Long-term leases are a hurdle for Concord parking garages

In 1985, a local developer signed a lease agreement for 126 spaces in Concord’s newly minted parking garage on School Street. Each spot would cost $205 per year, plus property taxes and a share of capital improvements.

Tenants of the nearby Capital Plaza got a guaranteed stock of parking. The city got a consistent revenue stream. The deal was apparently so good the parties felt comfortable signing a long-term agreement – 70 years long, to be exact. It doesn’t expire until 2055.

In fact, almost half of Concord’s garage spaces – 561 of 1,148 – are tied up in contracts until 2026 or later. With leases currently priced more than $1,000 per year for individual buyers, most of these agreements are built on deep discounts not available to the public.

Now, decades after some of these deals were signed, they could be a barrier to hoped-for reform.

Matt Walsh, the city’s director of redevelopment, downtown services and special projects, recently unveiled a package of sweeping changes to the parking system, which is spiraling into debt. Walsh included a proposal to do away with most leases, replacing them with a more flexible permit system for the garages.

But that idea hinges on renegotiating these agreements with owners who have little to no incentive to pay more.

“I think hopefully all the parties recognize that the way the lease system is structured now is inefficient, and it certainly doesn’t work well for the economic development interests in downtown,” Walsh said. “Hopefully people will see the mutual benefits in that all the way around. It’s going to take some effort.”

His written report to the Concord city council was less optimistic. In that document, he noted his financial projections for the fund assume at least three of the five major lease holders “do not opt for permit system due to discounted long-term lease rates.” Those owners are Brady Sullivan Properties, Concord developer Steve Duprey and Manchester investor Peter Milnes.

When Brady Sullivan bought Capital Plaza One and Two in 2015, the firm also inherited that 70-year lease in the School Street garage through a chain of previous owners. Concord developer Ben Kelley, a partner at Brady Sullivan, did not respond to requests for comment. Duprey said he would need to engage at least 15 different tenants in the conversation.

Milnes, who is the registered agent of PRM Holdings LLC, controls 46 spaces in the same garage to benefit his nearby tenants at 41-51 N. Main St. Like Brady Sullivan, Milnes pays $205 per space plus property taxes and capital costs. His lease also expires in 2055.

He said he met with Concord officials months ago to talk about possible changes to the parking system, and would be open to talking again. However, at the last meeting, the city suggested shifting his leased spaces to the upper floors of the garage.

“We weren’t amenable to that because of the impact it would have on our folks,” Milnes said.

“We’d have to have good reasons to inconvenience or change the current arrangement,” he added.

Duprey purchased a pair of long-term leases in the Storrs Street garage when he built the Smile and Love buildings on South Main Street. In total, he has a monopoly over more than 40 percent of the 500-space garage. Both agreements last beyond 2030 and price most spaces less than $800.

“Obviously, we paid a price for those parking spaces based on the current structure, so we would need a discussion about that. . . . But our goal is to make sure we have a parking system that’s solvent so that it works for all the taxpayers. We’re obviously willing to be a cooperative party with the city,” he said.

Walsh’s report was more hopeful for negotiations with lease holders in the Storrs Street garage, including Concord Hospital and Capital Commons developer Michael Simchik. Those agreements are the city’s newest, and their owners pay market rates or slightly less per space. So in those cases, a permit system might mean a savings over current prices, Walsh said.

Simchik declined to comment on the report or its recommendations. Domenic Ciavarro, vice president of facilities, said Concord Hospital has already shifted spots in the garage at the city’s request.

Ciavarro said the hospital would be open to ideas, as long as workers didn’t lose their parking. About 225 hospital employees park in the garage and elsewhere downtown.

“I think our only concern would be to try to avoid under-subscribing what we might need for employees,” he said.

A utilization study found garage usage peaks at about 65 percent of their capacity, but often, more than half the spots are empty. On-street spaces, however, can be 90 percent full during busy hours. One of the strategic parking plan’s goals is to make the garages more attractive to downtown employees and visitors.

As Walsh sees it, the permit system would have multiple options and prices. The highest rate would be $2,000 a year for a dedicated space at all hours. Less expensive permits would be available at $1,350 for access to a pool of spaces, and the cheapest option would be $800 for a spot during business hours Monday through Friday. Walsh said a nights-and-weekends permit could also be attractive to downtown residents.

Leased spaces would be located in the top floors of the garages, while metered spaces would be on the lower levels. The current arrangement is flipped, but Walsh said that layout is confusing to drivers.

The city administration has also recommended increasing rates in the garages from 50 cents an hour to 75 cents; on-street spaces would go from 75 cents to $1.75 on Main Street and $1.25 on side streets. So Concord’s Main Street would have the highest rates in New Hampshire, tying with Portsmouth during that city’s peak hours. Changes are also proposed for parking fines, hours of enforcement and meter technology.

If approved, the permit system and other changes in the garages aren’t scheduled to take effect until at least fiscal year 2019, in part because negotiating out of these long-term leases could take many months.

“I don’t think at the time people truly understood how downtown parking works,” Walsh said. “It’s a shared environment.”

The proposed changes are subject to review and comment by the parking committee, and then they will need final approval from the Concord city council. That process will likely take months and will involve public input. For more information about the proposed changes to the parking system, visit concordnh.gov.

Concord’s newest business owner is already a familiar face downtown.

While working as the manager of Zoe & Co. Professional Bra Fitters, Elyssa Alfieri has also been active with Intown Concord, the Greater Concord Chamber of Commerce and the Concord Young Professionals Network. After seven years at the lingerie shop, Alfieri took over Lilise Designer Resale in June. The shop’s founder, Ellen Lessard, announced earlier this year she would sell or close for personal reasons.

“I’ve always wanted to do vintage and consignment,” Alfieri said. “That’s my dream since I was a little kid. It was like the heavens opening up.”

At 30 years old, Alfieri said her experience as a manager prepared her to strike out on her own.

“It was everything from taking the trash out to hiring to firing,” she said. “It was a really great way to get my bearings.”

For more than five years, Lilise has sold clothing, shoes and other consignment items from high-end brands like Chanel and Louis Vuitton. Alfieri said those staples will remain the same, but she is adding more vintage items to her collection.

“It allows you to create outfits with a little old and a little new,” she said.

Lilise’s website, social media accounts, address and contact information remain the same. Alfieri accepts consignment by appointment only. Visit liliseresale.com or find the store on Facebook or Instagram for more information, or call 715-2009.

At 6 a.m. today, construction will move from the east side of South Main Street to the west side.

The northbound lane will be open to traffic, while southbound drivers will be rerouted to Storrs or South State streets. Side streets will be open, and flaggers and police officers will be on site to direct traffic and pedestrians.

During the week, crews will continue trenching and laying conduit for underground utilities. They will also begin to remove curbs and install new storm drains in the blocks between Pitchfork Records and New England Cupcakery. The sidewalk will be open to pedestrians. As usual, parking will be open in the work zone and free for two hours.

This is the final phase of the Main Street project. The finish date is Nov. 11.

For more information, including a map of the new traffic pattern, visit concordmainstreetproject.com.

(Megan Doyle can be reached at 369-3321, mdoyle@cmonitor.com or on Twitter @megan_e_doyle.)