We predicted the nation’s largest city bankruptcy — 8 years ago

Penn­syl­va­ni­a’s cap­i­tal city is now fil­ing for bank­rupt­cy. We hate to say it, but we told them so… eight years ago. In 2003, Ener­gy Jus­tice founder, Mike Ewall, tes­ti­fied before Har­ris­burg City Coun­cil at the request of the coali­tion of black cler­gy in the region, warn­ing them that if they bor­rowed anoth­er $125 mil­lion to rebuilt the nation’s old­est and most tox­ic trash incin­er­a­tor, it would lead the city into bank­rupt­cy. After pre­sent­ing each slide in a pre­sen­ta­tion detail­ing how the pro­jec­t’s eco­nom­ics were not as rosy as the con­sul­tants led the city to believe, Ewall repeat­ed: “I’m telling you, this will put the city into bankruptcy.”

It was clear that the city could not dig them­selves out of their mas­sive incin­er­a­tor-relat­ed debt by rebuild­ing the incin­er­a­tor (nec­es­sary to com­ply with new reg­u­la­tions on tox­ic emis­sions that the incin­er­a­tor could­n’t meet, since they had off-the-charts diox­in emis­sions — the worst in the nation, respon­si­ble for 28% of the entire indus­try’s diox­in pol­lu­tion). After cam­paign­ing for a few years to seek the clo­sure of the incin­er­a­tor, the heavy cor­rup­tion in the city won the day and the city bor­rowed more mon­ey to sink into the doomed project. Not only has this caused eco­nom­ic hard­ship for the (large­ly minor­i­ty) city res­i­dents who must pay ever-increas­ing tax­es and util­i­ty rates in the city and suf­fer from the sell­ing off of pub­lic prop­er­ty, but they con­tin­ue to suf­fer from a glar­ing case of envi­ron­men­tal racism — with the nation’s longest-run­ning trash incin­er­a­tor and its high­ly tox­ic ash dump not far from the city’s pub­lic hous­ing projects.

The web­site of the Coali­tion Against the Incin­er­a­tor — a grass­roots group we start­ed in 2000 — is archived here: www.stoptheburn.com

A copy of the eco­nom­ic pre­sen­ta­tion we gave is here: http://www.stoptheburn.com/presentation.pdf

For fur­ther news on the city’s bank­rupt­cy, see:

• Spe­cial report: Har­ris­burg: a city at war with itself (Reuters, 10/27/2011)
• Har­ris­burg Patri­ot News articles
• Google News

Har­ris­burg finan­cial col­lapse was predicted

(CBS 21 TV News, 9/30/2011)

Orig­i­nal­ly post­ed at: http://www.whptv.com/news/local/story/UPDATE-Harrisburg-financial-colla…

UPDATE:

CBS 21 News con­tin­ues its exclu­sive look into how Har­ris­burg end­ed up in its cur­rent finan­cial cri­sis. On Fri­day we played for you audio from a city coun­cil meet­ing eight years ago were coun­cil approved a $125 mil­lion loan to fix the incinerator.

Many say that was the vote that crip­pled the cap­i­tal city. Now, city coun­cil mem­bers from that 2003 vote are speak­ing out.

Some regret their vote, oth­ers don’t and then there is May­or Lin­da Thomp­son. Back in 2003, she was a city coun­cil mem­ber who vot­ed for that loan. Now as may­or, she says there’s only one thing she wish­es she would have known.

Eight years ago, Har­ris­burg City Coun­cil vot­ed to take out a mas­sive loan to fix the incin­er­a­tor. That $125 mil­lion of debt has now turned into $310 mil­lion and the city is in finan­cial cri­sis. For­mer Coun­cil­man Otto Banks vot­ed for the loan and he stands by that vote saying,

“All the infor­ma­tion at that time, and with the finan­cial con­di­tion of the city, it was essen­tial that we vote in the affir­ma­tive to pass it,” stat­ed for­mer city coun­cil mem­ber Otto Banks. “We had no oth­er plan in place. No oth­er choic­es. We want­ed to see Har­ris­burg grow and thrive and we knew we could­n’t build Camelot on a swamp of debt.”

