(Adds mayor's comment at the last paragraph)
By Mark Shade
HARRISBURG, Penn., March 27 (Reuters) - The debt-laden Harrisburg incinerator, that caused Pennsylvania's capital to default on bonds, will have to accommodate a second receiver, who will work exclusively with that trash-burning facility.
The decision was made by Dauphin County Court of Common Pleas Judge Todd Hoover in response to a petition filed in September 2010 by three of the city's creditors: TD Bank, Assured Guaranty, and National Association Manufacturers and Traders Trust Co.
The creditors filed the petition after Harrisburg decided to stop paying the debt service on $37 million worth of bonds used to help cover the costs of an upgrade on the incinerator.
Harrisburg Authority was opposed to a second receiver arguing it could confound the job of David Unkovic as Harrisburg's receiver. Hoover disagreed.
"We cannot ignore express legislative intent and assume that an appointed receiver would act in conflict with the City's receiver, so as to invite confusion and difficulty," Hoover wrote in a March 22 order that was made public on Tuesday.
"An appointed receiver would carry out day to day operation of the Resource Recovery Facility, with the duty to comply with the Municipal Authorities Act," Hoover concluded.
The judge said he will outline the procedures for selecting the incinerator's receiver in a separate order.
Unkovic said his lawyers are reviewing Hoover's order but added that he is going ahead with the plan to sell or lease the incinerator whose expensive repairs helped build Harrisburg's $317 million debt.
"I am proceeding with my plan. However this works out ... it's not going to prevent me from moving forward with the plan," Unkovic said.
"This is another setback in the process we don't need. I look forward to everyone working cooperatively toward the same end which is the sale of the incinerator at a maximum return to reduce the debt burden on the taxpayers of the City of Harrisburg," said Harrisburg Mayor Linda Thompson adding that the ruling will probably be appealed. (Reporting By Mark Shade, Editing by Tiziana Barghini, Andrew Hay and Bob Burgdorfer)