Reprise: City Council Again Rejects Recovery Plan
Aug. 31 -- The Harrisburg City Council tonight sent a financial recovery plan down to defeat for a second time, making the possibility of state intervention into the city’s finances likely.
Mayor Linda Thompson failed to get the one additional vote she needed to pass her re-draft of the Act 47 plan. The 4-3 vote mimicked a July vote on the original, state-sponsored plan. Both plans relied on monetizing city assets, including selling Harrisburg's troubled incinerator and selling or leasing its valuable parking garages, to help pay off an estimated $310 million debt originating from multiple upgrades to the incinerator over many years. Thompson’s plan was similar to the first Act 47 plan, but included some additional state funds, as well as possible concessions from Dauphin County and bond insurer AGM, to help close an estimated $26 million in stranded debt – debt that would be left over even after disposal of city assets. However, those promises did not sway a majority of council members, who voiced concern over numerous issues, including the plan’s reliance on asset sales, its assumptions about revenue the sales would generate and questions about whether the county and AGM actually would make any concessions. “The true numbers just are not there,” said Councilman Brad Koplinski, who joined council members Susan Brown-Wilson, Wanda Williams and Eugenia Smith in voting no. “We are dealing with something very uncertain and nebulous.” The plan’s failure makes it increasingly likely that the state will pass a bill, now in a House committee, which would appoint a three-person board to oversee Harrisburg’s financial restructuring, implementing a plan that likely would resemble the Act 47 blueprint. Gov. Tom Corbett has said he would sign the bill if passed by the Republican-controlled legislature, which reconvenes late in September. “We have a takeover that’s coming – mark my words,” said Council President Gloria Martin-Roberts, who lambasted her council colleagues for turning down Thompson’s plan. Council members Patty Kim and Kelly Summerford also cast votes in support. At a press conference following the vote, Thompson warned of two other possible consequences. With the second no vote, the state now has the authority to withhold certain funds from Harrisburg, she said. In addition, Thompson tonight said Corbett may choose to reject her request for early payment on $2.6 million in pension funds and $487,000 in Capitol fire protection money due the city in October. If the funds are not received by mid-September, Harrisburg could run out of money, endangering its ability to make payroll and meet a $3.3 million general obligation bond payment on Sept. 14. The city already has suspended vendor payments. The council tonight also passed a resolution extending for 10 years a lease agreement with the Harrisburg Parking Authority for land beneath three parking garages. That deal, if concluded, would infuse the nearly broke city with $7.4 million. However, the authority still needs to borrow that money and is having trouble landing financing. It hopes that, with the council on board, a loan might be facilitated.
Mayor Again Pitches Her Plan, Secures State Funds
Aug. 23 -- Mayor Linda Thompson tonight secured an annual payment of $2.5 million from the state to help close a nagging financial gap as the City Council gears up to vote on her recovery package for Harrisburg.
A representative from Gov. Tom Corbett's office entered council chambers to deliver the news to Thompson in the midst of her testimony to the council, as she tried, for the second straight meeting, to convince a majority of members to support her revised Act 47 plan. The city needs that money to help offset $26 million in stranded debt, debt left over even after the sale of the city incinerator and sale or long-term lease of its valuable parking garages. Despite the good news, Thompson still has not received written commitments on additional concessions from Dauphin County and bond insurer AGM, she said last night. Both must make certain financial concessions to ensure that the entire stranded debt is retired. The council is slated to vote on Thompson's plan on Aug. 31. Councilman Kelly Summerford tonight became the first member to publicly announce support for Thompson's plan. He was one of three members to support the original Act 47 plan. Thompson needs to sway one of the four previous "no" votes to her side, a difficult task as the four council members tend to vote together in a bloc. When asked what she would do if the council rejects her plan, she said she would take steps to implement its provisons anyway. "If council votes it down, the mayor will move forward unilaterally," she said, not clarifying exactly how she could do that. Thompson's plan remains largely unchanged from Aug. 2, when she first introduced it. It mostly uses asset sales to raise about $310 million to retire debt tied to the troubled city incinerator, as well as other provisions intended to close a growing deficit in the city's annual operational budget.
Developer Hopes to Deliver New Life to Postal Facility
Aug. 11 -- A suburban Philadelphia developer plans to buy the Keystone Branch postal facility at the entry to Harrisburg's industrial zone, though the company has no firm plans for the site.
