Please do your fellow citizens a favor and share this link. It is, by far, the most in-depth explanation of the quagmire we’re in that you’re going to read anywhere.

It is time to go directly to the citizens of the city and region instead of the political officials providing sound bites for the media. My intent is to shed some light, provide some facts, and identify, from my perspective, the issues and players in our financial crisis.

1. The debt is actually around $283 million. There is also a risk the Authority could be liable for an additional $25 million if it loses the CIT litigation. The revenue from the incinerator, after operating expenses, has been unable to pay debt service. So, the city’s taxpayers, as primary guarantor of the debt, must come up with money to pay the debt service to the bondholders. Since the city is essentially broke, the county, as secondary guarantor for about half the debt, must come up with the funds. If the county defaults, then the bond insurer makes the payments to the bond and note holders. And any entity that makes a payment wants to be reimbursed eventually.

2. There are basic solutions to addressing that debt. Come up with $283 million and retire the debt or come up with $50 to $100 million to reduce the debt so it can be restructured and more manageable. Of course, how to do that is the big issue. Sale of the incinerator could bring in anywhere from $75 million to $180 million- if someone will purchase it. Leasing the parking garages apparently could net up to $100 million. There you go, done deal. Sell incinerator for $180 million and use parking lease proceeds of $100 million and we can go back to our lives. Easier said than done. A more realistic scenario is to pay down the debt by $50 million to $100 million and look to the state financing authority to provide leverage in refinancing or restructuring the outstanding amount. Neil Grover and City Controller have put forth their concepts for reducing the debt. The rest of this post will identify the parties and how I view their respective interests. My intent is to provide transparency without revealing the substance of draft documents being negotiated and better inform the taxpayers so they are able to participate in this discussion. Let’s look at the parties and their interests and issues:

3. Harrisburg Authority- does not have a quorum, can not conduct business. Wants to lead, but has little leverage. The authority staff is competent and the incinerator operator has the facility up and running rather smoothly. The issues are financial not operational. The Authority wants to pay contractors (unfairly being held hostage), fix turbine blade (to generate up to $1 million additional revenue in electric sales), repair steam line (possible $4 million in revenue), increase receipts and revenue (get higher paying waste from outside county), decrease operating expenses (find solution for ash disposal). A proposed amended budget that you haven’t seen reveals it may be able to start paying between $7 and $12 million annually in debt service. Current debt load too high- debt service is approx $22 million annually.

4. This year’s dilemna- $35 mil due in December because authority, city and county kicked the can down the road in 2007 by borrowing to pay debt service for 2007 and 2008. if that amount is refinanced, expect an additional $2 million in debt service.

5. This year’s budget for debt service includes amounts to reimburse the county, city, covanta and bond insurer. So far this year, on behalf of the authority, the city has paid $637,500, county has paid $1,126,254 and the insurer has paid $425,193. Payments from the debt service reserve fund this year total $5,074,733. All of those payments must be reimbursed or replenished. And, about $10 million in debt service is left to be paid before end of year (not including the $35 million notes).

6. City has limited resources to back up its guarantee. What should the city do? Are the recommendations from management consultants enough to deal with this financial crisis? Is there the political will and leadership to put the parking garages and other assets into play? Can the residents sustain a tax increase? Taxes did not increase in the city over the years because these financings typically would kick a few million to the city’s general fund so taxes would not go up.

7. County refuses to raise tipping fees to raise additional revenue for authority, won’t cooperate in enforcing flow control costing authority up to $600,000 annually in revenue, insists on additional $4.90/ton being added to tipping fee to go to county’s office of solid waste, requires its own engineer, financial consultant and attorneys to oversee authority (and get reimbursed by authority).

8. Covanta wants to be repaid on the $22 million it has put out to fix the Barlow mess. It has not been paid the last two quarterly installments of $637,000. So, Covanta will not release any more funds to pay contractors who did work (about $2.2 million).

9. AGM the bond insurer. Publicly has stated it will not reduce principal or interest on the debt. will not allow use of the $3.6 million from the Barlow settlement to be used to pay contractors or fix turbine blade until city comes up with a plan.

There are all kinds of legal issues involving the rights and remedies of each of these parties. The county has sued the city and authority for reimbursement of the money they have paid and wants the court to order the city to budget for the debt service and raise taxes or sell/lease assets. Covanta has put forth a list of its terms it wants in a forebearance agreement. AGM has put forth its terms for a forebearance agreement. The forebearance agreement initially was to buy time to enable the city to come up with a plan, but now the document is turning into the outline of a plan, which explains why it is taking so long to finalize. The authority can only sit on the sidelines until it gets a quorum.

So that is a status report on where things are as of now. Will the mayor and city council continue the stalemate over adding at least a third member to the board? Who will provide the necessary leadership to make the unpopular recommendations to do some combination of leasing or selling assets, raising taxes, raising tipping fees, asking the state to assist in restructuring the debt and/or allowing the filing of chapter 9, or even sell the water system or sewage treatment system?

At least you now know what we know. We promise to keep you informed and hopefully hold public forums on these issues.

I’m borrowing this text from LiveNation.com and seriously urging all of you who read this blog to simply copy and paste the following email addresses and message text into an email and reach out to your lawmakers.

