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HomeMy WebLinkAboutCAO-06-038 - Charles/Water/King Parking Lot Redevelopment (Water St S - Lt 3: King St W - Lt 6; Halls Lane - Lt 16).! Econoir~ic Develo~mei~t Report To: Chair Berry Vrbanovic and Members of Finance and Corporate Services Committee Date of Meeting: May 15, 2006 Submitted By: Hans Gross, Director of Project Adminitration and Economic Investment Prepared By: Hans Gross, Director of Project Administration and Economic Investment John McBride, Director of Transportation Planning Keith Baulk, Director of Enterprise Dan Chapman, Director of Financial Planning & Reporting Ward(s) Involved: 1 and 6 Date of Report: May 8, 2006 Report No.: CAO-06-038 Subject: Charles /Water /King Parking Lot Redevelopment (Water Street South -Lot 3; King Street West -Lot 6; Hall's Lane -Lot 16) RECOMMENDATION: That staff be instructed to prepare a full business plan for a Parking Enterprise for Committee consideration in the fall of 2006; and further, That staff be instructed to proceed simultaneously with the preparation of a Terms of Reference document for the redevelopment of the Charles /Water /King Parking Lots known as Water Street South -Lot 3, King Street West -Lot 6 and Hall's Lane -Lot 16 on the basis that the parking garage component will be owned and operated by the City of Kitchener; and further, That staff be instructed to proceed with a Request for Expression of Interest /Proposals for the redevelopment of the Charles /Water /King Parking Lots based on the Public-Private Partnership Procurement Policy Guidelines recently adopted by Council which provides an open and transparent approach and process whereby the City can solicit and develop expressions of interest and proposals for a project in a fair and practical manner. BACKGROUND: Report CAO-06-026, which dealt with the preliminary work required for to the redevelopment of the parking lots, was approved by Finance Committee on April 10, 2006 and by Council on April 24, 2006 through the following resolution: "That up to $70,000 be allocated from the Economic Development Investment Fund for the completion of a boundary and condition survey together with a Phase 1 and Phase 2 Environmental Site Assessment on the City owned property known as Water Street South -Lot 3, King Street West -Lot 6 and Hall's Lane -Lot 16." The report indicated that a Terms of Reference document would be brought forward for Committee consideration together with a Parking Enterprise business plan at the May 15, 2006 Committee meeting. Minutes of the April 10, 2006 Finance Committee meeting record the following discussion: "Councillor Gazzola questioned whether a business plan and terms of reference would be presented to this Committee for consideration, and directed that staff present the business plan first, and that the business plan and terms of reference be presented on different days." REPORT: 1) Parking Enterprise Business Plan Following the April 10, 2006 Finance Committee meeting, staff met to discuss the components and scope of the Parking Enterprise Business Plan. The Business Plan would address the following areas: • Current funding /operating issues • Mandate of a Parking Enterprise • Administrative and operating structure • Changes and resulting impact of the City's organizational structure • Financial overview and projection of capital and operating expenditures and revenues • Financial impact of a change in transfer payments to the City's general revenue • Capacity to finance the construction of one or more parking structures Staff have prepared an initial financial overview of income and expenses together with the impact on transfer payments to the City. The result indicates that the creation of a Parking Enterprise is viable. The issues of the Parking Enterprise's administrative and operating structure and its impact on the City's organizational structure are more complex and require additional time to resolve. It is anticipated that a business plan for the Parking Enterprise which includes all components would be available for Committee /Council consideration in the Fall of 2006. 2) Terms of Reference Document and Request for Expressions of Interest /Proposals for the Redevelopment of the Charles /Water / Kina Parkina Lots a) Need for Parking The recently completed and approved "Feasibility Study for the Development of Short and Long Term Parking Solutions for Downtown Kitchener" recommended an immediate need for an above-grade parking structure with approximately 380 public spaces on the Kitchener-owned property bounded by Charles Street, Water Street and King Street. The current parking situation is at a critical point. It was always assumed that the Centre Block parking would be developed first, but this no longer appears to be the case. A staff parking Committee is currently meeting weekly for the foreseeable future to