Sunday, May 23, 2010

Harrisburg incinerator works best burning money

Remember years ago when incinerators were sold to the public as the perfect waste-disposal solution?

The big burners would eliminate the need for landfills. They'd burn up all the trash and generate steam in the process that could be sold to heat nearby buildings or generate electricity.

And if your city or county was the first to build one, you could corner the disposal market. Other towns would send their trash to you and, eventually, you'd be making a tidy profit.

It didn't quite work out that way for Harrisburg, Pennsylvania.

An Incinerator Becomes Harrisburg’s Money Pit is how the New York Times summarizes that city's experience.

Michael Cooper reports that the problems started soon after the incinerator was built in 1972.

"Although its original price tag was less than $15 million, it required so many repairs and refinancings that it was saddled with $94 million in debt by the time the federal government shut it down in 2003 because it was polluting the air with dioxin.

"The city’s decision to borrow another $125 million to rebuild and expand it was essentially a double-down bet. Harrisburg’s gamble was that by expanding the incinerator so it could burn up to 800 tons of trash a day, it would be able to burn more garbage from neighboring counties. The fees it would collect, the city hoped, would pay off the debt.

But, Cooper says, some counties decided not to take their garbage to the incinerator.

"Dauphin County, of which Harrisburg is a part, does take its trash there, but pays lower fees than the incinerator originally anticipated — and about a third of what Harrisburg itself pays.

"The final insult may well be that Harrisburg now pays some of the highest trash disposal fees in the country — all to prop up the incinerator that it built. The money goes to the public authority that owns the incinerator, but whose inability to pay off its debts has left Harrisburg on the hook.

The resulting debt has forced the city to lay off 32 workers and increase taxes a few years ago. The city's mayor says taxes need to be raised again, but city council is balking.

This month, Moody’s Investors Service warned that Harrisburg's guarantee of the incinerator debt results in "a continuing burden that will stress the city’s finances for the foreseeable future, negatively affect its creditworthiness and jeopardize its future access to the public credit markets.”

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