Harrisburg and Pennsylvania officials are working on securing a potential bank loan so the city can meet a $3.3 million debt-service payment due Sept. 15 and avoid a default.

The payment relates to the capital city’s Series 1997D and Series 1997F general obligation bonds.

Fred Reddig, executive director of the Governor’s Center for Local Government Services, said Thursday that state and city officials are trying to obtain a bank loan to cover the payment and ward off a default.

“We’re not at the 15th yet and there are things that are in play,” Reddig said.

The Center for Local Government Services is part of the state’s Department of Community and Economic Development.

Ambac Assurance Corp. insures the capital appreciation bonds. It has said that it will meet any obligations on the debt.

“It’s not the 15th yet and there’s a lot of discussion that’s happening to see whether it can be averted,” Reddig said. “Whether it can or not remains to be seen, but there is dialogue taking place to try to avert it, if at all possible.”

The 11th-hour safety net would involve a bank loan to the city and not a bond or note issuance, according to Reddig. State officials first heard about the potential default last week, he said.

Chuck Ardo, spokesman for Mayor Linda Thompson, confirmed that a pending bank loan is in the works.

“That’s one of the options that the city is pursuing, the possibility of a short-term loan,” Ardo said.

Harrisburg officials met with Ambac Thursday regarding the issue and the insurer told them it expects the debt-service payment to be made on time, Ardo said. He stressed that the city is committed to doing everything within its power to make those payments on time.

Harrisburg is facing a $4.5 million deficit in its $64.7 million budget and has $282 million of outstanding incinerator debt that it cannot pay. The fiscal 2010 budget does not include incinerator debt-service payments. Assured Guaranty Municipal Corp. insures the incinerator bonds.

Earlier this year, Thompson cut expenditures by 20% and restricted hiring and overtime to generate $4.5 million of savings. On Wednesday, she proposed furloughs and layoffs, closing a fire station, and transferring surplus sanitation budget funds to the general fund. Proposed revenue enhancements include an increase in parking meter fees, license permit fees, and a parking-tax boost.

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