PHILADELPHIA — A new twist has emerged in the Harrisburg incinerator debt crisis.
Judge Todd Hoover in the Dauphin County Court of Common Pleas has ruled that Pennsylvania’s municipal takeover law, passed in October, does not prevent the separate appointment of a receiver to operate the trash burner on behalf of creditors.
Hoover plans to set procedures for selecting a receiver, which would leave the state capital with two such persons. Attorney David Unkovic, nominated by Gov. Tom Corbett and confirmed by the Commonwealth Court, has served the city in that role since November.
Corbett made the appointment after the state Legislature passed a law allowing him to declare Harrisburg a fiscal emergency. The move came after the Harrisburg City Council three times rejected a workout plan recommended by a state-appointed consultant.
The plaintiffs were TD Bank N.A. of Toronto, M&T Trust Co. of Buffalo, N.Y., Bank of New York Mellon Trust Co. of New York, and the insurer of the incinerator bonds Assured Guaranty Municipal Corp. of New York.
Harrisburg is more than $310 million in debt related to an incinerator modernization project, and has missed $65 million in bond payments related to the project. In addition, the city missed $5.3 million in general obligation bond payments earlier this month.
Harrisburg Mayor Linda Thompson expects an appeal.
“This is another setback in the process we don’t need,” she said. “I look forward to everyone working cooperatively toward the same end, which is the sale of the incinerator at a maximum return to reduce the debt burden on the taxpayers of the city of Harrisburg.”
Mark Schwartz, the Bryn Mawr, Pa., attorney representing the Harrisburg City Council, said Hoover’s decision “underlines the infirmity of the receivership act that was rushed through the General Assembly. Bad legislation like this makes inevitability the charade that Harrisburg has experienced.”
Schwartz added: “I questioned then and now whether special interests would come before the health and welfare of Harrisburg’s citizens with the first receiver. There is now no question when it comes to the second. There is also no question that Judge Hoover’s ruling impairs Mr. Unkovic’s powers and plans when it comes to the incinerator.”