CHARLOTTESVILLE, VA (CVILLE RIGHT NOW) – Charlottesville City Councilors swallowed a bitter pill on Monday night, voting unanimously in favor of an amended agreement with the Charlottesville Parking Center that requires the city to pay $1.8 million a year in rent for the Water Street Parking Garage. The amount is more than four times what the city has been paying, but the vote allowed the city to avoid an even higher spike in rent called for by an iron-clad lease the city signed with CPC more than 30 years ago.

“Hard to stomach,” is how Councilor Brian Pinkston described the situation minutes before the vote. “This is making what was a really horrible deal marginally less horrible.”

The legal relationship between CPC and the city began in 1991 with the signing of a lease, CPC owner Mark Brown explained in an interview on Charlottesville Right Now. CPC bought the land where the Water Street garage sits in 1959 and created a surface lot. In the late 1980s, downtown was economically struggling, and a lack of parking was part of the problem. Neither the city nor CPC had the money to build a garage, so they joined forces and then brought in Jefferson National Bank as a third entity to get the garage built and formed a condo association to manage the new structure, with the city signing a 99-year lease on the land.

“The intent of the people in the 1991 City Council [and also of the bank] was that when Charlottesville Parking Center got its finances further along with the new revenues, they would slowly buy out all of the other partners,” Brown explained. But he said that original intent changed.

CPC eventually bought Jefferson Bank out when it became Wells Fargo, but CPC never bought the city out. The city and CPC ran the garage together under the condo association’s bylaws. Brown purchased all shares of CPC in 2014, and the relationship with the city grew contentious when Brown wanted to raise the price of parking, and the city balked. CPC sued the city twice in 2016, according to reporting by Charlottesville Tomorrow, and eventually CPC and the city settled in 2018.

“In that settlement they leased all of my parking spaces from me. They assumed full management of the garage,” Brown said.

That left the city tied to the terms of the 1991 land lease, which calls for an appraisal of the land every 10 years. That new appraisal, coupled with the city’s lease of the 317 parking spaces in the garage, would have required the city to pay CPC $2.4 million annually beginning July 1, 2024, and that amount could have increased sharply again in 2034.

At Monday’s council meeting, Charlottesville Director of Economic Development Chris Engel explained the negotiations that had been underway to mitigate the city’s financial burden.

The amendments to the agreement with CPC reduced the annual payment to $1.8 million, subject to an annual increase of 3% or CPI. The amended agreement calls for a one-time 15 percent increase in 10 years. Additionally, the city has the option to buy the land from CPC in 2044 or sell its shares in the condo association and walk away.

In an interview on Charlottesville Right Now, city councilor Michael Payne echoed Engel’s explanation. “Now after 20 years, the city will have the option to either just completely get out of the parking garage or buy the entire parking garage and in addition, increases in prices have been baked in. So, there won’t be more kind of sudden appraisal jumps every 10 years,” he said.

At the meeting, City Manager Sam Sanders addressed concerns over the sudden increase in the city’s payments to CPC. “It’s easy to look back and say it’s a bad deal,” he said, noting that he doesn’t believe the city should enter into any other legal agreements that future councils can’t alter. “I want to reassure the public that we spent considerable time, and this was not rushed,” he said.