The beleaguered Scranton Parking Authority, which has no funds and cannot pay former employees' back pay, will be notifying them that their only recourse to getting paid may be to sue.
The stripped-down authority also has no means to pay back two loans, from Landmark Community Bank and Pennstar Bank, SPA solicitor Joseph O'Brien said during an authority meeting Wednesday. Exact amounts of what is owed to former employees and the banks were not immediately available.
SPA's dismantling, which resulted in its recent takeover by a court-appointed receiver, has raised "legal questions" about who is responsible to pay SPA debts incurred before the takeover, Mr. O'Brien told the board.
Those debts include back pay of former employees who were furloughed last month after SPA was rendered moneyless under the new arrangement, as well as the two outstanding bank loans, Mr. O'Brien said.
"There's a real legal question of whether those are the obligations of the receiver," Mr. O'Brien said.
The SPA's bondholders are the first lienholders of the SPA and likely won't be paying prior SPA debts unless ordered to by a court, Mr. O'Brien said.
"People are going to have to go to court" to ask a judge to release SPA funds to satisfy prior obligations, Mr. O'Brien said. "A judge will have to decide."
"This limbo they're in is really unfair," SPA board Chairwoman Kathleen Stella said of former employees.
They and the banks could sue the authority, but that likely would be futile because the authority has no funds to pay, Mr. O'Brien said. He advised the board to notify employees that they should consult their own attorneys and encourage them to seek redress through the courts.
SPA's unraveling, which was induced by city council and has been unfolding over the past four months, aims to reduce the amount of debt the city must pay back if the financially troubled SPA cannot fully make its bond payments.
After the city defaulted on paying an SPA bond that had been due June 1, the trustee representing SPA bondholders sought a court-appointed receiver to take control of the authority. Former Lackawanna County Commissioner Mike Washo was appointed receiver of SPA's estate under an Aug. 14 court consent order between bond trustee Wells Fargo Bank and SPA and the city. He formally took control of the SPA on Sept. 11 and hired Central Parking, an outside management firm, to operate the garages.
With no money to pay employees, the SPA board in mid-September furloughed SPA's 17 employees, though parking meter personnel have continued to work under city oversight.
Mr. Washo, who did not attend the SPA meeting but happened to be working in an adjacent SPA office, said after the meeting that under the court consent order he cannot use SPA funds to pay its prior debts. He also said that he is not seeking any clarification on the matter from a court.
Mr. O'Brien said, "The receiver is not authorized (to pay SPA's prior debts) without a court order. The trustee is saying this is not our obligation."
As for the bank loans, the SPA was current on them up to when Mr. Washo took over, Mr. O'Brien said.
In other matters, the board voted 5-0 to approve the following:
n A motion to ensure an employee pension fund remains open. This gives former employees the option to remain in the pension plan, get out of it, or roll it over to a new plan elsewhere, Mr. O'Brien said.
n A motion to extend a contract with its former employees for 90 days. Mr. O'Brien advised the contract should continue to be extended on a 90-day basis in the future until the receivership ends and the authority presumably resumes control.
The board also said Wednesday's meeting was its last at the 140 Adams Ave. SPA headquarters because it is now being used by Mr. Washo and Central Parking. The authority decided to hold its November meeting at the nearby law office of board member Frank Tunis Jr., a few doors away on Adams Avenue. Mr. O'Brien said the authority was not getting kicked out of its building by Mr. Washo, but because he and Central Parking are now in control, they have no reason to allow a third party on the premises. Mr. O'Brien also said he believed that Mr. Washo perhaps would be looking to close the Adams Avenue office.
Mr. Washo declined to comment on the office situation.
Contact the writer: jlockwood@timesshamrock.com