Privatization Could Save Harrisburg

Money woes coming to a city near youIn December, Harrisburg entered into the state’s ominous Act 47 program for distressed cities to avoid bankruptcy.

Privatization seems one option to help the city deal with its debt and fiscal woes. LambdaStar and EQT Infrastructure proposed leasing the city’s troubled incinerator for 99 years for $140 million. The catch is the conglomerate also wants the city’s parking assets. LambdaStar kept their original proposal to lease the city’s parking garages, $215 million for 75 years, on the table for three years before adding the incinerator to their proposal.

But LambdaStar has competition. Lancaster County Solid Waste Management Authority has expressed interest in buying the aging incinerator from the city for $124 million. Of course there are strings attached, including future subsidy payments if income targets aren’t reached.

These are unsolicited proposals that the city should leverage in an open procurement process to secure the best deal possible for the taxpayers of Harrisburg. Today, Mayor Thompson announced the results of an evaluation of parking assets, which found a 30-year lease of the system is worth about $215.5 million.

Harrisburg’s fiscal disaster does not solely rest on the growing incinerator costs, but it is part of a list of fiscal follies including $7 million to purchase artifacts for a failed Wild West Museum and purchasing a minor league baseball team. Ironically, the incinerator that has become the symbol of the city’s fiscal woes could become its (partial) savior if officials are willing to consider all lease option.

Our upcoming policy brief on privatization provides more ways cities can work with private companies to stretch tight budgets while improving services.

EDITORS NOTE: This post has been updated to correct a typographical error in the amount offered from the Lancaster County Solid Waste Management Authority.