The proposed sale of the Harrisburg incinerator to the Lancaster County Solid Waste Management Authority (LCSWMA) grew more complicated, and perhaps less certain, with last week’s mayoral and city council elections in Harrisburg.
Incumbent Harrisburg Mayor Linda Thompson, long an opponent of the city’s filing for municipal bankruptcy, was defeated in the Democratic primary by Harrisburg bookstore owner Eric Papenfuse.
But Papenfuse faces as many as two opponents in the November election, and it’s not certain that he will be mayor come January.
Making matters less certain, in the days following Mayor Thompson’s ouster by voters, key members of the city’s financial recovery team are said to be resigning.
Harrisburg Chief Operating Officer Ricardo Mendez-Saldivia, hired only months before as part of the state’s Act 47 recovery plan, announced he was leaving to take a job in Florida.
As well, a city budget officer and an IT director also were reported to be leaving.
Newly arrived COO Mendez-Saldivia was said to have been on the outs for months in the shifting political maelstrom, and was considering leaving before the election.
“He probably got to Harrisburg last year and realized he didn’t want to stay,” one observer notes. COO Mendez-Saldivia wasn’t even informed of one of city’s financial recovery committee meetings last year.
As well, two new city council members will be seated next January.
Harrisburg political insiders are already suggesting that replacements for the finance position(s) should wait until after the November elections, so that the new mayor, whoever that is, can have a hand in picking his replacement.
The big question is whether the proposed incinerator sale will also be delayed due to the murky and unstable political situation in the capital city.
On the surface, state-appointed receiver William Lynch is conducting negotiations for the sale of the Harrisburg incinerator.
But city council, and the outgoing mayor, must sign off on any sale of city properties involving the staggering city debt.
As NewsLanc has been reporting, LCSWMA has offered $150 million for the troubled incinerator, which currently is encumbered with at least $340 million in debt.
The city receiver is in talks to lease the city’s parking garages for somewhere around $100 million.
This leaves about $100 million or so in “stranded debt” on the incinerator.
A big question concerning the current deal is whether creditors that are owed the remaining $100 million — a bond insurer and Dauphin County — will except a haircut and forgive the debt.
The creditors are reported to be ferociously fighting the receiver’s plan. If the creditors ultimately refuse to forgive the debt, the city seems likely to be pushed into federal bankruptcy court.
For political and financial reasons, it seems unlikely that Harrisburg city council will approve any incinerator deal that leaves stranded debt on the table, let alone $100 million.
More ominously, as NewsLanc reported last week, there is growing concern about the potential liability of the city of Harrisburg for decades of illegal hazardous waste processing and dumping at the incinerator site.
LCSWMA, as part of the deal, is proposing to dump even more incinerator ash on the site.
The growing fear is that the current deal, as proposed, will only lead to more lawsuits about who should pay to clean up the environmentally compromised incinerator site.
“This new bond deal (involving LCSWMA) is starting to look as bad and irresponsible as previous irresponsible bond deals involving the incinerator,” one Harrisburg financial insider told me.
“It may be best for Harrisburg city council to table any new deal until these serious political, financial and environmental problems can be properly addressed and worked out,” I was told.
The bottom line for those in Lancaster County who are attempting to follow the proposed incinerator sale to LCSWMA: this deal is far from certain.
This deal is not simple, is far from done, and in fact could yet be undone by any number of uncertainties and complications.
