A judge last week rejected Harrisburg’s request to dismiss or postpone two lawsuits filed by bond trustees of the city’s $282 million of incinerator debt and by Assured Guaranty Municipal Corp., the insurer of the bonds.
TD Bank NA and M&T Bank, along with Assured, want the court to appoint a receiver for the incinerator and to order the city to meet its obligations.
The city has not paid debt service on the bonds. Dauphin County, the co-guarantor, and Assured Guaranty have been making payments to bondholders.
The Harrisburg Authority issued the incinerator bonds and the city pledged its guaranty of repayment in the event the facility was unable to generate enough revenue to meet debt service costs.
Harrisburg is under Pennsylvania’s distressed municipalities program, Act 47. The city expects to receive by mid-May a fiscal recovery plan from a team of outside professionals led by Novak Consulting Group. State and city officials anticipate the recovery plan will address the $282 million of incinerator debt.
Also last week, Councilman Brad Koplinkski said the city should wait to act on a proposal from the Lancaster County Solid Waste Management Authority to purchase its incinerator for an up-front fee of $45 million and lower tipping-fee charges in the future.
In addition, the Harrisburg Parking Authority plans to form a team of finance professionals, according to Koplinkski.
Last year, the Parking Authority contemplated refinancing its debt, including bonds guaranteed by the city, and Mayor Linda Thompson proposed selling city-owned land underneath parking garages to the agency.
Koplinkski wants the city to evaluate the Novak plan before moving forward on other fiscal initiatives.
Meanwhile, Cravath, Swaine and Moore LLP is set to advise the City Council on a possible bankruptcy filing by the end of the month.
“It is clearly imperative for council to urge that both [the solid waste authority and the Parking Authority’s] efforts be put on hold until the community has seen the Act 47 recommendations and the analysis from Cravath so that we all can rally around a plan that doesn’t leave a host of lingering doubts as to its wisdom or integrity,” Koplinkski said.