Harrisburg, Pa., which last year narrowly averted a bankruptcy filing, has three financial institutions bidding on its tax revenue anticipation note planned for January.
The city might not need it, given its projected fund balance of nearly $5 million by year's end.
Metro Bank, Mid Penn Bank and M&T Bank Corp. proposed on the note when Pennsylvania's capital city took bids last week. Two years ago, no bank came forward as the city was a capital markets pariah, In 2013, only Metro Bank stepped up.
According to Steven Goldfield, a financial advisor to the city's recovery team and an attorney with Public Resources Advisory Group of Media, Pa., the renewed interest in the capital markets will effectively reduce borrowing costs for a city continuing its recovery from financial distress.
In addition, said Goldfield, the city expects to pay another $4.7 million on March 15 toward its general obligation balance. Ambac Assurance Corp. is the GO bond insurer.
Mayor Eric Papenfuse and other city officials will present details of the TRAN to the City Council in January for its consideration. Most third-class cities in Pennsylvania --which categorizes its municipalities by population tiers -- take out TRANs to pay bills from January through March.
Tax collections pick up in late February and March and the borrowing tides them over until property tax money arrives.
While TRANs represent mainstream borrowing for many municipalities, some in 49,000-population Harrisburg may be skittish about borrowing, given the incinerator fiasco that crippled the city financially.
Bond-financing overruns to an incinerator retrofit project accounted for much of the city's nearly $600 million in debt. The City Council tried to instigate a Chapter 9 bankruptcy filing in late 2011, but it was negated by a federal judge.
The city in 2013 finalized its Harrisburg Strong plan, which included the sale of the incinerator to the Lancaster County Solid Waste Management Authority and the long-term leasing of parking assets from the city and the Harrisburg Parking Authority to the Pennsylvania Economic Development Financing Authority. It also included a four-year balanced budget and various measures intended to win back the good graces of the capital markets.
On Tuesday night the City Council approved a $59.4 million general fund budget that has no tax increases and invests $2 million for infrastructure improvements, the latter earmarked as an alternative to privatizing the sanitation department, which the Harrisburg Strong plan recommended.
"Many communities contract for all solid waste collection services. Private services are readily available and often offer a more economical service than that provided by city crews," said the plan, which the Commonwealth Court of Pennsylvania approved.
The budget also adds 36 positions, including five firefighters and nine police officers.
Papenfuse intends to sign the budget.