The City of Harrisburg is clear of its debt related to prior administration spending, following the news of its final payment to AMBAC Assurance.
FOR IMMEDIATE RELEASE
CONTACT: Matt Maisel
Director of Communications, City of Harrisburg
March 16, 2023
HARRISBURG – More than $8.3 million cleared a wire transfer this week, marking the final payment from the City of Harrisburg to Ambac Assurance, and ending a series of debts dating back to December 1997.
The final payment, specifically $8,335,968.49, is part of a series of debt payments to Ambac Financial Group, which started in 2012. The City of Harrisburg defaulted on its Series D&F Bond payments in 2011, which were then paid by Ambac Assurance. City financial leaders paid off the bonds for good in September 2022, clearing the city of more than $125.6 million in debt it accrued in prior administration spending.
The City of Harrisburg’s commitment to paying off the debt was made through years of good financial leadership, headlined by the work of Mayor Williams, City Controller Charlie DeBrunner, City Treasurer Dan Miller, and members of City Council, in the past year. For Mayor Williams, she says ridding the city of its debt payments was among her chief campaign goals.
“Through all my years on City Council, to my time when I was campaigning for Mayor, and through my first year in office, I have been focused on getting the city out of debt,” Mayor Williams said. “We are debt free in 2023 because we finally had the courage to do what’s best for the people of Harrisburg, and now we can turn the corner and start an exciting new chapter for our great city.”
The AMBAC debt started in March 2012, and increased with interest to $18.7 million in December 2013. At that point, the Thompson Administration made a $6 million payment to AMBAC, lowering the debt to $13 million.
The Papenfuse Administration made consistent $11,069 payments, plus four payments of $76,429, to AMBAC over most of the next eight years. In the process, the AMBAC debt ballooned from $13 million to $26.2 million in September 2021. A $7.2 million payment was made in November 2021 to reduce the debt to $19 million.
“The AMBAC debt had been particularly distressing and costly,” said City Treasurer Dan Miller. “Harrisburg’s excess funds have been available for years, but earning almost nothing during times of historic low interest rates. At the same time AMBAC was charging us up to 6.5% interest. Some of us pleaded with the prior administration to pay down and pay off this debt. Unfortunately, they ignored our advice and it cost the city millions in interest. Finally, paying off this debt has been taken seriously. This is an important day. If it had only come sooner the benefits would have been far greater.”
In December 2022, City Council approved a $12 million payment from Mayor Wanda R.D. Williams’ Administration, with the final $8.3 million payment to come March 15.
“Paying off the AMBAC hurdle is an enormous accomplishment for the City of Harrisburg,” said Finance Director Marita Kelley. “As the City moves forward, its financial picture becomes much more stable, and it promotes the overall fiscal health of the city.”
Historically, the City of Harrisburg spent money out of its annual general appropriations budget to help pay for debt payments. Moving forward, residents can expect to see those funds which were previously used to pay off bonds, to now go towards city services which will improve the quality of life for every Harrisburg resident. Citizens started to see this in the 2023 budget with the payment of the Series D&F Bonds. Eliminating the AMBAC debt will create more money in the city’s future general fund balance.
“This is a historic day for the City (of Harrisburg). It should have come a little quicker, but it’s here now, and that’s all that’s important,” said City Controller Charlie DeBrunner. “We’re out of debt. The future of the city is as bright as it’s ever been, and the Mayor is doing a terrific job providing leadership on this.”