By Justin Sondel

Copyright buffalonews

Members of the nonprofit organization that currently manages the city’s parking ramps are at odds over the estimated value of the ramps as the city prepares to sell them to a newly created authority.

Sam Iraci, executive director of Buffalo Civic Auto Ramps, took umbrage with claims made by the nonprofit’s treasurer, real estate developer Rocco Termini, that Iraci’s calculations of the ramps’ values were inflated. Termini was quoted by news outlet Investigative Post.

Mayor Christopher Scanlon’s administration has relied in its budget on estimates that the sale of the ramps would fetch $40 million to $60 million.

“Anybody that said these numbers are drawn out of thin air is full of (expletive),” Iraci said in a phone interview.

Termini did not respond to messages Tuesday.

But in his comments to Investigative Post, he said the deterioration of the ramps and the capital needed to keep them operational were not included in the calculations, an assessment a bond market analyst agreed with, according to an interview with Investigative Post.

“That’s all that they’re looking at, is cash flow. And I think you have to look beyond that,” Termini said to the news outlet. “The older the ramps get, the more expensive it is to make capital improvements on those.”

Fillmore Council Member Mitchell Nowakowski also expressed concerns over the estimated value of the ramps.

“You also have to account for how much in capital needs those large and very, very significantly old and in disrepair ramps will cost to bring up to a code to then be able to make them revenue generating,” Nowakowski said.

Since shortly after winning the approval of the State Legislature this spring to create a new parking authority, Scanlon’s administration has been saying that the sale of the ramps would generate between $40 million and $60 million. Scanlon said the extra revenue would help stem the rising tide of the city’s structural budget deficit, and could be used to lessen property tax increases.

To come up with the estimated valuation, Iraci said he used three figures, which are industry standard: replacement value, comparable valuations for similar properties and the capitalization of net income.

Iraci used a 10% rate on the capitalization of the parking authority’s net income of $4.8 million last fiscal year, combined with $892,000 in debt service the authority paid to the city last year. Over the last 30 years, the authority has averaged payment – net income and debt service combined – of just under $5 million a year.

Last year’s combined net income and debt service of $5.7 million capitalized at 10% leads to a valuation of $57 million, the source of what the administration has described as their conservative estimate of bringing in at least $40 million, the amount of revenue included in its four-year financial plan. The current fiscal year budget includes more than $26 million in revenue from the sales.

Iraci then used estimates on the $40 million figure and current interest rates to calculate the estimated continued payments the city would receive of more than $2 million a year, using last year’s $4.8 million net revenue and subtracting the estimated $2.5 million in debt service.

All of these figures exclude the $700,000 a year BCAR sets aside for maintenance and the potential revenue growth that could come from increased use of the ramps or a rate hike, both of which the administration has said are likely in the coming years, Iraci said.

And a 4% rate increase could bring in an additional $400,000 in revenue each year, he added.

“The numbers I gave you don’t count any of that,” Iraci said.

Investigative Post also reported being denied Freedom of Information Law requests for the documentation behind the estimated value of the ramps, with the city’s Law Department telling reporters there were no documents of the calculations to share.

Gould on Wednesday sent The News documents the administration had sent to members of the state Legislature as it pushed for state approval this spring to create the authority and the Buffalo Fiscal Stability Authority with figures similar to those described by Iraci in the phone interview. Those documents, Gould said, had also been shared with Common Council members.

They did not contain any details on comparable real estate valuations.

Appointments to the board of the new authority were held up in Common Council this week over several concerns, including ethical considerations raised by Majority Leader Leah Halton-Pope with two of Scanlon’s appointees being city employees and part of his administration.

Scanlon, who has been on the Council for 12 years and will return to his South District seat in January, in a phone interview Wednesday said he understands that Council members want to feel confident in their vote and will work with them to make sure all their concerns are allayed before the next Council meeting.

“I still feel very confident that things will proceed,” Scanlon said. “I fully understand the Council members, if they have questions, sending it back to committee until the questions are answered.”

Fillmore Council Member Mitchell Nowakowski, who has expressed skepticism about the wisdom of the sale, also said he is concerned with Scanlon holding all five appointments to the board of the new authority – the Buffalo Parking and Mobility Authority – which will then work with the new mayor when the winner of the November election is sworn in.

Scanlon – who became acting mayor when Byron Brown resigned last year – lost to State Sen. Sean Ryan in the Democratic primary. Ryan, who is endorsed by Nowakowski, is considered the favorite in the heavily Democratic city. He faces Republican James Gardner and independent Michael Gainer in the fall election.

Scanlon said he chose two members of his administration for the board – Nadine Marrero, executive director of the Office of Strategic Planning, and Raymour Nosworthy, commissioner of Finance and Administration – because they were instrumental in the creation of the authority, and their institutional knowledge will be helpful to its implementation and operation. Two other appointees, one of whom is a former BCAR board member, were chosen because of their knowledge of the downtown business landscape.

Lovejoy Council Member Bryan Bollman is the fifth member that Council representation agreed to in a memorandum of understanding between the Mayor’s Office and the Council.

“My appointments are not political in any way, shape or form,” Scanlon said.