Four years ago, the Lexington Public Library paid $3 million for the parking garage next to its Main Street headquarters, even though its own appraisal valued the garage at only $1 million.
Library officials insisted the deal would prove profitable.
Instead, the garage runs a deficit — $52,000 last year — requiring library funds to cover the difference. Every year it produces less parking revenue than library officials predicted in their annual budgets.
"Hindsight is 20-20," library board chairman Burgess Carey said last week. "Obviously, we were hoping it would be profitable. But nothing is as easy as you think it will be once you get into it."
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There were other signs that the garage might not be the deal library officials hoped it would be.
The Urban County Government refused to issue $3.5 million in bonds the library wanted to buy and renovate the seven-story garage. City leaders said the property's appraised value was too low to justify such a debt.
So the library went to the Kentucky League of Cities, which gave it a 29-year loan that will ultimately cost $5.8 million in principal and interest. It's paying nearly $230,000 a year, a cost that it struggles with as it searches for drivers to lease parking spaces for $55 a month or a daily rate of $6.
Downtown Lexington has more than 7,300 off-street parking spaces, three-fourths of them in garages, according to the Lexington and Fayette County Parking Authority. Parking is plentiful.
"In this market, purchasing a garage is not really a money-making venture," said Gary Means, the parking authority's executive director.
Dennis Anderson, co-owner and manager of Park Plaza Apartments, also bid for the parking garage, which sits under his building, in 2005. He bid $1.9 million, which was too much, but at least that wasn't taxpayer money, Anderson said last week.
Later, he sued the library in Fayette Circuit Court on behalf of the taxpayers, citing "waste of public funds." (The library is guaranteed a nickel of every $100 in Fayette County property taxes.)
Anderson warned in his lawsuit that the library would spend money on the garage that should be spent on books and programs.
"The board has agreed to pay $3 million for a garage which is only worth — at most — $1 million," he wrote.
The library responded to the suit by stating that not one penny of public money was at stake. Rather, the garage would pay for itself through the money that drivers pay to park there.
"No taxpayer funds are being utilized for this transaction," the library said in court. Eventually, Anderson's suit was dismissed.
Now, library officials acknowledge that the Urban County government and Anderson had a point.
"No, it's not a money-maker," said Richard Browning, library board treasurer. "We've just not found enough people to park there. We're a library, not a garage. This isn't what we do."
Nobody disputes that $3 million was too much to pay, but the library board didn't know what other people might offer in the sealed bids, Browning said.
"What happens when you have a bidding process and you really want something is, you up your bid. And we certainly did," he said. "It probably would have been better for us had it been an auction, where we could see what the other party was bidding."
On the bright side, Browning said, the garage had fallen into poor condition under state ownership, with inadequate lighting, broken stairwell doors and other problems. The library used $500,000 from its loan for repairs, improving the parking experience for library patrons and enhancing the value of the Central Library building should it ever be sold, he said.
The library subsidizes the garage twice, Browning explained. It must find money in its general fund to cover the garage's annual deficit, he said. And library employees and visitors park in the garage for free, with the library shifting $55 a month for every space into its garage account, he said.
"We're paying ourselves in a sense, but the garage is separate on the books," Browning said.
'Not parking people'
Library officials regularly kick around ideas for attracting parking business.
In January, chief executive officer Kathleen Imhoff told the board she wanted to lease parking to the people who would be building the proposed CentrePointe hotel and condominium project across the street, according to minutes of the board meeting.
But the CentrePointe block remains empty. If the project is built, plans call for it to include a 580-space parking garage.
Means, of the parking authority, said he can think of a couple of obstacles facing the library garage. One is how cramped it seems inside.
"People say it feels tight in there," Means said. "There's not a lot of space for your vehicle, and the columns are larger there than you ordinarily see in a garage. That makes people uncomfortable when they're trying to pull in or back out."
Also, the sign over the main entrance — relatively small and brightly colored, reading "Lexington Public Library Garage" — is difficult for motorists to decipher while passing on Main Street at 35 mph, he said. And it suggests that it's strictly for library visitors, not the general public, he said.
"They haven't marketed it as well as they could have," Means said. "They should have promoted it better, told the public about it, broadcast that, 'Hey, we've added lighting, we've renovated, it's nicer now.'"
"But they're a library," Means said. "They're not parking people."