Now it’s the Harrisburg, Pa. City Council’s turn to evaluate the massive financial recovery plan proposed for the troubled city.
The council Tuesday night, in its first public meeting after state-appointed receiver William Lynch filed his “Harrisburg Strong” blueprint to keep Pennsylvania’s capital out of bankruptcy, delegated portions of the plan to its committees.
The budget and finance panel will hold a hearing at 5:30 p.m. Sept. 4 on measures to increase parking rates and add meters. The Lynch plan calls for a 40-year lease of parking assets, including garages, lots and street meters, to Harrisburg First, a consortium consisting of Guggenheim Securities, Piper Jaffray & Co., AEW Capital Management and Standard Parking Corp. The Pennsylvania Economic Development Financing Authority would issue tax-exempt bonds.
Parking is one component of Lynch’s plan, which includes the sale of the incinerator – the source of Harrisburg’s debt crisis – to the Lancaster County Solid Waste Management Authority, as well as haircuts to major creditors including Assured Guaranty Municipal Corp., Dauphin County and Covanta Energy.
Assured and Dauphin, whose claims are intertwined, have a combined $298 million claim.
“The initial haircut to the major creditors, Assured Guaranty and Dauphin County, at about 30%, is significant, but it is notable that the agreement was achieved without the expensive and time-consuming process of bankruptcy,” Janney Capital Markets of Philadelphia said in a special commentary.
Bond financing overruns to a retrofit the trash burner, which sits four miles outside downtown, have left Harrisburg with an estimated $362.5 million of debt. Harrisburg’s overall deficit, including so-called stranded debt and obligations from a variety of transactions dating 30 years, is estimated at more than $600 million.
Lynch filed his 357-page report Monday with the Commonwealth Court of Pennsylvania. Justice Bonnie Brigance Leadbetter, who must sign off on the plan, has scheduled a hearing for 10:30 a.m. Sept. 19.
“‘Harrisburg Strong’ offers the city an opportunity to regain fiscal stability and even thrive in the coming years,” Janney said.
“[It’s] a comprehensive plan that leaves no tax or expense unnoticed on the road to recovery,” said David Fiorenza, a Villanova School of Business professor and former chief financial officer for Radnor Township, Pa. “Mr. Lynch has submitted a fair and equitable financial plan to resurrect and restore Harrisburg to financial and economic respectability.”
Council president Wanda Williams would like the council to hire a separate financial advisor to examine the report, although the council may be unable to afford one.
City comptroller and mayoral candidate Dan Miller, who said bankruptcy would lead to a more equitable settlement, urged the council to move carefully.
“The decisions this council is being asked to make will affect the city for decades to come,” said Miller, who lost the Democratic primary to Eric Papenfuse but will run as a Republican in November. “So, it’s critical that there is a full understanding of the short and long term impact of the plan and all the fine points it entails. There is no need to rush to judgment.”
Papenfuse, a bookstore owner who toppled incumbent Linda Thompson in May, praised Lynch while calling the plan imperfect. “We thank city leaders who decided to work through Harrisburg’s problems and not cave in to bankruptcy and defeat,” he said.