Despite bruised feelings about the renewed battle for the Harrisburg mayor’s office, it appears city officials on both sides of this political divide are okay with moving forward with a plan designed to win the city. a financial break on one of the last remaining piles of debt from the administration of former Mayor Stephen Reed.
As part of the two-step plan, which city council is now expected to take the final steps to approve this fall, the city would release its bond insurer of all remaining guarantees of nearly $ 5 million in outstanding debt from renovations to the city. 2005 to the minor belonging to the city. league baseball stadium on City Island.
In return, the insurer, Ambac Assurance Corp., will grant Harrisburg a credit of $ 1.7 million out of the $ 26.2 million the city owes Ambac to cover a series of missed bond payments during the The city’s 2010-2012 fiscal crisis, plus a three-year period, discounted interest rate on the remaining balance.
The city could also get additional credit worth about $ 1.5 million if it made additional prepayments on debt, for a total forgiveness of about $ 3.3 million.
To cement the deal and maximize its savings, city officials must pay around $ 9 million by the end of this year: $ 5 million into an escrow account to cover remaining payments on stadium bonds, thus freeing Ambac from its coverage obligations in this regard. Remark; and $ 4 million for advance payments.
The framework for the deal has been on the table for months, and the board had already allocated $ 7 million in the 2021 budget in anticipation of a final deal with Ambac.
But there were fears the proposal could collapse this fall after transition talks never really opened up between current mayor Eric Papenfuse and city council chairperson Wanda Williams, who beat Papenfuse in the Democratic five-a-side primary. this year’s mayoral candidates. Papenfuse has since opened a written candidacy against Williams, in an attempt to win a third term.
Papenfuse accused Williams of trying to sabotage the deal – which has a December 31 deadline for completion – for political reasons.
After a series of meetings this week between City Tax Advisor Dan Connelly, City Comptroller Charlie DeBrunner and City Treasurer Dan Miller, it looks like the Ambac deal is back on track. Council is expected to consider a budget amendment that would free up the final $ 2 million to maximize the city’s savings through next month’s deal.
Williams and other members appeared reassured at a board meeting on Tuesday by assurances from DeBrunner – after face-to-face talks with Connelly and Miller earlier in the week – that the Ambac deal is worth it to be done and does not commit the city to any additional refinancing. – an important part of Papenfuse’s original proposal – at this point.
DeBrunner told council on Tuesday that while he and Connelly have different estimates of the city’s fund balance at the end of this year, they both agreed there was a sufficient cash reserve to meet the conditions. Ambac now, and it’s “a really good deal … I wouldn’t hesitate to go ahead.
More refinancing of the remaining debt can be decided later, DeBrunner said.
Papenfuse said he believed a refinancing of Ambac’s remaining debt could now lower the city’s interest rate to the 3% to 3.5% range, while spreading the remaining debt over 10 years to keep the city’s cash balances in a stronger position for the long term.
On Tuesday, however, DeBrunner praised Williams for curbing follow-up refinancing at this time.
“As a controller and as a human being, I try to get out of debt as much as possible,” DeBrunner said, “and I think that’s not bad (political) for the city. Now there are times when you need to get into debt. If you want to build a fire station or pave a road, yes you will have to borrow money. But not always and – especially if you don’t need it – I don’t think we should. “
Noting that another round of the city’s general bonds will be pulled next year, DeBrunner said that means the city will save $ 8 million a year in debt service charges starting in 2023.
“We see a bright future if we can just keep it together for another year,” DeBrunner said.
No one should see this as a declaration of peace in the valley.
Papenfuse, while delighted that the board appears ready to move forward with the Ambac deal, is still concerned about his hesitation on a follow-up plan to refinance the remaining $ 18.9 million in debt, this which could cost the city a chance for significant additional savings if it can secure the reissue of the remaining debt at even lower interest rates.
“This election, in part, will be a referendum on this,” he told PennLive on Wednesday.
Williams, meanwhile, told TheBurgNews this summer that instead of refinancing, it was supporting the use of the city’s healthy cash reserves to pay off Harrisburg’s debt in full.
Williams then said that with the city’s year-end balance projected to be around $ 40 million, “we can fully pay off the debt. We should pay it and be done with it [bond insurer] Ambac. We would still have money in reserve.