2015 | News

Bethesda’s Parking Lot District On Verge Of Going Broke

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The fund Montgomery County uses to pay for upkeep and operation of Bethesda’s public parking lots and garages is dangerously close to being out of money.

A report released Tuesday by the County Council’s Office of Legislative Oversight details how bond payments on the recently completed Capital Crescent Garage, funding help for groups such as the Bethesda Urban Partnership and an increasing amount of parking tax exemptions offered to property owners could mean the Bethesda Parking Lot District goes broke by FY 2020.

This fiscal year, the Bethesda PLD was budgeted to make $21.7 million in revenues, mostly from parking meter fees ($13.9 million) and parking fines ($4.8 million.)

The Bethesda PLD was budgeted to spend $24.8 million, $4.9 million of which went to retiring debt service payments on the Capital Crescent Garage/Lot 31 project. None of the county’s other Parking Lot Districts — in Silver Spring, Montgomery Hills and Wheaton — had any debt service payments.

“The Bethesda PLD fund faces serious structural challenges that will cause the fund to fall into deficit unless corrective actions are taken,” read the Legislative Oversight report. “Under current policies and practices, the fund will annually spend more than it receives in revenues driving its already precariously low fund balance toward zero. The insufficient fund reserve leaves the PLD incapable of absorbing an unanticipated spike in expenses or a downturn in revenue generation.”

County officials have long known of the Bethesda parking fund’s challenges.

Last budget cycle, the County Council approved a one-time loan of $1.5 million from the Silver Spring PLD fund to the Bethesda PLD fund to prevent the Bethesda PLD from falling into a deficit this year.

At the time, members of Council said it was their intention to address soon the major structural problems leading to the Bethesda PLD’s money woes.

The PLD funds pay for maintenance and repair of garage elevators, plumbing and electrical systems, meter repair, graffiti removal, facility cleaning, snow removal, credit and debit card processing fees and contracts for security officers.

Bethesda’s PLD includes 7,511 spaces spread throughout the downtown area. The Office of Legislative Oversight (OLO) compared the Bethesda and Silver Spring PLDs in depth, seeing as they are the two major clusters of county-provided parking.

The OLO found that generally higher parking rates in Bethesda that must be paid for more hours throughout the day led to this: Bethesda parkers pay $5.32 in fees for every dollar paid through the Bethesda PLD property tax.

In comparison, Silver Spring parkers pay just $1.35 in fees for every dollar its PLD property taxes raise.

Another reason for the difference is that Silver Spring’s property tax rates are higher than Bethesda’s.

And the OLO reported the parking tax problem is only going to get tougher. The county’s new zoning code very likely will allow for more property tax exemptions as the county seeks to lower the number of parking spots in transit-oriented areas and discourage driving:

The PLDs were created to provide ample public and private parking spaces in County commercial districts. The Zoning Ordinance mandates that developers provide a certain amount of on-site parking while the County simultaneously provides shared parking in public facilities to support properties that do not comply with zoning requirements. In fact, the County provides an economic incentive for developers to provide on-site parking by means of the PLD property tax exemption. However, in recent years, the County has pursued Smart Growth policies intended to promote higher density transit-oriented development. Moreover, the County has implemented transportation management programs intended to discourage (single-occupant) driving to areas such as the Bethesda, Silver Spring, and Wheaton Central Business Districts. Policies regarding public parking pricing and supply inevitably intersect (and possibly diverge) with commercial district land use decisions.

The only relief on the horizon would come in 2032, when the revenue bonds reserve requirements for the Bethesda PLD expire.

The OLO provides a number of recommendations for cutting down on expenditures, one of which would be to restrict the transfer of parking lot district funds to the urban management districts and mass transit fund.

In Bethesda that could mean fewer dollars for the Bethesda Urban Partnership, the quasi-public agency that provides trash pick-up, landscaping, the Bethesda Circulator and organizes events such as the Taste of Bethesda.

The Partnership is funded by parking fees from the Bethesda PLD, the commercial Urban District property tax, revenue from outside maintenance contracts and sponsorship dollars.