Council to pay more to Charlottesville Parking Center for use of Water Street Garage

The final two items on Council’s meeting for Monday night relate to the cost of municipal parking in a city that lost control of what had been a reliable asset. The city owns the Market Street Parking Garage outright but constructed the Water Street Parking Garage as part of a public-private partnership. 

The Charlottesville Parking Center (CPC) was created in 1959 as a way to help attract or retain commerce in Downtown Charlottesville which was facing new pressures from suburbanization and new developments such as the Barracks Road Shopping Center. 

In 1994, the CPC and the city entered into a ground lease for the land on Water Street where the 1,019-space garage would be built. The CPC was governed by its shareholders, many of whom were interested in the economic health of the city’s downtown. 

Since 1994, both the city and CPC have representatives on the Water Street Parking Garage Condominium Association (WSPGCA), a body with eight members that is a party to a ground lease related to the use of the garage. Membership in the governing body on ownership of specific spaces and storefronts in the structure. 

In 2014, developer Mark Brown purchased the CPC outright for $13.8 million giving him sole ownership control of the parking structure building as well as a surface-parking lot next door. 

Brown and the city had different positions on how much the city should be charging for hourly and monthly parkers. 

CPC sued the city in March 2016 as I wrote at the time for Charlottesville Tomorrow. In late April, the city sued CPC for breach of contract for acquiring additional spaces in the garage. 

By 2018, the dispute was resolved and CPC agreed to lease their share of parking spaces to the city to allow for a third-party company to manage the garage. 

The terms of the original ground lease include a clause that the rent to be paid to CPC would be reset in 2024 based on a new appraisal. The staff report describes this as a “significant increase” in rent the city pays the Charlottesville Parking Space in rent according to the ground lease. No dollar amounts are mentioned nor is CPC identified in the staff report as the other party. 

“In an effort to avoid litigation and make this increase more gradual the association and tenant sought to negotiate an alternative solution,” reads the staff report. 

An agreement has been brokered that would:

• Amend the ground lease to establish a specific rent from July 1, 2024 to June 30, 2044
• Amend the parking space lease to establish a set sent to between July 1, 2024 and June 30, 2044. 
• Give the city the option to purchase the land and the parking spaces effective July 1, 2044.

“The amendments remove the opportunity for future appraisal disputes, provide known costs and allow current parking operations to continue uninterrupted,” the report continues. 

Here are some terms in the amended ground lease:

• The city will pay $1.8 million in FY2025 to cover the ground lease to Charlottesville Parking Center. There is no figure given for what the rent under the ground lease has been, or what CPC had originally proposed. 
• Through 2044, rent will increase by either three percent or the annual inflation rate as measured by the federal Consumer Price Index, whichever is higher.
• There will be a 15 percent increase in the ground lease that goes into effect on July 1, 2034. 

The monthly rent for the city to rent 317 parking spaces owned by CPC will be $57,984.64, or $695,815.68 a year. This will also increase either by three percent a year or the annual inflation rate. 

I recently spent a week writing up a story for C-Ville Weekly on the history of the Belmont Bridge replacement and could easily spend a week detailing what happened with parking in Charlottesville beginning ten years ago when Brown’s acquisition of the CPC was complete.

In an attempt to add options to a parking portfolio it could control, City Council purchased a lot on Market Street for $2.85 million in January 2017 for a future garage. A later City Council canceled work on that project and the Lucky Seven and the Guadalajara franchise on the property still pay rent to the city. 

The final item on Council’s agenda is to use $1.4 million from the city’s Capital Improvement Plan contingency plan to cover the cost increase for the ground lease. 

“The WSPGCA’s governing documents provide that the base rent for the land underneath the Water Street Parking Garage (the “Garage”) must be renegotiated every ten years, based on the appraised value of the land as if the land was unimproved,” reads that resolution. 

Stay tuned.

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment is from the August 5, 2024 Week Ahead edition of the newsletter.