It's getting down to financial crunch time - again - for Scranton, but a loan should be in hand soon, officials said.
After making a roughly $1 million payroll earlier this week, the city as of Friday had $500,000 cash on hand, and $3.4 million in accounts payable, or unpaid bills, city Business Administrator Ryan McGowan said.
An $11.45 million bond issue called unfunded debt is in the works, and its proceeds should be in city coffers soon, Mayor Chris Doherty said.
"Everything is on track" for the city to receive the bond proceeds, Mr. Doherty said.
Mr. McGowan also said, "I'm confident we'll get it. We'll probably have a discussion here in the next couple of days with what's going on. We're very hopeful everything will be cleared up in the next couple of days."
And council President Janet Evans added, "We're feeling fairly confident. There has been interest expressed (in purchasing the bonds) by several different entities, so we remain confident. I think we should be hearing something by early next week at the latest."
They are hoping to avoid another cash-crunch crisis of the kind that threatened the city's survival this summer and led to a minimum-wage payday and court battles with employee unions. The city got some breathing room over the past seven weeks through a state loan/grant package and a short-term tax-anticipation note from a union-owned bank, but those funds have since been depleted, Mr. McGowan said. As a result, the city again is starting to run on fumes and securing unfunded debt is critical to keeping the city afloat, he said.
"Obviously, revenue is getting tight again. This unfunded debt and refinancing savings that will take place will help us get through the next couple of months," Mr. McGowan said.
The city has been dealing with financial firm Janney Montgomery Scott to secure $9.85 million in unfunded debt and $1.6 million in refinancing, for a total of $11.45 million in borrowing from a private placement bond issuance, he said. The city hoped to obtain this financing by Oct. 1, but it was held up by delays in completing certain facets of the city's annual audit, Mr. McGowan said.
The bond issue was marketed earlier this month. The bonds are being offered and sold only to qualified institutional buyers who could bear the economic risks of investing in such bonds, according to the bond prospectus. Along with providing the city with cash from unfunded debt, the bond proceeds also will refinance four series of a 2003 bond and pay for costs and expenses of issuance.
Efforts to reach a representative of Janney Montgomery Scott were unsuccessful.
The Janney bond issuance would be the first of two rounds of borrowing the city needs to obtain to end the year in the black. The city also has an Oct. 24 court date set to ask a Lackawanna County Court judge to approve an additional $9.75 million in unfunded debt. A lender for that debt has not yet been identified, Mr. McGowan said.
Unfunded debt is only part of the city's plan to restore financial stability. A revised recovery plan adopted Aug. 23 calls for raising numerous revenues as alternatives to real estate tax hikes on city residents, such as a commuter and amusement taxes and significantly-increased contributions from nonprofits.
Mrs. Evans said that along with concerns about securing two rounds of unfunded debt on schedule, "I'm also worried about all of the objectives of the recovery plan and successfully meeting them, and should anything fall short, we must be prepared with Plan B."
She could not provide specifics on what "Plan B" entails.
"Plan B certainly does not include a greater tax increase for city residents," Mrs. Evans said. With nothing left in city government to cut to generate huge savings, Mrs. Evans said. "There are, I believe, other ideas that can be discussed in terms of new revenue generators," though she declined to be more specific.
Contact the writer: jlockwood@timesshamrock.com