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Administration projects hotel tax and ramp sale revenue; council asks for outside valuation
Summary
Officials outlined how projected hotel occupancy and parking‑ramp sale revenues are calculated and said the city will contract outside appraisal and financial advisers as the parking authority plan moves forward.
City staff explained how forecasted revenues from a 3% hotel occupancy levy and a planned transfer of parking ramps to a parking authority were derived, and they committed to outside appraisal and advisory work before any final sale.
Staff said the occupancy‑tax projection used Visit Buffalo Niagara hotel data from 2022–23 to estimate revenue from both hotel rooms and short‑term rental units. Using average revenue per available room and estimated unit counts, the administration presented a conservative revenue estimate of roughly $3.1 million from a 3% levy (the administration elsewhere displayed $3.4 million as an upper estimate). Staff said they included short‑term rental units in the calculation to reflect the local law change that would add those units to the tax base.
On parking, staff described three valuation approaches: income capitalization, comparable sales, and replacement cost. Using an income capital‑ization approach with a 10% cap rate on an estimated $4.5 million annual net income, the theoretical value could reach $45 million; replacement‑cost estimates using $30,000 per structured parking space produced substantially higher valuations (staff cited a $156 million replacement‑cost figure using 5,200 spaces). To be conservative, the administration budgeted a sale receipt of $40 million.
Council members asked for an independent third‑party appraisal and outside financial advisers; staff said the city will contract external advisers when the authority is formed and will provide the council with the calculations and underlying assumptions. Officials stressed the authority model would aim to preserve recurring parking revenue for the city, shift capital‑repair responsibility, and provide a multi‑year payment schedule rather than a single net loss of ongoing revenue.
Several council members said they were more comfortable if both in‑house estimates and independent outside valuations aligned before any sale was finalized.
