Delays in Boro Project Addressed as Residents Consider Financial Hits
Borough officials were still scrutinizing the stalled downtown development project last week in response to concerns about revenues lost during the delay.
Originally scheduled to be well under way by now, Phase II of the project a five-story building on the Tulane Street surface parking lot has been held up by the continuing water problem on the lower level of the Spring Street municipal garage. The issue must be resolved before Phase II can begin, according to a stipulation in the agreement between the Borough and developer Nassau HKT & Associates (NHKT) calling for the acquisition of a permanent certificate of occupancy (CO). While the garage is bringing in over $14,500 per week, it is still "way under" initial estimates, said Borough Administrator Robert Bruschi. Financial losses incurred, however, have been softened somewhat by the fact that the Tulane Street lot remains open, even though it has also siphoned off some of the new garage's business.
The revenue from the Spring Street Garage combined with the Tulane lot brings in over $900,000 about $15,000 less than what Borough officials had estimated.
Mr. Bruschi said he was "comfortable" with where the Borough stands with that number.
However, "We're not where we thought we would be in 2002" when the Borough signed off on the plan. By taking out the Park n' Shop lot, where the garage currently stands, the Borough has been losing revenue since the project's inception. Nearly $1.8 million in subsidies are being held up for a project that is now delayed over one year, according to Mark Alexandridis of Princeton Avenue.
"It's just not obvious that [the project] will ever be cash-flow positive," he said.
Councilman David Goldfarb said to view the delay as an ultimate loss in revenue was "not fair," pointing to the Borough's projections once the 24-residential-unit Witherspoon House, and the future 53-unit Tulane Street building are fully occupied, and once the garage has a permanent CO.
The original projections of raising the parking fees by 15 percent by 2007 could increase the profit margin if the Borough decides to hike rates before that date.
"I think we may revisit rates before 2007, particularly when it comes to Sundays," Mr. Goldfarb said, adding that while the Borough has lost revenue throughout the delay, it has gained the additional parking, the new library, and the nearly-open public plaza next to the library. Although the plaza is open to the public, it still awaits the construction of a pergola that will surround the periphery.
"People can make their own value judgment about which is better, but I feel what we have is better than what we had before," he said, predicting that the project will turn cash-flow positive shortly after it is completed.
However, to mitigate revenue lost in the first two years, "drastic changes" will be required down the line, including the aforementioned increase in parking fees. According to Mr. Bruschi's financial update to Council, 2005 will be the first year the Borough profits on the development project. But that profit, $46,882, is still $650,840 short of the 2002 estimate. Mr. Bruschi added that while those initial projections will not be realized in the short-term, the eventual yield will be in line with the original estimates.
Garage repairs to correct the damp basement are expected to be undertaken by fall, according to the developer. NHKT principal Robert Powell was not certain how much repairs might cost, but estimates have reportedly fallen within the $400,000 area. Borough officials said the municipality will not be responsible for shouldering that cost.