HARRISBURG PATRIOT-NEWS:….The [leasing of the land]deal gave Harrisburg $20.3 million to spend after fees were taken off the top — which it primarily used to pay down other debt — but now threatens the city with having to make at least $930,000 in annual bond payments beginning in 2016 on $7 million of the debt, when the authority has to begin repaying the bonds. Harrisburg could find itself on the hook for the payments because in 2016 the lease for Strawberry Square’s main tenant, Verizon, comes due and the telecommunications company may leave or greatly reduce its presence in the building…
Should leases not cover the payments, then HRA is on the hook as well as Harrisburg itself, which pledged to back the bonds. A bond insurance company would then have to make payments should Harrisburg default.
“If the [authority] defaults on this loan and we are required to pay $2 million more each year in debt service, a currently impossible situation becomes even worse. It’s another potential nightmare for the city,” said City Controller Dan Miller… (more)
