Sales help support parking system, but long-term questions remain 

A call for building additional public parking in downtown Oklahoma City would be easy to make. After all, the system continued to enjoy an occupancy rate of 83 percent in September and has only a quarter of the debt it had less than a year ago.

HOW TIMES CHANGED
WHY NOT OTHERS?
A TIDAL SHIFT
BAD OR GOOD NEWS?
THREE CONDITIONS

But don't look for the Central Oklahoma Transportation and Parking Authority to build any new garages just yet.

Rick Cain, the authority's administrator and director of public transportation and parking, expects to see changes to demands on the system in the next decade just as much as it did during the past one.

HOW TIMES CHANGED
Before the late 1990s, COTPA's garage system appeared to be one frozen in place. It had been nearly 20 years since the authority had added a garage to its inventory of about 6,200 spaces at the time.

No surprises there. During the late '80s and early '90s, the state and Oklahoma City found themselves deep in the energy bust, with little activity going on downtown.

But as the economy began to return to life during the late '90s, downtown building owners found themselves enjoying a renaissance in renewed leasing interest in their spaces.

By 2001, COTPA's parking system had an occupancy rate of more than 90 percent, and downtown property owners trying to sign leases for firms needing 20,000 square feet of space or more just couldn't find the parking to meet potential tenants' needs.

"Building owners were coming to us," Cain remembers, adding that a need for additional public parking near the Park and Robinson Avenues corridors became acute.

"We knew that we needed to locate more parking there to give us a capacity to deal with demand, and to give these building owners a better opportunity to market their places," he said.

COTPA's answer? It added 1,804 new spaces in two new garages: City Center East and City Center West, costing more than $24.9 million to build along the old Main Street frontage of Urban Renewal's Galleria super block.

City Center East, a garage containing 604 covered spaces and another 33 surface spaces, was built just south of Oklahoma Tower. Unlike the larger new garage, City Center West, this one was capped in height to avoid blocking site lines from windows on the south side of the adjacent tower.

City Center West, meanwhile, covers more surface area just south of the Ronald J. Norick Downtown Library and contains 1,167 spaces. But because the library's windows all face away from the garage, the structure is able to add another five levels to its height.

The spaces in those two garages came on line in 2006, and COTPA, which also had bumped its monthly parking rates higher years earlier, continued to enjoy life without relying upon subsidies from Oklahoma City.

But as the spaces were absorbed into the system, downtown parking needs were already in flux because of changing office space priorities being developed by downtown's biggest business.

Devon Energy Corp. decided about the same time that it needed to consolidate its people. The company, by now a giant, employing more than 1,300 people downtown, called Devon Mid-America Tower its headquarters, but also had workers spread out in other downtown buildings.

As the company began evaluating where it could build a new corporate headquarters big enough to have all of its workers in one place, the obvious spot appeared to be the south half of the Galleria super block.

The Oklahoma City Urban Renewal Authority solicited proposals to develop the location in 2008, and selected Devon as the redeveloper later the same year. But the Devon proposal sought more than just the south half of the block: The company also wanted to acquire the larger of the two new garages to provide needed adjacent parking to the proposed development for its employees.

WHY NOT OTHERS?
As Urban Renewal moved toward approving the redevelopment proposal and began negotiating with COTPA to acquire the City Center West garage for the project, inquiries came from other downtown building owners about whether other COTPA-owned garages might be for sale.

To Cain and the authority's board of directors, the inquiries were worth evaluating. COTPA sought purchase proposals four of its five remaining garages: Broadway/Kerr, Century Center, Sheridan/Walker and City Center East. Purchase offers were not sought by the authority on the Santa Fe Garage, given that COTPA deemed that parking too important for transient parkers attending events downtown.

Ultimately, the authority opted to sell only one of its remaining garages, City Center East, to Specialty Real Estate Services, a partnership of downtown property owners representing Oklahoma and Corporate Towers and Leadership Square.

The authority closed both deals earlier this year, and new owners are already beginning to modify both. Devon's garage, of course, is on its way to being expanded. The City Center East garage is having an above-ground passageway attached to it from Oklahoma Tower.

