HARRISBURG, Pa. — The Harrisburg City Council Tuesday evening approved the appointment of three board members to the Harrisburg Authority, with the expectation that the new members will help the agency address its $282 million of outstanding incinerator debt.
The council voted in favor of adding attorneys Bill Cluck and Neil Grover to the authority’s five-member board. Council members noted that Cluck and Grover have been following and critiquing the agency’s business practices for some time.
Their background could provide useful insights for addressing the $282 million of outstanding resource recovery bonds that the authority is currently unable to pay down, according to council members.
Executive director Michele Torres said Tuesday that the authority cannot make a $425,000 payment to bondholders of Series 2002A bonds due May 1.
Assured Guaranty Municipal Corp. insures the bonds. The city of Harrisburg is guarantor of the $282 million of resource recovery bonds but did not budget for debt service costs on the bonds in its fiscal 2010 budget.
“The city will not be able to make the May 1 payment due to its current cash position,” Michael Holmes, chief of staff for Mayor Linda Thompson, said in an e-mail. “We are currently seeking forbearance agreements in lieu of this payment.”
While Dauphin County, where Harrisburg is located, is a co-guarantor on roughly 40% of the incinerator bonds, the Series 2002A bonds do not carry the county’s pledge of repayment.
“I think Mr. Cluck will certainly dig into the facts and make us all know what’s really going on over there,” council member Susan Brown Wilson said during Tuesday night’s meeting.
Members also approved Eric Davidson to the authority’s board. Davidson has worked as a supply system analyst for 21 years at the property and fiscal office in the U.S. Department of Veteran’s Affairs.
Term expirations and one board member stepping down from his seat opened up three positions on the board.
After the meeting, Cluck said that the authority needs to re-examine how and why it took on debt that it now cannot pay off, slash operating expenses, and look into new revenue sources such as making sure that Dauphin County delivers all of its waste to the incinerator.
The county has a contract with the city in which Dauphin sends all of its waste to the facility in exchange for a fixed price. Waste from other urban areas also could provide additional revenue.
“I’m also going to look into New York City waste as a possibility,” Cluck said. “They are apparently willing to spend a lot of money to bring their waste to Pennsylvania. I think we would gladly accept it.”
The council also approved a resolution to acknowledge its receipt of an early intervention program report that Management Partners Inc. released in January. The report suggests how the city could improve its finances. The program is the first step on the path to Pennsylvania taking over Harrisburg’s finances under Act 47.
“This is not to say we’re adopting the plan,” council president Gloria Martin Roberts said during the meeting. “This is so that the state can release funds to our municipality so that we can begin the process of having public hearings.”