MAYOR PROPOSES MAJOR TAX REBATES, TAX RATE CUTS; ELIMINATION OF MOST CITY DEBT, HIRING OF ADDITIONAL POLICE OFFICERS, MAINTENANCE PERSONNEL, CODES INSPECTORS AND LAUNCH OF FIRST-EVER NEIGHBORHOOD BLIGHT SQUAD
(The following link requires a PowerPoint Viewer, click here for the FREE viewer.)
Read "A Public-Private Partnership with the Harrisburg Public Parking System". . .
Harrisburg, PA – Mayor Stephen R. Reed today unveiled an additional comprehensive financial plan that would have sweeping benefits for the City’s financial picture and municipal service operations.
"Citizens may recall that in the third quarter of 2006, the City was facing a $14 million deficit. Through multi-faceted action steps, this was not only resolved but we ended 2007 with a $1,242,000.00 surplus. That is no small achievement in so short a time," Reed said.
"Now we move forward with additional major steps. The plan I advance today would do the following:
• Wipe out most of the City’s direct debt. It would additionally retire and wipe out all debt of the Harrisburg Parking Authority, which involves bonds issued over the years which were guaranteed by the City. The outstanding principal amount of remaining parking bonds is $112,830,000.00. The remaining principal amount of direct City debt, including accrued interest due to the use of zero coupon bonds in some years, is $93,559,520.
• The elimination of most City direct debt frees up funds in the City’s annual budget that otherwise would be spent on debt payments. This plan therefore further includes the following:
1. Tax rebates for 2008 City property taxes:
- For lower-income homeowners making less than $40,000.00 household income per year, as verified by federal income tax filings, there would be a 100% tax rebate. This would include virtually all senior citizens and handicapped homeowners living on lower fixed incomes.
- For homeowners making above $40,000.00 per year, a 50% tax rebate
- For all other property owners, a 10% tax rebate
- For property owners making less than $40,000.00 per year who have not yet paid their 2008 City property taxes, which were billed in February, the amount they would receive as a tax rebate will be instead applied against what they owe and have not paid, thus eliminating the need for them to first pay the money and then wait for the reimbursement to come later.
2. Starting in July and August, we would seek to hire:
- 15 additional police officers; we presently have external grant monies to hire five of those officers; this would represent an additional 10 officers, which we much need and would allow us to expand the use of our walking and other patrols in neighborhood areas.
- Six additional Bureau of Neighborhood Services heavy equipment and motor equipment operators and laborers, which are sorely needed; this is the agency that handles a multitude of daily duties, including trash pick-up and street-sweeping; there are simply not enough personnel to attend to these tasks every day and this would resolve this constant problem.
- Two parks maintenance personnel; with the largest municipal parks system in Central Pennsylvania, the use of which is constantly increasing, we presently have only 13 maintenance staff; this is not enough.
- Two additional codes enforcement officers; for the thousands of inspections and violation cases handled each year, the City needs additional staff.
- Five personnel that would comprise the first-ever Neighborhood Blight Squad, assigned solely to daily tasks and targeted sites to clear debris, secure empty buildings, remove graffiti and perform other visible problem abatement year-round; one of the two new codes inspectors would be assigned to this squad, along with a half-time city Law Bureau attorney, to do aggressive pursuit of illegal dumpers, nuisance properties, abandoned vehicles and other issues; the squad, with these additional assigned persons, would be 6.5 personnel and would be separate from the already-existing four-person Demolition Squad this office formed four years ago that performs the removal of seriously-blighted structures that cannot be restored; Harrisburg is the only municipality in Central PA – and possibly the state – that does demolition work in-house, which saves substantial sums over the cost of private contractors doing the same work.
- For 2009, the budget will include these additional personnel, along with
- A reduction in property tax rates and tax rebates.
- Plans for the demolition of 100 additional seriously-blighted properties, the repaving of additional streets, and an extensive tree-planting program across the City.
- Hiring of still more police officers.
Reed said the comprehensive plan is possible through a long-term lease of the Harrisburg Parking Authority’s garages and parking lots. The Parking Authority would remain the owner of these assets and would continue to own and operate the City Island parking garage and lots. The lease would be for 75 years, and during such time the operator assumes all responsibility to maintain and rebuild these assets.
The Parking Authority issued a Request for Proposals last year to invite investor interest in leasing the parking facilities. The highest offer was selected and negotiations have been occurring since.
Harrisburg Public Parking, LLC (HPP), the proposed new parking facility operator, would pay the Parking Authority $215 million in one lump sum.
Reed noted the following:
• The Harrisburg Parking Authority will still continue to exist as the ownership entity and will be responsible for City Island parking operations. The Authority may also develop new parking facilities outside of the zone where today’s parking facilities exist, including in the Southgate Project area and Midtown.
• All existing Parking authority staff would continue on their jobs. The Plan includes that they would become employees of the company operating the facilities. It is expected that additional staff will be hired, as the new operator wishes to establish valet parking services at some garages. Further, the company will invest $6 million in upgrading existing facilities in the near term, starting with an almost immediate $2.5 million in equipment and construction work.
