A Primer in Garage Building in Cincinnati

There’s no such thing as too much parking in Cincinnati, Ohio.  According to current public policy in this city, every problem we have can be solved with a one-size-fits-all answer: taxpayers pay for more garages.  Taxpayers paying for more garages will result in more jobs.  More jobs will generate more income-tax revenue to pay for basic services to fill our pot holes and hire more police which will make middle class homeowners happy “customers” (that’s what the City Manager calls us these days). More jobs will apparently alleviate poverty, reverse our absurdly high incarceration rates, stop violence and get people off drugs.

Since we are making these infrastructure investments as fast as we can – and they are very expensive – it behooves us to become garage literate, Citizens.

image (8)Here are the costs for three of our most recent garage projects.  But the figures are not entirely apples-to-apples fair.

Western & Southern’s Queen City Square figures are inflated due to the fact that I did not try to back out non-garage costs from the total $65,000,000 Tax Increment Financing package.  We didn’t just get garage space.  We purchased a multi-storied pedestrian promenade, two giant escalators, a plaza and quite a bit of ground level retail for our money.  It’s a pretty sophisticated set-up and Eagle Realty probably did a very decent job of holding garage costs to within 10-15% of the national average.

Of course, Oakley Station’s $6,200,000 structure hasn’t broken ground yet.  We can see that our development professionals must have used the same national average costs for garage construction I did for their projections.  New construction always costs more than we think it will and this project will probably be no different.  Let’s just hope it comes in close.

That leaves the mysterious dunnhumby, now known as 84.51, a 3CDC public-private partnership with Kroger’s latest acquisition.  I contacted Anastasia Mileham, VP of Communications, five times over the past three months asking for a clarification on why construction costs were so high.  At dunnhumby taxpayers bought 1,003 spaces for somewhere between $60,000,000 and $70,000,000.  (The figure tended to float a bit as we talked.) She explained that only the top four floors of the 9 story structure are currently needed for offices, but they anticipate significant growth and it was decided to build the lower floors so that they could someday be converted. Ramp design was complicated, ceiling height had to be 12 feet as opposed to the normal 10, and two floors of the garage were built below ground.

Call me annoying – but that didn’t seem an adequate explanation for costs more than three times the national average.  So I did what I always do – kept asking questions.  I asked super-smart staff members of City Council.  I mentioned my concerns to other developer friends.  I even called Robert Bertsch, Sr. (otherwise known as Bob), the guy who is in charge of development projects for this area of town in city administration.  He called me back within 5 minutes, was funny and charming and forthcoming. But he couldn’t tell me why the project cost so much more than anticipated when Council approved the deal in June of 2012. (They voted on $88 million.  It came in around $140 million.)  “You’ll have to ask 3CDC,” he said.

So I sent my little-Kathy charts to Anastasia and explained why I was confused.  More than 2,200 spaces at Queen City Square cost us about the same as 1,003 at dunnhumby.  I told her I would have to start to ask publicly why this building cost so much for us to build.  And I heard nothing.

I hate to write this post.  Because I’m a 3CDC fan.  I think they’ve done about as good a job as is humanly possible in Over-the-Rhine and on Fountain Square.  But since City Hall clearly intends to use 3CDC as their preferred developer on parking garages in the city center and we are building them as fast as we can, it’s important that we honestly evaluate our garage-outcomes.

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8 thoughts on “A Primer in Garage Building in Cincinnati

  1. Pingback: Today’s Headlines | Streetsblog Ohio

  2. John Yung

    Here’s a good link with info-graphic that breaks down structured parking costs and what it does to the cost of everything else: http://www.reinventingparking.org/2015/06/how-much-does-one-parking-spot-add-to.html

    The problem with all these garages being constructed is that they are predicated on the continued prosperity of the automobile oriented economy. Cities that utilize taxpayer money for these kinds of things are basically betting on the status quo. The flip-side to the argument is that these deals won’t get done without the structured parking. And that is unfortunately the case in cities with less public transportation options like Cincinnati. The key to the whole equation though is that cities that invest in alternative transportation modes shift the development calculation on parking by reducing market demand for cars. This allows developers to add units and reduce structured parking costs.

    By using TIF money to fund parking garage construction, the city is making bad bets against the future tax generation of developments in these districts.

    Reply
  3. Anastasia Mileham

    Hi Kathy – your assessment of our communication about the 84.51 garage may not be entirely accurate. We spoke by phone 12 days ago at which point you informed me you were leaving for Italy for the rest of the summer and there was no rush on responding to your charts. Additionally, your charts and questions covered the same ground we walked through back on April 21st when I explained the project financing and the TIF.