Protect the industry which provides you with the most fun and enjoyment. It’s one of the few things we have left…

Send an email to the politicians listed below:
jscarnati@pasen.gov; dpileggi@pasen.gov; jcorman@pasen.gov; kmccall@pahouse.net; teachus@pahouse.net; devans@hacd.net; mellow@pasenate.com; costa@pasenate.com; mkeller@pahousegop.com; lfarnese@pasenate.com; kitchen@pasenate.com; jwilliam@pahouse.net; dwhite@pasen.gov; dreed@pahousegop.com; pbrowne@pasen.gov; ferlo@pasenate.com; dlevdans@pahouse.net; jearll@pasen.gov; Fontana@pasenate.com; tkirklan@pahouse.net; parep160@aol.com; jwheatley@pahouse.net; fontana2@pasenate.com

Subject:
Kill the Arts Tax

Copy and paste the following text into the new email:
I buy tickets to live performances in Pennsylvania, and I strongly oppose the Arts Tax because it will cause top performing acts to eliminate Pennsylvania tour sites. I urge you to oppose the Arts Tax, which would add state sales tax to all ticket prices for live performance concerts and shows statewide. Keep It Live in Pennsylvania! Kill the Arts Tax instead!

They call it “exodus”. Movement of jah people.

Word on the street tells me that many (if not all) of the higher-ranking Reed Administration members have sold or are selling their homes in the city and moving to the surrounding, more stable suburbs.

Funny that’s happening now…do they know something us commoners don’t?

Methinks they do. Considering lame-duck Mayor Reed still hasn’t officially conceded the May primary to democratic victor Linda Thompson and also considering that Republican nominee Nevin Mindlin has been hitting the streets hard for months now…it almost seems as if Reed wants to see Thompson take his throne from him.

The reason for my thinking that is simple: a Reed write-in campaign simply cannot win. There are far too many variables which need to be precise in order for a single write in vote to even count…much less the three thousand-or-so which would be necessary for Reed to even stand a chance at winning.

Meanwhile, Reed could simply concede the election to Thompson and put 100 percent of his support behind Mindlin….getting the last-standing Reed supporters to guarantee a fighting chance for a relatively hopeful future for our city.

Linda Thompson is not a sound choice for Mayor of Harrisburg.

Let me repeat that: Linda Thompson is not a sound choice for Mayor of Harrisburg.

Considering the fact that she fails to acknowledge Mindlins repeated requests for three public debates; considering the questionable financial records of her non-profit “Loveship”; considering her emotional outbursts, delusions of grandeur and outright abuse of the English language while serving as president of City Council…this woman would not make a level-headed and educated-enough Mayor of a financially distressed city such as ours. (And don’t forget about the rumors of a couple of arrests back in her college days which have neither been denied or confirmed)

We’ve had entirely too much secrecy in the halls of the Martin Luther King building over the past twenty five years. And a vote for Thompson will almost certainly lead to more of the same.

This November, vote Mindlin.

It’s the smartest thing you can do.

“Yes we can” beat the hype machine that is Thompson and Co.

Consultant to and Reed-ally Fred Clark entered the building towards the end of the rally when cameraman/indie news reporter James Roxbury turned his camera towards Clark.

What happened next was a scene that played out like a paparazzi scuffle in Los Angeles. Clark allegedly grabbed Roxbury’s camera and pulled it towards the floor saying “get that fuckin’ camera out of my face”.

Odd behavior for a usually press-savvy Clark a mere seven days prior to the 2009 primary in a hotly contested Mayoral race.

Roxbury filed assault charges against Clark.

More details to follow.

Clark VS Roxbury

Wouldn’t it be great if we could take the best parts of Linda Thompson, Les Ford, Nevin Mindlin AND Steve Reed; roll them all into one super-candidate and then vote for that hybrid?

Based on what I saw last night, I’m still on the fence with regard to my vote on May 19th.

If we could take Linda’s fire, Les’ intelligence, Nevin’s patience and Reed’s established connections and somehow mix them all together, MAN would we have a great Mayor.

But all four candidates still leave something to be desired.

Les and Sheila assured me that what I said in my last candidates night review was simply not true. And although Sheila tries to influence Les, the man stands on his own. Whether that’s good or bad is still to be determined. But one thing’s for sure…if Les wants to effectively communicate his vision to the public, he’s going to need to tone down his vocabulary and speak to his audience…not three levels above them.

Nevin had some great answers to (mostly) slow-pitch questions. Specifically, his idea to create a legislative body for School Board while keeping the Mayor on as CEO. Similar to the Mayor/City Council dynamic, this does seem like (at least) a good transitional plan to give control of the school board back to…the school board.

Reed wasn’t there. He thought it was more important to remind the Hispanic community to wash their hands and avoid travel to Mexico than attend and participate in a debate planned for months.

And Linda.

Oh, Linda. After the debate, I had a brief moment with her to address the “Kill Whitey” statement in my last post about the debates. We are tentatively scheduled to tape a conversation with Roxbury to talk about the race issue in the city.

But two things stuck out in my mind about her answers last night: 1st- she all but said that she’ll be voting “NO” on the proposed Keystone Opportunity Zone tonight. And two: she said that, in order to encourage more African American male teachers in the Harrisburg School District, that she would explore the option of offering incentives and bonuses to black men to teach in the district.

WHAT?!?!?

It’s still anybody’s race.

And my vote is still up for the taking.

I’m just hoping one of these four does something spectacular to win my confidence.