Thanks a lot -- WSF reclaims 'city' parking area

The city parking lot at the ferry terminal isn’t really the city’s.

And if Washington State Ferries, the cash-strapped owner, has its way, the parking profit – as much as $250,000 annually – won’t be the city’s any longer, either.

“This is one of the areas we’re looking at to enhance our financial situation,” said Brian Volkert, WSF’s manager of financial accountability.

Since 1994, the city has been pocketing revenue from the 163-space parking lot without making any payments to WSF – cash that presently amounts to over $300,000 per year, based on a per-day charge of $7.25.

In light of that, WSF wants to be paid some $180,000 in “back rent” – almost nine years’ worth of payments under the $1,700-per-month terms contained in a lease dating to 1988, the last mutual agreement between the city and the state.

“That’s the straight per-month charge,” said Volkert. “There could also be some interest.”

Ralph Eells, city director of finance and administration, said there was an agreement in the early 1990s that relieved the city of its rent obligations so long as it used the money in a way that would benefit the ferry system.

“We had agreed with them that instead of paying them directly, we would put the money into a street fund to make improvements on the roads surrounding the ferry terminal,” Eells said.

But nobody can actually produce a copy of that agreement, and Volkert does not believe it was ever finalized.

“My understanding is that the two sides never agreed,” he said. “The city proposed something that was not acceptable to WSF, then WSF proposed something that was not acceptable to the city.”

Eells says he believes WSF did accept the agreement.

“We signed the agreement and sent it to WSF, and I talked to a woman in operations who said they had signed it as well,” Eells said, “but she has left the system, and now a copy can’t be found.”

While the city did not pay rent, it did make road improvements, spending some $2.7 million for projects immediately adjacent to the terminal – Ferncliff Avenue and Winslow Way East, and for nearby projects, including lower Madison Avenue, and Brien and Bjune drives.

The WSF proposal Volkert referenced came in early 2001, when the ferry system approached the city and offered a deal under which the ferry system would get 60 percent of parking revenue – half of which could be retained and used on road projects in the immediate vicinity of the terminal. But the Bainbridge Island City Council wouldn’t buy that.

“We believed we would have had to bring in a commercial operator, and they charge 40 percent of the revenue,” said Councilman Norm Wooldridge, who was a party to those deliberations. “There wouldn’t have been anything left to the city, so we elected not to proceed.”

Now, WSF won’t even offer Bainbridge a 40 percent split – it wants all the revenue.

Stretching away from the terminal building’s front entrance beneath a sign reading “Welcome City Parking,” the lot is bounded by several other commercial parking areas to the north and west.

In reasserting the state’s interest, Volkert’s motive is strictly financial. He is charged with developing $6.5 million in annual savings and revenues in order to keep WSF afloat with fewer fare increases.

It’s all part of WSF CEO Mike Thorne’s business plan, which calls for the ferry system to maximize the revenue potential of its properties.

Bainbridge Island city Administrator Lynn Nordby sympathizes with WSF’s motives.

“They are facing the same problem all of us are facing, which is the loss of MVET money,” said Nordby, referring to the $750 million in annual revenues lost when the value-based Motor Vehicle Excise Tax was terminated by voter initiative and by Legislative action.

The loss hit the ferry system particularly hard, because much of its operational funding and virtually all of its capital funding came from the MVET.

Although the lot yields total revenues of over $300,000 annually, Eells said the losses to the city coffers won’t be that large.

“We pay ourselves a parking tax of 12 percent, and that will continue, because the state has to pay taxes on property that it operates with a private contractor for profit,” he said.

“And our costs to operate are $25 to $40,000 per year,” he said, pointing to administrative costs and the personnel costs to the police department of managing the lot.

Katie Jones, Bainbridge Police parking enforcement officer, said she spends one to three hours a day at the terminal lot, collecting the money deposited into the self-pay boxes and issuing tickets.

Determining the city’s overall loss from the deal isn’t easy, Eells said, because it will be offset by difficult-to-quantify cost savings.

“For example, we issue a lot of parking tickets down there, but a significant portion of municipal court time involves those tickets,” he said. “I don’t think the tickets pay for themselves, but those kind of things are going to be difficult to know until the change actually happens.”

Eells said the city’s 2003 budget calls for some $300,000 more in revenue than it allocates for spending, so the loss can be absorbed in the near term. But in the long run, lower spending or compensating revenue will be needed, he said.

While the city plans future talks with WSF, Nordby said he doesn’t think the city has a great deal of leverage in terms of preventing the takeover – “it is their lot,” he said.

But Nordby said the city may successfully argue that it would be unfair for WSF to demand back rent when it has been ignoring the non-payment for so long, perhaps giving the city reason to believe it had accepted the purported deal that called for road-building in lieu of monthly rent payments.

Mayor Darlene Kordonowy met informally over the weekend with WSF CEO Mike Thorne. She said that while they did not discuss the parking lot, she expects to do so later this week.

“I’m happy if they want to take over the lot next year, but it’s not fair to walk in and say we need it this week,” she said.

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