I have been away from this thread for a while; sorry for not getting back with you sooner. There has been a lot of good info posted here, especially on estimating the revenue. I note that the numbers cited by Karen reduce to about $6/day per space which is less than my $7-8/day estimate. My estimate was intended to be optimistic from the point of view of those who wish to see the structure built. I was checking to see if the utilization rate would have to be in excess of 100% assuming generous operating assumptions. I did not try to figure maintenance costs since I have no idea what they would be; instead I assumed generous staffing and labor costs (about 4 staffers per shift, with 4 shifts per week and $40,000/year cost per staffer). When it comes to the debt payments, I used a trick from my financial engineering class and calculated the cost assuming the loan was an interest only loan that is never paid off and the loan payments increase with the expected rate of inflation or about 3%/year forever. My analysis is equivalent to comparing the project cost to the present worth of the expected future net income. And in fact, if you do the calculation that way with my previous assumptions above plus the added assumption of $6/day per space, the cost of the structure is $55 Million while the value of the future net income is only about $41 Million ($1.4 Million gross – $640,000 operating expense times a multiplier of 50 to take into account the net positive cash flow out to infinity; the multiplier of 50 is what you get when you discount a cash flow stream that is increasing at 3%/year but discounted by an interest rate of 5%/year out to infinity–1/(0.05-0.03) .)

Another thing to note is that the debt payment assuming the debt is amortized over a 30 year schedule is around $3 Million/year for the principle and interest. Given that the projected revenue for the structure is no more than $2 Million/year for the first year of operation, the cash flow will be negative until the debt is paid off in about 30 years. At 3%/year increase, it will take 24 years for the gross revenue to double to $4 Million/year, but of course the operating expenses will increase too. Given the $6/day per space estimate for revenue, I’d say the structure is getting a heavy subsidy from the city and the DDA.

That’s certainly a reasonable conclusion. And yet…

Almost(?) two years ago now, following the lead of councilmember Greden, city council directed the DDA to propose a design for an underground parking structure next to the library. The DDA professionally and competently (and for some board members, gladly) completed that task.

In the meantime, work on the “Immediate Actions” for parking demand management recommended in the Nelson/Nygaard parking study report seems to have dropped off while the DDA board and staff fulfilled that request. The report recommended that those efforts be “exhausted” prior to any decision to either raise rates systemwide or expand capacity. That recommendation was apparently ignored by city council.

Roughly a third of the eighteen recommended actions were completed or otherwise instituted early on after the report was received. (I don’t have enough information to be more exact about this, though I’d like to be.) Another third or so have been acted on in the last six months or so, and don’t have much of a track record to evaluate yet. The remaining five or so items, including one specifically targeted at the problem that Robin points to in the State Street area, have not yet been acted on (with the possible exception of a decision(s) to delay implementation of a particular item(s) by the DDA board.)

So almost(?) two years have passed since council decided on the “solution” to the downtown peak parking demand problem, and still–as far as I’m aware–no permit holders have been moved from the frequently full Maynard structure to the underutilized 4th & William structure, and we don’t have a good sense of how well other demand management policies and practices will work, in part because they haven’t all been tried yet. The desire for “more parking downtown” in the future seems to have interfered with fully addressing the issue today.

But still, parking is free on Sunday.

Councilmember Briere might want to consider what downtown merchants thought about the replacement of the Kline’s lot as part of the three-site plan several years back, or just the input from merchants at this meeting, for that matter. Whether it’s a surface lot or a structure, removing a big block of parking capacity is not likely in the near term.

“He said he thought they’d passed peak oil, but felt that people will still drive some kind of vehicle, though they might be electric-powered.”

Peak oil equals peak parking (with some small time lag.) We can address that peak through parking demand management efforts without shortchanging our potential investment in the transportation system we will need for our future by over-investing in parking capacity now.

The time to build underground (public) parking was 20+ years ago. We missed that window of opportunity. Our opportunity now is to strengthen the array of lower-cost alternatives, some of which, like park-and-ride lots, car pooling, and car sharing, involve cars, while others involve technology, buses, and legs.

Principal and interest payments for the structure bonds in fiscal year 2013 were 2,736,992 from the parking fund and $852,496 from the DDA TIF fund. The bonds will be structured as interest only during the construction period. The payments listed include principal and interest.

The costs paid from the TIF taxes are for pedestrian improvements and things to encourage future development, like the additional supports for a 25 story building.

With 100 less spaces, the revenue and debt service should be less than these amounts. Since this structure will be a money loser, at least while the city is paying off the bonds, reducing the number of spaces helps the cash flow in the parking fund and makes it easier for the DDA to continue to pay the city’s general fund $2 million per year. The DDA parking fund also gives the city almost $800,000 per year to help maintain the streets.

Newcombe, how can you promise parking? The structure won’t be completed for at least a year and a half. Were your comments to council disingenuous? Or are you just referring to parking costs? Even then, you’ve got some explaining to do, given the existence of a waiting list for permits, among other things. I wouldn’t be surprised if you have in mind using some of the hundreds of underutilized spaces in private surface lots downtown. The DDA has not explored the potential for (inexpensively) coordinating the use of those spaces.

With regard to that construction period, I wonder how many downtown merchants understand that the 193 spaces at the existing surface lot and another 88 (or some portion of those) spaces at the old Y site will be unavailable during that time. Library patrons will need to park at the 4th & William structure (which fortunately usually has 200 or more spaces available during library hours) or in metered parking on the streets, very possibly displacing shoppers (who also will not have those surface lots as an option.)

If it really is true that people who can’t find a space during peak times and say, “I’ll never come downtown again!” actually never do, we can expect their number to grow much faster in the next two years. Of course, it could be that they say that when they’re frustrated and don’t follow through on the threat. For all we know, they later realized that it was silly to expect to find a space next to campus on Parents Weekend. That’s the problem with anecdotal “evidence”–we can’t really know how much of it is true, regardless of how much it suits our position.

Unfortunately, I think it’s much more likely that the reality for the next few years will be more downtown businesses closing and more available parking.

If the structure weren’t built we’d still have the 193 spaces indefinitely, the 88 for at least two more years, the 50+ business district spaces added to 5th and Division, and the 200 or so that will be added in the Ann Arbor City Apartments development in the next year or so. Add those to the 100+ that are usually available in 4th & William, and it’s a sufficient amount to work with in order to creatively manage peak demand for parking.

The key words are “sufficient” and “creatively”. We can’t afford more than what’s sufficient, and we can’t afford not to think creatively.

Good info from the annual budget – but another complication is that some of these structures are all daily parking, some all permit parking, and some a mix. If the work that I did some years ago in examining the parking system is still reasonably accurate, the permits pay less per day than a fully utilized daily parking space. Also, I’d guess that these rates do not increase with inflation, but rather in steps, with jumps at arbitrary times (not annually).

http://a2dda.org/downloads/Budget_09-approved.pdf

which has a table for revenue per structure. From that I see the following for revenues :

Forest: $1.0m/yr, 854 spaces
Maynard: $1.75m/yr, 797 spaces
Fourth/William: $2.0m/yr, 847 spaces
Liberty Square: $1.25m/yr, 573 spaces
Fourth/Washington: $0.65m/yr, 282 spaces

I know that the Forest structure is shared with the U, so that doesn’t really count; if you look at the others, then you do a ballpark estimate of $2100-$2300 per space per year in gross revenues. That pegs the projected annual revenue from a 670 space lot at about $1.5m per year. If you take ChuckL’s $670k/yr operating costs figure, that gives you about $830k/yr to service the debt.