Building a £12 million multi-storey car park at Eastside will send out a message to the private sector that Birmingham is confident of emerging from the recession in good shape, city council leaders have claimed.
The local authority admits demand will be low initially, with two-thirds of the 1,000 spaces likely to lie empty when the huge parking area opens.
As a result, the car park is expected to lose £651,000 during its first three years of operation before breaking even in 2014.
But the council insists the multi-storey is a vital component for the future growth of Eastside, where a number of mixed-use development schemes coming on stream over the next few years are set to generate 12,500 jobs and bring £2.7 billion of private investment to the area.
The council cabinet had been expected yesterday to approve the scheme and appoint Thomas Vale Construction as preferred developer. But the item was withdrawn at the last minute.
Council leader Mike Whitby said negotiations were ongoing, but declined to give further detail.
If it is built, the multi-storey will be next to a site reserved for a unique vertical theme park, which is on course to open in 2012 and expected to attract hundreds of thousands of visitors each year. The new building will allow a surface-level car park at the front of Millennium Point to be vacated, with the land earmarked for the new city park.
A written cabinet report by strategic development director Clive Dutton warned of the dangers of not building the car park, which he said would send the wrong message.
The cost of the project is set to be split between the council, which will pay £9 million, and regional development agency Advantage West Midlands, £3 million.
Mr Dutton added: “The multi-storey car park and the projects made possible as a result will be a demonstration of the city council leading the way in the Eastside regeneration area through a time of wider economic uncertainty. As such, a significant likelihood of a revenue shortfall exists in the early years of car park operation until private developments in the area come forward, providing increased demand for parking.
"It is strongly suggested that costs be viewed in the current economic climate as a statement of commitment towards boosting the local economy and an investment in the wider context of the Eastside regeneration programme.”