No Garage Financing = No Project
The City reports that the mixed use project can secure approval in 2023, with construction beginning in the following year. However, there will be no construction unless the garage can secure bond financing—not possible unless the Downtown Parking District can show annual revenue to pay the bond debt.
In Fiscal Year 2022, the Downtown Parking District deficit was $4 million, which is huge relative to the size of its expenditures of slightly over $8 million. The City projects a deficit in 2023 of $2.9 million. There is no estimate for when the Parking District will make ends meet, let alone generate the $2.9 million surplus City staff say is needed to make bond payments. A reasonable guess is that it will take four years for the Parking District to break even, three more years to pay back loans from the General Fund. Whether it will ever generate $2.9 million surplus is questionable. The City Council already doubled parking rates beginning in 2019. So there is no quick fix to bring profitability to the Parking District.
Hope for Affordable Housing Downtown
What this means is that our community’s best hope for getting housing built downtown anytime soon is the Our Downtown, Our Future ballot measure which would amend the General Plan to “Require, to the maximum extent feasible, that certain designated parcels situated within the City of Santa Cruz Downtown Plan area…shall be developed with permanently affordable housing, with parking permissible on the ground level…” Those parcels are currently City parking lots (see map). The General Plan would also recognize City Lot 4 (Cedar St. where the Farmers Market meets) as the “preferred long-term location of the Downtown Farmers Market as well as other fairs and public events…This policy priority shall specifically not preclude the development of affordable housing and associated uses on Lot 4.” Without the millstone of financing a parking garage, the City’s process of developing housing on these Downtown lots is much more straightforward.
Opponents of the Our Downtown initiative adopt the false premise that we can’t have affordable housing AND make a permanent home for our beloved Farmers Market on an improved community commons on Cedar St. Happily, we can do both.
A consultant for the City predicted problems with garage financing during recessions. According to a report by Economic and Planning Systems in 2018, the City’s plan for financing the garage “does not evaluate a worst-case scenario for parking revenue where a major recession occurs or a technological change and pricing substantially reduces parking demand.”