monitor and resolve parking issues. b) Previous Staff Reports and Council Decisions In report FIN-03-021, dated May 6, 2003 and presented to Finance Committee on May 12, 2003, the issue of the City's role as a parking provider was brought forward through the Asset Management Steering Committee. The following goals for parking were considered: • Provision of adequate number of short-term and long-term parking in the Downtown so that businesses thrive • Ensuring continuing growth in the commercial, retail and residential base through the provision and availability of parking • Increasing parking availability at minimal cost to the city • Encouraging and supporting the private sector in the building of additional parking • Moving parking costs to a competitive rate It was resolved by Committee: "That the following principles be approved with respect to the City's parking portfolio: a) the City should continue in the parking business to ensure control; b) parking should operate as an enterprise providing a dividend to the City (i. e. parking authority), as a return on investment c) parking subsidies should be considered an `economic development tool' and each should be accounted for and managed accordingly; and further, That staff compile historic data on costs and financing for Downtown parking and develop various models for the provision of parking in the Downtown for consideration at a future Finance and Corporate Services Committee meeting. " In Report CSD-04-123 dated January 16, 2004 and presented to Community Services Committee on June 21, 2004, an update of the parking principles was provided together with an interim framework for a Parking Enterprise Structure. (A copy of the report is attached). The update demonstrated the viability of the framework to manage the City's parking portfolio. Based on the foregoing, it is clear that the City's position has been to stay in the parking business to ensure control and to operate as an enterprise. This report supports continuation of this position but under a more formal time enterprise model. c) Process for the Request of Expressions of Interest /Proposals The process for the Request for Expressions of Interest /Proposals will be competitive in nature and will follow the recently adopted Public-Private Partnership Procurement Policy Guidelines. The process requires the preparation of a Terms of Reference document which states the City's expectations, role and financial commitments to the redevelopment. Interest has been expressed by several private sector businesses and developers in the construction of a parking structure together with other uses such as residential, commercial and retail. In order to harness the current private sector interest and meet the critical and urgent demands for parking, it is proposed to issue a Request for Expressions of Interest /Proposals as soon as possible and prior to a final decision on the creation of a Parking Enterprise. The City would own and operate the public parking component of the development and would provide the capital required for its construction. The alternative is to delay the issuance of the Request for Expressions of Interest /Proposals until a decision has been made relative to the creation of a parking enterprise. The time delay is in the order of 6 months. Following is a preliminary schedule of events for the two alternatives. The delivery date for the parking structure is anticipated to be June/08 if we proceed with the proposal call prior to a parking enterprise decision and December/08 if the proposal call is delayed. Proceed with Expression of Delay Proposal call until Interest enterprise decision is made Finance Committee Decision May 15 / 06 May 15 / 06 Complete Terms of June 30 / 06 Nov 15 / 06 Reference Document -ready for proposal call Decision Parking Enterprise Sept / 06 Sept / 06 Selection of Developer January / 07 June / 07 Completion of Parking June / 08 Dec / 08 Structure FINANCIAL IMPLICATIONS: The creation of a Parking Enterprise will allow for the financing of a new parking structure without affecting the funding and timing of other capital projects within the 10 year capital forecast. If the parking structure is financed through the City's budget, other capital projects will need to be delayed to maintain the capital expenditure balance. The creation of a Parking Enterprise will affect and reduce the dividend returned to the City in order to maintain a positive balance within the Parking Enterprise budget. It is estimated that the levy impact of creating a parking enterprise is approximately 1% on the tax rate. This could be phased in over a 3 year period. CONCLUSION: It is recommended that a Request for Expression of Interest /Proposals for the redevelopment of the Charles /Water /King parking lots be issued as early as possible. Hans Gross, P.Eng Director of Project Administration and Economic Investment