Cincinnati Aims to Use P3 to Upgrade Parking Assets, Leverage Economic Development

Last week, Cincinnati City Manager Milton Dohoney unveiled the city’s plans for modernizing its parking assets through what he called a public-public partnership.

The plan calls for a 30-year lease on thousands of on-street parking meters, and a 50-year lease on 2,363 spaces in five city-owned garages and four city-owned lots. The deal includes an initial $92 million upfront payment, and an estimated $3 million annual installment payment.

The other public partner in the deal is the Port Authority of Greater Cincinnati, who would oversee the operation of the parking assets. Xerox would work with the Port Authority to manage on-street spaces, while Denison Parking would help manage the garages and lots. The financing muscle behind the deal would be AEW Capital Management and Guggenheim Partners.

City officials note that the collection of private partners will be known as the ParkCincy Team.

Organizational Structure
The organizational structure under the proposed parking asset deal would keep the City of Cincinnati in charge. Provided.

In addition to the complex financial structure of the deal, the City of Cincinnati will see its parking assets dramatically modernized in the coming years. All on-street parking meters will be replaced by electronic meters that accept credit cards, and will be monitored to allow for those searching for a parking space to get real-time information on parking availability.

Several parking structures throughout the center city will also be overhauled. The crumbling Pogue’s Garage at Fourth and Race Streets will be torn down and replaced by a 30-story residential tower with a 1,000-space parking garage that will reserve more than half of the spaces for public use. Across the street, the 500-space Tower Place Garage will be renovated and expanded into the existing and vacant Tower Place Mall by another 500 spaces.

The improvements to be made to the Pogue’s Garage site and Tower Place Garage are being assisted by $12 million in city financing made available through the lease’s upfront payment.

Current-vs-Proposed
The proposed deal would significantly simplify the City’s accounting responsibilities with regards to its parking assets, but it would shift the bulk of annual revenues to the ParkCincy Team. Provided.

As part of that $12 million deal, the Port Authority will work with the developer to construct the planned $14.2 million 725-space parking garage, near the Horseshoe Casino at Seventh and Sycamore Streets, in place of the deteriorating parking garage at that site. The new garage’s development, meanwhile, is expected to jump-start the adjacent development of the proposed 115-room Holiday Inn & Suites.

In order to make the deal worthwhile for the Port Authority and the ParkCincy Team, parking meters will be in effect from 8am to 9pm downtown, and 7am to 9pm in other neighborhoods. Parking rates will remain the same downtown, but rates will increase to $.75 an hour once meter upgrades have been made.

Mayor Mallory’s Administration reviewed the bids and decided to take a lesser upfront payment in order to avoid some of the pitfalls experienced in Chicago, as pointed out by critics of Cincinnati’s deal. The City of Cincinnati sacrificed roughly $50 million in order to maintain control over certain aspects of the parking inventory including first ten minutes free at downtown meters, free parking on Sundays and holidays, and oversight on rate increases and enforcement.

One very crucial aspect is that the city will retain control over the price of parking, which will be determined by a board made up of City and Port Authority representatives, and rate increases will be capped at 3% annually.

In addition to the $12 million for the development at Fourth and Race Streets, the remaining $80 million from the upfront lease payment will go towards the following items:

  • $20 million to jump-start the Martin Luther King Drive Interchange at I-71;
  • $4 million to accelerate the next phase of Smale Riverfront Park in order to be complete in time for the 2015 All-Star Game;
  • $3 million to acquire the Wasson Corridor right-of-way;
  • $6.3 million to bring the City’s reserve savings account to its goal of 8%;
  • $25.8 million to balance the City’s 2014 budget; and
  • $20.9 million to balance the City’s 2015 budget.

City officials hope the $20 million for the MLK Interchange will accelerate its construction, but is contingent upon the Ohio Department of Transportation (ODOT). The project, officials say, will have a $750 million economic impact and create between 5,900 and 7,300 permanent jobs.

Should ODOT officials turn down the deal, City officials have said that they are prepared to redirect the funds to a 2,500-job “mega deal.”

The administration’s parking modernization and lease agreement requires approval from the Planning Commission and City Council before being finalized. The Planning Commission will vote on the matter this Friday at 9am, with a full City Council vote expected shortly thereafter.

Randy A. Simes contributed to this story.

  • http://5chw4r7z.com 5chw4r7z

    You’re not exaggerating about the Pogue Garage deteriorating either, here is a picture I snapped Sunday.

    http://instagram.com/p/WIU02fvwju/

    • http://www.UrbanCincy.com/ Randy A. Simes

      The Garfield and Seventh Street Garages are not much better. These were some of the worst assets in the system.

  • http://twitter.com/CincyCapell CincyCapell

    Excellent analysis John, well done. In one article you have provide more details and clarity to the parking lease than the Enquirer has with weeks of coverage.

  • http://www.facebook.com/profile.php?id=2309211 Eric Douglas

    I get the 3% rate increase cap to prevent what happened in Chicago year 2, but I don’t like this across-the-board assumption that a limited rate increase determined by a board is the rate that’s appropriate for each and every neighborhood business district. Are parking meters even needed in E Walnut Hills right now? Should there be an even greater rate increase in Hyde Park to keep shoppers from parking in residential areas?