Meanwhile, the 900 spaces of an older garage that used to occupy most of the south half of the Galleria block is gone " demolished to make way for Devon's new office tower. About 700 regular monthly parkers there have already been moved elsewhere in the system, or to parking operated by Oklahoma County or private interests.

Parkers in City Center West also are being relocated into other parts of COTPA's parking system or into other places before the garage can be expanded.  

A TIDAL SHIFT
In the near-term, expect it to become harder for downtown property owners to find available parking to meet potential tenants' needs. Transient parkers, too, will have a more difficult time in finding places to park if they come downtown during the day.

But the most profound change in public parking needs will happen in about six months, when expansion work is completed to Devon's garage, giving it approximately 2,900 spaces for its downtown employees to use.

If Devon moves its parkers into its expanded garage all at once, Cain said the estimated impact to the COTPA system will be: the loss of 300 monthly parkers under the Cox Convention Center " more than half of the monthly parkers there; the loss of 500 monthly parkers in the Santa Fe garage; the loss of 200 monthly parkers in the Century Center garage; and the loss of 100 monthly parkers in the Broadway/Kerr garage.

In all, COTPA estimates the loss in monthly parking will cost it $1.5 million a year.

"Monthly parkers are our bread and butter, because 75 percent of our revenue comes from that," Cain said. "All of the sudden, we will have a big cash flow issue there."

It is this sudden revenue loss " along with uncertainty about where the future need for parking will be " that are reasons the authority is taking a wait-and-see approach about where to build new parking.

"Do we want to take on more debt today, knowing what is coming at us? No, we need to better understand what is going on in the marketplace," Cain said.

"Today's business environment is different. Certainly, there are some potential opportunities," he said. "Will there be a need for parking to go along with a new convention center and hotel? Who will build and operate it? And what about the downtown park? Will it need parking? How will it be done? We could fill those needs."

BAD OR GOOD NEWS?
Jane Jenkins, president and CEO of Downtown Oklahoma City Inc., knows how the availability of parking can impact the leasing potential for downtown office spaces.

In her most recent position as executive director of the Downtown Boulder Business Improvement District in Boulder, Colo., Jenkins constantly worked with building owners to try to meet their parking needs for potential tenants.

There, parking demand always exceeded available supply.

In part, Jenkins said, city officials kept it that way by design, seeking to encourage the use of the community's mass transit system. Plus, most businesses there were small " the largest employer in the district only employed about 100.

But Oklahoma City, unlike Boulder, doesn't have the advanced mass transit system needed to support the downtown market. Having a new supply of available spaces for monthly parkers in downtown Oklahoma City will be a good thing, she said, as building owners try to fill the space Devon leaves behind when its employees move into their new home in 2012.

Meanwhile, "it will be nice to have those available spaces for transient parkers when they come downtown for special events," she said.

THREE CONDITIONS
Three conditions had to be met before the Central Oklahoma Parking and Transportation Authority would agree to sell City Center East and City Center West, said Rick Cain, the authority's executive director.

"First, we have to get fair market value, assessed by a current appraisal," he said. "Second, we cannot harm our bondholders. That means we have to make our interest payments and not pay the debt before we promised to. And, you don't want to harm the system by selling your cash cows."

Records provided by the authority show the appraisal value for City Center East came in at $7.7 million; the value for City Center West was set by an appraiser at $12.45 million.

Specialty Real Estate Services, an ownership group led by Mark Beffort, bought City Center East for about $7.62 million.

Devon bought City Center West for $18 million. The two together provided just about enough money to meet interest payment and debt pay off obligations for the bonds sold to build the two garages in 2003 " about $26.4 million.

But this deal was more complex than that, because COTPA's indebtedness related to the Devon development area also included a 2006 bond measure worth about $7.6 million it was carrying for the older scissor-lift garage on the south half of the Galleria super block.

In all, COTPA needed $34.2 million to meet all of its obligations. It met those by using the sale proceeds and other contributions from ongoing debt service reduction funds and sizable cash infusions from the urban renewal authority and the area's tax increment finance district of $2 million and about $4.3 million, respectively.

In all, the redevelopment deal helped COTPA immensely, as it reduced its long-term debt service obligation from $42 million to $12 million, Cain said.  "Jack Money

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