The bond insurer for Harrisburg, Pa.'s troubled incinerator renovation project has rejected a request from the city to forgive $100 million of debt.

"There is absolutely no rationale for a $100 million concession," Holly Horn, chief surveillance officer for public finance for Assured Guaranty Municipal Corp. of New York, said in a letter to Mayor Linda Thompson. "Assured Guaranty has attempted for over two years to reach a viable solution with absolutely no cooperation from City Council."

Harrisburg is saddled with $310 million of bond debt, mostly due to cost overruns in repairing its incinerator, known formally as the resource recovery facility. The City Council filed for Chapter 9 bankruptcy protection last month, a filing that Pennsylvania, Thompson, and Assured Guaranty oppose, among other parties. According to bankruptcy papers, the city has skipped $60 million of bond payments.

Assured Guaranty said it would not attend Thursday's meeting that was to feature Thompson, council members, and other major creditors, including Dauphin County and Covanta Energy Corp., which issued a loan to the city to help finish the incinerator project.

The city, meanwhile, announced that a separate meeting, scheduled for Thursday night in council chambers, was rescheduled to 5:05 p.m. Monday. "Discussions are ongoing, however, throughout the weekend," said Thompson's spokesman, Robert Philbin.

Last Monday, at a four-hour meeting that Assured Guaranty attended — intended to help draft a financial recovery plan to avert a state takeover — the council and Thompson agreed to council member Brad Koplinski's request that major creditors forgive $100 million of debt as part of a recovery plan consent agreement to submit to state officials. They also re-emphasized the need to sell the incinerator and sell or lease revenue-producing municipal parking garages.

Thompson, while agreeing to the provision, admitted that the request might get nowhere. "You just can't throw out $100 million and tell your creditors to pay it," she said after the meeting. "That is a hard pill to swallow for any creditor."

In her letter, Horn said Assured Guaranty has been generous in its concessions. "It is disappointing that certain City Council members seek to shift blame to Assured Guaranty that squarely belongs to the city and the [Harrisburg Authority, which operates the incinerator] for their mismanagement of the RRF project," Horn wrote.

Recently enacted legislation enabled the state to declare fiscal-emergency status in Pennsylvania's capital city, after the council three times — all by 4-to-3 votes — rejected a recovery plan under the state's Act 47 program. The city has until the end of Monday to submit an alternate plan to prevent a state takeover through receivership, though the bankruptcy filing also challenges the takeover.

The sponsor of the takeover legislation, Sen. Jeffrey Piccola, R-Susquehanna Valley, said Thursday he would not seek re-election. His district had included parts of Harrisburg, though that may change with redistricting.

Judge Mary France of the U.S. Bankruptcy Court for the Middle District of Pennsylvania in Harrisburg will rule on the legitimacy of the bankruptcy filing on Nov. 23.

"Assured is acting as all good civil defendants should," said Mark Schwartz, the Bryn Mawr, Pa., attorney representing the City Council. "Doubtless on the advice of counsel, they are bowing out."

"I don't strictly speaking view them as a creditor," he said. "Rather, I view them as one of the participants that brought about a bond issue that should not have been undertaken, let alone be labeled as 'self-liquidating.' "

Schwartz also criticized Thompson for not releasing the fiscal year budget until Nov. 22, the day before the next bankruptcy court hearing.

"This agreement-with-creditors process can't work. This is all why I filed the bankruptcy and why I can't understand the mayor's objection to the bankruptcy," he said.

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