SCRANTON — The city reached a deal with bondholders to keep downtown street parking free on Saturdays and avoid a default on debt of the outside operators of the city’s parking system, Mayor Paige Gebhardt Cognetti announced Tuesday.
The agreement will have city contribute $50,000 a year for three years to offset the $75,000 in revenue that bondholders estimated to bring in by charging to park on streets on Saturdays, Cognetti said during the announcement at City Hall.
Parking on downtown streets on Saturdays currently is free. A debt-restructuring plan called for charging motorists to park on streets downtown from 7 a.m. to 7 p.m. The downtown business community, residents and others strongly opposed that, fearing that charging to park on streets on Saturdays would kill downtown commerce.
The business community also expressed concern about the refinancing plan also calling for expanding hours of street-metered parking on weekdays, from the current 8 a.m. to 5 p.m., to 7 a.m. to 7 p.m. But the bondholders also agreed to pare that increase back by an hour, by instead charging for street parking on weekdays from 8 a.m. to 7 p.m., the mayor said.
“The new debt refinancing package and its reduction in metered parking hours recognizes the concerns that have been voiced by downtown business owners and residents alike, while also reflecting our commitment to sound financial management when it comes to the city’s assets,” Cognetti said in a statement.
The initial refinancing plan called for the city to contribute $200,000 a year for 10 years to the parking system for capital maintenance and repairs. Under the new deal, the city instead would contribute $250,000 a year for the first three years of the 10-year period, or $50,000 more per those first three years, to get Saturday metered hours taken off the table, Cognetti said.
The city, parking operators and bondholders would revisit the situation after three years, to see if the city should perhaps continue to contribute $250,000 a year or raise it to $275,000, Cognetti said.
“We were able to go successfully back to the negotiating table with the bondholder and negotiate out the Saturday hours,” Cognetti said during the announcement press conference. “It’s very good news.”
The updated terms also requires Grow America, the nonprofit organization that oversees the lease of the city’s parking operations of street-metered spaces and parking garages, to conduct a comprehensive downtown parking study aimed at assessing the current state of downtown parking. Specifically, the study will focus on a combination of data gathering and public outreach that will allow the creation of an effective strategy to meet the city’s long-term economic development needs, the statement said.
“We want to hear from residents, business stakeholders and visitors about their parking experiences and obtain the objective data needed to make important parking policy decisions,” Cognetti said. “We want to position downtown Scranton for continued growth and expansion. That’s why providing adequate parking resources and maintaining those resources will remain of strategic importance to the city.”
She noted the refinancing has the bondholders taking a “$15 million haircut,” meaning a reduction in the amount of returns they would have been due under the original bonds issued in 2016 and thus helping prevent a disastrous default.
“It was very much a give-and-take on this,” Cognetti said.
The refinancing plan still needs approval of Scranton City Council, which has a caucus on it scheduled for Tuesday at 5:30 p.m. Afterward, council expects to revisit a certain ordinance that is key to the plan and that was defeated last Tuesday in a tie 2-2 council vote, pending the outcome of the negotiations on Saturday hours with the bondholders.
“Hopefully, council will pass this and go forward and not risk a default,” Cognetti said.
While the city is not directly on the hook for the debt of the parking concessionaire, the city still owns the parking system. A default would have the bondholders bring in a receiver to run things and the city would lose input or control. That’s what happened in 2012, when the then-council induced a default on Scranton Parking Authority debt that was backed by the city. That default led to the 2016 “monetization” of the parking system that brought in the outside operator and allowed the city to clean up the default and restore city creditworthiness. The lease arrangement had been working well for the outside operators until the COVID-19 pandemic caused a slowdown for the system that has not fully recovered and now requires a debt restructuring.
“Not reaching a deal means that the parking system would be in jeopardy of receivership, meaning that we have no say in what the system would do. We’d have no say in rates. We’d have no say in the parking hours, the operating times, the days,” Cognetti said. “So we really want to make sure that we continue to have a seat at the table and we still have the deal as we have it. Nothing’s perfect. This is tough. We did this a decade ago but the city was in a tough position. I understand why the decision was made when it was made and here we are. We have to play the hand we were dealt. I think this is a very good compromise.”