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Piscitelli.
Leasing the Broadway parking lot to Yale means trading over $8 million in projected parking fee revenue for $3 million upfront. But it also means the city could pull in close to $100,000 a year in new property taxes — and theoretically come out over $3 million ahead in today’s dollars.
That’s based on figures released Wednesday by city officials.
The figures are relevant to a proposed budget-gap-closing deal currently before the Board of Aldermen. The city’s economic development department is proposing adding the 1.2‑acre Broadway lot to a 99-year lease agreement closed with Yale two years ago.
The money would go toward plugging a hole in the current fiscal year’s budget.
On Wednesday evening, the City Plan Commission approved the deal. It’s now headed to the Board of Aldermen’s Finance Committee in advance of a vote by the full board.
In 2009, the city leased “Begonia Island” and “Market Island” to Yale. The two small parcels, along with the Broadway parking lot, comprise the chunk of property that splits Broadway in two halves.
The new plan would add the 136-space Broadway parking lot to the lease in exchange for a $3 million payment. Yale would then pay a dollar per year until the end of the term, which would endure until after the turn of the century.
On Wednesday afternoon city spokesman Adam Joseph shared last year’s numbers on the parking lot. He said the lot took in $88,760 in profit. The gross was around $463,000; expenses totaled about $375,000.
Assuming that last year was a typical one for the lot, the new deal would mean the city would give up about $8.6 million in projected revenue over the next 97 years. That’s without any increases in parking fees. The lot would earn $3 million — the amount promised by Yale — in about 33 years, and still be only a third of the way through the lease.
But leasing the property to Yale means the city can also start collecting taxes on it. Assuming it’s worth $3 million and the tax rate is what it is now, the city can expect to take in an estimated $92,190 in annual property taxes, said Mike Piscitelli, deputy economic development administrator. That is subject to change given the assessment of the property next year, he said.
In today’s dollars, that amount of property taxes collected over the remaining 97 years of the lease would add up to $8.94 million. That plus the $3 million up-front payment from Yale would give the city close to $12 million over the term of the long term lease in today’s dollars, over $3 million more than the projected $8.6 million in sacrificed revenues (based on today’s dollars, land values, and mill and parking rates).
Piscitelli shared the tax estimate after testifying before the City Plan Commission Wednesday evening.
He told commissioners that the lot sale is part of a plan to fill the budget hole. The city considered several strategies to do that, he said. “We bring this to you as a very responsible way forward.”
As part of the deal, Yale would be required to keep the lot open for use as public parking. But there is nothing in the agreement that limits Yale’s power to set parking fees as it sees fit.
Piscitelli said the city and Yale settled on the $3 million figure after having the lot appraised and then negotiating on the final price.
Why not just sell it to Yale? asked Commissioner and East Rock Alderman Justin Elicker.
Piscitelli replied that “timeliness” was the chief factor: The city needs the money now, and it’s much faster to simply add the lot to the existing lease than to sell it.
Yale has the option to buy the lot in the future, with the approval of the city, Piscitelli said.
The City Plan Commission voted unanimously to approve the deal, with Elicker, a Yale employee, abstaining.
Although he plans to abstain again when the plan comes before the Board of Aldermen, Elicker later shared his thoughts on the deal.
“Obviously, it’s not an ideal situation,” he said. But given the city’s circumstances, it’s the best that can be done, he said.
Elicker compared the parking lot deal with the disgraced parking meter monetization plan, which would have sold off 25 years of parking meter revenue for $50 million up front. This is different, he said. It’s a much smaller amount of money, and it’s a simple lease that won’t leave the city indebted for years to come, he said.
I think Mike's approach to transparency (laying out full data and explaining cost/benefit) is what we need more of in this city, instead of the defensiveness and hostility many city employees display when questioned.
While the deal isn't ideal, we are in a really serious budget problem, and I think this is a good proposal when you consider our financial situation.
Yale gets something they way, we get more taxable property that we don't have to spend upkeep on. Seems like a good compromise and a much better way to close a budget hole than the other ideas proposed so far.
Nice job by City Plan Commission & Mr. Piscitelli.