Scranton council: Officials must appear at public meeting or risk SPA default [The Times-Tribune, Scranton, Pa.]

May 27--Scranton City Council has made Mayor Chris Doherty an offer he may not be able to refuse:

Show up at a public caucus before Thursday's council meeting, or the council may allow the Scranton Parking Authority to go into default.

At its meeting Thursday, council introduced a measure to transfer funds to pay a $940,000 SPA debt, but with a caveat from Councilman Jack Loscombe: Mr. Doherty, SPA Executive Director Robert Scopelliti, city Business Administrator Ryan McGowan, the SPA's board, and representatives of the bond company and the bond insurer must appear at a public caucus Thursday at 5:30 p.m. to explain why the funds are needed.

Mr. Loscombe and Councilman Frank Joyce hinted that if all of the above do not appear, they would vote against the funding with Councilman Pat Rogan, who is adamantly opposed to it. Three or more no votes Thursday would plunge SPA into default on Friday, when a bond payment is due, the mayor has previously said.

"If any of them do not appear, this issue is done, and the council will vote accordingly," Mr. Loscombe said Thursday, when Mr. Joyce added, "If they fail to show, I don't believe I'll be voting for it, either."

Mr. Doherty was unavailable for comment Friday, but Mr. McGowan responded.

"We'll wait for the request (from council) and do what we have to do to comply as best we can," Mr. McGowan said. "We understand the urgency of this issue. We'll do what we have to do to comply with the request as long as it fits with everyone's schedule."

Mr. McGowan noted that the city cannot compel representatives of a bank or bond insurer, or even SPA, to attend a meeting. Mr. Rogan said Friday he wants to at least hear from Mr. Doherty, Mr. Scopelliti and Mr. McGowan.

The issue has evolved since the fall when council was notified by SPA that it would have a deficit in 2012 and would need council to fill the gap. The city backs the SPA debt in question, and council set funds aside in a contingency account that only council can release.

On May 10, the administration requested emergency legislation from council for $1.4 million for SPA. Council refused and said SPA had failed to provide specific financial information that council requested in October, such as amounts due on all SPA bonds and trust agreements that govern them, and a detailed line-item budget for 2012 compared to 2011.

Council demanded that Mr. Scopelliti and Mr. McGowan first appear before council on May 17, and Mr. Rogan and council solicitor Boyd Hughes went so far as to say SPA should be allowed to go into default.

Mr. Scopelliti and Mr. McGowan did not attend the May 17 meeting and council took no action that night. Now, by introducing the fund transfer while at the same time imposing conditions, "It gives them (the council majority) an out" if a default occurs, minority Councilman Bob McGoff said.

Mr. McGowan, who has labeled council tactics as a high-stakes game of chicken, warned that allowing SPA to default would be disastrous for the city because wary banks would reject any future loans for the city. The impact would be felt sooner rather than later, as the city likely would not be able to secure some $16 million in unfunded debt and refinancing that are key planks of the council's 2012 budget, and that the city desperately needs to stay afloat this year, Mr. McGowan said.

"Council still needs to fully understand that if their decision is to not do the transfer, their decision will affect the city in a negative way. This needs to be done. It was budgeted in 2012," Mr. McGowan said.

The fund transfer was introduced by a 3-1 vote with Mr. McGoff, Mr. Loscombe and Mr. Joyce voting yes, and Mr. Rogan voting no.

Council President Janet Evans was absent Thursday. Efforts made Friday to reach her, Mr. Loscombe and Mr. Joyce were unsuccessful.

"She can't let the city go into default and jeopardize this (2012) budget. It's hers," Mr. McGoff said of Mrs. Evans, who often sets the tone for the majority. "Is she going to be the architect of bankruptcy? I don't think so."

The administration initially was seeking $1.4 million for SPA, and the $940,000 represents one of two payments the SPA will need to make, Mr. Joyce has said. The resolution stipulates payment will be made directly to Bank of New York Trust Co., the trustee of the debt.

Contact the writer: [email protected]

___

(c)2012 The Times-Tribune (Scranton, Pa.)

Visit The Times-Tribune (Scranton, Pa.) at thetimes-tribune.com

Distributed by MCT Information Services