City opts to take slice of revenue instead of buying car park

A city has decided to take a slice of the revenues from one of Cork’s busiest car parks for the next decade instead of buying it out.

Councillors agreed to accept a detailed report from city manager Tim Lucey on the council’s future involvement in the 395-space, 24-hour City Hall car park on Eglinton St.

It will see the council extending the lease for a decade and taking:

* 15% of the car park revenues generated in excess of €1m;

* 25% of the revenues generated between €1.25m and €1.4m;

* and 40% of the revenues generated in excess of €1.4m.

Mr Lucey said it represents a good deal for the city in that it avoids the need to borrow €5.1m to buy out the car park, maintains an important public parking facility, contains a clear ‘tiering’ mechanism which will see the council benefit from increases in turnover, as is the case on toll roads, and will see the public benefiting if there is an increase in revenues, while being exposed to none of the downside risk of being involved in the day-to-day running of the business.

The deal follows lengthy negotiations between the city council and Cornmarket Properties Ltd, triggered by the terms and conditions of a complex lease arrangement.

In Nov 1998, the council did a deal for the sale of shares in a special purpose company, Cornmarket Properties Ltd, to facilitate the construction and operation of the car park on land originally owned by the council.

The council got a market value consideration for the site and the car park was built.

Among the conditions in the 25-year lease were that a small annuity would be paid to the council annually for the first 14 years, with a profit-sharing formula in place for the remaining years and, at the end of the lease, the car park would revert to the council for IR£1.

But the agreement also contained an opt-out clause for Cornmarket Properties Ltd to surrender the lease in 2012, if it so chose, and to receive a certain payment.

Talks on the future of the lease began last year.

Mr Lucey told councillors on Monday that the surrender value of the car park would be in the order of €5.1m.

He said the current levels of revenue and profit from the facility are not high enough to result in any payments to the council in the short-to medium-term under the profit-sharing clause, and he said the revenue-sharing option was the best option.

Councillors agreed to support the revenue-sharing deal.

The car park is managed by Q-Park Ireland Ltd, a subsidiary of Shudehill Ltd, which is in turn a subsidiary of Cornmarket Properties Ltd.

Q-Park operates dozens of car parks in Dublin, Belfast, Limerick, and five car parks in Cork City — at Carroll’s Quay, Grand Parade, North Main St, St Finbarr’s near Wandesford Quay, and City Hall.