BEVERLY — The city is planning to pay its $500,000 share of the new MBTA parking garage in cash after state officials questioned the legality of borrowing the money.
Mayor Mike Cahill said he will ask the City Council to approve spending $250,000 from the city’s free cash account and another $250,000 from parking revenues to meet its obligation for the garage, which is scheduled to open in May.
“It’s a timely issue,” Cahill said. “The project is almost done.”
The MBTA asked the city in 2009 to pay $500,000 toward the cost of the 500-car garage, which is being constructed on Rantoul Street near the train station. The MBTA and the state and federal government are paying the vast majority of the $25 million in construction costs.
The City Council voted at the time to borrow the $500,000. But last month state revenue officials questioned whether the city could borrow money to pay for an asset that it does not own, city Finance Director Bryant Ayles said.
Revenue officials recommended the city pay the cost out of its reserve accounts instead. The city decided to split the difference between free cash and parking revenues, which come from parking meters and parking tickets.
Ayles said paying the $500,000 directly from those accounts is actually a better option for the city than borrowing the money.
“It’s not only an approved use of the city’s reserves but it also creates capacity in the debt service budget for things like sidewalks and the middle school,” he said.
Ayles said the city has $5.7 million in certified free cash, one of its highest amounts ever. And the city had already targeted parking revenue to help pay off the debt if it had bonded for the garage.
The appropriation for the $500,000 will go before the City Council Monday night. The council must set a public hearing before it takes a vote.
Construction of the garage began in November 2012. It was scheduled to open last December but was delayed when it was discovered that more contaminated soil had to be removed from the site.
Staff writer Paul Leighton can be reached at 978-338-2675 or email@example.com. Statehouse reporter Christian Wade contributed to this story.