Four companies remain in the running to purchase the incinerator in Harrisburg, Pa., that is the focal point of the city’s debt crisis.
But Covanta Energy, the Newark, N.J., company that now operates the trash burner, has the right of first refusal, which means it could trump the four with its own bid.
“It’s part of the agreement,” said Covanta spokesman James Regan, who confirmed that the right expires at the end of this year.
The company has a 10-year operating agreement that began in 2007. “We’re proud of the work we have done at the facility to make it a viable asset,” Regan added.
Among the four are the Lancaster County Solid Waste Management Authority. Lancaster, a neighbor to Harrisburg’s Dauphin County, offered $124 million last year, without debt assumption.
The three other finalists are Cambridge Project Development Inc. of Miami and Energy Investors Funds of Needham, Mass.; Interstate Waste Services of Jersey City, N.J.; and Wheelabrator Technologies Inc. of Hampton, N.H.
David Unkovic, the state-appointed receiver overseeing Harrisburg’s finances, announced the list on Tuesday. He also revealed 12 finalists for consideration for the sale or lease of the city’s parking garages, including groups led by Morgan Stanley and the Ontario, Canada, Teachers’ Pension Fund.
Additionally, four qualified bidders are in the running to manage the water, wastewater and stormwater systems. They are Aqua America Inc. of Merrick, N.Y., Ch2M Hill of Englewood, Colo., Pennsylvania American Water Inc. of Hershey, Pa., and United Water Environmental Services Inc. of Harrington Park, N.J., in conjunction with New York private-equity firm Kohlberg Kravis Roberts & Co.
Harrisburg, Pennsylvania’s capital, has $310 million of incinerator bond debt, and has skipped $65 million of payments. Last week the city, at Unkovic’s behest, missed two general obligation bond payments totaling $5.3 million. Bond insurer Ambac Assurance Corp. made the payments.
Moody’s Investors Service, which does not rate Harrisburg’s bonds, called the default a credit negative because it demonstrates the city’s inability and unwillingness to pay debt.
“The default also highlights a small but growing number of distressed municipal issuers willing to default on insured debt,” Moody’s analysts said in a report released Tuesday.