What do you do with 100 spare parking spaces?

If you follow the lead of a group of Alexandria businesses, you sell them to the city -- for half a million dollars.

"Someone who's opposed to it, I guess they would call it a bailout," says Clifford H. Rusch, Alexandria's deputy city manager. But that someone, Rusch says, wouldn't realize that "merchants are citizens, too."

The story began last November when 138 businesses decided to disband Park & Shop Inc. The corporation, in which they held all the shares, was formed in 1952 to remedy a parking space shortage that merchants in the blossoming Old Town are considered a constraint on growth.

But by last year the main thing parking was constraining in Alexandria was Park & Shop's profits, said Edward S. Holland, a partner in Holland Engineering, who was the last president of the parking corporation. Their solution: sell.

Within two weeks, the city came in with a bid of around $510,000 for two small lots and part of a third. "That offer was so close to our own assessment," Holland said last week, "that we really didn't need to talk about it that much." The deal became effective Jan. 1 this year.

Rusch justified the city's expenditure -- to the tune of $5,000 per space, or more than $200 for each square foot of asphalt -- as "a way of protecting the Old Town investment."

"The commercial vitalization of Old Town depends on not losing any more parking," said Dayton L. Cook, Alexandria's director of transportation and environmental services. "The success of those shops depends on parking being available. If there's not nearby parking in Old Town, those shoppers are going to go to a shopping center, where parking is free."

He added that the lot at Cameron and Columbus streets, which was partly owned by Park & Shop, is high on the city's list of good spots for a parking garage.

Park & Shop's demise had as many causes as a mall has stores. Perhaps most important, shareholders cite cost increases that made the company not just a break-even proposition -- as it had been throughout its history -- but a losing one.

"Park & Shop was originally formed to offer low-cost parking," explained Karen L. Grozinger, manager of the Alexandria store for J.C. Penney Co. Inc. "It wasn't meant to make money."

Park & Shop president Holland added, "It was a public service, as well as of providing parking for the merchants' customers."

But by the end of the 1970s a variety of financial pressures began to mount. Rising property values pushed up the company's property taxes. And Alexandria's character began to change.

"Many of the stores that attracted a high traffic turnover went out of business," said Holland. "They were replaced by offices, with demand for all-day parking that had to be satisfied with monthly contracts. We began to lose money."

Monthly contracts yield only about 60 to 70 percent of the revenue per space that hourly charges yield, he said. By the late 1970s, Holland said, any profits came from the sale of property, while the parking operation lost money. Meanwhile, the number of lots operated by Park & Shop fell from 14 at the beginning of the decade to five at the end.

The denouement came as many of the founders of Park & Shop, who had paid in about $25 a share during the 1950s, decided to retire or leave the area. As a result, said Rusch, "they wanted to get their money and get out." When they finally sold out last fall their shares brought $170 each, buoyed by the strong Washington area real estate market.

The city maintains that it made a good purchase.

"Yeah, we paid about $5,000 a space," said transportation director Cook. But he says that is just the way things are in real estate today. The city recently paid $13,000 per space for another parking lot.

The story of parking in downtown Alexandria has at least one white knight. The Old Town store of J. C. Penney, which held $61,000 in Park & Shop's shares, last week gave them to the city. In return for the stock, Penney's received only the guarantee that the city would continue to provide parking at the lot at Cameron and Columbus streets for 20 years, according to transportation director Cook, who says the city would have kept the spaces open anyway. Cook sent letters to all Park & Shop shareholders -- with less success -- asking for similar gifts.