Wednesday, October 5, 2011

City paying millions to keep Jacksonville garages afloat

Jacksonville has lent $16 million in five years to subsidize a parking company it picked to own and run three downtown garages.

Now, the city could spend $50 million buying its way out of the deal.

That would leave City Hall owning and operating garages it never wanted and hoping that spending big money up front can cut taxpayers' losses - eventually.

The city approved a deal with Metropolitan in 2004, while new buildings from the Better Jacksonville Plan were popping up across downtown. Headed by businessmen from another firm, Signet Development, Metropolitan was one of five companies that answered a city notice for proposals to build and run new garages.

To have parking for sports and music fans - and eventually for courthouse visitors - the city helped Metropolitan issue $50 million in bonds for construction, with the company solely responsible for repaying investors who bought them. The company also brought $3 million of its own to the table and the city held notes on $5.7 million spent buying the sites.

The city agreed that if Metropolitan couldn't break even once the garages opened, it would lend enough to cover the company's losses, along with a $240,000 yearly return on the company's investment. The loans would be repaid with interest once the garages turned a profit.

The company has collected nine loans from the city since 2007, ranging from $859,000 to $2.3 million, usually through payments in May and September.

This summer the company requested an additional loan of $2.3 million to cover losses from the first half of 2011.

With the company still obligated to pay off bonds that will last more than 20 years, auditors say the city should expect to lend millions year after year.

"It's conceivable that one day the city will have $100 million loaned to this developer," Billy warned council Finance Committee members.

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