Downtown Hartford has been battered by the pandemic.
Many office buildings remain lightly populated as workers continue to work from home. Restaurants and other small merchants are hanging on for dear life. And companies are still trying to figure out how much office space they’ll need downtown — or elsewhere — in a post-pandemic world.
Amid that backdrop, it’s puzzling that the Hartford city council is proposing a major fee hike on downtown parking-lot operators.
The policy is misguided in several ways. It not only will increase the cost of parking downtown — an issue for many office tenants who are in, or considering locating in, the center city — but it sends the wrong message to the private sector, including some of the city’s largest investors and boosters.
More frustrating is the lack of transparency around the proposal. Initially, there was little to no outreach to the business community about it.
In fact, some of the city’s most important private-sector stakeholders didn’t learn about the proposal until the Hartford Business Journal reported on it in mid-December, just as the city council was scheduled to vote on it.
That’s not how you create an effective public-private partnership.
The timing is also wrong, given that many parking spaces downtown are going unused. Even if the ordinance doesn’t go into effect until next year, the city of Hartford is looking at years of recovery to rebound from the pandemic.
Proponents of the plan say parking-lot operator fees haven’t increased in about 18 years and should be higher. That may be true, but the plan being considered could increase the biennial fee parking-lot operators pay by tens of thousands of dollars — per parking lot.
That’s too much.
Proponents also say the higher fees could spur ground-up development of the city’s overabundant parking lots.
In fact, it’s more likely to do the opposite, frustrating the very developers who are currently risking millions of dollars to make the city a more attractive place to live, work and play.
Demand for office, retail or apartment space is what drives new development, and Hartford doesn’t have enough of it right now to justify new construction, unless there are significant government subsidies involved.
Downtown Hartford has added nearly 2,000 new apartment units in recent years and most of them have been filled — a great success story. But not one apartment has been built without a subsidy from the Capital Region Development Authority.
That’s because landlords can’t charge high enough rent to justify subsidy-free construction. There is even less justification for building office space, where the downtown vacancy rate hovers around 20% and rental rates have stagnated for decades.
Meantime, the city of Hartford already suffers from having the highest commercial property tax rate in the state. Higher parking-lot fees would only add to the burden.
Wrong policy, wrong time
The city council could vote on the proposed fee increase at its Jan. 25 meeting.
It would hike the biennial permit fees the city charges downtown parking-lot operators from a maximum of $1,000 per parking lot to as much as $28,900 or more, depending on the number of spaces in a particular lot.
Specifically it creates 13 different permit fee structures based on lot size. For example, a lot with 16 to 30 motor vehicles would have to pay a biennial permit fee of $2,000, up from $500 today. Lots with more than 250 vehicles would have to pay $28,900 plus an additional $2,500 for every additional 20 vehicles (under that scheme a lot with 305 vehicles would have to pay a $36,400 biennial fee).
City council member John Gale — the main proponent of the fee increase and turning more parking lots into developed real estate — said the change equates to about a $62.50 increase per parking space per year, a nominal number when you consider that parking-lot fees haven’t increased in nearly two decades.
But the added cost is in fact significant. During a recent public hearing on the proposal, parking magnate and downtown landlord Alan Lazowksi, who has made major investments in the center city in recent years, said one of his parking lots would see its biennial fee jump from $1,000 to more than $50,000 based on the number of available spaces.
Hartford Business Journal was previously a tenant at a Lazowski-owned property, at 15 Lewis St.
Another major Hartford investor, Shelbourne Global Solutions LLC, also spoke out against the measure.
Can they afford it? Well, it likely won’t make them go broke but it’s another disincentive to invest in the city at a time when Hartford desperately needs new investment.
The pushback from businesses has been so strong that it’s forced the MetroHartford Alliance, which has tried to steer away from policy debates in recent years, to weigh in.
CEO David Griggs recently told me that his members would love to see more development downtown, but this isn’t the way to spur it.
Small businesses in particular are worried about higher parking costs downtown, as the fee hikes will likely be passed on to consumers.
“Coming out of the pandemic where we desperately need people to return to their offices and people to visit downtown, we shouldn’t be doing anything that would prohibit that or make it more expensive,” he said. “If we had demand for development perhaps this fee would make more sense. But this doesn’t spur demand. Decreasing prices helps spur development.”
Where to go from here?
This column isn’t just meant to be another rant against a tax increase. If the city council is serious about turning parking lots into new development it must come up with a broader economic-development policy plan and vision.
It must include lowering the city’s exorbitant 74.29 mill rate and establishing a new pool of public funds (likely from the state) to subsidize development.
More importantly, council members must have a sit-down with key city investors to get a better understanding of the downtown market and what it will take to spur new development.
Until then, any parking-lot fee hike should be put on hold.
