S&P: Scranton-Lackawanna Health and Welfare Authority, PA, 2016A-C Bonds Assigned 'BB+' Rating; Outlook Stable
The 2016 bonds have a senior lien and will be paid from net revenues from community development properties, Community Development Properties Scranton (CDPS) Inc., the concessionaire who entered into agreements to operate certain parking and parking meter assets. The assets include four off-street parking garages with 2,001 spaces, 500 parking spaces at the mall garages and approximately 1,479 on-street metered parking spaces in the Scranton central business district.
"The rating reflects our view of a parking system that is diverse-but-small, and which will be highly leveraged and require initial revenue enhancements and regular rate increases to address escalating debt service requirements in a service area with below-average wealth levels," said S&P Global Ratings credit analyst Todd Spence.
Proceeds from the 2016 bonds will fund the payment for entering the structured parking and metered parking concession agreements, pay for capital improvements, fund the debt service reserve, and pay costs of issuance.
We believe the parking system benefits from serving central business district in Scranton with major medical facilities, education facilities, government organizations, shopping, and nightlife, which provide a good base of demand for parking.
In our opinion, the service area has exhibited adequate population trends and stabilizing employment. From 2000-2015, Scranton's population declined modestly, to 75,615 in 2015 from 76,082 in 2000. The population of Lackawanna County increased modestly, to 213,895 from 212,925. The unemployment rate has declined and is similar to the state average at 4.7% in 2015. Based on U. S. Bureau of Economic Analysis data, the city's labor force declined to 279,100 in 2015 from 305,200 in the year 2000.
The stable outlook reflects our expectation that demand and revenue will meet the minimum coverage levels provided in the financial forecast and that officials will maintain all required deposits in the indenture.
We could raise the rating if net revenues provide DSC higher than forecast and we believe the increase is sustainable.
If revenues and expenses yield DSC that is below forecast or if the concessionaire incurs additional debt we could lower the rating.