“They paved paradise and they put up a parking lot.”
Such was the lyric painted on an old cement wall on James Street shortly after Key West’s four-story parking garage was completed in 1996 at the corner of Grinnell and Caroline streets.
Since then, the garage has become an accepted and oft-used parking structure in Old Town.
Now, the 30-year lease between the city of Key West and the local power utility, Keys Energy Services, that governs ownership and operation of the garage ends on Dec. 31 and requires the two entities to work out a new agreement.
The Park ‘n’ Ride is built on two parcels of land — one owned by the city and one owned by the electric utility.
The garage includes 318 parking spaces and nets the city about $542,000 per year, which is used to support the city’s transit department, including the popular Duval Loop bus route that encircles Old Town.
In order to build the garage, back in 1993, the city made a one-time payment of $10 to Keys Energy for use of about 26,000 square feet of utility-owned land. The city paid to build the garage, continues to pay for all maintenance and repairs and assumes all liability.
The city also retains all parking revenue from the garage.
Keys Energy Services gets 65 parking spaces in the garage for its employees plus access to an additional 28 spots during storm events.
But with the 30-year lease between the city and the utility ending this month, officials at the two entities have to come up with a new arrangement to share the garage.
Keys Energy officials want the city to pay the utility for use of the 26,000 square feet of land upon which the garage sits and meetings have been taking place, although no final agreement has been reached and the city did not include any payments to the utility in its current budget plans.
Keys Energy has agreed to extend the current arrangement for six months — in exchange for $75,000 — to allow the city to work annual payments to the utility into its next budget cycle. Commissioners seemed willing to pay for that extension at their Dec. 14 meeting.
After that six-month extension, “Keys Energy is asking for $8 million over 30 years,” City Manager Al Childress told the commissioners, adding that he and his team would not want a 30-year agreement, as the 30-year-old building’s life expectancy is only 50 years.
Commissioner Lissette Carey asked the city’s finance director Christine Bervaldi to compile the amounts the city has spent on maintenance and repairs at the garage over the past 10 to 30 years so the city would be armed with that as discussions continue.
City Attorney Ron Ramsingh said he is hopeful the two entities can work out a long-term solution in January.
Following the Dec. 14 city commission discussion, the Keys Weekly reached out to Lynne Tejeda, CEO of Keys Energy Services.
Tejeda said their latest proposal to the city — $8 million over 30 years for use of the land beneath the garage — works out to $320,000 a year.
The utility on Nov. 29 then offered to discount the annual payment for the first three years to give the city time to budget the expense.
“We would charge them the initial $75,000 for the six-month extension of the current lease, then $150,000 the second year, $250,000 the third year and then the $320,000 annual payments would begin,” Tejeda said. “That proposal was sent on Nov. 29 but we haven’t yet heard back.”
She added that she had heard the city manager was concerned about a 30-year lease and Tejeda told the Keys Weekly the utility “would certainly consider a 20-year lease instead,” with no increase in the annual payment of $320,000 a year.
Tejeda added that the annual payment from the city would be spent on the utility’s ongoing capital, or construction, improvements to increase reliability and protect the system from storms.
“It costs about $10,000 to replace each wooden power pole with the new metal ones,” Tejeda said. “The $320,000 per year would enable us to replace 32 poles each year.
“Basically, we need to come up with a fair agreement for the city to lease Keys Energy’s land under the parking garage,” she said.
If no agreement is reached, then the original lease language states, “Upon expiration … the city agrees to surrender and yield possession of the premises peacefully and without further notice. … In the event the City discontinues use … City shall be responsible for demolition and disposal of the facility.”
No one wants to see the parking garage demolished, both Tejeda and the city officials said.
