MEDCO Bond Financing Promotes $70 Million Hillman Garage Rebuild

A vital access point to the Severn River and the Chesapeake Bay, Annapolis’ City Dock has experienced increased flooding due to the impacts of climate change. This historic landmark is at a critical juncture, requiring substantial infrastructure upgrades to withstand the rising environmental pressure. Recognizing the urgency, Mayor Gavin Buckley, alongside the Annapolis City Council, appointed the City Dock Action Committee (CDAC) to craft a resilience strategy in 2019.

To fund the resilience strategy and City Dock infrastructure improvements, the CDAC recommended tearing down the Noah Hillman Garage (Hillman Garage), which was at the end of its useful life, and building a new parking structure. The new Hillman Garage would create a revenue-generating system for the project and expand the city’s parking capacity, which is at a premium in downtown Annapolis.

The City of Annapolis chose a Public-Private Partnership (P3) to help fund the Hillman Garage redevelopment. A consortium of companies — including a developer, architects, consultants, builders, and a garage operator — assembled to create the Annapolis Mobility and Resilience Partners (AMRP). The City of Annapolis and AMRP negotiated a concession agreement for constructing and operating the new garage. AMRP engaged MEDCO in February 2022 to help allocate bond funding and act as a concessionaire for the project.

MEDCO Assistant Director of Financing Francina Brinker notes, “The city monetized an asset that had outlived its usefulness to simultaneously generate money for the City Dock renovation and address a resident need.” She adds, “The initiative needed initial funds to set each part of the plan in motion. MEDCO quickly allocated the funding necessary to kick off the entire process.”

Interest rates on the capital markets were steadily rising while MEDCO organized bond funding. Brinker adds, “Because MEDCO doesn’t have some of the restrictions many other government entities have, the team was able to be flexible in our approach and quickly acquire the bonds. We’re unique in that we’re agile and can overcome many challenges that traditional financing bodies cannot.”

By September 2022, bond funding was secure. The initial bond financed over $45 million for demolishing the existing structure, constructing the new garage, and paying a $24.5 million concession payment to the City of Annapolis to jumpstart the City Dock infrastructure improvements. In total, MEDCO facilitated over $70 million in bond financing for the AMRP construction project.

“Typically, MEDCO is involved in our projects from inception,” Brinker shares. “The AMRP involvement and the concession payment made this deal very unique. Our team stepped in to work within an established system, collaborate with different partners, and support an existing project to accelerate the initiative.”

Construction began in April 2022, and the garage opened to the public in June 2023. The structure offers 465 parking spaces (165 more than the previous structure), gateless entry, digital payment options, and greater ADA accessibility. The garage also includes 594 solar panels that power the garage itself, a stormwater collection system, and nine electronic vehicle charging stations. Rooftop pickleball courts and flexible first-floor space for farmer’s markets add a community element to the garage. Now that construction is complete, MEDCO will collect the garage revenue as the concessionaire to repay the project bonds.

The financial structure of this project received recognition from the Public-Private Partnership community at the 2023 P3 Awards in New York City, winning a “Highly Commended” distinction in the “Best Financial Structure” category.

As of March 2023, the first City Dock infrastructure improvements are underway, starting with changes to the Susan Campbell Park and electrical modifications. AMRP estimates that the full Annapolis City Dock resiliency strategy will be complete in the winter of 2025.