In 2008, the City of Harrisburg was offered $215 million for a 75 year lease of its parking system, which included parking garages and meters. Locally, this deal was dubbed the "Frydman Deal," so named after Jacob Frydman, co-owner and prominent personality of the private equity firm that put the offer on the table.

The Mayor at the time, Stephen Reed, vigorously pitched the Frydman Deal as the perfect solution to the City's massive debt problems. Reed told the public the $215 million lease would eliminate the full City-backed debt of the Harrisburg Parking Authority (HPA), who owns and operates the parking system, as well as eliminate the full debt of the City of Harrisburg. He promised that the freedom from debt would result in tax rebates and tax reductions for the residents of the City.

Reed successfully convinced the majority of the HPA Board to approve the Frydman Deal; however, he was unable to garner the ratification of Harrisburg City Council. Thus, the deal never went through.

There has always been debate about the true virility of the Frydman Deal. Opposers of it have claimed it was a shamelessly bad deal for the City and would not yield the results Frydman, Reed, and other supporters claimed. In their defense, advocates have continually called the deal the best, missed opportunity to resolving Harrisburg's debt crisis. In fact in both 2008 and 2010 (when Jacob Frydman returned with a re-offer), the Patriot News endorsed the deal as such.

At the recent PA Senate Local Government Committee hearing on the Harrisburg Incinerator Forensic Audit Report, James Losty of RBC Capital Markets testified about the Fydman Deal. He referred to it as what could have prevented the City of Harrisburg from reaching the critical point it is currently at. Losty declared the proceeds from the Frydman Deal would have been used to pay off the HPA debt and "to pay down the excess Resource Recovery Facility debt," that is, the Incinerator debt. For the first time, under oath, a proponent and architect of the Frydman Deal contradicts Reed and proclaims what the money was to really be used for---to decrease the Incinerator debt, not to eliminate the City's debt.

On October 24, 2012, Harrisburg Receiver William Lynch and Receiver Team financial advisor Steven Goldfield of Public Resources Advisory Group met with employees of HPA to discuss an upcoming lease proposal of the City's parking system by Harrisburg First, LLC, an entity of Guggenheim Partners.

Goldfield told the roomful of people that Frydman's group was one of the bidders that responded to the Receiver's call for proposals, but was eliminated early on. Goldfield said after reviewing the Frydman Deal, "[We] used that as our guiding light of what not to do."

The Receiver's Team is currently in negotiations with Harrisburg First. No details of a proposal have been publicized.

by Tara Leo Auchey

photo by Natalie Cake