Harrisburg, Pa., which two weeks ago exited state receivership, made its first general obligation bond payment since September 2011.
On Thursday it wired $4.7 million of a $5.14 million payment due March 15. Bond insurer Ambac Assurance Corp. will cover the balance, according to Steven Goldfield, the financial advisor to the Harrisburg recovery team and an attorney at Public Resources Advisory Group.
"This payment by the city at a reduced amount was consensually agreed upon by Ambac. It is part of the settlement agreement between the city and Ambac filed as part of the
The Harrisburg Strong Plan, crafted by state-appointed receiver William Lynch and on which Goldfield consulted, erased roughly $600 million of debt and kept Pennsylvania's 49,000-population capital out of bankruptcy through the sale of the city's incinerator to the Lancaster County Solid Waste Management Authority and a long-term lease of parking assets from the city and the Harrisburg Parking Authority to the Pennsylvania Economic Development Financing Authority.
Bond sales for both closed in late December.
Harrisburg has missed its last four GO payments, beginning in March 2012. It only made the September 2011 payment after finalizing a deal with the Harrisburg Parking Authority for upfront money.
According to Goldfield, Harrisburg was able to secure a tax anticipation note from Metro Bank to ensure that after paying this amount from incoming real estate tax receipts, there would be enough for payroll and other obligations.
Goldfield said resuming GO payments is one of several steps Harrisburg has taken to win back the good graces of lenders. Other moves include repaying Metro Bank back ahead of schedule on a loan to the city that was secured by Wild West artifacts, and obtaining a tax anticipation notes commitment from a financial institution.