• The company would be solely responsible for future maintenance, repair, replacement and capital costs related to the existing parking system during the lease term.
• The existing union, AFSCME Local 521 B, which represents Parking Authority bargaining unit employees, would remain in place. HPP is currently negotiating with the HPA employee’s union and expects to enhance the economic terms and conditions of their current agreement with additional wage increases and possible bonuses. All but one of the current management staff of the Parking Authority may stay if they wish but would become employees of the new operator. Employment offers have been extended to then. Authority Executive Director Joseph V. Link, P.E., who is also the City Engineer, would remain in charge of the smaller Parking Authority operations after the transaction. The Parking Authority board of directors also remains in place.
• Since state law stipulates that leases of 30 years or more are subject to real estate transfer taxes, this transaction, when completed, would provide both the City and the Harrisburg School District with $1,075,000.00 each as tax revenue this year. Further, the County will also see real estate tax revenue for this year.
The company selected through the competitive process has registered in Pennsylvania as Harrisburg Public Parking, LLC.
Reed said they would operate 11 parking garages and the parking lots of the Parking Authority, other than City Island, as well as the parking meters. They would have responsibility for parking meter overtime parking enforcement but no other parking violation enforcement.
The Parking Enforcement Unit in the City Police Bureau will remain in place and have responsibility for enforcement of all other parking violations citywide. No existing City personnel will lose their positions and all may remain with the City if they wish. HPP will annually pay the city $210,000.00 from the overtime parking violation revenue.
Reed said Harrisburg Public Parking is controlled by North American Strategic Infrastructure Partners, in New York, and LAZ Parking of Hartford, CT. The managing partners of North American Strategic Infrastructure Partners are Jacob Frydman, a leading national real estate developer and investor, and Leonard Shaykin, a prominent private equity investor.
Reed said the transaction is what is called a Public Private Partnership Concession and Lease Agreement or P3 transaction and is very similar to other public property and infrastructure leases that have occurred around the globe over the past decade or more, ranging from the Chicago Parking Garage leases to dozens of long-term road and bridge leases. Harrisburg becomes only the second city in the nation to reach a P3 lease agreement for its public parking system.
The Mayor said the new operator of the city parking system, LAZ Parking, is one of the largest parking companies in the world, overseeing more than 250,000 spaces in sixteen states. The company already has a presence in the city with a new valet parking service at the Crowne Plaza Hotel that it started several months ago.
LAZ Parking is also the same company that was selected to operate Chicago’s newly-leased garages, giving them substantial previous experience in the operation of municipal public parking systems.
The Mayor said the transaction must be approved by the Parking Authority board and City Council. Further, negotiations must be completed with AFSCME since they represent the bargaining unit staff of the Parking Authority.
"We are very excited about this innovative partnership with the City and the Authority," said HPP President Jacob Frydman. "Harrisburg is clearly a city on the move – a city that we think is poised for even greater success in the decades to come. We want to be a part of this evolving story and are committing substantial resources to do so. This is a long-term business investment, and we look forward to becoming one of the major contributors to Harrisburg’s future growth and vitality."
Alan Lazowski, Chairman and CEO of LAZ Parking, said, "We are delighted to serve Harrisburg and we plan to keep many of the garages open additional hours, provide parking valet service in the Restaurant Row District and add many other customer-service enhancements and amenities."
Reed said at the end of the lease term, operation of the Parking Authority garages and lots return to the Parking Authority. During the next five years, if the surface parking lot adjacent to the North 7th Street Garage at North and 7th Streets is not developed with a highrise building on the site, the Parking Authority would be paid an additional sum of $3.8 million, which is in addition to the initial $215 million lease price. In the interim, HPP will operate this lot and will pay the Parking Authority $258,000.00 per year during each of the five years to do so and whatever has been paid annually would be deducted from the $3.8 million price.
HPP will also annually pay the Parking Authority a sum to cover their administrative costs, starting at $120,000.00 per year and increasing later at the Consumer Price Index inflation rate.
Reed said what makes this transaction possible is the building of parking assets in the City which, at one time, actually lost money and had to be subsidized out of the City’s annual operating budget.
"I remember when first coming into office that the Harrisburg Parking Authority was losing money every year and its deficit became a bill sent to the City each year to be paid from City funds. City taxpayers were literally subsidizing non-resident commuter parking.
"This office launched aggressive action to correct this and, within two years, the Parking Authority was breaking even and producing a profit. The asset base has been built since. Now we have the opportunity to use these assets for further significant gain for the City and its citizens and taxpayers."
The Mayor said retiring all the Parking Authority bonds and most of the City debt involves defeasance of the Parking Authority debt existing at the time of closing of this transaction and providing for the payment of as much of the City direct debt as possible.
Reed said as much as $60 million in savings on future interest payments on City direct debt will also be realized.
|