LOS ANGELES — Union-owned Amalgamated Bank is providing a second round of short-term financing to Scranton, Pa., in the form of a $14 million tax anticipation note.
Earlier this month, the distressed city in northeast Pennsylvania received $10 million of the funds from the most recent tax anticipation note, and it will get the remaining $4 million in early February.
"We're very proud to be the bank for the city of Scranton, a community with a rich union history," said the bank's president and chief executive officer, Edward Grebow. "Amalgamated Bank has always sought to support working families when they needed financial assistance and providing this loan to Scranton is the latest chapter in that history."
The bank declined to say how much interest it is charging the city.
Loan proceeds will provide the city with cash flow to pay municipal employees and other obligations until taxes are collected.
"Once again, the nation's largest union-owned bank is standing up and supporting Scranton's working men and women — its firefighters, police and public works employees," said John Judge, president of Scranton Fire Fighters Local 60. "Amalgamated has played a critical role in working with the city's leaders and unions to develop a feasible, long-term plan to strengthen and restore the city's financial foundation."
The 76,000-population city has had a hard time accessing the capital markets since the City Council let the Scranton Parking Authority default on a $1 million bond payment due June 1 last year. It released the funds in mid-June, but cash-flow problems resulted in city workers receiving the federal minimum wage for two weeks in July.
New York-headquartered Amalgamated said it was the only financial services organization to submit a bid for financing Scranton's initial $6.25 million tax anticipation note in August, which has since been fully repaid. The two loans are part of the city's three-year municipal finance recovery plan.
Janet Evans, Scranton's city council chair, said Scranton is building a "solid public-private sector relationship" with a bank that is assisting the city as it works through its financial difficulties.
"Just as they did in August 2012, the team at Amalgamated provided essential financing when everyone else passed on the opportunity to support our city," Evans said.
Amalgamated was established in 1923 by the Amalgamated Clothing Workers of America and is now owned by its successor organization, Workers United. The Federal Deposit Insurance Corporation-insured commercial bank has $4.2 billion of assets.