PORTLAND — A proposal to raise the hourly parking rate for two city-owned garages by 40 percent and increase the daily rate from $12 to $21 is upsetting some downtown merchants, particularly those on Congress Street and in the city’s arts district.

They say the increase would make it more expensive for people to visit downtown Portland and hinder the city’s economic development efforts in the arts district.

Additional Photos

“Find ways to attract more people and create revenues that way, instead of penalizing the people who are already coming to downtown Portland,” said Allan Labos, owner of Akari salon. John Patriquin/Staff Photographer

A proposal that is part of the municipal budget before the City Council would raise hourly rates at two city-owned parking garages – at Spring Street, shown here, and Elm Street – so that the fees were closer to market rates. John Ewing/Staff Photographer

The lack of easy access to parking is the biggest obstacle for downtown merchants, said Bob Reny, co-owner of the Renys discount department store chain, which opened a store on Congress Street a year ago.

“The city should try to make it easier, not harder, for customers,” he said. “That is what keeps downtowns vibrant. It makes it a lot harder when they throw something like this at you.”

The proposal, part of City Manager Mark Rees’ $162.5 million budget for the fiscal year that starts July 1, was endorsed by the City Council’s Finance Committee with no public comment. It would raise $160,000 in new revenue and bring parking rates in the city-owned garages closer to market rates, Rees said Tuesday.

Privately owned garages in the city charge an average of $2.70 per hour, according to a city study. Only the garage at the Holiday Inn by the Bay charges less than city-owned garages, $1 an hour, and that’s because it’s far from the city’s commercial districts, Rees said.

He said the city-owned garages compete with privately owned parking lots and garages, so the city must take the market into account in setting rates.

Even with the rate increase, the city garages would have lower rates than every other garage expect for the one at the Holiday Inn by the Bay.

Parking is a money maker for the city. In fiscal 2010-11, parking fees generated $132,000 at the Elm Street garage and $433,000 at the Spring Street garage.

The council will take up the issue when it considers the budget Monday. It is scheduled to vote on the budget May 21.

Councilor John Anton, who chairs the Finance Committee, said the committee agreed with the proposed fee increase because Rees’ arguments make sense.

Anton said several councilors want to discuss the issue Monday. He said he is open to reconsidering the fee increases if the council can find a way to make up for the $160,000 it would give up. He said he doesn’t want to raise the property-tax rate any more than the 2.9 percent now proposed.

“If folks want to remove it, I certainly want to know how we will make up the hole in the budget,” Anton said.

A fee increase would run counter to the city’s economic development plans for the arts district, said Jan Beitzer, executive director of Portland’s Downtown District.

The proposal is just the latest attempt to use parking fees to boost city revenues in recent years, she said.

She noted that the city eliminated a popular parking-ticket forgiveness program, increased fees at parking meters, increased the cost of monthly parking passes for city garages from $90 a month $110, and eliminated a policy that allowed people to park for free for the first hour at city garages.

“Parking is a commodity that affects economic development, and we argue that it be part of the total picture of downtown,” she said.

If the city wants to increase revenues, it should do a better job helping businesses thrive by keeping its parks clean and safe, said Allan Labos, who has owned and operated the Akari salon since 1986.

“Find ways to attract more people and create revenues that way, instead of penalizing the people who are already coming to downtown Portland,” he said.

Staff Writer Tom Bell can be contacted at 791-6369 or at: tbell@pressherald.com

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