Dr. Eric Waters, who also vot­ed for the loan, would change his vote say­ing, “Coun­cil attempt­ed to do its due-dili­gence and we were assured that every­thing was on the up and up. And we were assured the debt would be tak­en care of quick­ly and would be man­age­able. Look­ing at the state of the city, you wish you could reverse deci­sions. But in 2003 things were urgent and inter­est rates were per­fect. Won­der­ful things were hap­pen­ing in the city.”

“We were nev­er told there was not a per­for­mance bond,” stat­ed May­or Thomp­son. May­or Lin­da Thomp­son was one of the six coun­cil mem­bers to vote to yes. She admit­ted that it was a very hard deci­sion. But the right one con­sid­er­ing what she knew at the time.

She just wish­es she would have known every­thing. “That’s the only stick­ing point, that I wish I had known there was no per­for­mance bond,” Thomp­son explained. “And if I had known there was no per­for­mance bond, I would have stayed at the table and made them have a per­for­mance bond. That was the respon­si­ble thing to do.”

A per­for­mance bond is basi­cal­ly insur­ance that a pub­lic project will be com­plet­ed. There was no per­for­mance bond on the incin­er­a­tor. So when the first con­trac­tor went bank­rupt before the project was fin­ished, it wasn’t insured and Har­ris­burg took a huge hit.

With Har­ris­burg on the verge of finan­cial col­lapse, and the state about to take over, CBS-21 has acquired audio of a city coun­cil meet­ing from eight years ago that many say caused this moment. His­to­ry is prov­ing a lot of peo­ple right.

On Novem­ber 5, 2003, Har­ris­burg City Coun­cil had a choice to make; do they guar­an­tee a $125 mil­lion loan and fix the city’s ail­ing incin­er­a­tor or not. Many say this was the vote that got Har­ris­burg to where it is today. We found the audio from that coun­cil meet­ing and lis­tened to it to see what said. CBS-21 did cov­er this vote eight years ago. But, we obvi­ous­ly know more now than then. Here’s what we found out.

“I’m telling you that this project will put the city into bank­rupt­cy,” said Mike Ewall, Coali­tion Against the Incinerator.

That was Mike Ewall, a Philadel­phia res­i­dent who helped start a group called the Coali­tion Against the Incin­er­a­tor. The night city coun­cil vot­ed to retro­fit that facil­i­ty, Ewall spoke for 15 min­utes to a packed room explain­ing how the num­bers were wrong and why coun­cil should not accept the loan.

“Because the city and the author­i­ty don’t have guar­an­teed waste steams; over esti­mate the poten­tial pow­er and steam sales, under esti­mate ash dis­pos­al and oper­at­ing costs; and have no guar­an­tee of an air pol­lu­tion per­mit, this project will put the city into bank­rupt­cy,” Mike Ewall, Coali­tion Against the Incin­er­a­tor said. “But who will go first, res­i­dents or city hall?”

This is how then May­or Stephen Reed’s spokesman respond­ed that night.

“Every­thing that our oppo­nents have said have been lies, dis­tor­tions and untruths and things they have made up,” said Randy King, May­or Reed’s Spokesman.

Dur­ing pub­lic com­ment before the vote, dozens spoke — only two sup­port­ed the plan.

Despite over­whelm­ing pub­lic rejec­tion and Ewall’s tes­ti­mo­ny, coun­cil vot­ed 6–1 to accept the $125 mil­lion loan. This was a tear­ful then city coun­cil mem­ber Lin­da Thomp­son jus­ti­fy­ing her “yes” vote.

“This has been no easy deci­sion for me. With moral con­vic­tion I have prayed over this and I’ve prayed over this,” Lin­da Thomp­son, 2003 Coun­cil Member/current may­or said. “And I’ve had inti­mate dis­cus­sions with God. And my bible tells me let you yes be yes and let your no be no. And if 15 or 20 years from now it proves that I have made the wrong deci­sion, charge it to my head and not my heart.”

I called Mike Ewall today, the man who said Har­ris­burg would go bank­rupt if coun­cil guar­an­teed that debt, and he doesn’t think the cap­i­tal city can come out of this finan­cial crises with­out declare bank­rupt­cy, which he pre­dict­ed eight years ago.