Harrisburg would exit receivership while remaining under state oversight under a plan by Pennsylvania officials.
The state Office of General Counsel must petition the Commonwealth Court of Pennsylvania to vacate the receivership, which could happen this week. The court received no such petition as of Wednesday, according to one official speaking anonymously.
The court in September approved the so-called Harrisburg Strong recovery plan, intended to keep the capital city out of bankruptcy by erasing $600 million of debt, mostly through the sale of the city incinerator to the Lancaster County Solid Waste Management Authority and a long-term lease of parking assets from the Harrisburg Parking Authority to Pennsylvania Economic Development Financing Authority.
The deal also included concessions from major creditors including Dauphin County and Assured Guaranty Municipal Corp., provided Harrisburg with a balanced budget for four years, and included economic development incentives.
State-appointed receiver William Lynch's team closed on the plan last month, after bond sales related to the two transactions.
Post-receivership, Harrisburg would revert to the state-appointed workout program known as Act 47, administered by the Department of Community and Economic Development. The City Council rejected the original Act 47 plan three times in 2011, all by 4-3 votes, prompting state lawmakers to place Harrisburg under receivership.
A federal bankruptcy court dismissed a Chapter 9 filing by the council in November 2011, citing the disapproval of then-Mayor Linda Thompson and state laws at the time that restricted such a filing.
"Our city has fared much better than the vast majority of other Act 47 cities in Pennsylvania," said councilman Brad Koplinski, a Democratic candidate for lieutenant governor. "This is the opposite of what happened in Detroit."
Koplinski, however, warned that the city is not yet in the clear. "The city must be fiscally responsible, a solution still has to be found to the Verizon building lease concern, and the commonwealth must maintain its commitment to providing $5 million of fire protection funds to the city each year," he said.
Verizon Communications' lease expires in 2016, just when repayments begin on the $40 million in debt connected to the building in Strawberry Square downtown. Verizon said it would not renew.
Separately, new Mayor Eric Papenfuse reintroduced his $57 million budget to the City Council on Tuesday night, reclassifying some personnel positions to reflect new priorities. Papenfuse succeeded Linda Thompson on Jan. 6.
The new spending plan, on which the council is expected to vote Feb. 11, includes a new director of business development while eliminating the chief operating officer post, an initiative of Lynch and his predecessor, David Unkovic. "The COO's position does not reflect the current state of the city or the current organizational structure that I envision," said Papenfuse.