Don't worry CCY will be moving. That could be why some in mgt are bailing out, they don't want to relocate there.
Dow: Lease city parking deck to RSA
Sunday, August 01, 2004
Mobile Mayor Mike Dow has proposed leasing the city's Water Street parking deck to the Retirement Systems of Alabama, whose purchase of the adjacent Riverview Plaza Hotel is its most recent downtown acquisition.
The lease agreement, which is scheduled to come up Tuesday for a vote by the City Council, would give RSA control of the deck for 99 years in exchange for $5 million up front and 30 percent of the profits. RSA, headed by David Bronner, is the state employees' pension fund.
But City Council Attorney Jim Rossler said he doesn't believe the city has the authority to lease out the deck.
"We still have to go through that discussion," Dow responded. "We and our lawyers think differently. We think it is able to be leased."
RSA's July 14 purchase of the Riverview Plaza Hotel, formerly the Adam's Mark, was contingent upon the city handing management of the parking deck over to RSA, Dow said. And, about a week before RSA closed on the deal, Dow and Council President Reggie Copeland issued a letter of intent to lease out the deck.
RSA purchased the 377-room hotel from TQP Mobile Inc., a subsidiary of Presidio Hotel Group in Fairfield, Calif., which acquired the property only a month prior. RSA did not purchase the Riverview Plaza office building, which is next door and resembles the hotel building.
RSA had planned to get city approval to build two additional levels on the parking deck and use them, Dow stated in a letter to the council. But RSA at the last minute was unable to secure the air rights above the garage, resulting in the agreement to acquire the entire existing deck, Dow said.
"We cannot buy this hotel without an adequate parking plan, and I don't have it right now," Dow said he was told by Ed Kulik Jr., president of Alabama Real Estate Holdings, an RSA affiliate.
Friday, Kulik said RSA would use the deck for the Riverview Plaza Hotel and the nearby historic Battle House Hotel, which RSA is renovating. At the same time, the city will make money and have a well-managed parking facility for people attending conventions at the Arthur R. Outlaw Mobile Convention Center across Water Street.
"We had a need, and he (Dow) wanted," the agreement, Kulik said.
When asked if RSA would have purchased the hotel without the parking agreement, Kulik said, "Don't know. Good question."
The deck is managed by Central Parking System, and that contract ends Sept. 30, according to the city.
The six-story facility is worth between $6.4 million and $8 million, according to a report by M.D. Bell Company Inc., an appraisal group. Adding land value increases that to between $10 million and $11.5 million.
The report's numbers do not factor in potential parking income, according to the city. The deck has about 1,540 parking spaces and operates at about 50 percent capacity.
The deck averaged about $235,000 in annual revenue, after expenses, over the last five years. The four years prior to that, the average revenue was about $428,000 per year, according to numbers provided by the city.
Dow said he wants to use half of the $5 million from the RSA parking agreement for capital improvements and put the other half into a fund for employee raises. The mayor said he expects to be able to increase the 30 percent revenue share in the agreement to 35 percent before Tuesday's vote.
Dow said the city has leased out other property it has, including land for the Magnolia Grove golf course in west Mobile. The course is part of the RSA-backed Robert Trent Jones Golf Trail.
Rossler said state law does not allow the city to relinquish its authority of the deck. In order for a city to lease out its property, it must show that the property is no longer needed for municipal purposes. Because the deck is in use -- Rossler noted that his car was parked there -- it does not qualify, he said.
RSA in the last few years has increased its holdings in Mobile, and the city in turn has invested in RSA.
The retirement system's largest project is the RSA Tower, set to be the Alabama's tallest building, which is under construction one block north of the parking deck. The Battle House Hotel, being renovated by RSA, will connect to the office building.
The city committed $15 million toward both of those projects.
AREH is building the cruise ship terminal at Mobile Landing. Carnival Cruise Lines is set to begin cruises from there in October.
As part of the agreement between the city and AREH, any profits from the $20 million terminal would be shared. If the terminal loses money or if the cruise industry leaves Mobile, the city would be responsible for the losses.
At a council meeting last week, when the parking deck lease first appeared on the agenda, one resident asked if Mobile should change its name to "Bronnerville."
"We have a very strong partner in RSA and AREH," Dow said Friday. "They are us, they are not them, OK. And that strong partner has got over $200 million invested in two hotels, an office tower and cruise ship dock. ... And we're going to quibble over a parking deck?"
