Report praises healthy finances, prescribes three more years of Act 47 for Harrisburg.

A state overseer has recommended that Harrisburg spend another three years in the Act 47 program for financially distressed municipalities, according to a report submitted to City Hall on Thursday.

The report, authored by Harrisburg’s Act 47 coordinator Marita Kelley, is the first part of a months-long process before Harrisburg’s Act 47 status expires in September. As coordinator, Kelley is charged with monitoring the city’s finances and signing off on its annual budgets.

Kelley praised the city’s leadership for limiting spending and accruing a healthy cash balance through budget surpluses. But she said that Harrisburg’s financial obligations — including debt service, healthcare, pensions and costs for collective bargaining contracts – are too great for the city to exit the oversight program and surrender some of its taxing authority.

Nonetheless, Kelley said that Harrisburg has made noteworthy progress in many aspects of its budget. She noted that conservative spending allowed Harrisburg to end 2017 with a $2.9 million surplus, bringing its total fund balance to almost $40 million.

That cash balance has allowed the city to resume capital improvement projects. Harrisburg’s approved 2018 budget includes $7.4 million in updates for infrastructure, equipment and technology.

Even so, Kelley noted that none of the city’s victories would have been possible without the extraordinary taxing authority granted by Act 47. Cities and townships under Act 47 are given special provisions for consolidating debt and setting tax rates. Once a city leaves the oversight program, it must once again comply with state tax codes.

Harrisburg has flexed its Act 47 privileges to triple its Local Services Tax, which is levied on anyone who works within city limits. That action alone has generated more than $11 million of revenue for the city. It also doubled its earned income tax from 1 percent to 2 percent in 2012.

Losing that additional taxing revenue would make it impossible for Harrisburg to balance its budget. As it is, Kelley’s report projects small budget deficits for Harrisburg from 2018-2021, as anticipated expenditures outpace revenues. Since the city could use cash from its $39 million general fund to plug the gaps, the deficits shouldn’t create any debt.

Kelley’s recommended three-year extension didn’t come as a surprise to Harrisburg officials, who have long known that exiting the program would subject the city to an antiquated tax code.

Harrisburg Mayor Eric Papenfuse agreed with Kelley’s recommendation but said that the city’s calculations actually project budget surpluses in 2019 and 2020.

“The state’s revenue and expense projections differ from ours,” Papenfuse said. “But that’s not really a surprise – they’re only projections, after all.”

City Council budget and finance chair Ben Allatt said on Friday that Kelley’s report was “exactly” what he’d expected. He pointed out that extending Act 47 is a less dire action than entering the program in the first place.

“What I want the community to know is that we’re not in the same predicament we were when we were part of a mandated state takeover,” Allatt said. “We have control over our budgeting process. We just have to have it approved by our Act 47 coordinator.”

Allatt said that the city’s most immediate priority for financial recovery is to negotiate more favorable interest rates on some of its general obligation debt. The city was invited last year to enter negotiations with one of its lenders, AMBAC Insurance Corp., and recently hired a financial advisor as counsel.

If AMBAC does offer the city a lower interest rate, Harrisburg could direct those savings to another expenditure category. Papenfuse said today that talks with AMBAC are already underway, but any potential savings will likely come after 2022.

Harrisburg officials are also hopeful that legislative change in Pennsylvania’s statehouse could improve taxing conditions for third class cities, including Harrisburg. The city is currently in a one-year contract with Maverick Strategies, a Harrisburg-based lobbying shop that helps local officials monitor legislative activity and communicate with lawmakers about decisions that impact Harrisburg.

Allatt said that he doesn’t think Harrisburg will exit Act 47 until Pennsylvania’s legislature creates more favorable taxing conditions for cities.

“We’ve been in financial distress because the typical expenditures expected to maintain services and put resources into the city do create a natural deficit.” Allatt said. “What do we need out of this? We need legislative change and other options to draw revenue from. The logical answer for us is to stay in Act 47.”

Papenfuse said today that lobbying efforts are “actively underway.” City Council is expected to receive a presentation from Maverick lobbyists in March or April.

Read the full financial condition report here.

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Weekend Roundup with Sara Bozich

 

Happy Weekend!

Hope ya’ll had a good snow day! One of the day’s casualties was our Happy Hour, but it was bumped to tonight! Hope you’ll join us this afternoon at Strawberry Square.

