HARRISBURG, Pa. (WHTM) — According to the City of Harrisburg, more than $8.3 million cleared a wire transfer this week, which marks the end of a series of debts the city had to Ambac Assurance Financial Group going back more than a decade.
The $8,335,968.49 million wire transfer marked the final payment from the City of Harrisburg to Ambac, freeing the city of what officials call Reed-era spending debt. This payment was part of a series of debt payments to Ambac, which started back in 2012.
According to Director of Communications Matt Maisel, debt payments started back in 1997 to pay off Series D&F Bonds. He said the decades of payments began after poor financial planning and spending during Mayor Stephen Reed’s administration.
In 2011, Harrisburg defaulted on its Series D&F Bond payments, which were then paid by Ambac Assurance. City financial leaders paid off the bonds in September 2022. This cleared the city of more than $125.6 million in debt.
Mayor Wanda Williams stated that ridding the city of this debt was one of her chief campaign goals, and something she has wanted to do since her time on City Council.
“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.
Mayor Williams said the credit goes to her staff and administration officials, many of whom attended the announcement Thursday that the final payment had gone through.
“The people you see up here today…are the heroes in this story. They had the courage to do what’s right for the people of Harrisburg,” Mayor Williams said.
Below is a timeline of the AMBAC debt that began in March 2012:
- December 2013: $18.7 million – Thompson Administration made a $6 million payment lowering the debt to $13 million
- The next 8 years: The Papenfuse Administration made consistent $11,069 payments, plus four payments of $76,429
- September 2021: The debt reached $26.2 million and in November 2021, a $7.2 million payment was made
- December 2022: City Council approved a $12 million payment with a final payment of $8.3 million paid in March 2023
“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.”
The City of Harrisburg stated that citizens will now see payments going towards city services instead of bonds, which will improve the quality of life for every Harrisburg resident. More money will now be available in the city’s future general fund balance.
“Now we can start focusing on making the city better in the future,” Maisel said.
Projects could include repaving city streets, tearing down empty buildings and buying new vehicles officials said are critical to city departments like Public Works.
“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.”
Mayor Williams called the end of the debt payments a new chapter.
“Harrisburg’s best days are ahead,” she said. “We opened a new [chapter], one with promises fulfilled and hope on the horizon.”
abc27 also reached out to General William Lynch, who helped develop the “Harrisburg Srong” recovery plan, created back in 2013 to deal with this debt. Lynch said paying off this debt happened a lot faster than he expected, and he said the credit goes to Mayor Williams and other city officials.