Tuesday, November 15, 2011

Harrisburg or Bust

Remember this is all about the capital of the Commonwealth of Pennsylvania.

The latest on the financial soap opera otherwise known as Harrisburg.

The real endgame playing out as Moody's withdraws its rating on certain Harrisburg water bonds.

Yet money or not, money has to be spent on Harrisburg's water infrastructure.

Harrisburg may get what it asked for in the end.

6 Comments:

Anonymous MH said...

If Harrisburg defaults, do we get demoted from a commonwealth to a regular state?

Tuesday, November 15, 2011 10:56:00 PM  
Anonymous MH said...

"Assured Guarantee Mutual" is pronounced "Fannie Mae."

Wednesday, November 16, 2011 9:05:00 AM  
Anonymous BrianTH said...

So far this is demonstrating what I have previously argued, which is that a city cannot unilaterally force the state to allow it to enter Chapter 9 simply by refusing to pay its creditors, since the state can simply take over that city instead and force it to pay its creditors.

It has also been suggested that even if the state legally has such authority, the state would balk at doing so for political reasons. That appears not to be the case so far.

I gather the idea now is that once the state has taken over, it may be forced to let the city enter Chapter 9 anyway if the city's financial situation is sufficiently dire. I guess we shall see, but of course the possible steps by the state include things like forced service cuts, revenue increases (taxes, fees, and so on), and potentially sales/leases of various property rights.

And, of course, it is entirely possible all that will happen before a Chapter 9 filing, or in conjunction with one. Personally, I kinda doubt that would count as Harrisburg getting what it originally wanted out of filing under Chapter 9.

Wednesday, November 16, 2011 12:32:00 PM  
Anonymous MH said...

I think I can now claim I was correct in so far as assuming local officials could keep saying no regardless of the takeover. There is no incentive for them to compromise if the deal won't let them provide enough services to voters to win reelection. Better to let somebody else put their finger prints on the knife.

As to the knife, the state hasn’t stabbed yet, just taken the knife to hand. My guess is that they half-ass it for longer. That is, they sell the assets they can and don’t do anything else drastic that would cause a middle class resident to notice. This will buy time some time and everybody involved can hope something wonderful will happen in the next couple of years. Then, completely by surprise, the creditors will take a bigger hit in 2015 or so than they were asked by the council to take now.

Wednesday, November 16, 2011 1:02:00 PM  
Blogger C. Briem said...

What you are not appreciating is that the state had to pass extraordianary legislation pertaining to Harrisburg and is rushing to get some form of receiver in place which I am sure intended to then have said receiver take back the filing in some form.. It is precisely because of the likelihood that this could all be accepted by the court that the state is falling over itself to stop it. By the general argument that it just isn't allowed, there would be no need for any of this. Someone would just present the court with evidence that the state did not allow it,and it would all be thrown out.

That being said... there are multiple reasons to think this all will not go forward.

Wednesday, November 16, 2011 1:11:00 PM  
Anonymous n'at said...

I'm sure the state will modify the impact fee legislation to include the $70 million necessary for upgrades to Harrisburg's water treatment facility.

Thursday, November 17, 2011 7:20:00 PM  

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