CH Parking Fund Depleted As 140 West Revenues Lag

Business Management Director Ken Pennoyer told the Chapel Hill Town Council on Monday that the underground parking deck at 140 West is not as popular as town officials had hoped.

“We know it is less than what we had anticipated; it is certainly less than what it was when Lot 5 was a surface parking lot, in terms of occupancy,” said Pennoyer. “We expected that, ultimately, over time, people would return to that area to park, however, the dynamics between parking underground and parking on the surface are apparently different in terms of people’s behavior. So folks have kind of not used it to the same extent.”

The $55 million dollar complex of condos and retail was built atop what used to be a town-owned parking lot at the corner of Franklin, Church and Rosemary streets.

Chapel Hill partnered with Ram Development to build the two-level underground parking deck, with one level owned and operated by the town as public parking.

But since opening in 2013, parking revenues at 140 West have not met expectations, and Pennoyer said this is negatively impacting the town’s parking fund.

“The parking fund had built up a fund balance, so in the past few years we had been eating into that fund balance, however, the revenues have not caught up enough to carry us further than Fiscal Year 2016,” said Pennoyer. “In FY16, basically the fund’s cash reserves will be exhausted and it will need a subsidy.”

Pennoyer recommended shifting the debt from the 140 West project out of the parking fund to be paid using the town’s debt management fund.

“Currently, the parking fund is paying for the debt service that created the parking deck at 140 West. If we were to have the debt fund take over the payments for that debt, it would bring the parking fund back into alignment temporarily. We would kind of use that as a bailout to solidify the fund.”

He noted this would not a permanent fix and doing so would reduce the town’s ability to borrow money by about 10 percent. Pennoyer, along with Mayor Mark Kleinschmidt, suggested that in the short-term, lowering the price of parking at 140 West might be a way to draw in more drivers.

The Council will consider how to best balance the parking fund as part of the 2016 budget planning process. The first public budget forum is scheduled for February 23.

You can read the full update on town finances here.