A multi-space parking meter in downtown Harrisburg.
The state agency overseeing Harrisburg’s financial recovery sharply critiqued public accusations of fraud by Mayor Eric Papenfuse in a private letter last month, calling them “unsubstantiated” and “categorically untrue.”
Dennis M. Davin, secretary of the Department of Community and Economic Development, wrote in the Nov. 3 letter that his agency was “distressed” by Papenfuse’s claims that consultants had intentionally misrepresented how much money the city would get from its parking system.
“The team dedicated to supporting the City of Harrisburg’s recovery efforts is committed to providing the highest level of professional assistance,” Davin wrote in the letter, which TheBurg obtained through an open records request. “Given this fact, we take any allegations of fraud very seriously.”
Davin signed the letter in his role as chairman of the Pennsylvania Economic Development Financing Authority, a funding arm of his department that issued $286 million in bonds to finance the 2013 lease of the city’s parking system.
The Harrisburg Strong Plan, the state’s recovery plan for the bankrupt capital, relied on the lease both for upfront cash to settle the city’s debts and for ongoing revenue to help fix its persistent annual deficits.
Papenfuse made his remarks at the authority’s Oct. 21 board meeting, when he addressed shortfalls in the so-called “waterfall” payments that provide critical money to the city out of overall parking revenues.
The mayor suggested that professionals working on the lease had knowingly misrepresented the amount of money the system would produce.
“Frankly, I believe that these numbers of waterfall payments were inflated simply to make the numbers work for the Strong Plan, which means that essentially a fraud was perpetrated on you and us and the residents of the city,” Papenfuse said.
Papenfuse told the board that annual parking revenues to the city were around $1 million short. He said that as a result the city would have to raise taxes, and he urged the board to “hold somebody accountable” for the incorrect projections.
In his letter, Davin wrote that the plan’s 2013 projections had been reviewed by “nationally recognized companies and consultants” and that the city had been “informed of the level of uncertainty” in the estimates of future parking revenue.
He acknowledged the shortfalls, saying they were “due in large part to the disappointing performance of fines and penalty revenues.” “However,” he went on, “we want to make it very clear that our projections were never fraudulently established.”
Asked about the letter Thursday, Papenfuse said he stood by his comments. He said he had since met with Davin to provide additional information. “I understand why he feels he must defend his team—but there is no question the parking projections were wrong and there should be accountability for those mistakes,” he said.
The mayor has since proposed a tax increase in his 2016 budget, which City Council is set to discuss at committee hearings next week. The tax hike, an additional $2-per-week charge on people who work in the city, is expected to provide Harrisburg with nearly $2 million in additional revenue next year.
You can read the full letter from Secretary Davin here. Roxbury News also has footage of the mayor’s remarks at the Oct. 21 meeting.
