greater net income from operations of the ramp will be credited to the parking system fund,” she said.

For the first six months of this fiscal year, however, gross revenue to the Government Center ramp was down by $32,484 from last year, at $767,256. From July 1 to Dec. 31 of 2009, the ramp’s revenue was $799,740. Revenue was down by nearly $245,000 throughout the city’s downtown system of ramps and lots at the halfway mark of the current year from the previous year’s figure.

The Government Center ramp has provided the city with a small surplus in past years. The targeted date for the ramp’s transfer is April 1.

Parking Services currently operates eight ramps downtown and owns seven, as the Convention and Arena Authority owns the facility beneath DeVos Place. The department is building its eighth as part of the Gallery on Fulton project at Division Avenue and Fulton Street, and recently opened its seventh ramp at Weston Street and Commerce Avenue in conjunction with the Thirty-Eight office and residential project scheduled to be finished soon.

The city’s general fund is facing a deficit of $27.4 million for the 2011 fiscal year that begins July 1. After projected tax revenues are totaled and required and mandated expenses are met, City Manager Greg Sundstrom said the city will have roughly $65 million to meet the general fund’s discretionary spending that totals $92.3 million. Of that spending total, $52.2 million is needed for police and $27.3 million is needed for fire to keep both services at current levels. At a total of $79.5 million, police and fire services amount to about 85 percent of the fund’s discretionary spending.

The city has a request for a five-year income tax increase on the May 4 ballot. If approved by voters, the additional tax would give the city’s general fund another $7 million in revenue for each of those years.

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