Harrisburg reviews value of parking garages

A new valuation indicates that the city’s parking assets may be worth significantly more than the $215m, 75-year lease that LambdaStar and EQT Infrastructure have jointly proposed.

Harrisburg’s parking garages may be worth significantly more than what private sector bidders have been offering for them, according to a new property valuation undertaken by the city.

The Harrisburg Parking Authority has found that the city’s parking assets would be worth $215.5 million for a 30-year concession, according to a statement from Harrisburg Mayor Linda Thompson. By contrast, New York-based firm LambdaStar Infrastructure, which has been pursuing a lease of the Pennsylvania capital’s parking assets for the past few years, has proposed a $215 million, 75-year concession.

Thompson said in a statement that the new valuation would give the city “a starting point for discussions of potential lease payments for the entire system-wide parking concession moving beyond 2011”.

Thompson also said the results of the valuation were “better than expected” and could affect future financial planning in the city. Harrisburg is now being overseen by Pennsylvania's Act 47 law, which enables the state to help distressed municipalities restructure debts and undertake other reforms to rehabilitate their finances. Thompson said the new valuation could potentially change the city’s Act 47 planning.

The new valuation also marks the latest turn in a complicated battle for Harrisburg’s parking assets. In 2008, former Harrisburg Mayor Stephen Reed signed an agreement with LambdaStar, giving the city an upfront $215 million payment in exchange for a 75-year lease of the city’s parking garages. But Harrisburg’s city council unanimously voted down the deal later that year.

However, the issue was revived earlier this month, when LambdaStar Infrastructure and EQT Infrastructure submitted a joint bid to acquire Harrisburg’s heavily indebted waste incinerator on the condition that the city also award the two firms a parking concession.

As part of their bid for the incinerator, LambdaStar and EQT requested a $215 million, 75-year lease of Harrisburg’s parking assets, or a $195 million, 50-year lease, according to a letter from the two firms to The Harrisburg Authority, the independent agency that manages the incinerator.

Harrisburg has guaranteed about $242 million in debt for the incinerator, according to a recent report on the city’s finances by New York law firm Cravath, Swaine and Moore. Debt service obligations on the incinerator are affecting the city’s ability to pay payments on general obligation bonds, according to the report, and pushing the city toward default.

The Mayor’s office did not release the entire parking valuation report, which was conducted by consulting firm Wilbur Smith Associates. The Harrisburg Parking Authority did not return requests for further information on the new valuation. EQT and LambdaStar Infrastructure did not return calls for comment.