The private company that manages two downtown parking garages has filed suit against the city of Charlottesville, claiming that local government officials have conspired to keep rates in the Water Street garage below market-rate.
“The city’s oppressive and unlawful actions are wasting the property interests of the Charlottesville Parking Center,” reads the suit, filed Monday in Charlottesville Circuit Court.
In addition to seeking $1 million in damages, the CPC wants an injunction against the city making future decisions related to rates.
“The business relationship between the Charlottesville Parking Center and the city is untenable,” wrote attorneys with the Richmond-based law firm Thompson McMullan.
Mark Brown became the sole owner of the Charlottesville Parking Center in August 2014 via his limited liability company CPC Acquisitions. Previously, the company was privately held by several shareholders.
Officials with the city declined to comment Monday on the suit.
According to the filing, the issue is a dispute between the city and the CPC over rates for the 2016 calendar year.
Management of the Water Street property is governed by an eight-person board of directors as codified in a 1994 agreement that created the Water Street Parking Garage Condominium Association.
However, rates are set by directors who represent the 973 hourly and monthly parking spaces that are not reserved for the garage’s commercial tenants. These spaces are referred to as “pooled parking units” in the lawsuit and the condominium association’s bylaws.
The suit states the city controls 629 of these spaces while the CPC controls the remaining 344 spaces.
“The pooled parking unit joint venture is a joint business enterprise between CPC and the city for the mutual benefit of both parties,” reads the filing.
Rates are set each calendar year and must be approved by more than a two-thirds vote of the board of directors.
According to the lawsuit, the city wanted to set the rate at $125 a month for public spaces, $140 for reserved spaces and to remain at $2 an hour for transient spaces.
However, the CPC wanted to increase the rate to $145 a month for public spaces, $180 for reserved spaces and $2.50 an hour for transient spaces.
The two sides deadlocked.
“The city’s proposed pooled parking unit rates have no economic basis [and] are consistently below the reasonable rates that should be established based on the existing market for downtown Charlottesville,” reads the suit.
The suit then says the rates at Water Street are lower than those set for the Market Street Parking Garage, which is wholly owned by the city, although managed by the CPC.
The CPC also claims the city is actively competing against the Water Street garage by operating the Market Street Parking Garage with higher rates and proposing the installation of parking meters based on an October study.
“The city’s representatives are motivated by a desire to bring about parking rates that serve the city’s political and governmental objectives even when those objectives are clearly adverse to the financial interests of pooled parking unit owners,” the suit continues.
To resolve the impasse, the CPC offered to hire an appraiser to establish a fair market rate for parking but the suit claims the city refused to consent. The CPC hired Integra Realty Resources to conduct one anyway and the firm’s appraisal established rates of $165 a month for public spaces, $200 for reserved spaces and $2.50 an hour for transient spaces.
In January, the CPC offered to lease or sell all of its parking spaces to the city.
In February, the city responded that leasing would not be an option but wrote to the CPC stating that the City Council would entertain selling the city’s 629 spaces. The CPC made an offer that the suit claims was a “substantial premium” over market value. However, the city turned down the offer in a Feb. 17 letter.
“While the City Council remains very interested in changing the structure where both the city and CPC own spaces in the garage, the decision to sell the city’s spaces or to acquire CPC’s spaces implicates several significant policy issues that must be resolved before the city can make a substantive counterproposal,” wrote City Attorney Craig Brown. “We anticipate that City Council will address all of those issues in the next six months.”
He concluded his letter by saying the city could support a phased increase in parking rates at the garage if the CPC would drop its opposition to that concept.
The CPC’s lawsuit seeks action on three counts. First, they want $1 million in damages related to a “breach of fiduciary duty.”
“The city is actively competing against the Water Street Parking Garage … and CPC by operating a competing parking structure in downtown Charlottesville,” reads the suit.
The second count seeks court intervention to remove the city from a decision-making role on the condominium association through a process known as “disassociation.”
The third count seeks an injunction from the city participating in any further decisions related to setting rates at the garage.
The suit seeks a jury trial.
CPC acquisitions continue
Last week, the CPC purchased several commercial storefronts in the garage.
Mark Brown said on Friday that he wants to “simplify” the garage’s management structure.
“I have offered to sell my spaces to the city or alternatively to purchase the city’s parking spaces,” Brown said. “In any business I’m involved in our goal is always to modernize the operation of that business, and that is what I would like to do at the garages.”
The CPC paid $1.35 million for eight units previously owned by a limited liability corporation called Octo Aquavia.
The CPC also is under contract to purchase another five commercial units from the Virginia Land Co.
In October, the CPC purchased 106 parking spaces from Wells Fargo for $600,000.