Sarasota mayor votes ‘No,’ indicating concern that insufficient revenue will be generated by on-street parking meters to help repay the bonds
She joined her fellow commissioners in approving the $11,974,255 Guaranteed Maximum Price and amended construction contract for the project. However, Sarasota Mayor Shelli Freeland Eddie this week voted against issuing $17.5 million in bonds to cover the expense of the St. Armands parking garage, plus the burying of electric lines on the John Ringling Causeway and other facets of the project — including the $100,000 cost of the building permit and the installation of a paid parking system in the facility.
The total project cost has been put at $15,499,457.
“I would love to not have anyone pay,” Freeland Eddie said, referring to parking fees, which will cover a significant part of the expense. Still, she acknowledged, “We don’t want to continue to have people drive around in circles” on St. Armands, looking for spaces.
Freeland Eddie also questioned the city’s financial adviser and its bond counsel about the potential for the city’s General Fund to cover any shortfall in debt service for the bonds if the metered, on-street parking program on St. Armands does not generate sufficient revenue.
Although Commissioner Hagen Brody noted once more his opposition to paid parking in downtown Sarasota, he pointed to the consensus of St. Armands business owners in supporting the meters on the Circle.
Diana Corrigan, executive director of the St. Armands Circle Association — which represents the merchants — addressed the board during its regular meeting on Oct. 2 to talk about the studies that were undertaken, as business owners on the Circle pushed for a sufficient number of parking areas for customers. The initiative effort began in 2005, she pointed out. “Our businesses have taken on a huge commitment,” she added, to make the 476-space garage a reality.
Along with the metered parking revenue, the merchants are being assessed $260,000 per year to help cover the repayment of the bonds, Mark Lyons, manager of the city’s Parking Division, explained.
In response to questions from Freeland Eddie, bond counsel Duane Draper — who is with Bryant Miller Olive in Tampa — and the city’s financial adviser, Craig Dunlap of Dunlap & Associates in Winter Park and Fort Myers, pointed out that the bond covenants would not allow the City Commission to halt the metered parking program on St. Armands, even if the public protested it, until the bonds were paid off.
However, the commissioners could change the fee structure and the time periods during which the meters are in operation, Draper said.
Based on an in-depth study, Lyons noted, people who park in the core area on St. Armands — in the spaces closest to the shops and restaurants — will pay $1.50 per hour from 9 a.m. to 8 p.m. Monday through Friday. The designated “perimeter spaces” will cost $1 per hour; the remaining surface lot, 75 cents per hour; and the garage itself, 50 cents per hour. The fee will be charged on Saturdays in the garage, as well, Lyons said.
The total revenue per year has been projected at $1,848,916, Lyons added, which was a conservative figure.
When Freeland Eddie asked why the street parking would be free on Saturdays, Lyons replied that that was the decision made, based on revenue projections. “Should there be a reason to increase revenues,” he added, “[adding that day] would be something that we could utilize.”
“I’m not suggesting one way or the other,” Freeland Eddie told him, but “that is an opportunity to kind of reduce the debt.”
A break in the interest rate
Dunlap did point out that the city would be saving money on its debt service on the bonds. “I am very pleased to announce that when we went to the rating agencies to get these bonds rated,” he began, “Moody’s … upgraded general obligation bonds of the City of Sarasota to Aa1. That is one notch below the highest rating that you can possibly achieve.”
City staff had been trying to win that bond rating for about three years, Dunlap added.
“There’s a handful of municipalities that enjoy AAA ratings,” he continued, “so you’re not very far from the best rating you could possibly achieve.”
The annual debt service would be about $1.1 million, Dunlap told the board, which was lower than the figure Lyons had included in his financial chart for the project.
The debt service for the St. Armands garage bonds will be paid off in 2038, Dunlap noted. The last time he had an analysis undertaken of the city’s interest rate, he said, was Sept. 26, before Moody’s offered its upgraded rating. Therefore, he anticipates the interest rate will end up being lower.
“I just want to be confident and comfortable that you are confidant and comfortable that we’re going to be able to pay back these bonds,” Commissioner Brody told city Finance Director Kelly Strickland.
“Absolutely,” she replied.
When Freeland Eddie began raising her concerns that the paid parking program on St. Armands might not bring in sufficient revenue to cover as much of the debt service as anticipated, Dunlap told her, “There is a possibility that the General Fund would have to step in and make up any difference.”
However, Draper pointed out, the paid parking program could continue beyond the life of the bonds, allowing the city to repay its General Fund out of the meter revenue.
When Commissioner Jen Ahearn-Koch asked whether the commission could change the merchants’ assessment to help cover any shortfall in meter revenue, Draper told her that that would not be possible under the terms of the bond covenants. Yet, he said, “you could always create a new revenue source,” if the majority of the commissioners were willing to make such a policy decision.
Jon F. Swift Construction of Sarasota will manage the building of the garage. The start of construction has been pushed back from November to the spring of 2018, with completion planned in December 2018, according to a chart shown to the commission on Oct. 2. A slide in the PowerPoint presentation Parking Manager Lyons showed the board indicated St. Armands business owners were worried about construction being underway during the height of the upcoming tourist season. Staff “[w]orked with Diana Corrigan (St. Armands Circle Association) and the St. Armands [Business Improvement District] on the best time to begin,” the slide noted.