Essay about bad effects of Harrisburg's selling their public parking to pay off incinerator debt

[JPZenger]

Last edited Mon Feb 9, 2015, 10:33 AM - Edit history (3)

For many decades, there was very creative financing in Harrisburg. No one asked many questions as long as new buildings were built and parks were improved. The City had taken out tens of millions of dollars in bonds to build a dam that never was built. They were making millions on arbitrage on the proceeds - which was later made illegal in the US for everyone else.

The Mayor had a $10 million fund of profits from various city financial deals that only he knew about, which he used to buy overpriced artifacts for a Wild West Museum (which never opened).

However, the City Authority's giant trash incinerator kept requiring huge infusions of debt to rebuild it and to make it operate properly. The City and the County guaranteed that debt, which could not be repaid on time with trash revenues. The City was about to declare bankruptcy, when Corbett and the Republican controlled legislature stepped in and stopped it. A receiver was appointed and then quit a few months later under questionable circumstances.

A new receiver was brought in to control the City's finances. There were questions about how much losses would be suffered by the bond holders and the company that guaranteed the bonds. There were allegations of fraud, conflicts of interest and deceit in some of the previous debt matters.

The State did help bail out Harrisburg by increasing the number of parking spaces it rented and by agreeing to lease part of the Strawberry Square complex, where the City many years ago had also agreed to guarantee the debt. Verizon will be moving out, and the City would otherwise be responsible for millions of dollars of payments on that building, even though the City doesn't own the building.

As part of that effort to pay down the absurd amounts of debt, the City was pressured to sell off its parking decks, parking lots and parking meters.

Parking rates went way up. Business is suffering. On some streets, for sale and for lease signs are common on businesses. Some blocks that were very successful are now losing customers and businesses.

And, surprise, parking revenues are now going down.

Here's an update:

http://www.yardbird.com/Harrisburg_parking_boycott_3_million_shortfall.htm

[djean111]

1. Isn't Obama pushing a public-privatized sort of thing for infrastructure rebuilding?

This is what we would be looking forward to. As usual, socialized losses and costs, and privatized profits.

[JPZenger]

2. Here's a conservative perspective on what has been has happening in Harrisburg

Last edited Mon Feb 9, 2015, 10:40 AM - Edit history (1)

http://www.city-journal.org/2014/eon1014jb.html

This article explains how this story fits into national municipal debt issues:

http://www.reuters.com/article/2014/02/27/harrisburg-moodys-recovery-rate-idUSL1N0LW2Y320140227

[djean111]

3. Interesting. The Conservative is pretty cheerful because, basically, Harrisburg residents

were treated to a form of austerity. The parking lot deal seems to have just been some sort of giveaway, and is hurting the taxpayers. The restructuring did nothing to lessen the loan. Really, IMO, like a mini-Greece.

[JPZenger]

4. Former Chair of Harrisburg Authority is under investigation for corruption

The Harrisburg Authority was an entity that was used for much of Harrisburg's very creative financing over the years. The former chairperson of that Authority is now under criminal investigation for his role as Solicitor for the Coatesville Area School District.

The Coatesville School District also sold millions of dollars of tax liens to the Harrisburg Authority in past years.

Grand jury report:

http://www.chesco.org/DocumentCenter/View/21487

Time line:

http://www.rockthecapital.com/10/30/rise-fall-james-ellison/