Dauphin County has authorized TD Bank to purse legal action against Harrisburg to force the city to pay $35 million in bond notes.
Shortly before the deadline, the city and the Harrisburg Authority notified TD Bank that neither could pay the $35 million. The authority or the city was required to transfer $23.9 million to one bond debt-service account and $10.8 million to another, as per a 2007 city guaranty agreement.
The county has had to make $3.5 million in incinerator bond payments for the authority and city since May 2009.
Harrisburg will know shortly whether it will have to file for Chapter 9 bankruptcy. The city might not have to file bankruptcy IF the other stakeholders are willing to accept a loss. Otherwise, Harrisburg has no other choice.