William B. Lynch, the state- appointed receiver of Pennsylvania’s capital, said “a deal is imminent” with creditors on resolving an incinerator debt burden of about $345 million that has left Harrisburg insolvent.
Dauphin County, home to Pennsylvania ’s capital of Harrisburg , may have to pay $34.7 million by Dec. 1 on notes issued in 2007 to cover costs tied to a municipal incinerator, if it can’t refinance the debt.
The Harrisburg Authority, which runs an incinerator whose $282 million in debt has driven Pennsylvania’s capital to consider bankruptcy, will miss $2.2 million in bond payments, its executive director said.
Harrisburg officials and advisers knew there was “substantial risk” that a city incinerator wouldn’t repay its debt and proceeded with bond deals anyway, according to an audit of the financings that drove the Pennsylvania capital into insolvency.
Harrisburg Mayor Linda Thompson requested enrollment in Pennsylvania’s recovery and oversight program for distressed municipalities, saying the capital city stands “on the precipice of a full-blown financial crisis.”
Pennsylvania delayed a determination of whether Harrisburg, its capital, is distressed and eligible for special state aid and oversight, putting off the decision until next month, according to testimony at a related hearing.
The Harrisburg Authority , operator of a trash incinerator whose debt has led the Pennsylvania capital to weigh bankruptcy, voted to cancel an interest-rate swap with JPMorgan Chase & Co . and resell $31.5 million in debt.