PDC’s $26 Million Parking Garage: Money Maker or Money Pit?
Portland Development Commission, a taxpayer funded organization chartered to foster healthy neighborhoods, promote social and economic equity, and build a vibrant central city, announced approval to build a $26,000,000 parking garage to accompany Metro’s controversial 600 room headquarters hotel in the transit rich Lloyd District Portland’s central city.
The 425 stall garage will be built adjacent to a MAX station and near the Rose Quarter Transit Center. Fifty spaces will be reserved, ironically, for the use of Trimet employees (who might be, reasonably, expected to ride their own product to work).
Sandwiched between the Rose Quarter Campus and the Oregon Convention Center which, together, have more than 3300 existing structured parking spaces, the new facility will provide one stall per two hotel units at a time when most central city hotel projects are building little to no structured parking at all.
The lot construction will be funded by a loan from the tax-funded Oregon Convention Center Urban Renewal Area which will partially be repaid when Trimet purchases its portion of the building for an estimated $8 million. The remainder of the cost, PDC claims, will be paid with proceeds generated by the operation of the garage.
Is it appropriate for a regional transit operator to be spending 8 million dollars on employee parking while asking for what some say is a regressive payroll tax to expand frequent service? That’s a bit outside our wheelhouse, but a question worth asking in itself.
PDC should show its math on this projected revenue and explain how it squares with projected VMT trends, nearby investments in transit, and the likely advent of the autonomous vehicle era.
PDC projects the net operating income will be $1.8 million a year starting in 2020, and expects to pay $1.3 million a year in debt service on the remaining $18 million loan (after Trimet pays its $8 million). This figures to a 20 year loan at roughly 3.5% interest.
PDC says this garage will not only be able to support the repayment, but “it will become an income generator for PDC” to the order of $500,000 in annual income. Let’s explore the math:
~$105,000/month PROFIT needed per month to cover the loan payment divided by 375 stalls is about $278/month in net income per stall, for 20 years. But we would need to add another $70-90 a month in operating costs (current costs are ~$1000/year per stall) to that amount to cover security, fee collection, maintenance, cleaning, etc.
Just to break even, this garage will need to generate more than $12 per space every day of every year for 20 years, starting in 2020.
Do we believe that a 600 room hotel in one of the most transit rich areas in one of the most transit/bike/walk-able cities in the nation, built adjacent to a light rail line that goes directly to the airport and downtown, in a district with over 3,000 structured spaces, will be parked to capacity in 2030? Doubtful.
This is a dinosaur plan. PDC and Metro should contract with the OCC and the Rose Quarter to utilize parking in their facilities. Guests to this hotel will increasingly use transit, bike share, car share, taxis, Lyft (and other services) and, soon, autonomous vehicles to get around during their visit.
The city has invested heavily in alternative modes for this region. For PDC to bank on an increase in single-occupancy-trips in 20 years to finance this building is not only financially irresponsible, but it goes against the goals of the Portland Plan, the Comprehensive Plan, and undermines the investments the city and Metro have made.
PDC has been facing a crossroads, traditional funding sources are drying up in the next decade and there is no reliable replacement on the horizon. Parking might prove to be a money-maker in the early 2020’s, but as a long term bet the odds are very long.
Portland taxpayers will be left holding the bag and paying the loans for this mistake for years to come. In a city with an acute affordable housing crisis, the last thing we should spend Urban Renewal funds on is housing rental cars for out of town visitors.