San Diego is relying on Balboa Park visitors paying for parking to cover its tab for a project that would transform the park’s central mesa.

The City Council is set to vote Monday on a plan to finance the controversial Plaza de Panama project, which aims to remove roadways from the park’s center and replace the asphalt lot behind the Organ Pavilion with a grass-covered paid garage.

Philanthropists have pledged to raise nearly $30 million for the project while the city’s poised to commit nearly $50 million, more than triple the amount it promised four years ago. The cost of the project has gone up more than 70 percent.

The city’s counting on profits from paid parking in the garage plus up to $10 million set aside for capital projects to cover its bills.

The city’s independent budget analyst, longtime critics of the project and at least one outside parking expert who spoke with Voice of San Diego caution that approach comes with risks, especially given free parking elsewhere in the park.

But a staffer for Mayor Kevin Faulconer, who’s led city efforts to revive the project, said the city and the Plaza de Panama committee are taking steps to protect the city’s operating fund and ensure philanthropists – not the city – are hit with the bill should the project cost more than the current $78 million estimate.

Let’s walk through their plans, protections for the city and the questions being raised about whether the city’s plans will pencil out.

The Deal with Philanthropists

The City Council will first vote Monday on an agreement between the city and the Plaza de Panama committee, led by Qualcomm co-founder and philanthropist Irwin Jacobs. It will be one of the city’s largest ever public-private partnerships.

The agreement commits the city to a $49 million share of the project and requires the committee to try to raise $29.1 million for continued project design work and a portion of construction costs.

To help with that fundraising, the committee’s proposed deal with the city includes a clause that would allow the committee to publicly recognize donors through features like bricks or bench signs and to name parts of the project, such as the bypass bridge or parts of the rooftop park, after donors. The mayor and the city would get to sign off before that happens.

Jacobs has said he’s confident the committee can raise the money. He believes the ability to publicly celebrate donors will aid the process.

Once they ink the construction contract, the committee’s on the hook for any cost overruns.

Before the city awards a construction contract, the committee is required to formally pledge to bridge any gap between the city’s contribution and the updated cost estimate. If the committee can’t raise the cash, individual members must pay the bill.

“The majority of risk is on the committee,” said Katherine Johnston, Faulconer’s director of infrastructure and budget policy.

The group also must drop about $6 million into a contingency fund before the city awards the construction contract for the project. The city will use that fund to help cover bills from contractors. The committee is expected to keep a $6 million balance in that fund until outstanding construction bills fall to that amount.

But up until the city agrees to a construction contract, the Plaza de Panama Committee can walk away from the project if it can’t raise additional cash or if bids come in more than 5 percent higher than expected. The city can also bow out if the committee isn’t making sufficient progress with fundraising before the city advertises the construction contract, or if the city and the committee agree construction bids that follow are too steep.

If the project comes in below existing estimates, though, the group won’t have to raise as much money. The city owes its $49 million share no matter what.

The Paid Parking Premise

The city’s prepared to seek up to $50 million in bonds to bankroll its portion of the project. It’ll rely on paid parking in the garage to cover its annual debt payments over the next 30 years.

The project has gotten more expensive since it was first proposed in 2012, so the city is now planning to charge more for parking to cover the increase. For example, visitors will now pay as much as $12 for more than two hours on weekends and holidays and as much as $8 on weekdays, compared with the $5 capped charge proposed in 2012.

The city relied on analyses by consulting firm Parking Concepts Inc. to calculate those charges. The company, which was hired by the Plaza de Panama Committee in 2011, did an in-depth analysis of parking demand in Balboa Park five years ago and worked with city staffers on a simpler survey this fall.

That more recent study showed demand for parking in Balboa Park’s core had increased slightly, Johnston said.

Based on that work, the consultant assumed the garage would see occupancies between 36 percent and 61 percent and thus could bring in $4 million annually starting in 2020.

If that total’s accurate, it would likely more than cover both the cost of operating it and the city’s annual debt for the project.

But experts urge caution.

Patrick Siegman, a San Francisco-based parking and transportation planner said paid parking garages surrounded by other free parking options – as in Balboa Park – can face challenges.

“The danger in pricing one parking facility while leaving all the others around it free is you wind up with the free lots full and the pay parking structure underutilized,” said Siegman, who did not review the city’s estimates.

Jeff Kawar, deputy director of the city’s independent budget analyst’s office, also keyed in on that point in his review of the city’s financing plans.

He noted the difficulty of predicting parking needs in 2020 and offered this takeaway: “The accuracy of PCI’s parking demand projections will ultimately determine whether this is a financially self-sufficient project, or a project that will potentially require contributions from the city’s general fund in the future.”

If those assumptions are off by more than 17 percent, Kawar said, the city would be forced to dip into its general fund for the annual debt payment.

A separate IBA report also pointed to a handful of new costs that could fall to the city’s general fund, including an estimated $366,000 annually to maintain the new park space atop the parking garage and the potential need for additional security for the garage.

Johnston said she’s confident the city won’t have to tap the general fund.

She said the consultant’s projections don’t incorporate special events that might draw more revenue and were developed with the assumption some nearby lots would be full before visitors tried the garage.

“We think these are very conservative demand assumptions for the garage,” Johnston said.

She also emphasized cautionary steps the city’s taking to shield the general fund.

If the City Council approves the financing agreement, the city will set up an internal safety fund to hold excess parking revenues that can be used to cover the annual debt payment if the garage pulls in less cash in any given year. The city estimates that funding stream would be available as a backstop four years after the garage opens.

The city will also set aside about $44,000 a year in parking revenue for capital improvements in the garage.

“I don’t think there’s any potential to have negative impact on the general fund,” Johnston said.

A Worthwhile Investment?

The cost of the Plaza de Panama project has ballooned since 2012 due to increased construction cost estimates and regulatory changes.

Jacobs, Faulconer and the leaders of many Balboa Park institutions still want to move forward.

Others, including many who opposed the project back in 2012, aren’t so sure.

They point to the long needs list for Balboa Park’s iconic and crumbling buildings and the city’s limited ability to address those, plus changes following the opening of a 650-car garage for zoo employees and ex-Mayor Bob Filner’s move to mostly shutter the Plaza de Panama to cars. They also question the proposed location of the garage, construction impacts and whether more parking is even needed.

“This is a tremendous amount of money for very little gain,” said Bruce Coons, whose nonprofit Save Our Heritage Organisation’s lawsuit stalled the project for years.

Supporters of the project, however, see Plaza de Panama Committee’s commitment as a rare opportunity to reclaim spaces now dominated by cars for pedestrians and to at least chip away at the park’s longtime parking woes.

Many, including Air & Space Museum CEO Jim Kidrick, also predict the potential success story could draw more philanthropy in Balboa Park.

“I think approval of project will put spotlight on the park like never before and will remind people of this park’s importance and ultimately provide the necessary attention that is needed to garner future city investment and future private investment,” said Kidrick, who chairs a group of Balboa Park institutions that back the project.

Faulconer and his staff have decided the investment is more than worthwhile.

If you incorporate the $14 million Jacobs has already sunk into the project, philanthropists will be nearly matching the city’s stake in the project, Johnston said.

“They’re taking on a tremendous amount of risk for private individuals. This is a public park and this is a City Council-adopted master plan,” Johnston said. “It’s incredible that almost every single public dollar will be matched with a private dollar.”