Project Profile: Scranton Parking Concession, Scranton, Pennsylvania

Scranton Parking Concession

Scranton, Pennsylvania

National Development Council and Scranton Parking Authority

Direct User Fees

Parking

The National Development Council (NDC) announced a parking system transaction with the City of Scranton and Scranton Parking Authority, effective August 30, 2016. Through its public-private partnership affiliate, the Housing and Economic Development Corporation (HEDC), NDC completed negotiations on this transaction that involved six parking structures and all on-street parking meters in downtown Scranton, Pennsylvania. The negotiated price is $32 million and is paid upfront to the City by the HEDC affiliate, Community Development Properties Scranton, Inc (CDPS). It will be paid with the proceeds of a $38 million, 40-year, a tax-exempt bond issued on behalf of CDPS by the Scranton-Lackawanna Health and Welfare Authority and sold by Citibank. The balance will fund capital repairs and transaction costs. All proceeds over operating expenses, debt service, and capital repairs and replacement will be returned to the City in the form of grants. Per the agreement, CDPS was responsible for the lease, operation, maintenance, and capital repair of the public parking system's entirety for 45 years.

The City chose NDC in an RFP process initiated in 2015 seeking a private entity to restructure its parking assets. NDC holds a nonprofit status, which ensures that public assets are kept in the public realm while reducing costs that could result from a for-profit P3 model. The resulting transaction specifies that NDC, thru its HEDC affiliate, CDPS, is entering into a lease-concession agreement on six parking structures, four leased from City and two from a private owner, Steamtown 300, LLC. CDPS has hired ABM Parking to manage all six structures, including five parking garages containing 2659 spaces and approximately 36,000 ft2 of retail and 1479 metered parking spaces. ABM Parking was entrusted to operate the meters, garages, and 500 parking spaces at a mall as City monthly parking spaces. When all the debt has been paid, ownership of the parking system will return to the City.

The Scranton Parking Authority will remain active, as it is not being sold, only leased, and will retain the aforementioned assets' ownership.

$32 million

CDPS, NDC’s single-purpose subordinate corporation, provided the financing through the proceeds of 40-year, tax-exempt private activity bonds the Scranton-Lackawanna Health and Welfare Authority. CDPS will also make grants for eligible 501(c)(3) projects and Scranton activities with all remaining proceeds from the concession. Once operating expenses, debt service, and capital repairs, and replacement costs are covered.

Lease-concession agreement. By File of the Council No. 37 of 2016, the City of Scranton entered into Concession Arrangements with Community Development Properties, Scranton, Inc., with respect to Metered Parking in the City of Scranton and the Garages owned by the Scranton Parking Authority of the City of Scranton, Pennsylvania pursuant to the Scranton Metered Parking System Concession and Services Agreement and Scranton Parking Facilities System Concession and Lease Agreement.

• National Development Council Housing and Economic Development Corporation
• ABM Parking

• CitiGroup Global Markets
• PFM Financial Advisors, LLC

Alliance Bernstein

The NDC announced the closing of a parking system transaction with the City of Scranton and Scranton Parking Authority, effective August 30, 2016. The lease will last 45 years.

The Scranton Parking Authority's debt is about $53 million, and the garages need millions of dollars in repairs. Under the lease terms, the NDC will give the Scranton Parking Authority $32 million to pay down its debt and invest millions in improvements to the garages and manage the parking system and collect any money made from it. In exchange for the payment of up-front consideration from the Concessionaire, the Concessionaire would receive the right to operate and retain revenues from the structured parking facilities and parking meters. The City and Scranton Parking Authority will utilize the up-front consideration received under the concession agreements to refund or forgive the debt of the Scranton Parking Authority agreement.

• The concession agreement includes the eventual replacement of all coin-operated meters with smart meters, a standardization of monthly rates, and a slight decrease in cost, on average.
• This transaction serves as a model for how municipalities can monetize assets while maintaining control and ownership.
• The non-profit public-private partnership model allows for participation by the public partner as a member of the Board of Directors of the CDPS entity.
• The City refinanced the Scranton Parking Authority’s leftover “stranded” debt by issuing new City debt in general obligation notes at current, lower interest rates.
• The deal will end the City’s annual bailouts of the Scranton Parking Authority’s debt that it cannot pay, as well as end a costly receivership that has been in charge of its five parking garages – Electric City, Linden, Medallion, Casey, and Connell – since a 2012 default on the debt by the Scranton Parking Authority and the City.

• City of Scranton - Scranton City Council Meeting
• Great Nonprofits - NDC Housing And Economic Development Corporation
• Hinerfeld Commercial Real Estate - Scranton council set for final votes on Mayor’s parking deal
• McElwee & Quinn - The Redevelopment Authority Of The City Of Scranton, Pennsylvania
• Muni Credit News - MCN To Partner With Court Street Group Research
• NDC - The National Development Council and Scranton Finalize $32 million Parking System Transaction
• Reason - Annual Privatization Report 2016
• WNEP - Scranton Parking Authority Agrees to Lease Garages, Meters

David Trevisani
Chief Operating Officer, NDC
(315) 734-0106