As Parking System Revenues Plummet, Lease with Georgio’s Pizza Amended (Again)

East Lansing’s Building Authority held a special meeting Wednesday, Feb. 3, at which the Authority again amended the lease between Georgio’s Pizza and the City, allowing the pizzeria at 120 Charles Street to pay $1,500 a month in rent to the City under a month-by-month lease arranged in light of the Covid-19 pandemic. 

Georgio’s pre-pandemic rent at the base of the colorful parking structure had been set at $2,214 per month plus property taxes. But Georgio’s owner Taso Alimonos has asked the City several times for accommodation as the business struggles to stay afloat. Other small businesses in East Lansing have gone under during the pandemic, including Twitchell’s Cleaners, East Lansing Threads, and Footgear.

In East Lansing, specifically, the Building Authority is tasked with tracking payments for the City’s parking garages’ debt — including the Division Street Garage, in which Georgio’s is located. And, as the Building Authority moved to help Georgio’s, they also acknowledged the financial crunch the City itself is in. 

Adam Cummins, Community and Economic Development Administer for the City, said the balance between providing relief to City tenants while keeping necessary revenue streams is something municipalities across the country are trying to achieve. 

The City’s parking system has been hit hard by the drop caused by shut-downs at MSU and in East Lansing. A Freedom of Information Act (FOIA) request by ELi regarding parking revenues showed that in the most recently ended fiscal year, ending June 30, 2020, the City planned on bringing in a little more than $4 million in revenue from the parking system. The actual revenue came in at about $3.67 million, roughly $388,000 short of expectations.

In response, the City has put off maintenance on the garages, a decision that may ultimately mean higher overall maintenance costs.

FOIA documents also show that, more than halfway through Fiscal Year 2021 (which will end June 30, 2021), the City has brought in roughly a third of anticipated annual revenue — only about $1.5 million of the expected $4.7 million.

All told, the City has brought in, on average, $3.97 million a year in parking over the last six fiscal years (2015-2020), but is set to fall short of that mark this year. (ELi’s data analyst Nathan Andrus has organized the data and made it available for viewing here.)

Back in June 2020, the Building Authority voted to authorize a rent forbearance for Georgio’s, which lowered the rent for Georgio’s by roughly $600. The City also set up a payment plan to deal with past-due rents of about $11,000. The new arrangement created a monthly payment figure of $3,475 plus taxes.

But Georgio’s was still unable to make those payments. So, six months after the prior decision, on Dec. 3, 2020, the Building Authority agreed to lower the payments to $1,500, plus taxes, bringing the total monthly payment to roughly $1,900. 

According to Cummins’ latest memo, Georgio’s “indicated they cannot sign the new lease because they do not agree to the lease terms” that would have them paying more than $1,500. Cummins, there was a misunderstanding between him and Georgio’s representatives, who thought they were set to be paying a reduced rate of $1,500 including tax.

On Wednesday last week, the Building Authority voted to approve a new amendment, modifying the month-by-month lease agreement to lower the rent payments to $1,500 total a month, including taxes. 

During Wednesday’s discussion, Authority member Kathleen Boyle worried that Georgio’s might still fail to make payments. Boyle asked Cummins if Georgio’s had shared financial information demonstrating their inability to pay, something discussed at the December meeting. Cummins said they had.

The impetus for the Building Authority to keep hearing and approving requests for rent relief from Georgio’s — they could have terminated the lease on Wednesday — is to show compassion to businesses hit by the Covid-19 pandemic. 

Cummins outlined this in a memo from Dec. 3, and highlighted Georgio’s particular struggles: 

“In response to the threat posed by COVID-19, public health officials continue to establish guidelines and restrictions on indoor gatherings and indoor dining. These restrictions, combined with a shift in consumer behaviors, have resulted in significant revenue losses for the food service industry, including Georgio’s Pizza. In addition to public health orders and changes in consumer behaviors, Michigan State University suspended most in-person classes scheduled for Fall 2020; decreasing the number of students typically living in East Lansing and further reducing revenue opportunities for downtown businesses.”

During the 12-minute special meeting of the Building Authority on Wednesday — Georgio’s request was the only agenda item, and the parking system’s revenue numbers were not discussed — Chair John Czarnecki offered a hopeful outlook. 

“Let’s keep our fingers crossed that they can make this payment,” Czarnecki said. “But I think we should try to hold them to it and hopefully business will start picking up. Some kids are coming back to campus, or have come back, I guess, and hopefully, maybe they’ll have a little better business soon in the coming months. As it warms up, hopefully the business will pick up, slowly but surely. And as more people get their vaccines, more people will be out and about and hopefully the business community will be strengthened by people going out.”

“I think traffic downtown is crucial to this Georgio’s location,” Boyle noted.

ELi data analyst Nathan Andrus contributed to this report.

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