Distressed Harrisburg, Pa., reached an agreement in principle to transfer operations of its water and sewer system to the Harrisburg Authority public works agency, the parties announced Thursday.

The move, which will take effect Oct. 1 pending City Council approval, will enable the impoverished city to access more than $26 million in low-interest loans from the Pennsylvania Infrastructure and Investment Authority, or Pennvest.

Most of the funds will cover improvements to a wastewater treatment plant under federal environmental regulations. About $900,000 will pay to repair sinkholes, a problem on several Harrisburg streets.

State-appointed receiver William Lynch on Monday filed a financial recovery plan on behalf of the city with the Commonwealth Court of Pennsylvania.

“This will set in motion a major step for the authority and the city to regain access to the capital markets,” Mayor Linda Thompson said at a City Hall press conference.

“This is a big deal because it demonstrates we have the ability to work in a collegial fashion to craft a solution that not too long ago might not have been possible,” said Lynch.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.