We predicted the nation's largest city bankruptcy -- 8 years ago

Pennsylvania's capital city is now filing for bankruptcy. We hate to say it, but we told them so... eight years ago. In 2003, Energy Justice founder, 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 dioxin emissions -- 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.

The website of the Coalition Against the Incinerator -- a grassroots group we started in 2000 -- is archived here: www.stoptheburn.com

A copy of the economic presentation we gave is here: http://www.stoptheburn.com/presentation.pdf

For further news on the city's bankruptcy, see:

Harrisburg financial collapse was predicted

(CBS 21 TV News, 9/30/2011)

Originally posted at: http://www.whptv.com/news/local/story/UPDATE-Harrisburg-financial-colla…

UPDATE:

CBS 21 News continues its exclusive look into how Harrisburg ended up in its current financial crisis. On Friday we played for you audio from a city council meeting eight years ago were council approved a $125 million loan to fix the incinerator.

Many say that was the vote that crippled the capital city. Now, city council members from that 2003 vote are speaking out.

Some regret their vote, others don’t and then there is Mayor Linda Thompson. Back in 2003, she was a city council member who voted for that loan. Now as mayor, she says there’s only one thing she wishes she would have known.

Eight years ago, Harrisburg City Council voted to take out a massive loan to fix the incinerator. That $125 million of debt has now turned into $310 million and the city is in financial crisis. Former Councilman Otto Banks voted for the loan 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."

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.”

“We were never told there was not a performance bond,” stated Mayor Thompson. Mayor Linda Thompson was one of the six council members to vote to yes. She admitted that it was a very hard decision. But the right one considering what she knew at the time.

She just wishes she would have known everything. “That’s the only sticking point, that I wish I had known there was no performance bond,” Thompson explained. “And if I had known there was no performance bond, I would have stayed at the table and made them have a performance bond. That was the responsible thing to do.”

A performance bond is basically insurance that a public project will be completed. There was no performance bond on the incinerator. So when the first contractor went bankrupt before the project was finished, it wasn’t insured and Harrisburg took a huge hit.

With Harrisburg on the verge of financial collapse, and the state about to take over, CBS-21 has acquired audio of a city council meeting from eight years ago that many say caused this moment. History is proving a lot of people right.

On November 5, 2003, Harrisburg City Council had a choice to make; do they guarantee a $125 million loan and fix the city’s ailing incinerator or not. Many say this was the vote that got Harrisburg to where it is today. We found the audio from that council meeting and listened to it to see what said. CBS-21 did cover this vote eight years ago. But, we obviously know more now than then. Here’s what we found out.

“I’m telling you that this project will put the city into bankruptcy," said Mike Ewall, Coalition Against the Incinerator.

That was Mike Ewall, a Philadelphia resident who helped start a group called the Coalition Against the Incinerator. The night city council voted to retrofit that facility, Ewall spoke for 15 minutes to a packed room explaining how the numbers were wrong and why council should not accept the loan.

“Because the city and the authority don’t have guaranteed waste steams; over estimate the potential power and steam sales, under estimate ash disposal and operating costs; and have no guarantee of an air pollution permit, this project will put the city into bankruptcy," Mike Ewall, Coalition Against the Incinerator said. "But who will go first, residents or city hall?”

This is how then Mayor Stephen Reed’s spokesman responded that night.

“Everything that our opponents have said have been lies, distortions and untruths and things they have made up,” said Randy King, Mayor Reed’s Spokesman.

During public comment before the vote, dozens spoke - only two supported the plan.

Despite overwhelming public rejection and Ewall’s testimony, council voted 6-1 to accept the $125 million loan. This was a tearful then city council member Linda Thompson justifying her “yes” vote.

“This has been no easy decision for me. With moral conviction I have prayed over this and I’ve prayed over this," Linda Thompson, 2003 Council Member/current mayor said. "And I’ve had intimate discussions with God. And my bible tells me let you yes be yes and let your no be no. And if 15 or 20 years from now it proves that I have made the wrong decision, charge it to my head and not my heart.”

I called Mike Ewall today, the man who said Harrisburg would go bankrupt if council guaranteed that debt, and he doesn’t think the capital city can come out of this financial crises without declare bankruptcy, which he predicted eight years ago.