    But let me take another stab at this…

    I know this can be confusing, but the first significantly inaccurate statement in your blog is one that states taxpayers spent “somewhere between $60,000,000 and $70,000,000” to build 1,003 spaces at the 84.51 garage. Taxpayers spent nowhere near this amount. The taxpayer contribution to this project is $688,000 per year for 30 years under a TIF ordinance by City Council. In present value terms (which is the only method to value a stream of payments over a 30-year period), this equates to approximately $10,000,000. And please note, these are new taxes that would not have been generated if it weren’t for the project. If you want, you can add half of the donated land value ($4,250,000) for a total of $14.25 million from taxpayers to build 1,087 parking spaces (not 1,003 as your blog states), 26,000 square feet of street-level commercial space, and substantial support structures for the 300,000 square-foot office building above (foundations, columns, ramping, higher ceiling heights, etc.).

    Also not mentioned in your math is that the difference between the $918,395 in new taxes generated per year by the project and the $688,000 annual TIF payment, goes to the Cincinnati Public Schools. That difference equates to $230,395 per year to our schools! Again, these are new taxes.

    Your blog also blithely dismisses the advantages to well-managed, suitably-priced parking in the middle of a city, yet this garage provides parking for not only the rapidly growing staff of 84.51, but for hotel guests, sports fans, convention attendees, and other downtown office workers and residents. You may have seen the recent articles in the Enquirer and Courier about Ashley Commercial Group’s plans to redevelop the old Merchants Building on Sixth Street into 62 loft-style apartments – this development is a direct result of the new available parking across the street. Additionally, we’ve been approached recently by no less than half a dozen potential redevelopers seeking parking support for the old Terrace Hotel on Sixth Street. This kind of impact cannot be dismissed.

    You can’t confuse the total developments costs of the garage, retail, and structural support for the office building with the TIF amount. The taxpayer contribution of approximately $14 million leveraged another $53 million in private investment to construct the garage, commercial space, and support structures. The total development costs were $67,156,249 (I apologize for not having this exact number in front of me in previous communications, hence the “floating figure”).

    As for the charts you use to calculate the cost per parking space and then compare it to a national average, you’re using a 2008 national average figure for freestanding above-grade parking garages. The per-space average for below grade stalls in 2008 was $40,000. And these costs are not total development costs but rather construction costs only (not including the “soft costs” of architectural and engineering fees, testing and inspections, third party consultants, legal fees, construction period interest, operating reserves, etc.). An apples to apples comparison would take a blend of 2015 average construction costs for both above and below grade stalls and compare with actual construction costs (not total development costs) of the 84.51 garage.

    For the actual construction costs of the 84.51 garage, one would need to take the total development cost of $67,156,249 and subtract the following: (1) $4,250,000 in land costs, (2) $12,386,339 in soft costs, (3) $2,604,200 in concrete costs incurred for additional support structures needed for the office building, and (4) $5,615,906 for the concrete shell relating to the commercial space, the commercial storefront glazing system, and the cost to fill out the commercial spaces (tenant improvement allowance). This would leave $42,299,804 in construction costs dedicated strictly to the parking garage, or approximately $38,914 per stall.

    Reply
  4. Marc Raab

    The cities “investment” in parking structures would be easier to support if 1) they had resulted in more jobs and therefore more income tax collections and 2) the building built on top of them were aesthetically pleasing and architecturally significant.

    On both counts, the city failed.

    Queen City square just shifted/consolidated jobs from existing employers around downtown. Oakley Square moved jobs from one neighborhood to another. Dunnhumby just moved their employees north a few blocks.

    Yes Cranley & Friends will say the city “retained” these jobs, but there was hardly any noise about Dunnhumby, Great American, or Anthem leaving.

    And the architecture. Sigh. 84.51’s new shoebox building, plopped right in the city center, is just terrible. It takes up a half a block of super valuable real estate, looks awful, and consists of mostly parking, with a few levels of offices for good measure. This is not a good example of urban planning.

    Queen City Square is a testament to how Cincinnati just can’t let go of the 1980’s. While a more dense development, it looks like something that Nashville or Charlotte would have erected decades ago. I would hope we aspire to be more than these fine cities.

    I don’t know what the office at Oakley Station will look like, but with Vandercar developing it, my guess it will resemble something with no uniqueness that pays no homage to the surrounding area.

    Oh, and then there’s the colossal architectural failure that is the Banks. As a bonus, the county gets to help play a part is stinking up our skyline. Horray!

    Folks seem to forget that these buildings will be around well after we are gone. If the Banks looks bad now, how bad will it look in 75 years? Generations of Cincinnatians will look at our skyline, and dry-heave. With no one demanding better results from our developers, they continue to saddle the city with unremarkable buildings. It’s a as though our elected leaders are infatuated with seeing cranes dot the skyline, regardless of what the cranes are building. And too many times, these cranes are erecting parking structures.

    Reply
    1. Craig Hochscheid

      HEAR!! HEAR!!

      Cincinnati is plagued by milquetoast new architecture that would be more at home in Mason rather than in our urban core.

      Reply

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