A Lackawanna County, Pa., judge has appointed a receiver to oversee the finances of the troubled Scranton Parking Authority.
Michael Washo of Clarks Green, an attorney and former county commissioner, has extensive authority to run an agency that has defaulted on bond payments in the distressed city, according to an order on Tuesday
Wells Fargo Bank, the indenture trustee for $54 million of authority bonds, sued the authority and the city of Scranton on July 30, seeking a receiver.
The authority, which operates five parking garages, had defaulted on a $1 million bond payment on June 1, when a majority of City Council members would not transfer the funds for the payment. They called the agency incompetent and secretive
The city is the guarantor of the bonds. The council released the funds in mid-June, but Mayor Chris Doherty blamed the default for the capital markets essentially shutting off the city. He said the city needs a $16 million loan to cover payroll and pay past-due bills.
The Parking Authority's debt is roughly $100 million. It accumulated much of it during the past decade as the city added garages amid a downtown redevelopment.
According to Mazzoni's order, Washo has "full and exclusive control" over bank accounts containing garage revenues. He also can hire and fire whom he wishes, though he told the Times-Tribune of Scranton that it is too soon to determine whether executive director Robert Scopelliti, a frequent target of City Council critics, will remain. "I don't want to scare anybody," he told the newspaper.
Washo, who will receive $100 per hour, must forward a $5 million bond to the court and file an operating report by the 20th of each month. He did not seek re-election to the Board of County Commissioners last year.
His appointment comes as the City Council is weighing its latest revised financial recovery plan for the 77,000-population city. The council will meet Thursday night.
The plan calls for commuter and sales taxes, both of which would need state or court approval, but the city's plan coordinator under the state-sponsored Act 47 program for distressed communities, the Pennsylvania Economy League, said revenue projections from these alternatives to the property tax were speculative.
Pennsylvania's Department of Community and Economic Development, which oversees distressed communities, has offered Scranton an interest-free $2 million loan and a $250,000 grant if it can approve a plan, and relaxed its initial deadline of early August.
Gary Lewis, a private-sector financial consultant and downtown resident, criticized the latest plan.
"Clearly, this plan will not work," he said. "Mining for new revenue sources is a lot like drilling for oil. As current resources become depleted, new sources become difficult to locate and access. Because of this, the city must address the expenditure side of the fiscal equation."
