DIA plans to buy parking lots managed by MPS | Jax Daily Record | Jacksonville Daily Record
The board of directors of the Downtown Investment Authority is expected to vote on March 17 on the $ 32.9 million purchase of three parking garages owned and operated by Metropolitan Parking Solutions.
This step comes as the DIA, the city, and the MPS are in a legal battle over the DIA withholding development loan payments to the Jacksonville-based parking operator.
The question is also whether MPS is meeting the financial reporting obligations in its 2004 contract to own and operate downtown parking garages at the Duval County Courthouse and VyStar Veterans Memorial Arena.
MPS filed a lawsuit against the DIA and the city in September in the 4th Judicial Circuit Court, alleging that the authority was in breach of contract and in default when it withheld part of several development loan payments owed at MPS.
The city is required in the agreement to make payments to cover MPS’s operating losses and to ensure an annual return of 6.75% on the required $ 3 million investment of the business.
MPS provided only a portion of the missing revenue information requested by the DIA to certify payments, according to the background to the issues included in a March 3 memo to city manager Brian Hughes, CEO of the DIA, Lori Boyer.
An audit carried out last year by the city council’s auditor’s office identified omissions in MPS files submitted to the DIA, the note said.
The DIA and the city filed a response and counterclaim at the lawsuit in October that reiterates the authority’s claim that MPS is in default of a 26-year contract.
DIA staff members want council to authorize the borrowing of money to continue the buyout provision under the deal, if the court rules in favor of the city.
Council auditor Kim Taylor said in a March 11 email that the city had paid and loaned MPS a total of $ 58.45 million, including $ 5.7 million to purchase the land, since the contract came into effect almost 17 years ago.
Taylor noted that this did not include interest accrued on the loan at an annual rate of 2.85%. Under the agreement, MPS is obligated to make annual payments of principal and interest only if it generates “annual excess cash flow” from garage operations.
The DIA manages the public parking lot in the city center as well as the city’s contract with MPS which provided three plots of land to the company to build the garages.
The DIA’s Strategic Implementation Committee is due to vote on March 15 on its recommendation to the board, and the full board is expected to vote on March 17 before legislation is tabled with the board.
The city would use either fixed-rate debt or a commercial paper program – a short-term liquidity lending option – to buy out the contractual rights to MPS and the garages, according to the memo.
Boyer told the board in May that the cost is hampering the DIA’s ability to offer incentives for more downtown development projects.
“This has had a serious impact on the Northbank Tax Raising District for many years,” she said.
Garage fees weren’t as noticeable for previous councils as the city loaned money to the Northbank Community Redevelopment Zone fund while its cash flow was negative, Boyer said.
The fund is now autonomous.
In May, Boyer estimated that $ 500,000 from unallocated DIA funds may be needed to cover MPS’s revenue losses in 2021 that will be compounded after events are canceled due to the coronavirus pandemic.
“In the event that the court finds certain voluntary purchase option provisions applicable which would allow the city to purchase the garages for an amount lower than the authorized amount, it would be in the financial interest of the city to do so” , Boyer wrote in his memo. to Hugues.
The mayor’s budget review committee on March 8 approved the DIA’s request to introduce legislation.
The Council bill would change the current budget for the 2020-21 fiscal year, requiring a two-thirds vote before Mayor Lenny Curry’s administration and the DIA can access debt financing.
Hughes, who chairs the mayor’s budget committee, said he hoped the $ 32.9 million would not be needed. He said he agreed with the action taken by Boyer.
“The best outcome would be for all parties to be happy and for the garages to earn money to help us pay off the related debt. But there are currently conflicts in the process, ”said Hughes.
“This is a long-standing deal that may not have ultimately been in the best interests of taxpayers,” he said.
“I hope the DIA and the MPS parties will come together and find a solution so that we don’t have to go down a path we don’t want,” he said.