Harrisburg to Skip Guaranteed Incinerator Payments (Correct)
Pennsylvania’s capital city won’t make $2.2 million in Sept. 1 bond payments it has guaranteed on behalf of the Harrisburg Authority, according to Chuck Ardo, a spokesman for Mayor Linda Thompson.
Harrisburg has already skipped about $6 million in payments this year on the debt related to a waste-to-energy incinerator. It has considered seeking bankruptcy protection to cope with the $68 million in debt service it is responsible for in 2010.
The Sept. 1 payments on the authority’s Series 1998A and Series 2003 ABC bonds will be paid from a debt service reserve fund, Michele Torres, the agency’s executive director, said. This year’s incinerator-debt costs for the city of 47,000 exceed its annual property-tax revenue by about threefold, budget documents show.
Harrisburg “has served notice that it will be unable to make the payments due to the city’s financial situation,” Ardo said today by e-mail.
The city’s credit rating was cut to B2, five levels below investment grade, in February by Moody’s Investors Service on concern that its strategy for managing the incinerator debt was “weak” and raised prospects for default.
The incinerator is operated by Covanta Holding Corp., based in Fairfield, New Jersey.
To contact the reporter on this story: Dunstan McNichol in Trenton, New Jersey, at dmcnichol@bloomberg.net.
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