UPDATE: Covanta Energy Sues Harrisburg Over $1.9 Million In Missed Payments
October 05 2010 - 3:22PM
Dow Jones News
Adding to the bevy of legal and financial challenges faced by
Harrisburg, Pa., the company that operates the capital city's
debt-laden incinerator sued the city Tuesday because of $1.9
million in skipped loan payments.
Covanta Energy had provided the city a $22 million loan to fund
improvements to the incinerator. But Harrisburg has skipped the
last three payments on the loan this year, said Jim Klecko, a
Covanta vice president.
The suit was filed in the Court of Common Pleas in Dauphin
County.
Klecko said the suit was spurred by Mayor Linda Thompson's
application to a state program for distressed municipalities and
serves to protect the company's interests. The suit asks for
payments of the missed obligations.
Still, "we're going to hope for the best" that the city can work
out its financial difficulties, Klecko said.
Asked to respond to the suit, Thompson's spokesman Chuck Ardo
said, "We are looking forward to developing a plan to meet all our
financial obligations."
Harrisburg is already being sued by Dauphin County; bond insurer
Assured Guaranty Municipal Corp., a unit of Assured Guaranty Ltd.
(AGO); and bond trustees TD Bank and M&T Bank Corp. (MTB) over
$19 million in skipped bond payments related to the failed revamp
of the incinerator.
The incinerator's debt load is $288 million, over four times the
city's annual budget. But efforts to deal with that and a $4.5
million budget deficit have been stymied by political squabbling.
The city of 47,000 averted a general obligation bond default Sept.
15 thanks to the state accelerating $3.6 million in funds slated
for pensions and fire protection to cover that payment.
-By Romy Varghese, Dow Jones Newswires; 215-656-8263;
romy.varghese@dowjones.com
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