Even though I technically didn’t have the day off yesterday, it somehow still felt like a Saturday. My weekend plans include QT with a good friend, Market Saturday, and maybe some research for an upcoming post …

 

What are you doing this weekend?

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Harrisburg School Board votes to consider a new superintendent.

Superintendent Sybil Knight-Burney speaks at a district press conference in December 2017.

The Harrisburg School District is putting up a help wanted sign, but there won’t necessarily be a personnel change in its highest office.

In a 5-4 vote tonight, the Harrisburg School Board decided to accept applications for the position of superintendent. The vote means that if sitting superintendent Sybil Knight-Burney wishes to stay in her post, she must apply for her position and beat out other candidates.

The vote came after more than an hour of spirited public comments, as near-equal numbers of district residents encouraged the board to vote for or against a resolution to initiate the hiring process.

Residents who supported renewing Knight-Burney’s contract emphasized the importance of consistent leadership during the district’s recovery process. Those who called for an open hiring process said that the district deserved to consider candidates who might make more dramatic gains in student achievement.

Knight-Burney has been Harrisburg’s superintendent since 2011. Since 2013, she’s been responsible for implementing the actions in a state-crafted recovery plan, which outlined almost 100 initiatives to improve the district’s academics and operations.

Harrisburg schools are perennially plagued by low test scores, high personnel turnover, and expenses that outpace revenues. The district has had pockets of success–test scores at Marshall Math and Science Academy and Harrisburg High School’s SciTech Campus far outpace other schools in the district. But most campuses have failed to meet academic targets set in the district’s 2011 recovery plan.

District data show that Harrisburg’s five elementary schools had an average of 20 percent ELA proficiency among third graders in 2017. That figure, which is based on data from the PSSA standardized tests, did not exceed 23 percent for grades 5 to 8.

Proficiency rates are even lower for math. Across the district, fewer than 18 percent of students were considered proficient in the subject in 2017. The district recorded zero-percent proficiency for seventh grade students at Camp Curtin Academy and eighth grade students at Rowland Academy.

The district has also struggled with high rates of chronic absenteeism, which TheBurg reported in February can undermine even the most effective teaching.

In a presentation tonight before the board, Knight-Burney pointed to student growth data as evidence of the district’s improvement. Growth data measure how much students progress during an academic year, whereas test scores measure what they know at a given point in time.

Knight-Burney said that test scores are unreliable performance indicators, which is an argument that’s gaining traction in the education community. Since test scores are tightly correlated with family income, they often offer a dire picture of high-poverty districts like Harrisburg, where 85 percent of students are from low-income households. Growth is becoming the new standard for educational success.

“Growth is about how fast and how much kids are learning,” Knight-Burney said. “Our students are growing and have the potential to be high achievement.”

Data show that Knight-Burney isn’t wrong. TheBurg reported in February that Pennsylvania’s new method for evaluating school success will focus on growth rates rather than test scores. That could drastically alter how Harrisburg ranks in statewide school assessments. Whereas the district’s test scores are perennially among the worst in the state, its growth rate is only slightly below average.

Data show that Harrisburg students progress by an average of 4.2 years during five years of schooling. That means they learn at a rate that’s equal to or faster than students in wealthier districts nearby, even though their test scores are consistently much lower.

“Many kids come to school three to four years behind grade level, so there’s lots of work that we have to do,” Knight-Burney said. “When we’re comparing ourselves to other districts, it’s not fair.”

While making her case before the board, Knight-Burney also touted the development of a district-wide curriculum, a Teacher Leadership Academy and new extracurricular activities as successes of her seven-year tenure.

Nonetheless, the superintendent’s pitch didn’t convince all board members that she deserved another term. Faced with a four-to-four vote among his fellow directors, board newcomer Tyrell Spradley cast the tie-breaker to initiate the hiring process. He expressed confidence that Knight-Burney would stand out among other candidates.

“I’d put my superintendent against anyone else who came in,” Spradley said. “I know she’d succeed.”

Spradley joined board directors Carrie Fowler, Percel Eiland, Brian Carter and board president Judd Pittman in voting for the resolution to start a hiring process. Board directors Melvin Wilson, Ellis Roy, Lionel Gonzalez and board vice president Danielle Robinson voted against it.

