The Capital Improvement Board will be charged with helping Rolls-Royce Corp. find up to 500 additional parking spaces to accommodate the company’s move to a downtown office campus formerly occupied by Eli Lilly and Co.
At its meeting Monday, the board gave its leaders clearance to move forward in drafting a parking agreement with Rolls-Royce and the city.
It would include giving the CIB, which operates the city’s stadiums and the Indiana Convention Center, authority to operate the Faris Campus garage and two nearby parking lots – 2,000 spaces in total – during evenings and weekends when events are taking place. The CIB would keep the net parking revenue, and that money would be escrowed into a fund that would be used to cover the cost of finding more spaces for Rolls-Royce, said Barney Levengood, the CIB’s executive director.
Rolls-Royce, which this spring finalized an agreement to move 2,500 of its 4,000 employees to the 465,000-square-foot building building it has dubbed the “Rolls-Royce Meridian Center” on South Meridian Street, would operate the garage during office hours and on evenings and weekends when events were not taking place. A company spokesman said Rolls-Royce plans to start moving employees to the campus in phases later this year, with most employees moving in the first half of 2012.
In January, IBJ reported that parking was among the key issues in discussions between Rolls-Royce and the city about the move. Up to this point, the city had not provided specifics of how that issue would be addressed.
Deron Kintner, executive director of the Indianapolis Bond Bank, said parking experts have told the city that Rolls-Royce likely will not need all 500 additional spaces. In these sorts of arrangements, groups typically only need enough parking to accomodate about 80 percent of their employees, since people go on vacation, work from home, walk or bike to work, etc.
But Kintner said the company wants to have the option to access that many spaces if needed.
"The important thing was for them to know before a big move like this that if they needed the 2,500 spaces, they would be there," Kintner said.
The CIB will get to keep its cash from parking operations that is not used toward securing spots for Rolls-Royce. Levengood said he could not estimate how much revenue the garage could bring in for the CIB.
If it’s not enough to cover the cost of finding parking, Levengood said, the CIB has the right to negotiate a new financial structure for the deal, but it’s not yet clear whether that would involve the city or Rolls-Royce chipping in to cover the cost of financing the garage.
“If the revenues are not sufficient to pay the outstanding liability, we have the ability to go back to the city,” Levengood said.
Levengood also declined to identify potential parking areas for fear that owners could drive a harder bargain in negotiating with the CIB for the sale of the spots. Kintner said Lucas Oil Stadium, which the CIB operates, could be one option.
The board could vote on a proposal as soon as its next meeting in September.
Also on Monday, the CIB approved a budget of about $121 million, an increase of about 16 percent over last year.
That total includes a $77.5 million operating budget, a $36 million bond fund and about $8 million in Super Bowl-related expenses. The NFL will reimburse about half of the Super Bowl-related expenses, and most of the rest—with the exception of about $800,000—will be covered by additional tax revenues generated by the Super Bowl, said Dan Huge, the CIB's chief financial officer.
Other increases will fund repairs to a leaking underground membrane above the Capital Commons parking garage near Capitol Avenue and Washington Street; cover salaries of new staff members at Lucas Oil Stadium and the expanded Indiana Convention Center; provide a sinking fund for bond payments that are due in 2017; and fund various improvement projects at Lucas Oil Stadium and the convention center.
The CIB will get additional revenue mostly from an uptick in reimbursements for setting up for events and rental income, both of which are driven by additional convention center space. Added hotel space also is expected to generate higher hotel-motel tax receipts.
The board will dip into its operating reserves by $10.8 million to help finance some of the additional expenses. That will leave the CIB with a reserve of about $50 million.