Harrisburg incinerator debt plan halted

The Keystone State capital was ordered to hold off paying a debt on its waste incinerator. The infrastructure project, which is up for sale, has racked up a $330m tab.

A court order on Monday halted Harrisburg from paying off the ever-ballooning tab owed on its trash incinerator, a debt-laden infrastructure project now up for sale.

The ruling came after state-appointed receiver William Lynch revealed last week that Harrisburg would incur a $500,000 deficit if the fiscally strapped city paid a $3.4 million invoice due in September.

The incinerator, a plant opened in 1972 and designed to convert municipal solid waste into electric power, has put the Pennsylvania capital $330 million in debt.

Lynch, installed in June to replace departed receiver David Unkovic, is in charge of a large-scale privatisation initiative conceived to shore up insolvent Harrisburg.

Erstwhile receiver Unkovic in a several-hundred-page report recommended Harrisburg restart an 'on-again, off-again' plan to lease or sell its waste incinerator as well as lease public parking.

Unkovic, who quit in March, had also suggested the city lease its water and wastewater management.

The office of the receiver had set June as its deadline to find a suitor for the incinerator. Now, Harrisburg is hoping to select a private operator by 2013.

Miami-based solid waste management concern Cambridge Project Development and Highstar Capital portfolio company Interstate Waste Service are both bidding to acquire the incinerator as is nearby Lancaster County Solid Waste Management Authority (LCSWMA).

In 2011, Harrisburg commissioned Novak Consulting Group to examine leasing or selling the incinerator.

Novak concluded LCSWMA, which was offering $124 million, was best-qualified to operate the facility, favouring the agency instead of EQT Infrastructure and LambdaStar Infrastructure Partners.

EQT and LambdaStar had offered $140 million for a 99-year lease of the incinerator, on the condition Harrisburg would also lease them its parking.

EQT and LambdaStar had proposed $215 million for a 75-year parking concession or $195 million for a 50-year concession.

Novak, meanwhile, blamed the incinerator for financially decimating Harrisburg.

Harrisburg would hold off on leasing or selling its incinerator or parking, but last autumn, the city was forced to revisit privatisation after a court forbid it from filing for bankruptcy.

The Monday ruling is in effect until further notice. Meanwhile, the court told Harrisburg to implement a 1 percent tax hike.