Tax-consuming assets

Property-tax payers to pick up cost of operating parking ramps

File photo The Renaissance parking structure, shown last May, along with Minot’s Central ramp downtown, are city assets that come with operation and maintenance costs listed in the city’s proposed 2019 budget.

Minot taxpayers will be asked to foot a $1.66 million bill to operate and put roofs on two downtown parking ramps next year, according to the city’s preliminary 2019 city budget.

The budget shows the city will need to impose an estimated 7.71 mills to support the parking ramp spending. That’s about $34.69 for every $100,000 of property value, or nearly $62 for the owner of a home at median value of $178,000.

The largest share of the cost is $1.5 million for parking ramp roofs and drainage systems.

Mayor Shaun Sipma said the city needs to put a temporary roof on each of the structures to protect its investment. The original contract with the developer did not include a permanent roof because it was expected the top of the ramps would be the base for housing construction, he said.

Whether the city is able to recoup any money from the developer for the cost of roofing will depend on how the litigation might unfold, Sipma said.

File photo Leakage and poor drainage led to water pooling in a downtown parking ramp last March. The city addressed immediate maintenance issues but is proposing putting roofs and improving the drainage in 2019.

The Minot City Council voted March 15 to end its relationship with Cypress Development, which was involved in construction of the ramps and was to erect the housing. The city called in loans to Cypress that were then at $1.77 million with interest and sued for at least $1.76 million in other costs.

Minot City Council members say the city now must maintain and protect the structures owned by the city to avoid watching the ramps deteriorate.

The parking ramps are estimated to generate $72,000 a year in parking receipts. However, estimated expenses total $160,557, which includes $27,386 in personnel costs, along with snow removal, maintenance of building and grounds, office-related expenses and utilities.

“It’s a change, certainly from last year, where we were just trying to mitigate damage. Now we have to go into management mode until we can essentially get the litigation taken care of,” Sipma said.

The council proposed a $222,246 budget for the remainder of 2018 to operate the ramps, using money from cash reserves from sales tax to help balance the budget.

“The absolute goal is to have the parking ramps pay for themselves. Down the road, there will be apartments. There will be commercial activities within those,” Sipma said. “In the meantime, we as city officials, along with staff, want to look at maybe some different ideas on how we can get closer to break even until that happens.”

He said the ramps have potential, in time, to be assets and a catalysts for development.

“Our challenge is getting through this budget, understanding that if we don’t protect this asset, we are going to start to see it deteriorate,” he said.

Council member Stephan Podrygula said he is uncomfortable with the spending but sees little recourse to avoid ramp deterioration. He supports closing down upper levels and using only the levels needed to accommodate the number of vehicles, although that action would do more to address safety than maintenance costs.

He opposes any potential property-tax alternative using more MAGIC Fund money to maintain the ramps.

“We have already squandered enough MAGIC Fund money on those ramps. That’s not what that money is there for,” he said.

Council member Lisa Olson noted the city has management responsibilities.

“It’s certainly not ideal but it’s a situation that we are in. We want to be able to have them functioning, and if we are the ones who are taking care of that, we will have to be responsible for the costs that are associated with it,” she said. “At some point, in my mind, we would be able to give up management on those and have a private company take that on.”

“This is one of the many challenges that remain in Minot’s future but I think the most important priority is protecting the investment,” council member Josh Wolsky said. He understands the parking ramp budget will anger at least some taxpayers.

“There’s a lot of days I am mad about the parking ramps. At the same time, we have a responsibility,” he said. “We have to plot a best path forward for the city and the investment that’s been made.”

Council member Paul Pitner agreed the city has a responsibility to maintain the structures. Failing to maintain them only increases costs in the future, he said.

Council President Mark Jantzer said it’s unfortunate the project hasn’t developed as hoped, but the ramps are the city’s responsibility now.

“It’s important that we recognize those structures for the city assets that they are and ensure that they be appropriately operated and taken care of like we do every other asset,” he said.

Council member Shannon Straight said it’s important the city move past the mistakes of the past when it comes to the parking ramps.

“I see them as a tremendous asset and resource downtown. If we don’t embrace that, we are never going to get over the past,” he said. “If we just look at it as the unfortunate debacle it’s become, we are never going to overcome that and move beyond that.”