A Lancaster County, Pa. public works agency expects to pay $130.7 million for the Harrisburg incinerator under a key component of the city’s recovery plan, according to county documents.
The county acknowledged that rising municipal bond interest rates could affect the pricing.
The sale of the incinerator to the Lancaster County Solid Waste Management Authority and a 40-year lease of city parking assets are the lynchpins of an extensive recovery plan, titled “Harrisburg Strong,” that state-appointed receiver William Lynch filed on Aug. 26 with the Commonwealth Court of Pennsylvania.
Justice Bonnie Brigance Leadbetter has scheduled a Sept. 19 hearing on the plan.
Harrisburg owes an estimated $363 million in incinerator-related debt that it cannot pay, due to bond financing overruns. The initial bond issue to retrofit the trash burner to comply with federal environmental regulations was roughly $30 million.
The city’s overall debt, including past-due general obligation bond payments and myriad other transactions, is estimated at more than $600 million.
Lancaster’s transaction will include a $98 million asset purchase price, a $24 million subordinate note that Dauphin County will guarantee, and $8 million from Harrisburg Authority indenture funds. Dauphin will also cover two-thirds of interest payments, or about $480,000 annually, for 20 years.
The Harrisburg Authority owns the incinerator, now called the Harrisburg Resource Recovery Facility.
The county’s Solid Waste Management Authority will also rename the facility the Susquehanna Resource Management Complex. It plans to close on the acquisition in mid-November, according to chief executive James Warner.
On Thursday, the Lancaster authority’s board of directors approved several acquisition-related agreements.
“Our board approving these agreements was an important and significant next step,” said Warner. “While there are many other components to Harrisburg’s recovery plan, we are taking the necessary initiative to keep our portion of the transaction moving forward in timely fashion.”
Several creditors must approve the deal before Sept. 19. They include bond insurer Assured Guarantee Municipal Corp. as well as Covanta Energy Corp, which operates the trash burner. In addition, the city and several state agencies, including Attorney General Kathleen Kane, must sign off.
Dauphin County Commission Chairman Jeff Haste was also pleased.
“This deal opens the doors to Lancaster’s even more modern resource recovery facility that is just outside our county’s border,’’ Haste said. “This is now a regional approach. Their facility is now part of a bigger plan and if the Harrisburg facility ever goes down, we have backup.’’