State officials recently purchased Hartford’s Morgan Street garage, paying significantly more than its appraised value, in a move that results in a better financial picture for the Hartford Parking Authority.
Last year, the city took $1.2 million from the authority’s savings for future repairs in order to balance the budget. For the current fiscal year, Hartford is using $8.3 million from its own savings to cover a budget shortfall.
The $1.2 million removed from the renewal and replacement reserve left the HPA with another $1.2 million in the reserve as of August, according to Chief Financial Officer John Michalik.
Michalik said the sale also reduces the city’s need to contribute to the reserve each quarter from $171,000 to $98,250. Over the next year, the HPA will save $291,000 in payments to the reserve because of the garage sale.
Critics of the deal like Sen. John Kissel, R-Enfield, have suggested the state overpaid in order to help Hartford. Two appraisals done for the state confirm the garage is worth considerably less than the state paid for it. Sen. Tony Guglielmo, R- Stafford, called the sale “a sweetheart deal.”
According to the Hartford Business Journal, the city was losing more than $600,000 a year on the garage. Although the garage generated an operating profit, the city is still paying off the bonds issued to build the garage.
The appraisals put the value of the garage at no more than $9 million.
“While these figures are helpful guides they do not reflect the reality that the city is not able to sell the garage for less than the amount of the outstanding bonds; that figure is the $23.25 million sales price,” Ben Barnes, secretary of the Office of Policy and Management, said in a letter to Kissel.