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Thursday, October 20, 2011

City of opportunity or opportunists?

I may have missed a few meetings at city hall during the provincial election, but I did try to keep up with the decisions made and some of the debate around them. More to the point, what I really missed was reading the agendas thoroughly so that I knew what was coming down the pike. I don’t like being blind-sided.

That’s pretty much what happened over the last few weeks with reports, and offers and opportunities coming out of nowhere.

First we had the Pompilii report telling us what a great opportunity awaited council at the 401. Jobs, jobs, jobs! The presenter was none other than a lobbyist for some landowners in the area. A special meeting was called by the Mayor to herald his report.

Then, a few weeks ago, a local developer offered us a deal that was too good to pass up: a chance to lease parking spaces in the parking garage he was building between his two buildings downtown. Tricar’s Joe Carapella was offering the deal of a lifetime, 300 parking spots right across from the John Labatt Centre. A 25 year lease for only $2,600 per year per spot. Hey, over the 25 years, that’s less than $2M. Who could let that slip by?

There was just one niggly little matter. Council hadn’t actually discussed the issue, hadn’t issued a request for proposals or expression of interest. It was an unsolicited single source offer. After some discussion, council suggested going ahead with negotiations providing there wasn’t a problem with the city’s purchasing by-law and a few other matters.

When I watched the debate on Rogers cable TV, I couldn’t believe it. I served on the Downtown Parking Committee for several years and there had been consideration of this location before, but the committee had decided to take no action because it was an outrageously expensive undertaking. Even the most avid proponents of more downtown parking couldn’t support it. And, according to the staff report, council had better be prepared to find $500,000 per year in its operating budget to cover the cost of operating it because, even though there are revenues from parking, they don’t begin to cover the actual costs.

In fact, a city-owned parking garage was on the agenda at my first full council meeting back in 2006. It was a close vote at that time but I like to think I showed some leadership in having the proposal abandoned at that time. Even then, the cost of building a facility was estimated to be around $26,000 per space. To break even, one would have to rent out the spaces to individuals for well in excess of $200 per month, well beyond what most downtown workers are able or willing to pay.

This is why developers are not interested in going it alone on a parking facility; it’s not a viable investment. The only parking that makes money is that which is occupied most of the time on an hourly basis, but that’s not what people in offices want; they want free or low cost parking as close to their workplace as possible. They don’t want to spend $2,600 per year. And even that wouldn’t allow them to break even because there are maintenance costs. So all you can do is hope to make a little extra money in the evening and on weekends with occasional parking for shopping and entertainment. 

But shopping happens during the week; on Saturdays you get two hours free downtown and Sundays is free all day. That leaves only entertainment at the JLC to make up the difference. It’s not enough.

On Wednesday, staff reported back to the Finance and Administration Committee (FAC). Our purchasing policy requires competitive bidding among other things, city treasurer Martin Hayward pointed out. Also, another offer had come forward from Shmuel Farhi. It was quite different from the Tricar offer, but since we had not sent out a request, there were no guidelines to indicate what the city was looking for, if anything.

Thank goodness Nancy Branscombe was back! She too had served on the Downtown Parking Committee at the same time as I did. She pointed out that during her tenure on it, there had never been a consensus on the need for a parking garage nor had it been established that a parking problem existed. There had been a request for an update on a previous study (I had asked for that), but it had not been done. The last I heard from the consultants was that the existing spaces had only a 70% utilization rate even at peak periods.

On the basis of this, and the potential costs which had not been included in any budget estimates, Branscombe moved that no action be taken on the item. “How do we pay for it ongoing?” she demanded. “That’s how we get ourselves into trouble. Things just pop up and we don’t know how to pay for it. I don’t support any of it.”

Paul Hubert thought differently. He pointed out that this was a decided matter of council and it would take a re-consideration and a two-thirds vote to get it reversed. Tricar is in the process of construction, he noted and the offer is time-limited. "Let’s just go ahead with the negotiations," he urged. Farhi’s getting into the mix with a much bigger bid just made it competitive.

However, the take no action motion had been made and seconded by none other than Dale Henderson. He wondered if there was anyone around who wanted to give us land for parking and “Why would we want to spend the money so fast.” At the same time, he wanted to pursue the deal. He suggested a friendly amendment.

Mayor Fontana pointed out that he, Henderson, had seconded the take no action motion.

Hubert was rapidly losing patience. “You can’t amend no action,” he lectured. “It’s an inert state. There is no movement. The molecules have stopped.”

Joni Baechler, not a member of the committee, was also present. She pointed out that the original motion supported by council was to pursue an agreement subject to it being in conformity with the purchasing by-law. Because it was’t, it no longer was a matter for re-consideration. “The test has not been met,” she asserted. She went on to discuss the dangers facing council in accepting offers that don’t conform to policy, in committing to projects ($800 million and counting) that haven’t been vetted, by investing in projects that don’t provide a return on investment and the taxpayer carries the burden. She was in fine form.

“Be pragmatic,” Fontana beseeched. “Sometimes opportunities are presented.” A building with private money, no less! He noted that it was unfortunate that Baechler and Branscombe hadn’t been present at the previous meeting. Council had taken advantage of a great opportunity. He noted that Tricar’s proposal had gone to the city and to himself. Council couldn’t say no “if this city wants to be the city of opportunity. The worst thing we can do is take no action.”

Branscombe wanted to know what would happen if “we accept this and we don’t finance it at budget?”
“You’d still have to pay,” she was advised by Hayward. “You’d have to find the money elsewhere”.

Harold Usher was also present. He had voted against it at council. He didn’t like taxpayers paying for a building for other people’s convenience. He had been on the parking committee too. There had never been a consensus. Besides, too much parking undermines public transit.

Then it was Joe Swan’s turn. He had originally put forward the motion at council; he didn’t want to see it lost now. He pointed out that although things were improving in the downtown, there is still a 15% business vacancy rate. Lack of secured monthly parking is a barrier to attracting new business, he asserted. “Twenty years we’ve been talking about this. We need it. We need it now!”

Fontana had had enough. There had been plenty of discussion; everyone had had a turn. Time to call the question.

But what was the question. Was it to take no action or to reconsider a previously decided matter of council?

The clerk’s office was invited to weigh in on the issue. The deputy clerk wisely suggested that it was at the discretion of the chair, Mayor Fontana.That resulted in even more discussion about the alternatives.

As Hubert put it, “The waters got muddied.” He suggested that the matter be referred to a special meeting the following Monday prior to council. Staff informed him that the analysis required could not be completed in that time frame. Hubert then referred it to staff for a report back at the next FAC meeting.

Finally, there was consensus.

But minutes later, another great opportunity walked through the door.

More about that later.

Note: Many thanks to Greg Fowler for the audio recording he made of this meeting. I was unable to attend due to a conflict with another meeting in which I actually have a vote although the consensus approach prevails. 


Greg Fowler said...

Parking structures don't make money. For all of their yapping about how much they want to be able to park conveniently, drivers aren't willing to pay enough for parking to cover the capital (inc. borrowing) and operating costs of one of these things. If they did then the private sector would build them. So instead, taxpayers are asked to subsidize them. Vic Cote said as much.

Anonymous said...

You can see that Fontana is running around make deals some for his friends (Tricar), some for others like EPCOR. He has to find someway to pay for his grand ribbon cutting schemes. Meanwhile, the consequences of his frentic, non analytical approach will leave a fiscal mess after he is done.