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Lynch: Incinerator dealings with Lancaster authority only

By - Last modified: June 27, 2012 at 10:23 AM

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Harrisburg's incinerator debt is more than $326 million. File photo
Harrisburg's incinerator debt is more than $326 million. File photo

Harrisburg receiver William Lynch — upon conferring with his screening and evaluation team — said today he will engage in exclusive negotiations with the Lancaster County Solid Waste Management Authority regarding the sale of the city's troubled incinerator.

The team had previously been vetting proposals from the authority, also known as LCSWMA, and Florida-based Cambridge Project Development Inc.

"This is not the end," Lynch said. "This is the next phase of the negotiations process."

He called it the possible "end of the beginning" with respect to this part of the city's court-approved recovery plan. The plan also calls for leasing Harrisburg's parking garages and bringing an outside party in to manage water and wastewater assets

However, if talks would break down with LCSWMA, Lynch said he is reserving the right to renew discussions with Cambridge.

The city's incinerator debt is more than $326 million.

Lynch said negotiations with LCSWMA will escalate this week. He did not offer a timetable to see a deal completed.

"We were confident that our solution was the best choice all along and are glad the receiver has selected LCSWMA," Jim Warner, the authority's CEO, said in a statement. "However, we understand and support their desire for a fair and transparent process. Thus, we were happy to participate in the qualification and bidding procedure."

Warner added that the authority is eager to work with Lynch and the Harrisburg Authority, which owns the incinerator.

The deal could create successful regionalization on waste management between Lancaster and Dauphin counties, Warner said.

Prior to the city going into state receivership, which was prompted by the rejection of multiple recovery plans, LCSWMA had been the only player interested in buying the incinerator. Dauphin County had agreed to concessions in order to facilitate a deal.

A spokeswoman for the county commissioners was not immediately available for comment.

Noon update: Lancaster County Solid Waste Management Authority CEO Jim Warner said he expects a deal to buy Harrisburg's incinerator to be done this year.

He believes LCSWMA was chosen because it has been actively pursuing the trash-burning plant longer than anyone else. The authority also is local and well known in the industry.

Covanta Energy, which operates the incinerator for the Harrisburg Authority, also runs the Lancasterfacilities, Warner said.

"It's not like we would have to get to know a new operator," he said. "We have partnered with them for 21 years. That also made this acquisition very attractive."

He declined to comment on what LCSWMA is offering in its proposal.

"We would hate to put out a number. Last year, we did that and learned our lesson," he said.

Those numbers were $45 million, then $124 million. Dauphin County had agreed to cover $62 million of the larger offer. That concession was over 20 years and was achieved through graduated tipping-fee increases and other incinerator costs. Among them are off-site ash disposal costs.

The final number is contingent upon guarantees by other parties, Warner said.

He added that past concepts with the county remain on the table. A county spokeswoman has been unavailable for comment.

LCSWMA manages more than 650,000 tons of LancasterCounty's solid waste each year. The acquisition of the Harrisburgincinerator would enable the authority to expand its expertise to DauphinCountywhile also benefiting LancasterCountywith additional capacity for a growing population, Warner said.

Upon acquisition of the incinerator, LCSWMA would manage a system consisting of about 1 million tons of solid waste per year, generate total revenues of approximately $87 million and position itself as one of the largest generators of renewable energy in Central Pennsylvania, powering the equivalent of 55,000 homes, the authority said in a news release.

The authority's plan includes at least $16 million of planned facility improvements, Warner said.

Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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