Pa. capital gets offer to buy costly incinerator

AP News
Posted: Mar 10, 2011 6:36 PM
Pa. capital gets offer to buy costly incinerator

Pennsylvania's financially troubled capital has received a $45 million offer to buy the city's trash incinerator, whose heavy debt burden has prompted some city officials to explore a municipal bankruptcy filing.

Mayor Linda Thompson said Thursday that she would meet with representatives of the Lancaster County Solid Waste Management Authority to discuss the offer. The authority said it had made a $45 million cash offer that would also involve lowering the trash disposal fees paid by city residents while raising the trash disposal fees paid by residents in the rest of Dauphin County.

Thompson welcomed the offer, but made no promises. In a statement, she said she "believes this is a great first start and suspects the administration will see others submitting their proposals."

Harrisburg pays $200 per ton in trash disposal fees, while the rest of Dauphin County pays $72.60 per ton. Under the sale, all of the county would eventually end up paying $78 per ton.

The authority said it would not assume any of the incinerator's debt _ more than $280 million, or several times the size of Harrisburg's annual operating budget. Much of the debt was borrowed in the last seven years to overhaul the aging facility in an attempt to transform it into a moneymaker for the city.

However, the overhaul cost much more and took much longer to complete than city leaders originally envisioned. Meanwhile, the incinerator is less profitable than they had hoped, while Harrisburg residents pay among the highest trash disposal fees in the country.

Authority officials said the Harrisburg incinerator would provide a place to bring waste from the growing Lancaster County, where the authority's incinerator is at capacity.

James Warner, the authority's CEO, said it would borrow $40 million and use $5 million of its own cash. It also would make $12 million in improvements to the Harrisburg incinerator in the first three years, he said.

Whether it solves Harrisburg's debt problems is another question, Warner said. But, he added, lowering trash disposal fees would provide some savings that the city could put toward debt payments.

Thompson has opposed a bankruptcy filing. But for more than a year since she was elected, she has been unable to agree with City Council on a plan to address the incinerator debt. To help the city make a $3.3 million bond payment in September, the state sped up aid payments to Harrisburg.

Dauphin County officials arranged a two-year loan to cover a $34.7 million debt payment due three months ago. Harrisburg is the county seat.

The city of 47,000 is now in a state program designed to help distressed municipalities meet the immediate health, security and welfare needs of its citizens while it gets guidance in drawing up a recovery plan.