Harrisburg, Pennsylvania – Reuters called the Harrisburg filing one of the biggest municipal bankruptcies in U.S. history, and according to Energy Justice Network, the Harrisburg financial collapse was predicted in testimony presented before Harrisburg City Council prior to voting for the incinerator debt.
But in 2003, despite the stern warning, Harrisburg City Council voted to take out a massive $125 million loan to fix the failing incinerator. However, city council voted on the debt with no performance bond in the contract that would have protected the city if the company could not deliver. That $125 million of debt eventually turned into $310 million, leaving the city in financial ruin.
An Incinerator Becomes Harrisburg’s Money Pit – New York Times, May 2010
Former Councilman Otto Banks voted for the incinerator debt 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.”
According to CBS21, 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.”
According to Energy Justice Network:
In 2003, 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 dioxinemissions — 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.