After Spradley’s deciding vote, it became clear that board members did not agree on what the resolution meant. Robinson and Wilson visibly reproached Spradley for his vote, implying he had cost the superintendent her job.

“It means she’s gone,” Robinson said to Spradley.

School solicitor Samuel Cooper had to intervene to clarify that the vote did not preclude Knight-Burney from serving another term.

“What you chose in your vote is to open up the office for a search for superintendent, and she has the ability to apply,” Cooper said.

After the clarification, Spradley reiterated his belief that Knight-Burney would defend her post from competitors.

“You don’t know that,” Wilson told him.

The board considered the resolution tonight because it is required to give Knight-Burney 60 days notice if it chooses not to renew her contract. The resolution was also on the agenda in December, January and February, though it was tabled by a board vote each time.

Knight-Burney previously beat out competition to become Harrisburg’s superintendent. She was selected from a pool of applicants by the school board in 2011. Her current contract, which was renewed in 2014, expires on June 30.

Asked after tonight’s meeting if she would reapply for her job, Knight-Burney declined to comment.

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TheBurg Podcast: “Hot Dough” Edition


On this week’s Burg Podcast, Larry and Lizzy outline the next steps in the city’s Act 47 process, consider the fortunes of a new small-business loan fund, and parse recent studies on the Harrisburg Train Station and Paxton Creek reclamation project.

Stream the episode on Soundcloud, or subscribe to TheBurg Podcast in the Apple or Android podcast apps.

Read more about the news discussed in this week’s episode:

City council approves free evening parking downtown, but only for one year.

Need a Loan? Harrisburg Business Opportunity Fund set to launch next week.

Capital Ambition: State outlines major improvement plan for Paxton Creek, Market Street, Harrisburg station.

TheBurg Podcast is released semi-monthly by TheBurg Magazine. It is recorded in the offices of Startup Harrisburg and produced by Lizzy Hardison. Special thanks to Paul Coolley, who wrote our theme music.

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Capital Ambition: State outlines major improvement plan for Paxton Creek, Market Street, Harrisburg station.

A rendering of the restored Market/Cameron street corridor after completion of improvements.

A restaurant and café in Harrisburg’s train station, a pedestrian bridge over the train tracks, a flood-controlled Paxton Creek.

Those are a few of the ambitious goals laid out in two reports released today by the state Department of Transportation, which is taking the lead on rehabilitating the blighted Market Street corridor just east of the Harrisburg Transportation Center–roughly from the train station to Cameron Street.

“These studies serve as a road map to help the city continue to develop as an attractive place to work and play,” PennDOT Secretary Leslie S. Richards said in a statement.

PennDOT’s first priority is rehabilitation of the train/bus station itself, as laid out in the report titled, “Harrisburg Transportation Center Transit Oriented Development Master Plan.”

That project includes removal of the large office space in the main lobby, the addition of an “open-concept café” in the lobby, new seating in the station concourse, the addition of a restaurant with indoor and outdoor seating, a new entry plaza from the lower-level Market Street entrance and the addition of office space on the upper floors.

According to Richards, work is expected to begin relatively soon, as the department has completed 90 percent of the design for the $15 million renovation and is now working with Amtrak on a construction schedule.

A map of a portion of central Harrisburg, with the study area highlighted.

The next priority is a massive flood control project designed to restrain, improve and restore Paxton Creek, as delineated in the “Paxton Creek Master Plan.”

The plan outlines steps to modify the channel size and make other improvements that would take 133 acres out of the 100-year flood plan and partially remove another 275 acres, making the area far more attractive for redevelopment. The plan also envisions enhancing the creek area with recreational paths and restoring it to a more natural environment.

PennDOT anticipates four to five years of preliminary work before construction on the project could begin. The estimated cost of the creek improvements is $60 to $90 million, with potential grants coming from the state’s Multimodal Fund, the Department of Community and Economic Development and the Department of Conservation and Natural Resources.

The transportation master plan envisions other projects, which include:

  • Streetscaping and façade enhancement, including new sidewalks, landscaping, street furniture, signage and utility and lighting poles.
  • A pedestrian bridge that would extend the station concourse over the railroad tracks, through the former Harrisburg central post office and into the redevelopment area.
  • Relocation of the intercity bus terminal from Market Street to the redevelopment area and expansion of the facility.
  • Development of the area near an east entrance to the station.
  • A new plaza on Market Street.

