Sam Iraci appeared before Common Council members on Tuesday to explain why he believes the city’s parking ramps are worth between $40 million and $60 million.
The ramps are set to be sold to raise revenue for the city and plug gaps in the budget.
Members of the nonprofit organization that currently manages the city’s parking ramps dispute the estimated value of the ramps as the city prepares to sell them to a newly created authority.
Iraci’s estimates are important because Mayor Christopher Scanlon’s administration has been counting on those figures in its plan to create a new entity to purchase and run the ramps. The new parking authority will borrow money to pay the city.
Iraci, the executive director of Buffalo Civic Auto Ramps, acknowledged to the Council that his estimates are not as detailed as the coming analysis to be done by professionals as they prepare for the sale. But he said that all figures are based on his longstanding knowledge of municipal borrowing in various roles of public service going back decades and based on audited figures from the nonprofit’s financials.
And he is confident that the coming analysis will show his figures to be accurate, he said.
“All of these numbers are going to go through appraisals for credit underwriting, credit analysis,” Iraci said.
His detailed comments to the committee echoed what he told The News last week, explaining that he used a 9% to 10% rate on the capitalization of the parking authority’s net income of $4.8 million last fiscal year combined with the $892,000 in debt service the authority paid to the city last year. Over the last 10 years – excluding three outlier years during the pandemic – the authority has averaged payments, with net income and debt service combined, of about $5 million a year.
Last year’s combined net income and debt service capitalized at those rates leads to an estimated valuation of $51 million to $57 million, the source of what the administration has described as their conservative estimate of bringing in at least $40 million, the amount of revenue included in its four-year financial plan. The current fiscal year budget includes more than $26 million in revenue from the sales.
Iraci then used estimates on the $40 million figure and current interest rates to calculate the estimated continued payments the city would receive of more than $2 million a year, using last year’s $4.8 million net revenue and subtracting the estimated $2.5 million in debt service.
Commissioner of Finance and Administration Raymour Nosworthy has said the administration remains confident the sales will be complete in time to recoup the budget revenues before the end of the fiscal year.
But if that does not happen the city plans to rely on short-term borrowing to bridge the gap until the sales are complete.
The Buffalo Common Council has held up the appointment of members to the forthcoming Buffalo Parking and Mobility Authority over concerns about the process.
The Scanlon administration’s estimates have drawn skepticism from some corners. Fillmore District Council Member Mitchell Nowakowski, who has expressed concerns about the plan to sell the ramps, has said that he has doubts that the city will be able to collect the full estimated value given the age and disrepair of the ramps.
Rocco Termini, a real estate developer who serves as the treasurer on the Buffalo Civic Auto Ramps board, also called into question the veracity of Iraci’s figures in comments to the news outlet Investigative Post, saying that the estimate fails to consider the condition of the ramps and other factors.
During the meeting, Nowakowski asked Iraci to address the concerns about the capital needs and maintenance.
“Do we know how many millions of dollars in just original maintenance that we need and improvements that the ramps need and then future?” he said.
Iraci said the nonprofit commissioned engineering firms to examine the structural condition of all ramps in 2022, part of a state mandate.
“They found no major structural issues with those ramps,” he said.
Nowakowski said after the meeting he understands how Iraci arrived at the numbers, but won’t be entirely confident that they will recoup enough to hit the projected amounts until a full appraisal.
“It won’t be official or fully legitimate until bond counsel and appraisals are produced,” he said.
Several council members and board members at the Buffalo Fiscal Stability Authority, the city’s state-imposed control board, have asked members of the Scanlon administration when they plan to get a full appraisal done.
Nosworthy told the control board that the city has secured services for title and survey work and is now preparing to bid out for appraisals of the ramps.
At the control board meeting Monday board member Tom Keenan asked Nosworthy to submit an estimated timeline for the appraisal and sale of the ramps, which Nosworthy agreed to do.
Scanlon, who became acting mayor in October when former Mayor Byron Brown resigned, will return to his South District Council seat at the beginning of the year when the winner of the November election takes office as the city’s new mayor. Scanlon lost to state Sen. Sean Ryan in the Democratic primary. Ryan will face Republican James Gardner and independent Michael Gainer.
The winner of the election will be coming into office in the middle of the ramp sale process with the current fiscal year relying on the revenues.
Some Council members, including Nowakowski, have expressed concerns about Scanlon appointing all five board members being Scanlon appointees, with one Council representative – President Pro Tempore Bryan Bollman – nominated as part of an agreement with the Council.
Nowakowski said he has no issue with Scanlon’s nominees but is concerned that the incoming mayor will have no input on the board members they will have to work with to complete the sale of the ramps and fill the budget hole.
“When you’re talking about a transition of city hall and city government in three months, that this is another item that is discussed during a transition, because it could be facilitating a large quantity of cash to the city,” he said.
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