For much of its history, the Water Street Parking Garage was operated through an amicable public private partnership created to build another place for downtown visitors to park. The Charlottesville Parking Center is the owner of the two acres of land underneath the garage.
Both the city and the CPC are among the members of an eight-member condominium organization that sets rates and other policies.
“The condo board, barring any changes, is made of eight members,” said Chris Engel, the city’s director of economic development since February 2012. “The city has five. There are three others. It takes 70 percent or six members to have them take action per the bylaws of that entity as it was established originally in the nineties.”
In August 2014, a property investor named Mark Brown became the single shareholder and the relationship quickly became hostile. He managed to buy enough spaces in the garage to control that sixth seat, allowing the city to lose control.
In 2016, CPC filed suit against the city alleging they were setting prices at the garage artificially low. The city filed a countersuit alleging CPC of breach of contract for purchasing 106 spaces from Wells Fargo without giving a right of first refusal.
- Charlottesville Parking Center files lawsuit against Charlottesville, Charlottesville Tomorrow, March 16, 2016
- City files countersuit against Charlottesville Parking Center, Charlottesville Tomorrow, April 29, 2016
- Truce: City and Mark Brown settle parking garage dispute, C-Ville Weekly, July 25, 2018
The two sides settled in 2018 and Brown sold some of the Wells Fargo spaces to the city. The terms allowed the city to operate the garage how they wanted and a firm hired by the city took over day-to-day management.
Engel appeared before City Council on August 5 to give an update on where things stand.
“As you are aware, the city does not own the land under the garage,” Engel said. “We are operating under a 99 year ground lease currently for that. That started in 1994, and that agreement basically resets every ten years based upon the fair market value of the land, as if it were unimproved. That is, no garage on top of it.”
For the first ten years, the condo association paid $131,000 a year, a figure that increased to $167,691 for the next ten years. In year 23 of the lease, the payment to CPC increased to $415,000. These were not payments based on fair market value.
To come up with a new figure post 2024, both CPC and the city hired firms to conduct appraisals and according to the lease, a new calculation was to have been made based on the average payment.
The city hired Noble Value Consulting and their market analysis points to a city that is stable with some signs of trouble downtown. (view the appraisal)
“Supply and demand for property is approaching an oversupply of redevelopment projects,” reads page 16. “Also note that development has stalled in the neighborhood. Across Water Street from the Subject property is an abandoned 10-story concrete frame of a failed hotel development.”
The next page mentions the city-owned parking lot where developer Keith Woodard proposed Market Plaza, a city-commissioned design that the report notes “failed to materialize.”
Noble Value Consulting came up with a fair market rent of $778,080 based on a land value of $12,968,000.
Brown hired Holtzman Appraisal and Consulting Services who came up with a fair market rent of $2.45 million a year based on a land value of $22,260,000. (view the appraisal)
Their market analysis points to three projects within 0.2 miles of the Water Street Parking Garage: Apex Plaza, the CODE Building, and the first phase of Kindlewood.
Engel said there are 67 years left on the ground lease and said attempts were made to negotiate with CPC and the proposed annual payment of $1.8 million is the result.
“The benefits of the negotiated settlement include no interruption to the current parking system, no reduction in inventory,” Engel said. “Obviously, the Water Street Garage is used significantly, although not to its fullest capacity, every day.”
Engel said the rent will increase every year by either three percent or by the consumer price index as well as a 15 percent increase in 2034.
“So we have cost certainty for 20 years,” Engel said. There’s also an option to purchase the land in 2044 based on the fair market value. The city could also choose to sell the spaces it owns in the garage at that time.
“I know none of that is very satisfactory and exciting for you all, but parking is part of what cities do, and this agreement was entered into many years ago,” Engel said.
Engel did not mentioned the fact that the city was planning to build a new municipal parking garage at the corner of East Market and 9th Street. In late 2016, City Council agreed to purchase a 0.4 acre lot for $2.85 million for this purpose as part of an overall parking plan.
“We are pleased to announce today that the city has entered into a purchase agreement for a nearly half acre parcel of property located at the corner of 9th and Market St. in downtown Charlottesville,” reads a four-page hand-out given out to attendees of a November 15, 2016 press conference. “Control of this strategic property will better position the city to address its future parking needs.”
In early 2021, the Charlottesville Planning Commission voted to recommend defunding of a capital project on the land. City Councilors Michael Payne and Lloyd Snook agreed with the Planning Commission’s recommendations that year which was to reduce funding from a proposed $8 million in FY22 to $1 million. That effectively killed the project. (Charlottesville PC recommends adjustments to FY22 capital budget, including defunding parking garage, February 10, 2021)
The city still owns the property and collects rent from the Lucky 7 Convenience Store and the Guadalajara Restaurant.
City Councilor Brian Pinkston was elected in 2021 and said the additional payment is hard to stomach.
“A deal that was set up back in the nineties that we’re sort of stuck with,” Pinkston said. “That kind of in some ways seems like it’s taken on a life of its own in terms of the owners and what they’re wanting to force the city to pay.”
Brown has not yet responded to a request for comment.
Council received legal advice about the settlement in several closed meetings. The city is currently without an official attorney and is relying on advice from the firm Sands Anderson. City Councilor Lloyd Snook explained why he supported the deal.
“One of my questions, being a lawyer, was, well, surely there is some option to go to a judge or to go to court, basically to make them give us a better deal,” Snook said. “And the advice that we received was, well, there really isn’t an option to do that.”
A question moving forward is: What other public-private partnerships might one day turn sour? Will staff members 30 years from now understand what deals are being made today and why?
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