UPDATE 1-Harrisburg, PA, has deal to sell debt-laden incinerator
Harrisburg, PA., July 24 (Reuters) - The city of Harrisburg, Pennsylvania, said on Wednesday it reached an agreement to sell the garbage incinerator that burned a $345 million hole in its finances and nearly left it bankrupt.
State-appointed receiver William Lynch said in a statement that a deal is "imminent" to sell the incinerator to Lancaster County Solid Waste Management, a quasi-public authority, after stakeholders agreed to work together rather than fight each other.
Lynch wants to get $130 million for the incinerator, but a price has not been finalized, he told reporters at a meeting. He said he hopes to file terms of the deal next month with the court overseeing the city's financial recovery plan.
Harrisburg is at least $345 million in debt thanks largely to municipal bonds it guaranteed to finance upgrades to its problematic waste-to-energy trash incinerator. The city filed for bankruptcy in October 2011, but a court threw out the case after state lawmakers blocked it.
News of the deal comes less than a week after Detroit filed the biggest municipal bankruptcy in U.S. history.
In Harrisburg, Lynch has been working on a plan, including the sale or lease of some assets, to pull the city out of its financial morass. He has previously said bankruptcy is still an option if the city cannot execute its recovery plan.
Selling the debt-laden incinerator is critical for the city's finances to get back on track. Lancaster County's waste authority was chosen more than a year ago to purchase the incinerator, but there had been no news of an agreement on terms.
"All the stakeholders involved in the sale of the incinerator are in agreement," Lynch said. "While they realize this may be an imperfect situation for each of them, everyone understands a cooperative solution is most certainly in everyone's best interests."
Other stakeholders, including Dauphin County and bond insurer Assured Guaranty Municipal Corp., have financial claims that must be resolved before the deal can be closed.
The agreement could also include the lease of the city's parking garages, but that would involve a modification of the its recovery plan and must also be approved by the Commonwealth Court, Lynch said.