    • chilismaug

      Yep, Like HP and Mt Adams, the University Heights area, for instance, is getting to be downright East Coast so far as parking. Hopefully if this gets managed by the port authority, they will take an approach sensitive to the neighborhoods, and to times of use – like how Mt Adams and University areas are tough on residents during the party hours.

  • http://www.facebook.com/people/Nate-Wessel/100002013606145 Nate Wessel

    How many more thousands of spaces does Downtown need??
    This is getting silly IMO. It’s 1000x easier to find parking than to find a vacant apartment in Downtown.

    Also, I think we’ll regret the cap on meter rates by the time this deal is over. Downtown is densifying(even despite the new car storage space) and rates should be able to go up to match increased demand for increasingly limited space. We’re setting the rate to match demand in the current market where parking is grossly over-supplied, transit under-supplied. I think that situation will change, especially as the minimums are removed, and we’ll have locked ourselves into a bad deal that subsidises cars at the same time that we’re trying to encourage other modes like transit and bikes. 30 years is a really long time!

    • http://www.UrbanCincy.com/ Randy A. Simes

      I agree with you about the amount of parking needed in the center city. With regards to the 3% annual increase limit, I would say that it is much more than what is currently done. Even with those things changing to drive demand up even more, I doubt that City Council would have the courage to raise rates at 3% annually. This essentially allows a non-governmental agency to increase those rates to more closely match free-market prices.

    • http://www.facebook.com/people/Nate-Wessel/100002013606145 Nate Wessel

      The pessimist in me agrees but the optimist balks and has more hope for forward looking governance. 30 years is forever in politics…I hope ;-)

    • http://www.facebook.com/people/Nate-Wessel/100002013606145 Nate Wessel

      I got a chance to talk with a City representative at the OTR community council meeting tonight and it seems that the 3% is NOT an absolute cap on rates. Rather rates can increase as the City and port authority and whoever else needs to be involved sees fit. That means that in some neighborhoods where the rate is already higher than the new neighborhood rate(I believe this is the case in at least some parts of OTR but I’m not sure), it could still start at more than $0.75 an hour and increase more rapidly, just as it could now, if people wanted it to and convinced the administration that it would be a good thing.

      It would seem to me that the 3% is more of a minimum increase that we can expect. That’s the amount that the operators can raise rates without question because the City has already agreed to it contractually. With that imagined limit out of the picture, I think it’s actually not that bad a plan at all. How the whole thing came about is still super-shady, and I’m uncertain about delegating power to an appointed board, but it seems like it could be a decent or at least unobtrusive change for the parking system.

  • Peter Cunningham

    Will this deal have an influence on private corporations who want to develop on parking lots? For instance, had the lot formerly on Fifth and Race been owned by the Port Authority, would dunnhumby’s have been financially discouraged from buying it? I have no statistical knowledge to back it up, but it seems that the City would be more inclined to sell parking lots to developers than a private operator.

  • http://www.facebook.com/profile.php?id=1414890499 Matt Jacob

    Are these all of the City’s parking assets? This is the first time that I’ve seen them on a map and I always had the impression that there were more. I know they’ve handed some over to 3CDC (under fountain square, washington park, vine and 12th among them) and I believe partner with the county at the Banks. Some of these assets are in serious disrepair (Pogue’s, seventh street, and garfield) while others seem like pretty valuable ones (FS south, grammercy) so I’m wondering if they only threw in enough of the good ones to get all the bad ones reinvested in/torn down and rebuilt. Is that the true motivation for this deal or are they simply trying to outsource the entire system (which it’s been noted is not a core City service)? Just spitballing and trying to get my head around it all…

    On a side note, it’s interesting that the Port is loading up on parking assets as revenue sources (kenwood towne place, pictoria, and now this massive deal) for their economic development in a similar fashion to 3CDC’s (as mentioned above); clearly taking a page out of a winning playbook; while the City is distancing itself from parking assets and investing in a new form of transit. Will each entity’s gamble one way or the other be a barrier towards future transit development of other modes? We’ll have to see how this all plays out, but it’s a dynamic that shouldn’t be missed here.

    • http://twitter.com/chrislamping Chris Lamping

      This does not include all of the parking assets the city owns. Most recent Cincinnati financial reports say that the city owns 14 parking garages/lots and 5,400 parking meters. I can’t seem to find a list of them anywhere, I was curious about this too.

  • charles ross

    I disagree that keeping the meters running until 9 pm is a free market pricing approach. That’s a short term grab that will hurt. This will discourage people from doing business downtown in off hours. I work in covington and live in mount auburn. While commuting I (which in my direction is only workable by car) like to stop and visit places like the library, shops and parks in downtown and uptown. Cincinnati is not the Loop or Manhattan (and I used to live in NJ, and I recall Manhattan used to have cheaper parking during off hours, including the meters off after 6 pm in many areas) . You don’t want to drive folks like me away by extending meter hours until 9 pm and Sunday, unless you give us, oh, i dunno, something like a streetcar that runs from the river uptown for instance.