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Cincinnati parking lease: Contractors would get $7M-plus in first year

Amount of bonds needed to finance deal unknown

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CINCINNATI -- After months of negotiations, the Port Authority on Tuesday released draft versions of contracts with the two sub-contractors who will operate Cincinnati’s parking garages and meters.

Under the proposed terms, the firm that will operate the meters – Xerox State & Local Solutions Inc. – would get a total of $6.7 million during the first year.

The firm that would manage the parking garages – Denison Parking – would get $45,054 during the first year.

Both Xerox and Denison also would be entitled to incentive fees based on increases in gross revenues.

The Port Authority’s contract with Xerox is for 10 years, with a provision to extend it for up to two 10-year periods, for a total of 30 years.

The contract with Denison is for three years.

In March, Cincinnati City Council approved leasing the meters and garages to the Port Authority in a 5-4 vote.

Since that time, the deal’s implementation has been delayed by a group of citizens seeking to hold a voter referendum on the deal. The effort ultimately failed.

The Port Authority’s CEO signed the lease June 21, and was given 75 days to negotiate contract details with private contractors.

The deadline fell on Sept. 4, but negotiations weren’t completed by that time.

“These contracts represent months of productive conversation that was directly influenced by input from neighborhood leaders, business owners and citizens concerned about the city’s future,” said Port Authority President and CEO Laura Brunner.

Gail Paul, the Port Authority's spokeswoman, didn't return calls and emails seeking additional details.

City Manager Milton Dohoney Jr. also praised the outcome.

“The Port Authority has demonstrated good stewardship of the parking system through its commitment to community outreach, expertise in municipal finance and willingness to devise solutions that will protect and enhance economic development,” Dohoney said in a prepared statement.

The Port Authority’s contract with Xerox is 51 pages, with attachments; the contract with Denison is 28 pages.

Additionally, the Port Authority released a draft copy of the contract for selling revenue bonds to finance the deal and upgrades to the parking system. But the contract didn’t include the amount of bonds that would be sold.

Initially, the Port Authority planned on issuing $127.65 million in tax-exempt bonds to finance the deal.

But delays in the process, changing market conditions and a reduction in enforcement hours at neighborhood meters altered the plan. The Port Authority hasn’t yet finished calculations about how much in bonds are needed under the revised deal.

The Port Authority’s board of directors will discuss the contracts during a meeting Wednesday morning.

Under the latest contracts, Xerox could get an incentive fee up to 20 percent of the total compensation paid by the Port Authority to the company during each year.

Further, Denison could get an incentive fee equal to 25 percent of the increase in gross revenues over a 12-month period that are attributable to operational improvements.

Some residents and small business owners are adamantly opposed to the lease. They worry rate increases and aggressive enforcement would drive away customers.

The lease has become a central issue in Cincinnati’s mayoral race.

Vice Mayor Roxanne Qualls supports the deal while her opponent, ex-City Councilman John Cranley, is opposed.

An attorney, Cranley still was reviewing the documents when contacted by WCPO. He said, however, that he was disappointed details of the bond sale aren’t available publicly.

“Where are the numbers? What’s the amount of the bonds?” Cranley asked. “At the end of the day, it’s all about the money.

“Those documents are leaving out the most important information, which is how much it’s all going to cost,” he added.

Under the original deal, the city would receive a $92 million upfront payment, along with annual payments of about $3 million.

City officials plan to use the money to quicken the pace of some development projects, as well as possibly help close an unfunded liability in the city’s pension fund.

The Port Authority would get annual management fees of about $300,000. Also, Brunner had asked City Council for $27 million of the $92 million upfront money.

The Xerox contract also details how much would be paid for technological upgrades.

Xerox would be paid $888.55 per meter with remote sensing technology, and $579.75 per meter without a sensor.

The plan calls for Xerox to deploy 500 meters with sensing technology in the first year; 350 in the eighth year; and 150 in the ninth year.

The cost would be $444,275 in the first year; $310,992 in the eighth year; and $133,282 in the ninth year.

Also, the plan calls for Xerox to deploy 3,153 meters without sensors in the first year; 400 in the fifth year; 1,000 in the sixth year; 2,050 in the eighth year; and 1,103 in the ninth year.

The cost would be $1.8 million in the first year; $231,900 in the fifth year; $579,750 in the sixth year; $1.2 million in the eighth year; and $639,464 in the ninth year.

 

 

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