By Becky Polaski

Staff Writer

City Manager David Greene recently responded to questions about the parking garage that were raised by area resident Joe Goetz at the City Council meeting on Monday, June 15. 

At that meeting Greene told Goetz that he would need time to research the issues before providing a response. He issued his response on Wednesday afternoon.  

Goetz had inquired as to what the cost would be to build a flat parking lot instead of a parking garage. Greene indicated that the estimated cost for construction of a flat parking lot would be $1,414,500 with an additional cost of $2,498,354 for the acquisition of the land. The estimated total amount for the construction of the flat lot would be $3,192,854.

Goetz had also asked whether the money that has been received so far could be used for anything other than a parking garage.

“I spoke with Lee Patterson, the gentleman who wrote the grants, and according to our grant agreement we cannot use the RACP Grant money for anything but the parking garage,” Greene said.

Greene indicated that so far the City has received $6 million for the project.

Another of Goetz’s questions was regarding the direct liability to the City if the City would choose to move in the direction of an alternate to the parking garage. Greene responded that the liability to the City would be $2,698,354.09.

“As of June 17, 2009, the City has spent $3,284,234.73,” Greene said.

Additionally, Goetz had expressed concerns regarding the Section 108 loan that the City hoped to obtain for the project.

City Councilman Denny Nero contacted Economic Development Specialist Andrea Edwards-Spence from HUD’s Philadelphia Regional Office regarding the Section 108 loan. Edwards-Spence provided a sample scenario in an attempt to answer Nero’s question. She based her response on a scenario in which the City would borrow $2 million in Section 108 loan funds with a repayment over 20 years.

“The City would pledge their CDBG as collateral as required. In order for the City to receive a Section 108 loan, there is a requirement, by the Secretary, that all borrowers provide collateral, in addition to the state’s CDBG line of credit, sufficient to cover approximately 120 percent of the value of the loan (in this case $2.4 million). This collateral could be in the form of mortgages, real property, a pledge of full faith and credit from the City, or other sources that the Department would deem acceptable,” Edwards-Spence explained.

“In the event that the City misses a payment, the first recourse would be to take the payment from the State of Pennsylvania’s CDBG line of credit. In the event of default, the City would be required to pay HUD with its CDBG funds until the loan is repaid, or from the collateral, or any other source the City chooses,” Edwards-Spence said. “The City should understand that it must repay the loan from any source it has agreed to use. However, its liability for repayment is limited to those sources it has identified. Therefore, if it did not agree to use its own funds to repay and the repayment sources identified in its contract are insufficient (that is, pledged CDBG funds are insufficient and other collateral is insufficient), then the City is not liable for repayment from any other source.”

“In the event the CDBG program no longer exists and the loan is still outstanding,” Edwards-Spence added. “HUD would seek remedy by taking any remaining CDBG funds the City has in its line of credit along with any residual value from the collateral. This would then satisfy the loan.”