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City Hall, Wilmorite discuss North Clinton garage deal

The move is one of several measures suggested by a Rochester Downtown Development Corp. parking study to reduce or even eliminate the city’s downtown parking facility ownership.
A 14-member RDDC parking committee, whose members include Wilmorite vice president Karen Noble Hanson and Farash Corp. chairman Max Farash, issued a draft version of the report in December.
Other recommendations include having the city search for a private owner for the Mortimer Street Garage and look into the creation of a real estate investment trust to take over all eight city-owned downtown garages.
Currently, the city leases those facilities to private operators who then take revenues from parking fees. The city, meanwhile, is responsible for most of the maintenance.
Carlson said it costs the city $115 a month to build and maintain each parking space, while it keeps monthly rental charges at $69.
Prices are kept artificially low to keep downtown office space competitive with suburban complexes, which typically do not charge for parking, he said.
Private operators could build and run such facilities more efficiently than the city and thus not risk driving up downtown parking prices, Carlson believes.
If a new garage is built as a private project, the developer will not have to comply with regulations applying to public projects and therefore could shave millions of dollars off the cost, he said. Private owners also can afford to do better and more frequent preventive maintenance and thus extend the life of parking facilities, he added.
Different economics can apply to each facility, however, so decisions to privatize existing garages or seek private developers to build new ones have to be made on a case-by-case basis, Carlson said.
“We’re not necessarily talking about a wholesale effort, but we’re very interested in privatizing garages where it’s appropriate,” he said.
The Clinton Avenue garage adjacent to Wilmorite’s Sibley Building has been virtually closed since last February and is scheduled for replacement.
Allright Parking of New York Inc. is under contract to run the garage for the city but now rents spaces on the first floor only.
A preliminary plan under discussion by the city and Wilmorite calls for Wilmorite to build and run a new 850-space garage and lease some 300 spaces to the city for public use, Carlson said.
He said the city is not talking to any other private developers.
Nicholas Litton, Allright of New York vice president, said Allright that knows of the talks with Wilmorite and that he knows of no interest Allright has in the project.
Terms discussed so far with Wilmorite would have the facility financed through city general obligation bonds. Wilmorite would pay debt service on the bonds but would not pay taxes on the facility, Carlson said.
The city, meanwhile, would pay $3 million to $4 million for its spaces, a cost considerably less than the $12 million to $15 million it would spend to build a garage itself, he said.
While he stressed the proposal’s preliminary nature, Carlson said that planning for the facility’s replacement is proceeding on the assumption of Wilmorite’s ownership.
The Mortimer Street Garage is still in operation but due for replacement. The RDDC study recommends that the city complete by June an analysis of privatizing it.
Also recommended for completion by June is an analysis of the REIT idea.
REITs are investment vehicles, usually publicly traded, in which shareholders are paid dividends from interest on mortgages or income from properties held by the trust. Equity trusts with income derived from property ownership rather than mortgage interest are by far the most popular, accounting for 81 percent of those now in existence.
Equity REITs based on shopping centers, hotels and residential properties are increasingly common, but none owning parking garages yet exist.
“It’s pretty far out, but I think it will have to come eventually,” said Norman Leenhouts, chairman of Home Properties of New York Inc., of the parking-garage REIT idea.
Home Properties last year formed the Rochester area’s first REIT, an apartment-based trust with properties in Rochester, Syracuse and Buffalo.
Wall Street is increasingly interested in REIT financing and ready to extend it to new concepts such as parking garages, Leenhouts said.
However, questions such as who would manage such an entity and who would operate the garages would need to be settled before a Rochester parking-garage REIT could be developed, he said.
Indeed, Leenhouts is skeptical of whether Rochester’s eight garages alone would be sufficient base to form a REIT.
“It just wouldn’t be enough to interest those guys,” Leenhouts said.
Such a REIT would have to encompass garages in several cities and might well have to include private as well as municipal facilities to reach a size and diversity sufficient to interest Wall Street backers, he said.
Aside from its privatizing suggestions, the RDDC study calls for a number of measures to relieve pressure on overworked garages and encourage use of underused ones.
The study is predicated on the assumption that downtown parking clientele is overwhelmingly made up of downtown workers, said Jack Bowman, chairman of the RDDC committee.
“I know in my position that parking problems have a damping effect on real estate,” he said.
Bowman is Xerox Corp.’s manager of corporate real estate for Monroe County.
Among RDDC recommendations Carlson said the city is looking into: creation of a parking space auction to encourage more rooftop parking in garages and creation of a shuttle service to ferry workers from more distant garages to downtown’s central area.
In an auction, some bidders would theoretically pay more for prime, lower-level spots while others would bid less for less desirable rooftop spaces.
The study recommends beginning rooftop-space auctions for the Metro Center Garage by March 31 and for the Washington Square Garage by May 31.
If those attempts do not pull enough parkers to the underused spaces from more popular garages, the city should try again but offer a shuttle service to ferry parkers closer to the downtown core, the study recommends.
Carlson said this week he is in the process of briefing Mayor William Johnson Jr. and City Council on the RDDC study.


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