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Harrisburg's receivership to end on Saturday, judge rules

| Wednesday, Feb. 26, 2014, 8:30 p.m.

HARRISBURG — A judge has ordered an end to the state government's unprecedented takeover of Pennsylvania's capital after more than two years and hundreds of millions of dollars in deals designed to rescue Harrisburg's finances from a sea of debt.

In an order signed on Tuesday, Commonwealth Court Judge Bonnie Brigance Leadbetter said Harrisburg's receivership will end Saturday.

She cited agreement between Gov. Tom Corbett's administration and city officials that Harrisburg is no longer in the kind of financial distress that can trigger a takeover. She noted the completion of critical components of the receiver's plan, including the sale of the city's municipal trash incinerator and the leasing of its parking garages, lots and meters.

Since December 2011, a receiver appointed by Corbett and approved by a judge has had broad authority over the financial operations in Harrisburg, where about one-third of the 49,000 residents live below the poverty line.

With the end of the receivership, the state will continue to employ a coordinator to ensure that a plan developed by the receiver's office is followed.

The Republican-controlled Legislature authorized the takeover law in 2011 in an effort to prevent Harrisburg from winning federal bankruptcy protection or tax increases on suburban commuters.

Harrisburg's biggest problem was city leaders' inability to agree on a plan to repay $350 million in debt piled onto the trash incinerator. The city had already skipped millions of dollars in installment payments on the debt by the time the state stepped in. In 2012, the city's budget crisis was so dire that it began skipping payments on its general obligation bonds.

Under the state's receiver's office, Harrisburg sold the trash incinerator for nearly $130 million and leased its parking operations to a state agency, the Pennsylvania Economic Development Financing Authority, which is borrowing $283 million to pay off various city debts, including $100 million in parking authority debt.

City labor unions agreed to millions of dollars in concessions to save Harrisburg more than $4 million a year, creditors agreed to walk away from potentially more than $100 million and Corbett's administration committed millions of dollars in crucial aid to the city.

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