Morgan Stanley (MS:US), CBRE Global Investors and Guggenheim Partners LLC are among eight contenders to buy or lease the parking system of Harrisburg (9661MF:US), the insolvent Pennsylvania capital coping with more than $300 million in debt.
The city sought the bids as part of a court-approved plan to deal with obligations of more than five times its general- fund budget. The community backed financing for an overhaul of a municipal incinerator which doesn’t produce enough revenue to cover the cost of servicing the debt. The proposed sales or leases are designed to keep Harrisburg out of bankruptcy.
“It’s a real opportunity, and the process is attracting bidders,” said Bob Philbin, a spokesman for Mayor Linda Thompson. The number of interested parties “is a very good sign.”
The city has 10 garages, five surface lots and 1,250 metered spaces, which provide 72 percent of municipal parking. In 2010, the Harrisburg Parking Authority, which oversees the system, reported $13.8 million in revenue.
The plan to offer assets owned by the city of 49,500 residents for sale or lease was set up by David Unkovic, the state’s first municipal receiver, who resigned March 30 after calling for state and federal probes of the financing for the incinerator. A list of interested parties, dated April 2, was posted today on the receiver’s website.
In Chicago, a different Morgan Stanley venture may reap $9.58 billion in profit over a 75-year lease of city parking facilities, based on documents from the group. The bank, joined by the Abu Dhabi Investment Authority and Allianz Capital Partners, set up a venture to lease the Chicago operations in 2008. The profit was estimated based on projections in a 2010 offering document.
Partnering with New York-based Morgan Stanley in Harrisburg is Central Parking Corp. (PK:US) of Nashville, Tennessee, according to documents posted on the receiver’s website. Guggenheim’s bidding entity is named Harrisburg First.
CBRE Group Inc. of Los Angeles leads a consortium called Harrisburg Forward LLC, according to the list. Other contenders include National Development Council, a community organization, Boenning & Scattergood Inc., a securities broker in West Conshohocken, Pennsylvania.
Also listed are NW Financial Group LLC, a Jersey City, New Jersey-based investment bank, and the Ontario Teachers’ Pension Fund with Vancouver-based Impark Parking Corp. (2896591Q:US)
A group called Harrisburg Parking Partners LLC includes EQT Infrastructure Ltd., part of a Stockholm-based private-equity fund, an unnamed private-equity firm and a parking operator that also wasn’t identified in an earlier list of interested parties.
Before the city was placed in receivership, EQT with New York-based LambdaStar Infrastructure Partners LP offered to lease Harrisburg’s parking garages and lots for either 75 years for $215 million or 50 years for $195 million. No one at LambdaStar responded immediately to a telephone call seeking comment on the situation in the Pennsylvania capital.
Unkovic had planned to close any sale or lease transactions by June. Governor Tom Corbett hasn’t named a new receiver.
The fiscal recovery blueprint from Unkovic also called for savings from labor contracts and concessions from creditors once the value of city assets was determined. While Thompson supports the plan, it has been opposed by the City Council president, as well as the elected controller and treasurer.
State law bars the city, where 30 percent of residents live below poverty level, from seeking bankruptcy-court protection before July.
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