Harrisburg on the Rahway

Harrisburg, PA declared bankruptcy yesterday primarily because of debt they can’t pay on an ill-considered incinerator deal, including $120 million owed to Covanta Holdings Corporation which is suing.

You may wonder how a government can get itself into such a mess.  Who was advising them?  Were the government officials responsible for making these decisions incompetent or bought off?  Can this happen anywhere – like maybe Union County?

It is happening now in Union County along the Rahway River and the parallels are eerie.

Union County has a waste-to-energy incinerator that charges, as near as I can figure it, 14 towns under contract $68 per ton and 7 non-contract towns $97.  Haulers from outside the county pay as little as $44 per ton which I only found out about recently.  This is not common knowledge because, if it were, people might get upset.

Now the company that runs the incinerator for the county (Covanta) wants to restructure the deal with county towns offering them price breaks (though still substantially higher than what out-of-county haulers pay) in exchange for having a guarantee that the Union County Utilities Authority (UCUA) provide a minimum of 430,000 tons of waste at the county rate (currently $68 but indexed).

In 2009 320,000 tons of waste came from within Union County and that number has been declining. What the UCUA is expected to do is to acquire an additional 110,000 in waste by offering a price of $68 while Covanta is offering the same market a price of as low as $44.

Obviously the UCUA is not going to sign anybody up and will have to pay Covanta for 110,000+ tons at a rate of $68+ per ton for nothing.

But if it’s so obvious why don’t others see it? For one thing, they’re ignoring me.

A hearing was held on September 12 where I brought up these questions for which, according to McEnroe Act rules, answers were supposed to be supplied within 15 days.

They weren’t then.

and 31 days later, I still don’t have their answers. Maybe at the bankruptcy hearing.

9 responses to this post.

  1. Posted by briandin on October 13, 2011 at 1:48 pm

    Wow. All I can say is I am glad I don’t live in Union County!

    Reply

  2. The blog is accurate. As of of 12:00pm on October 13, 2011 when it was posted I did not have the answers to my questions.

    As of 12:15 pm on October 13, 2011 I received the official response in the mail which included two answers (outstanding debt and professional fees) and a host of obfuscations that have to be seen to be believed. Tomorrow you’ll see.

    In the meantime feel free to guess how much DeCotiis, Fitzpatrick has been paid “for representing the UCUA since July 1, 2009 in negotiating and finalizing the proposed transaction with Covanta.”

    Reply

  3. Posted by Javagold on October 13, 2011 at 2:56 pm

    UC taxpayers need to keep the incinerator open, as you will need to drop every last one of the criminals into it…..where is christie, guadagno, dow, fishman…………..anyone ?

    Reply

  4. Posted by briandin on October 13, 2011 at 4:01 pm

    Is there such a thing as initiative and referendum for local issues? If not, there should be. One such initiative would be a resounding “no” to a deal like this. Another would be never to allow such a deal to even be considered without approval of the voters – matters of this kind should NEVER be in the hands of corrupt politicians (is there any other kind?) so the only alternative is putting the issue before the people.

    I grew up in California (home of the infamous Proposition 13, which was enacted right before my family moved back East and I was but a Jr in High School). I always considered the I&R process to be one of the saving graces of CA (though it is clearly not enough to counteract the tyranny of the majority occurring there now).

    Reply

  5. […] BuryPensions: A mini Harrisburg? […]

    Reply

  6. Posted by George on October 14, 2011 at 7:38 pm

    The pricing may be partially explained by distance. The further away you are from a dump site the more you have to pay to transport the garbage there. So to lure garbage from further away Covanta reduces its incineration fees.

    Another possible explanation is you have to pay extra for a long term guarantee of incineration capacity near by.

    Another possibility is the fumes from incinerators are known to reduce asthma, which is an important service Covanta should be compensated for.

    Off topic, but Harrisburg went directly to bankruptcy without first being declared a distressed city under Penn. Law Act 37. So I am wondering what’s up with that.

    Reply

  7. Posted by Eric on October 14, 2011 at 7:55 pm

    I guess that they decided not to waste any more time since their prayer session failed to work.
    Eric

    Reply

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