“These projects will provide exciting opportunities for development in the city of Harrisburg, and for enhancing the quality of life for our residents,” Harrisburg Mayor Eric Papenfuse said in a statement. “We look forward to continuing our close collaboration with PennDOT on projects that will benefit not only Harrisburg residents but the entire region.”

PennDOT will hold a public meeting on these plans on March 22, 4 p.m. to 6 p.m., at the Harrisburg Transportation Center, Market and S. 4th streets.

 

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Weekend Roundup with Sara Bozich

Happy Weekend!

Hope you’ll consider dropping by Rubicon this evening as I guest-bartend for a good cause: Cumberland County Library System.

Also this weekend:

  • 3rd in the Burg
  • St. Patrick’s Day (Saturday – all the parties; Sunday – Harrisburg parade)

What are you doing this weekend?

(more…)

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Act 2: Gamut to complete facility build-out with new Education Center.

Gamut Theatre in downtown Harrisburg

Gamut Theatre Group is set to begin the second phase of the build-out of its downtown Harrisburg space—construction of the Gamut Theatre Education Center.

Melissa Nicholson, Gamut co-founder, said today that the organization’s board of directors recently voted to initiate construction after the theater company raised about 87 percent of the $700,000 cost.

Nicholson expects work to begin in late April and wrap up by August.

Co-founder Clark Nicholson said that he’s excited to “finally use a space that I have been walking around for two years, feeling it fairly bursting with potential.”

Gamut purchased the circa-1850s First Church of God in 2013, then raised about $1.5 million to complete the first phase of the project, which included construction of the main stage. Two years later, it mounted its first production in the space, moving from its long-time home across the street in Strawberry Square.

Since then, it has been raising money to complete the project. The two-year fundraising effort has been led by anchor grants from the Impact Harrisburg Foundation and the Donald B. and Dorothy L. Stabler Foundation, Melissa Nicholson said. Gamut kicked off a public fundraising campaign March 1 to raise the remaining $88,000 for the second phase.

Artist’s rendering of Gamut’s second stage (rendering by Lynne Porter).

When completed, the Education Center will include the Alexander Grass Second Stage, two renovated classrooms and other areas for students to learn various aspects of theater operations. The second stage will be the permanent home for the Popcorn Hat Players Children’s Theatre, Stage Door Series Ensemble and the Gamut Theatre Academy.

“By providing a home stage for both the Children’s Theatre and for the ensemble of Stage Door, the ability to develop the distinct and beloved programming of these two groups will be vastly expanded and improved,” Clark Nicholson said. “We will continue to do what we have done well throughout our first quarter-century, but with the physical facility to give each of these distinctive Gamut entities the secure launching and nurturing ground which they so richly deserve.”

This year marks the 25th anniversary for Gamut Theatre Group, which began in 1993 with the Popcorn Hat Players, later adding a Shakespeare troupe and other theater programming.

Gamut Theatre Group is located at 15 N. 4th St., Harrisburg. For more information or to make a donation, visit www.gamuttheatre.org.

 

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Healthy Hopes: Pennsylvania’s first Latino Health Summit addresses needs of rapidly growing Latino population.

Nurse Christiane Delgado, who is also coordinator of the Latino Heath Summit

Pennsylvania has the 13th-largest Latino population in the nation, according to the latest Pew Research Center report.

Like all Pennsylvanians, Latinos need and deserve quality healthcare. But often, due to cultural, immigration and language issues, they don’t get the services they require to stay healthy.

That’s where the Latino Health Summit comes in, a new event planned for Wednesday, April 4, by Latino Connection in collaboration with the Governor’s Advisory Commission on Latino Affairs (GACLA) and AETNA Better Health of Pennsylvania. The Summit is focused on bettering the health and wellbeing of this rapidly growing population, which currently is at 1 million people. This number continues to rise due to the influx of families moving here following Hurricane Maria.

“The purpose of the Health Summit is to have meaningful conversations about the top health disparities that affect Latinos and to address what everyone in healthcare is doing and, can do, to appropriately serve them,” said George Fernandez, CEO of Latino Connection and GACLA commissioner.