Adam Meinstein, president of Blue Bell-based Equilibrium Equities, said his company is purchasing the 11-acre property on Market Street, just east of the Harrisburg Transportation Center, on speculation, with no tenant in place. "We are not coming in with a customer for the building," he said. "It has potential for retail, office and industrial." Meinstein would not disclose the sales price, but said his company would complete the purchase on Sept. 15. It then will begin a $1.5 million rehabilitation of the 237,000-square-foot masonry building, which was built in 1962 as the region's main postal sorting facility. Renovation should take about nine months, he said. The sprawling building, he said, is in "excellent shape," but needs new heating and cooling systems and energy-efficient lighting. It also needs to be spruced up and emptied of its heavy postal equipment, he said. The U.S. Postal Service has been trying to sell the property for about two years. Meinstein said his company has been considering the purchase since he first saw the property about 18 months ago. Even though the company has yet to complete the sale, it already has shown the building to prospective tenants, Meinstein said, adding that the site's location near the train station, I-83 and downtown Harrisburg makes it attractive. Mayor Linda Thompson praised Meinstein for investing in Harrisburg, particularly given the city's well-publicized financial crisis. She said she looked forward to the day when the property again would become commercially active. "We'll have economic opportunity soon in that area, in less than two years, about the same time we'll get to fiscal solvency," she said.
Long Odds Seen for Latest Financial Recovery Plan
Aug. 9 -- It may be a difficult road ahead for Harrisburg's latest financial recovery plan, as several council members tonight voiced significant concerns over Mayor Linda Thompson's Act 47 alternative.
Councilman Brad Koplinski complained that the mayor did not explore the potential of implementing a 1 percent, county-wide sales tax, nor did her plan include any firm concessions from bond insurer AGM. "We're still playing by their (AGM's) rules, and that's not right," said Koplinski. "They need to show us what they'll bring into this." Councilwoman Susan Brown-Wilson echoed that concern and added that the state's annual contribution -- initially set by Thompson at $3 to $5 million a year but now estimated at $2.5 million a year -- would not be large enough. "The governor and the legislative body need to understand they rely on our services," said Brown-Wilson. "Those entities need to realize that they need to take a bigger stake to the table." Koplinski and Brown-Wilson, as well as Councilwomen Wanda Williams and Eugenia Smith, last month voted against the original, state-sponsored Act 47 plan, sending it to defeat by a 4-3 margin and necessitating an alternative from Thompson. Williams tonight also was critical of Thompson's revision, while Smith did not indicate how she might vote. The council members' comments came after Thompson provided a brief outline of her proposal, which centers around closing the initial plan's $26 million "stranded debt," debt left over after the city sells its troubled incinerator and sells or leases its valuable parking garages. Thompson's plan includes the possibility of seeking the adoption of a commuter tax if the stranded debt cannot be retired. Thompson urged council members to adopt her framework, arguing that the city risks a state takeover if the council votes it down. She also said that, without additional cash inflow, the city could run out of money completely after it makes its Sept. 15 general obligation bond payment of $3.3 million -- which she intends to pay even if it threatens vital city services. "If I pay it, we won't have enough money to pay for anything else, including payroll," she said. "I don't plan to miss that payment." A public hearing on the mayor's Act 47 plan will take place on Thursday at 6 p.m. at John Harris High School. A council vote, yet unscheduled, is expected as early as next week.
Thompson Focuses on Stranded Debt in Act 47 Re-do
Aug. 2 -- Mayor Linda Thompson today issued her financial recovery plan for Harrisburg, a plan much like the rejected Act 47 proposal, but with additional measures to close a nagging debt gap.
Thompson's plan focuses on the "stranded debt" of $26 million, the expected remaining shortfall from an estimated $310 million incinerator debt after the city sells the incinerator and leases its valuable parking garages. She said that agreements with Dauphin County, the state and bond insurer AGM would eliminate most, if not all, of the stranded debt. Thompson said she would support a commuter tax only if agreements fall through and the stranded debt cannot be eliminated. Otherwise, she did not propose any new taxes -- such as a commuter tax or county-wide sales tax -- with tax increases limited to the 8 percent property tax hike envisioned in the original Act 47 proposal. "I will not accept stranded debt," she said. Specifically, under Thompson's plan, the county would agree to transfer additional gaming funds to the city, while the state would make available more money for fire protection services. AGM also has agreed to concessions, she said, but is waiting for the City Council to approve the plan before giving its final OK. Thompson will present her plan to the council at its Aug. 9 meeting. A public hearing on the plan will follow, as will a council vote to accept or reject the plan.