The following is a letter that I sent today to the Members of Phoenixville's Borough Council.
March 30, 2009
Dear Council Members:
I write with regard to the proposal presented to Council on behalf of the Phoenixville Parking Authority at last Tuesday’s meeting.
In my view, the proposal is totally lacking in necessary specifics. At the same time the proposal advocates what amounts to not only a carte blanche financial guarantee from the Borough, but also a scheme to hide the current costs, keeping them off the Borough’s financial statements and outside of the Borough’s control. Acceptance of this proposal by Council would be the height of irresponsibility.
The financial guarantee is accomplished by the artifice of having the Borough transfer ownership of the Prospect Street lot to the Authority, so that the Authority can collateralize (mortgage) that property. (Note that this is the only lot which the Authority wishes to own. It is satisfied to lease the rest.) Although the proposed transfer and collateralization is not stated as being a Borough guarantee of the Authority’s debt, it is a guarantee in its effect.
The only source of repayment of the proposed loan (or any other debt or expense of the Authority) is the Authority’s revenues. The Authority has not said how much of a loan it is seeking, what repayment terms it anticipates, or how the loan funds will be used. It has not presented any estimate of revenues or expenses, or any explanatory narrative of how the estimates were constructed. Thus, there is no way to evaluate whether the Authority will be able to repay whatever it may borrow against the Prospect Street lot. Further, once the lot is transferred to the Authority, the Borough has no control over the loan transaction, just as it has no control over the Authority’s other financial affairs.
If the Authority is unable to repay the loan, the Borough will be faced with the alternative of repaying the loan (to maintain public ownership) or allowing the creditor to foreclose on the lot and sell it. The Borough may in effect be forced to repurchase its own parking lot. Since the loan transaction is not within the Borough’s control, this is actually worse for the Borough than an ordinary loan guarantee. In an ordinary guarantee, the Borough would have to specifically enact the guarantee and would thus have the opportunity to exercise control over the risk to taxpayer funds.
The lack of any financial estimates underlying any of the proposal is profoundly distressing. The Authority proposes to assume operating responsibility for the lots, but says nothing about what it thinks the costs will be or what revenues it expects to be able to achieve to cover those costs. Amazingly, the Authority proposes that it will develop its budgets only after the “disposition of the existing lots is ascertained.” That is just the wrong sequence for any sort of a business plan.
(As an aside, the Authority proposes to carry out many of its lot maintenance responsibilities by contracting with the Borough. This is little more than a bureaucratic soixante-neuf: ugly and devoid of redeeming social value.)
Another example of the superficiality of the proposal is the reference to establishing a two-hour nonmetered zone on Bridge Street, enforced by chalking tires. One needs to go no further than West Chester to discover that there are actually handheld electronic devices that allow a parking enforcement officer to record the plate number of parked vehicles in such nonmetered zones, along with the time, so that enforcement can be done in an accurate and trackable manner.
I am frankly at a loss to understand how the Authority, whose members I understand to be persons with business experience, could forward this proposal. Council should demand that the Authority propose meaningful specifics before Council undertakes any review, much less any action, on an Authority proposal. The purpose of the Authority was, after all, to get parking matters into the hands of people with the expertise (hah!) and time to work out the details.