The one-day event includes panel discussions hosted by top healthcare professionals across the commonwealth and breakout sessions, where attendees can chose from shorter lectures that best suit their specific interests. There will be breakout sessions addressing lung disease, heart disease, cancer, diabetes and obesity—the top-five most pertinent diseases that affect this community, according to Fernandez.

Universities have been invited to have booths in common areas to promote higher healthcare education. Attendees can receive continuing medical education (CME) credits for attending the Summit. Advance registration is required. Tickets include breakfast and lunch and can be purchased at www.palatinohealthsummit.org.

The Summit will also feature a Vendors Expo from 12 p.m. to 5 p.m., which is free and open to the public.

While his company focuses on helping Latinos, Fernandez said that he feels a personal connection to the healthcare struggles of Latinos. He added that he believes that the healthcare community can do a better job at providing quality care that is relevant to the Latino population.

“I’m taking on something that most people would say, ‘You’re crazy for taking on,’ because it’s not my responsibility to take on this task,” Fernandez said. “But for me, it’s filling a gap. It’s filling a void in the community in which I serve and call home.”

Fernandez moved to Harrisburg from the Dominican Republic when he was 8 years old. His mother spoke no English, so he quickly took on the role of translator and caretaker.

“A lot of the services that we offer today were the challenges my mother faced when I was growing up,” said Fernandez.

Fernandez said he hopes that the Latino Health Summit can be a catalyst to end that cycle. The event is planned to be annual, but he acknowledges that there are many different forms it could take and is open to the possibilities. Some of the future topics that he hopes to incorporate are Latino and LGBTQ issues and autism.

Although the Summit is geared towards those in the healthcare industry, anyone is invited to attend.

The Latino Health Summit will take place on April 4, 7:30 a.m. to 5:00 p.m., at the Lancaster Marriott at Penn Square. For more information, and to purchase tickets, visit www.palatinohealthsummit.org.

About Latino Connection: Latino Connection is a marketing and communications firm with a network of resources focused on connecting businesses and organizations within the Latino community. Their mission is to provide high quality translation and interpretation services while educating the Latino community in finance, jobs, health and other areas that present opportunities for growth and advancement. For more information, please visit www.thelatinoconnection.net or call 717-963-7218.

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City council approves free evening parking downtown, but only for one year.

Free parking could come to downtown Harrisburg this spring, as City Council tonight passed a resolution that would completely offset street parking costs after 5 p.m.

Council agreed unanimously to join Dauphin County and the Harrisburg Downtown Improvement District (HDID) in ponying up money to offset parking revenues that operator Park Harrisburg would lose between 5 and 7 p.m.

“I think it’s a boost for the city,” Mayor Eric Papenfuse told reporters after the meeting. “I think it will lead to more people visiting downtown.”

Harrisburg’s contribution will amount to $110,000 over the next year. It will come from money that the parking system currently owes the city, said Papenfuse. The county has also pledged $110,000, and HDID will pay $50,000.

The county and HDID had hoped for a three-year deal, though council approved just a one-year test period.

Council members tonight reiterated their support for a deal that would help downtown businesses, but said that renewing it would depend on future spending priorities.

Council members Cornelius Johnson and Shamaine Daniels both said they only voted for the agreement because it would not draw down the general fund.

By entering into the “memorandum of understanding,” the three entities — the city, county, and Downtown Improvement District — must now finalize the exchange with the parking system operator. Papenfuse has said he expects no pushback, as the system operator, SP+/Park Harrisburg, and its asset manager, Trimont, want to ensure that contributions offset lost revenue, which, last year, amounted to $270,000 between 5 and 7 p.m.

Papenfuse said the parking subsidy could kick in as soon as April, but may take longer.

Since 2014, the city has tried several tactics to mitigate the cost of street parking. First, the Papenfuse administration convinced the system’s operators to lower the “happy hour” rate from $3 to $2 an hour between 5 p.m. and 7 p.m. It later turned many of downtown’s loading zones into 15-minute free parking areas for quick stops.

Nonetheless, downtown bar and restaurant owners continue to complain about a loss of business, which they largely blame on high parking rates.

If implemented, the plan would come with some conditions. First, it would apply only to street, not garage, parking. Secondly, it would take effect only within the HDID boundaries, which run downtown from State to Chestnut streets.

