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November 21st, 2011

$100 million for debt forgiveness

Harrisburg officials to ask debt stakeholders for $100 million for debt forgiveness

Harrisburg officials are sending a memo to stakeholders of the city’s incinerator debt, asking for $100 million of debt forgiveness in a consent agreement they have to issue to the state by 5 p.m. Monday to prevent the state takeover from continuing.

The city wants the insurer of the incinerator bonds, the insurer of its general obligation debt, Dauphin County and Covanta Energy Corp., the company that issued the city a loan to help finish the retrofit of the trash burner, to pitch in to pay for the $100 million forgiveness.

Harrisburg City Council members Wanda D. Williams, (left) and Brad Koplinski, (center) and vice president of the city council Patty Kim listen to comment about the city’s parking garages. JENNY KANE, The Patriot-News
That would knock down Harrisburg’s incinerator debt to about $210 million.

At a continued consent agreement meeting tonight, council and Mayor Linda Thompson agreed to ask stakeholders to cover the following percentages of the forgiveness:

• Assured Guarantee Municipal Corp., the incinerator bond insurer, 50 percent.
• Dauphin County, 40 percent.
• Covanta, 5 percent.
• AMBAC Assurance Corp., the city’s general obligation debt insurer, 5 percent.

Officials also agreed to include the sale of the incinerator and lease of the city’s parking garages in the plan as a means to help pay down the debt.

Thompson and council met with stakeholders at a private negotiations meeting at 2 p.m., where they were told to ask for terms they want in an agreement to move negotiations forward.

Harrisburg leaders will continue the consent agreement meeting at 6 p.m. Wednesday in place of its scheduled legislative session.

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