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Winnipeg Free Press - PRINT EDITION

Parkade sale logical at $21.4M, council told

Winnipeg Square site faces hefty repair bill

By: Bartley Kives

Posted: 10/30/2009 1:00 AM | Comments: 0 (including replies)

Winnipeg Square charges some of the highest monthly rates in the city. (WAYNE GLOWACKI / FREE PRESS ARCHIVES)

CITY real-estate managers are urging councillors to accept a $21.4-million offer for the Winnipeg Square Parkade even though they say that price barely makes the deal worthwhile.

On Monday, two council committees will meet behind closed doors to decide whether to sell off the 33-year-old, three-storey parkade that generates $1.8 million in annual revenue for the Winnipeg Parking Authority.

City hall has been considering the sale of since 2008, when politicians mused whether the proceeds could be used to eliminate the parking authority's artificially accumulated debt, fix up two other parkades and possibly build new parking facilities.

Councillors once placed the value of the parkade as high as $50 million. But when the city asked potential buyers how much they'd be willing to pay, the responses ranged from $17.1 million to $21.4 million, councillors were told Thursday morning.

According to city real-estate managers, selling the parkade makes financial sense if the sale price exceeds $21 million. If councillors accept the highest offer, the net proceeds from the sale would be $21,039,000, after $361,000 in real-estate fees are deducted. That's good enough for officials to recommend selling the parkade even though they express some doubts over whether now is the best time to get rid of such a valuable city asset.

"This conclusion is particularly sensitive to changes in assumptions, both in terms of revenue growth and capital improvements required," real-estate managers write in a report to council. "In this regard, there is a question whether the city should continue to hold the property until economic conditions change. Although this represents an option, risks present themselves at various times during the life of ownership and it is difficult to predict future conditions."

One of the largest factors driving their decision is a pending parkade repair bill that could be as high as $12.1 million over the next five years. However, the Winnipeg Parking Authority pegs the cost of the repairs at only $2.5 million.

The disparity between those estimates has some city councillors questioning the wisdom of selling the parkade, especially as downtown parking prices continue to rise. Winnipeg Square already charges some of the highest monthly rates in the city -- $265 for a reserved spot and $225 for unreserved spaces -- and plans to raise rates again next year.

"They're just making a case for selling it off and they're cherry-picking numbers to make that case," said Fort Rouge Coun. Jenny Gerbasi, whose ward include the parkade.

Mayor Sam Katz, however, said the proposed sale price is attractive. "Keep in mind, that's a lot of money. I don't know about you, but I don't have that in my bank account," the mayor told reporters.

According to the report, the city could use the proceeds of the parkade sale to eliminate the Winnipeg Parking Authority's $12.2 million debt to the city, which was racked up when council used to force the special operating agency to fork over some of its profits every year.

The rest of the cash could be used to eliminate a separate $9.2-million line of credit the parking authority has with the city, the report states.

If council agrees, there would be no cash left over to make $4.5 million worth of required repairs to the Millennium Library and Civic Centre parkades or build new parking structures. Following the sale, the Winnipeg Parking Authority's annual revenue would also decline from $3.8 million a year to $1.7 million annually.

"This is like selling your house to buy groceries," charged Gerbasi, who claims the sale makes little sense. "Keeping this parkade and making a modest investment in it will maintain a sustainable revenue stream for the next 50 years."

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 30, 2009 B1

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