City council tonight also approved a resolution allowing the city to hire a financial advisor. Marathon Strategies LLC, the firm selected through a competitive bidding process, will help the city renegotiate interest rates on some of its general obligation debt.

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Need a Loan? Harrisburg Business Opportunity Fund set to launch next week.

Pal’s Apparel on Second St. in downtown Harrisburg. A new loan fund targets small, for-profit businesses in the city. (File photo.)

Whether you’re a shop owner looking to expand your storefront or an aspiring entrepreneur with a business dream, you may benefit from a new loan fund set to launch this month in Harrisburg.

Impact Harrisburg is partnering with the Community First Fund and the Pennsylvania Housing Finance Agency to launch the Harrisburg Business Opportunity Fund (HBOF) on March 20 with $1 million in seed money, according to Sheila Dow Ford, executive director of Impact Harrisburg.

Impact Harrisburg, which was founded with proceeds from the sale of Harrisburg’s incinerator, will contribute $350,000 to the fund. The Pennsylvania Housing and Financing Authority has pledged $650,000 through its nonprofit subsidiary, the Commonwealth Cornerstone Group.

Loans will be available to small, for-profit business owners or aspiring business owners in amounts ranging from $1,000 to $100,000. According to Dow Ford, the goal of the fund is to encourage economic development, job creation and a diverse workforce in the city of Harrisburg.

“We’re providing for a segment of the population that has, for various reasons, been overlooked by traditional lending institutions,” Dow Ford said. “We want to create opportunities to build business and put people on the tax rolls.”

Any for-profit business or startup in Harrisburg can apply for a loan, Dow Ford said. Real estate trusts or businesses that buy and sell property will not be eligible.

The new fund bears some resemblance to Harrisburg’s old revolving loan fund, which was launched in 1984 and languished in the 2000s as many borrowers went delinquent. As of 2015, businesses that received loans from that fund still collectively owed $1.1 million in past due payments, TheBurg has reported.

Dow Ford acknowledged that some HBOF loans might be considered risky by traditional lending standards, since they will be issued to people and ventures that might be denied by traditional lenders. However, she hopes that the partnership with CFF will prevent the same mismanagement and delinquency that plagued the city’s revolving loan fund.

CFF’s loan panel will apply its standard protocol for reviewing applications, disbursing monies and tracking return on investment. The Lancaster-based organization, which has provided capital to entrepreneurs in central Pennsylvania for 25 years, is working with Impact Harrisburg to solidify loan terms and criteria before the fund launches next week.

“We’ve identified criteria in line with the way we’ve always made loans,” said Joan Broadhead, executive vice president and chief operating officer of CFF. “But we’ve agreed to a few different areas of flexibility that we hope will encourage more entrepreneurs, especially entrepreneurs of color, to access loans.”

Dow Ford said that the Harrisburg Business Opportunity Fund will offer flexible underwriting and a 5 percent interest rate for its loans, which she said is lower than interest at a bank or other lending institution.

Impact Harrisburg will receive regular reports from CFF and internally track all the loans, Dow Ford said, but otherwise will not participate in the selection process.

Dow Ford said that the fund is also distinct because it offers microlending – small, short-term loans with low interest rates. In addition, monies from the Harrisburg Business Opportunity Fund will be available to entrepreneurs at any stage of business development.

“We want to put in place tools to help businesses succeed, from beginning to end,” said Brian Hudson, executive director of PHFA. “That could be for a business that’s struggling to find the capital to grow, or for a business that’s just getting off the ground.”

Impact Harrisburg, PHFA and CFF plan to work with local partners, including Harrisburg Young Professionals, CREDC and M&T Bank, to create a “toolbox” of business resources and offer expertise to loan recipients, Dow Ford said.

“We expect there will be some hand-holding,” Dow Ford said. “Everyone has to come in with something, but sometimes they need technical assistance or help structuring or tweaking their business plans.”

Dow Ford and Hudson hope the fund will grow in the coming years. Though PHFA will not participate in loan operations, Hudson said his main responsibility in the partnership will be identifying public and private partners to contribute capital to the fund.

“If we could get to $5 million in three to five years, that would be great,” Hudson said.

More information about the Harrisburg Business Opportunity Fund, including loan terms, criteria and application instructions, will be available on March 20.

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