In the next couple of weeks, the city will pay off a “mortgage” on the Air Rights Garage, and free up new revenue in the process.
That’s thanks to a Monday night vote of approval from the Board of Alders.
The board approved a transaction that will pay off money borrowed in 2002 for work on the garage by Yale-New Haven Hospital. The city will be paying off the debt a year early, netting a savings of between $100,000 and $250,000 from the interest it would have paid.
The deal also frees up revenue that will now come into city coffers. Just how much money remains to be determined.
City Economic Development Administrator Matt Nemerson explained how the deal will work:
The Air Rights Garage takes in about $5 million per year in revenue. The New Haven Parking Authority, which can issue bonds through the city, has been paying about $3 million per year in debt service on the garage. The authority has been investing about $1.5 million per year in repairs and improvements and putting the remainder into reserves.
For years, a group of bondholders has had control over what the authority could do with the revenue from the Air Rights Garage. Under the terms of the bonds, the authority was required to have enough money set aside to cover the next year’s debt service payment. Since next year is the final year of the bond term, the authority can now use its reserved money to pay off the entire debt.
After the final payment, which should take place in the next couple of weeks, the authority will begin putting $3 million per year into repairing and improving the garage, and $1.5 million will be freed up as revenue.
“We’ve basically burned the mortgage,” Nemerson said. Suddenly the bondholder group is gone, and the authority is master of its domain once more.
Except, the authority owns only half of the garage. It shares ownership with Yale-New Haven Hospital. The authority is now negotiating a split of the annual revenue for the years going forward.
“Some portion of the million and a half dollars will eventually start going into the city’s coffers,” Nemerson said.
The Board of Alders also voted Monday night to approve a different parking authority bond transaction, paving the way to pave a portion of the Route 34 corridor to make a temporary parking lot.
Alders approved a plan for the authority to borrow $9.9 million from First Niagara bank. Of that sum, $4.8 million would go toward paying off Wells Fargo bonds from 2012. First Niagara is offering a lower interest rate—2.15 percent—than Wells Fargo’s rate of 2.88 percent.
The other $5.1 million would go toward various improvements at downtown garages and the creation of a new $1.7-million parking lot in the block bounded by Sherman Avenue, Tyler Street, MLK Boulevard, and Legion Avenue. That lot would provide space for commuters displaced when an existing lot between Dwight and Orchard is turned into a new $50 million development.