Harrisburg could miss payroll in December or January should delays bog down transactions that are pivotal to its recovery plan, an attorney told the City Council.
“As I understand it, we are still at a real threat of being unable to meet payrolls either in December or in January if the money doesn’t come in,” Neil Grover, who represents the council, said Tuesday night.
The council must approve asset transfers related to the plan. State-appointed receiver William Lynch’s team wants to complete the necessary bond transactions by the end of November, although some council members feek they are being rushed.
The sale of the city’s incinerator to the Lancaster County Solid Waste Management Authority, which the Dauphin County commissioners approved Wednesday, and a 40-year lease of parking assets are centerpieces to the Harrisburg Strong recovery plan that the Commonwealth Court of Pennsylvania approved on Sept. 19.
Lynch’s plan aims to keep Harrisburg out of bankruptcy. The city is mired in more than $600 million of debt, including about $363 million in bond financing related to an incinerator retrofit project.
Complicating the parking deal was last week’s withdrawal of a key partner, AEW Capital Management LP.
AEW was part of a Harrisburg First consortium that included Guggenheim Securities, Piper Jaffray & Co. and Standard Parking Corp.
Steven Goldfield, the financial advisor to Harrisburg receiver William Lynch and an attorney with Public Resources Advisory Group, is still confident that the parking deal will materialize.
“We have interviewed four potential replacement firms. I think this will be OK,” said Goldfield. According to Goldfield, a finalist will appear at 11 a.m. Monday before the board of the Pennsylvania Economic Development Financing Authority, which would issue tax-exempt bonds to finance the parking transaction.
The Dauphin County commissioners on Wednesday delayed an ordinance to allow the county to issue up to $170 million in debt for the parking deal, pending further review.
In addition to city cash-flow concerns, Lynch and his team want to complete the bond sales while interest rates remain low. The Lynch team and Mayor Linda Thompson have urged that pricing of the bonds happen by the end of November.
But council members on Tuesday warned against acting too quickly.
“I understand the seriousness and nature of the beast where you are talking about employees who are not going to get paychecks, but certainly [we must] do our due diligence and make sure that everything in the contracts are accurate and legal,” said council president Wanda Williams.
Earlier Tuesday, Justice Bonnie Brigance Leadbetter, who approved the plan, dismissed city controller Dan Miller’s objections to it “because they were untimely and because Miller lacks standing to assert them.” Miller, who is running for mayor as a Republican in the Nov. 5 general election after losing the Democratic primary to bookstore owner Eric Papenfuse, is the lone mayoral candidate to favor a bankruptcy filing. Leadbetter said Miller filed his objections too late.
“The governing body and chief executive officer of a city in receivership are recognized under Act 47 as interested parties. The city controller is not,” Leadbetter ruled.
