No Parking: Fayetteville’s 14 Million Dollar Mistake

Fayetteville’s deal with Prince Charles Holdings, LLC (PCH) for a parking deck on the land beside our new baseball stadium is a mistake.  The details of this mistake have been kept from public view.  Thus far, the city council has hammered out the deal with PCH and its lawyers in “closed sessions” with only the minutes from these sessions being released to the press, providing little insight into what Fayetteville is getting and what we are giving away.

City officials are keeping the negotiations secret by claiming the deal falls under an “economic development” exception to the public meetings law, giving the council cloudy legal cover to act behind closed doors while it decides how to spend millions of tax dollars.

Few questions have been asked by the press, and there seems to be an underlying assumption that the general public will get to use the new deck.  The Fayetteville Observer’s editorial board recently supported the overall project, stating on March 18:

“The parking deck is likely to get plenty of use by the hotel, the office building and the ballpark, as well as by downtown visitors.”

After making a public records request on March 28, I received the city’s Downtown Development Agreement (and amendments) with PCH and its affiliated businesses.   The latest amendment can be viewed with this link.  Here’s what’s happening:

PCH has agreed to construct a hotel, offices, and condominiums on top of a massive, 507-space parking deck on the land facing Hay Street next to the stadium.  When the entire structure is finished, it will be the tallest building in Fayetteville.  The estimated cost for the parking deck was 7 million dollars, roughly the cost of the Franklin Street parking deck a few blocks away.  That number has more than doubled in closed meetings over the course of the deal.  The cost is now over $14 million.  When construction is finished, Fayetteville will purchase the deck from PCH at this cost, plus fees.

This seems like a decent deal, assuming city residents get to use the deck for baseball games and community events downtown, but that’s not the case:  

 

Mandatory Leases To PCH Take 72% of the Spaces

Under its agreement with PCH, once the city buys the deck for $14 million, it must lease back to PCH, for renewable fifteen-year terms:

  • At least 155 spaces for the offices/condominiums on top of the deck
  • At least 120 spaces for the hotel on top of the deck
  • At least 90 spaces for the Prince Charles condominiums next door

In short, there are only 142 spaces left for the public to use.  The baseball stadium will hold close to 5,000 people.  You do the math.

 

Discount Parking for PCH

To make matters worse, the city has agreed to charge PCH $50 per month, per space for the first four years of the lease agreement ($1.66/per day).  The price beyond those four years is the “average monthly rate for public parking in downtown Fayetteville parking decks.”  Only one other public deck currently exists downtown (Franklin St.), so presumably this will be the average rate between the two, with the new deck watering down the average.

 

“Development Fee”

As if PCH didn’t already have the city over a barrel, they’ve inserted another clause to their advantage into the agreement:

If the entire project comes in under-budget because PCH cuts costs (or corners), then PCH gets to pocket (and the city still has to pay) 80% of the savings (up to $575,000) as a “development fee.”  After this $575,000 is given to PCH, PCH gets 20% of any additional savings.

It’s likely that Fayetteville will be paying this illusory fee because PCH has the perfect incentive to come in under budget:  free money.   Why not build the cheapest deck possible?  The City still has to pay.

 

cor·po·rate wel·fare

noun 
1. government support or subsidy of private business, such as by tax incentives.

The city is paying for a parking deck under a private commercial development on the only good land for parking next to our new stadium.  Nearly all of the benefit goes to the private business owners.

A representative for a conservative think-tank, The Heritage Foundation, summed up the problem in testimony before Congress in 2015:

Corporate welfare and crony capitalism are reflected both in backroom deals in which a small group of individuals influence legislation or regulation to benefit a narrow interest at the expense of the broader public…

The terms of this deal were cut in closed, back-room sessions under the shadow of the “economic development” exception to North Carolina’s open meetings law.  The deal benefits PCH at the expense of Fayetteville taxpayers.  It’s the definition of corporate welfare.

PCH will likely argue that its multi-million dollar development will be a shining star in our community, increasing tax revenue and improving downtown.  That may be the case.  We’re still left asking what business the City of Fayetteville has owning a parking deck when only 28% of the deck can be used by the general public? 

If the investors in Prince Charles Holdings need a parking deck to serve their properties they should build one themselves, on their dime.

Enjoy your walk to the ballgame.

 

 


 

Full Text of the latest Amendment to the Downtown Development Agreement with PCH: PCH_Amendment_12.13.17

Cited Portions:

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parking-2.pngparking 2

 

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6 responses

  1. Pingback: Fayetteville City Manager Responds to Parking Deck Post « Cross Creek Divide

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  3. Pingback: Washed-Out Dams, Parking Decks, and Double Standards (Fay. City Council) « Cross Creek Divide

  4. Pingback: Reverse Engineering – Downtown Parking Continued « Cross Creek Divide

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