Transfer may boost city revenue
When Grand Rapids city commissioners transfer ownership of the Government Center parking ramp to Parking Services this week, the city’s general operating fund could very well receive an annual revenue boost from the transaction that exceeds the $700,000 City Manager Greg Sundstrom has projected.
Parking Services, the city’s parking department, will pay $11.8 million, plus interest at 4 percent per annum, for the 920-space ramp beneath Calder Plaza over the next nine fiscal years. The interest and principal for those nine years total $14.25 million. Parking Services will collect the ramp’s revenue and assume the ramp’s costs for operations and maintenance.
The department will also pay off the ramp’s remaining debt of $414,326 over the next three years, which brings the total acquisition cost to $14.67 million.
City CFO Scott Buhrer said last fall that the city typically cleared $250,000 from the ramp after expenses, as its owner. But Parking Services Director Pam Ritsema said the city’s general fund will get more money from the sale than it would if the city hung onto to the ramp.
With the annual payments from Parking Services averaging $1.5 million over the nine years, the city could gain more than the $700,000 that has been projected for each year. “It will be between $700,000 and $1 million for nine years,” said Ritsema.
Revenue to the Government Center ramp was $1.33 million at the third quarter of the fiscal year, down by about 5 percent from the same period last year. At that pace, revenue to the ramp would reach $1.7 million for the current fiscal year. Expenditures are expected to total about $1.1 million, with $330,000 going to operations and $800,000 for the ramp’s maintenance.
The ramp was appraised at $12.2 million. The transaction price was arrived at by subtracting the debt service from the appraised value. “It will be retroactive to April,” said Ritsema of the transfer.
Parking Services is not going to the bond market to pay for the transaction. The department should begin the fiscal year, which starts on July 1, with working capital of about $11 million and will dip into that fund to make the first year’s ramp payment. Parking Services has seven bond payments next year that total $1.12 million.
City commissioners are counting on the revenue from the sale of the Government Center parking ramp to help reduce a reported $9.5 million deficit facing the general fund.