CHAMPAIGN — City council members on Tuesday night unanimously said they are willing to essentially give JSM Development a loan to replace public parking when the company moves forward with a residential, retail and hotel building on a campus parking lot.
Because parking garages usually lose money for at least the first several years they are in operation, a city requirement that JSM build at least 131 public parking spaces on the property, officials believed, would be too much of a financial burden for the company.
City officials are still working out a contract with JSM for the sale and development at parking Lot J, near the intersection of Green and Sixth streets.
But under the proposal the city council supported on Tuesday night, the city would loan all or most of the difference to JSM in years the company loses money on the public parking spaces, and the company would pay the difference back to the city in years it makes money.
Officials think the garage will lose money for the first 12 years — as much as $60,000 in the first year and less than $3,000 by year 12. The financial arrangement between JSM and the city would end when all the money is paid back to the city or after 25 years, whichever comes first.
What is not yet sure is how much the public parking spaces will cost drivers. Most city spaces in Campustown cost $1 per hour now, but city council members said they were more interested in letting JSM Development figure out what the market rate is.
Right now, public parking in Lot J costs 75 cents for each of the first two hours and $1.50 per hour thereafter.
"These are business people," said council member Vic McIntosh. "They know how to do things."
McIntosh added that if JSM could charge a bit more, that would mean the city would need to loan less money to JSM for the parking garage deficit in the first few years.
Council member Marci Dodds said she would be comfortable with letting JSM, which will own the garage, set the rates for the public parking spaces. Council member Tom Bruno suggested that city officials generally underestimate what people are willing to pay for parking.
"The rates in the deck should be market-set, and the city doesn't need to micromanage that," said council member Deborah Frank Feinen.
The project itself is still evolving, but currently JSM Development plans to purchase the property from the city for several million dollars and build a 12-story residential and hotel building with retail space on the first floor. It would look consistent with the building JSM already owns on the corner of Sixth and Green streets, which houses Noodles and Co. and Chipotle restaurants.
"We still truly believe that the hotel is the missing piece of Campustown," said Chris Hartman, managing partner of JSM Development.
City council members say they are excited about the project.
"We're sure that this project is going to work," Hartman said. "We're willing to put our reputation and our capital and our time behind that."
An earlier version of this story incorrectly stated the price of parking in Lot J. This updated version contains correct information.