Harrisburg Mayor Wanda Williams announced the city’s debt payment at a press conference on Thursday.
Harrisburg officials celebrated a historic day on Thursday, as the city made final payments on a once staggering debt load.
The city officially paid off the last $8.3 million in general obligation bond debt dating back more than a decade to its municipal financial crisis.
“This is a historic moment in our city,” said Mayor Wanda Williams at a press conference. “Harrisburg’s best days are ahead.”
The forbearance liability debt is money that the city owed to bond insurer Ambac Assurance after it defaulted on its Series D&F bond payments in 2011. The original D&F bonds were issued in 1997, under former Mayor Steve Reed. Harrisburg paid off those bonds in September 2022.
Late last year, Harrisburg City Council approved the payoff of $12 million of what was $20 million in remaining in debt, at the time. While city administration officials had originally proposed paying off the total $20 million at once, council members were hesitant to spend down such a large amount of the city’s fund balance.
Last week, council approved the final $8.3 million payment.
“I’m glad we were in a position to finish the task,” said council President Danielle Bowers.
Before the Williams administration made the two large payments, the city, for years, mainly made smaller, routine annual payments, with the exception of a $6 million payment under former Mayor Linda Thompson in 2013 and a $7.2 million payment under former Mayor Eric Papenfuse in 2021.
Harrisburg’s Deputy Controller Bill Leinberger explained the history of the city’s payments on its forbearance liability debt.
Before this week’s payment, Harrisburg’s fund balance, or savings, sat at around $25 million. With this final bond payment, it now is about $17 million, according to Brian McCutcheon, accounting manager for the city.
Officials pointed out that the total debt payoff also saves the city from continuing to accrue interest on the debt. Most recently, the city’s interest rate was set at 5% after a refinancing deal made with Ambac in 2021. That rate would have jumped back up to 6.75% in November 2024.
“This has been a particularly annoying and costly debt,” said City Treasurer Dan Miller. “They [Ambac] have been making a killing off Harrisburg.”
With the freed-up money, Williams said that the city plans to put it towards resident services, possibly street repaving, purchasing public works vehicles and blighted building demolition.
As the city moves closer to being debt free, it also may be closer to exiting Act 47, the state’s program for financially distressed cities, according to Williams.
“It’s an amazing feeling,” she said.
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