Attachment 3ATTACHMENT 3
Downtown Parking Garage Financing Scenarios
The Council Parking and Infrastructure Ad Hoc Committee has been engaged in the review of conceptual
design scenarios and related pro forma for the development of a parking garage at the Towns West
Main property. Those deliberations led to a discussion regarding the expense associated with third party
private equity financing for the proposed project. For private equity investors to assume the market risk
associated with the project their business models require returns on capital of between 15 and 20
percent. The Ad Hoc Committee asked staff to explore internal financing scenarios as a way to gain
access to a cheaper cost of capital for the project. Based on input from the AD Hoc Committee, staff
worked with Public Resources Advisory Group (PRAG) to develop two financing scenarios utilizing the
Town’s bonding capacity. The following analyses are intended for illustrative purposes only but are
reflective of current market yields and recent municipal transactions. The scenarios assume funding for
the garage portion of the project only and show both 20 and 30 year maturity schedules.
Scenario 1
Scenario 1 is consistent with the development of the entire project including market rate and below
market rate housing. This scenario assumes a three level garage with two levels below ground. The
scenario also assumes that the development of market rate housing will provide $5.0 million in profits
and an additional $5.0 million through the sale of air rights. The bonds have been structured with a five
year call feature so a portion of the outstanding principal can be paid down utilizing the aforementioned
$10.0 million. As the table below illustrates Scenario 1 results in average annual debt service payments
of approximately $1.3 million (20 year) and $1.0 million for the initial five years. Once project proceeds
are used to pay down principal after the call date the average annual debt service payments are reduced
to $431,000 (20 year) and $400,000 for the remaining life of the bonds.
Scenario 2
Scenario 2 is funding strictly for the development of a standalone parking garage. This scenario assumes
a three level garage built entirely above ground. This scenario requires lower initial bond proceeds
because of the avoidance of higher costs associated with underground levels. As the table below
illustrates Scenario 2 results in average annual debt service payments of approximately $1.0 million (20
year) and $835,600 (30 year) for the life of the bonds.