As released by Dauphin County:
The Dauphin County Commissioners today praised those who helped make the Harrisburg Strong Plan a reality and said the agreement sets the stage for economic growth in the city and surrounding region.
In addition to removing the specter of bankruptcy and placing the city on a firm financial footing, the agreement finally solves the decades-old problem of how to make the Harrisburg Resource Recovery Facility a true community asset.
“This is a historic day,” said Chairman Jeff Haste. “A lot of hard work went into making this day possible and I’d like to thank Receiver Gen. William Lynch and his team, Mayor Linda Thompson, Harrisburg City Council members and the other creditors for stepping up and getting the job done.”
“We need to also recognize the leadership of Gov. Tom Corbett, who set in place the process that made this agreement possible,” Haste said. “It’s worth noting that without the governor’s support of a long-term parking deal between the state and city, we would not be where we are today.”
Haste said the agreement fulfills the commissioners’ promise to reach a fair solution without penalizing the other municipalities in the county or putting an additional burden on residents. The county commissioners have lowered the county’s overall debt obligations through the implementation of the plan and have held the line on taxes for the ninth consecutive year.
“We have resolved the single greatest financial crisis in our region’s history,” said Commissioner Mike Pries. “It wasn’t easy, but we worked together to find a solution that benefits the region now and in the future. I also want to thank Commissioner Haste for his tireless negotiating and leadership on this issue.”
A regional trash solution
As part of the Harrisburg Strong Plan, the Lancaster County Solid Waste Management Authority (LCSWMA) bought the incinerator from the Harrisburg Authority for $130 million. The sale ends Dauphin County’s obligation to back $140 million of Harrisburg’s bond debt on the facility.
Though the county has agreed to guarantee $24 million of LCSWMA’s borrowing for the plant over 20 years, the county’s new annual payment will be far less than the $7.6 million it was making to cover the Harrisburg debt.
Beginning in 2014, the county’s annual debt payment drops to approximately $960,000 for four years.
Additionally, the county will receive $7.1 million after the city incinerator debt is paid off at the end of this month and has the potential to recover another $1.5 million next year. Also, the county will have the opportunity to eventually recover the $20 million in Harrisburg payments made to date.
Combining the city’s facility with LCSWMA’s operation provides a long-term solution to the region’s trash disposal needs. It also makes operational sense, because Covanta Energy will continue to run both plants.
“We now have a regional waste solution,” Haste said. “LCSWMA has done a great job with its operations and having two plants ensures that should one need repairs, we have backup.”
Under the Harrisburg Strong Plan, county residents outside the city will not see a spike in trash disposal fees and in some years may pay a lower cost than under the previous agreement, which had increases tied to the Consumer Price Index (CPI).
Starting in 2014, tipping fees will be $80 per ton for three years, $85 for the next three, and thereafter increase according to the CPI. City residents will see tipping fees drop $10 to $190 per ton for five years until 2019, when they increase by $5.
The county’s parking guarantee
Under the Harrisburg Strong Plan, the county is guaranteeing $170 million in bonds used by the Pennsylvania Economic Development Financing Authority to buy the city’s parking system and lease it back to Harrisburg.
For the county, the guarantee presents little risk thanks to the state agreeing to enter into a 30-year parking lease, which will account for more than 50 percent of the expected parking revenue. Initially, the state had agreed to a 20-year lease. The additional 10 years has the effect of reducing the county’s exposure on its guarantee.
The agreement also calls for the county and Assured Guaranty Municipal Corp., which insured the city’s incinerator bonds, to share in a portion of excess revenue from the parking facilities until both are repaid for money spent covering Harrisburg’s incinerator debt. For the county, that means having the opportunity to eventually recoup its $20 million.
“This recovery will usher in a new era of economic prosperity and growth in the city, which is getting a fresh start,” said Commissioner George P. Hartwick III. “We can now focus on redevelopment of our urban core.”
“Working together, we protected taxpayers and ratepayers from unfair tax increases,” Haste said. “The county and city worked collaboratively on the recovery plan and will continue to work together to ensure a bright future for all county residents.”