Harrisburg told to lease parking assets

The team coordinating Harrisburg’s financial recovery says the city should sell or lease its parking garages and the indebted waste incinerator (right) at the heart of its financial troubles. But the team does not support the LambdaStar and EQT bid to take over both assets.

The team coordinating Harrisburg’s financial recovery plan has recommended that the city sell or lease some of its assets in order to close a budget shortfall, potentially reigniting the debate around privatisation of parking garages in the Pennsylvania capital.

In a report released this week, the team argued that the city must sell or lease its heavily indebted trash incinerator plant and its parking assets “to reduce [its] debt burden and then refinance stranded debt”.

The trash incinerator is described as “the major factor in the City of Harrisburg’s financial problems”.  Annual debt service obligations for the facility and operating expenses exceeded the incinerator’s revenues by about $14 million in 2008, after adjusting for extraordinary items, according to the report.

Last month, New York-based firm LambdaStar Infrastructure Partners, together with EQT Infrastructure, proposed to pay $140 million in cash to lease the city’s incinerator for 99 years, on the condition that the two firms were also granted a parking concession. The two firms proposed to pay $215 million for a 75-year concession or $195 million for a 50-year concession of the city’s parking garages.

But the team coordinating Harrisburg’s financial recovery explicitly supports the sale of the waste incinerator to the Lancaster County Solid Waste Management Authority, a local waste operator that also proposed to acquire the incinerator for $124 million, as part of a plan to restructure debt on the incinerator facility.

Julia Novak, president of the Novak Consulting Group, which coordinated the report, said there are “significant advantages” to having a public entity manage the incinerator. She said she did not want to “diminish the offer” by EQT and LambdaStar, but said it would be better for a public entity and a regional operator to manage the incinerator.

Even though the report also recommends the sale or lease of Harrisburg’s parking garages to a private operator or another public entity, support for the privatisation is not unanimous. Dan Miller, controller for the city of Harrisburg, opposed the LamdaStar deal, arguing that it would deprive the city of future revenues while still forcing it to shoulder risks. Miller also argued that if an outside party or private firm can raise parking rates, then “there is no reason that we can't raise the rates”.

Novak said the city of Harrisburg will be facing a tight schedule in which to decide whether to pursue the recommendations of the recovery team. She said a public comment period on the plan will end on June 28, and the team is hoping to present a revised proposal by July 8. That proposal would need to be approved by the city council by July 23.