Opinion: Parking garage on the Hill — boon or boondoggle?


The Boulder city government is proposing to promote the development of a new “boutique” hotel on the southwest corner of Broadway and University by building a two-story parking garage underneath it. Apparently the overall objective is to solve the Hill’s continuing problems, identified as lack of parking, lack of year-round business, and lack of an “anchor.” Here’s what I’ve found out to date:
Currently, the site has 62 public parking spaces plus 26 private spaces, all of which will be eliminated. The underground lot will have 204 spaces. Three spaces are reserved for the University Hill General Improvement District, and 32 for the hotel. So there will be 169 left for the public, a net gain of 81 spaces. (If hotel patrons occupying the 173 rooms bring more than 32 cars, this net gain is reduced.)
The public cost for the garage, including some sidewalk area improvements, is $20 million for construction, plus the $2 million UHGID Pleasant Street lot, which is being donated. So the net cost for the 81 additional public spaces will almost certainly exceed $250,000 per space.
The $20 million parking lot debt will be repaid by diverting all of four tax revenue streams from the site, plus the parking revenues net of operations and maintenance. The diverted city property tax, sales tax, accommodation tax, and UHGID revenues constitute 95 percent of the total; parking revenues are only 5 percent. This diversion is not just the incremental increase in these taxes due to the hotel; it’s 100 percent of all the tax revenues associated with the site, excluding dedicated taxes like for open space. So there will be no funds left over to pay for city services; presumably, other budget items will be cut.
The hotel will pay “market rate” for its spaces, not the full cost. Just operating and maintaining the spaces costs almost $1,000 per space per year, and uses up much of the parking revenues.
In spite of all the taxes being diverted, the revenue stream is still about $1 million short of the cost of covering the debt in first year. This deficit will be met by diverting additional revenue from the general fund. If all goes reasonably well and revenues grow at the city’s projected 3 percent per year, this annual additional diversion will go down to zero in year 13. However, the four revenue streams plus parking money will continue to be diverted from other uses until the general fund is fully “repaid” 27 years in the future. But this is all general fund money anyway, so it’s really we citizens who are paying.
The hotel benefits because it does not have to pay to build its parking. If it built its own spaces, say 40 to be more reasonable, and if the cost were still around $100,000 per space (though with fewer spaces, it would likely be higher per space), that’s a $4 million savings. And the hotel also is not paying for the UHGID lot, a significant portion of its needed land. So the hotel’s total avoided costs are around $6 million.
The hotel itself is projected to cost in the neighborhood of $63 million to $65 million, based on 2016 data. So the savings to the hotel by getting its parking at “market rates” and not having to pay for the UHGID land represents a potentially huge increase in profits. And, even with free EcoPasses, some employees will still drive, worsening the overall parking and traffic situation.
This hotel will displace 42,000 square feet of existing retail, restaurants, and office space. It will then add back 12,000 of new retail/restaurant space, almost certainly oriented toward its 200-plus “boutique” clients in their 173 rooms. The rest of the Hill merchants will still need to focus on the 34,000 CU-Boulder students (plus faculty and staff), who will continue to be their main customer base.
So the gain to the rest of the Hill from the hotel may be more illusory than real, other than a few very expensive additional parking spaces, which of course are not as convenient as the surface spaces they are displacing.
The city is proposing to use certificates of participation (COPs) to finance the garage. COPs must be renewed every year, and therefore do not require a TABOR vote. But were the city to renege, its credit rating would be seriously damaged, and the cost of future debt would skyrocket. So, COPs are effectively no different from standard tax-exempt municipal bonds, but cost significantly more in interest. Given all the above, I think that the citizens should be given a chance to vote on this deal. Don’t you?


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