Harrisburg's incinerator debt, which pushed Pennsylvania’s capital into insolvency, generated $49.1 million in fees to raise $310 million, a sign that the sales were at least partly driven by the profit they generated, said Mark Schwartz, a bankruptcy lawyer for the City Council.
Usually muni bond-sales entail <2% in fees. This was almost 16%.
One suspects that there will be indictments following in a few years.
Harrisburg, a city of 49,500 on the Susquehanna River, in 2003 overhauled the waste-burning plant that was in violation of environmental rules. While now running near capacity, it doesn’t produce enough revenue to cover its costs including the debt.
Schwartz said debt continued to be piled on the project even though the incinerator was operating in deficit and there was no performance bond to protect the city. He flagged a 2007 deal in which $28 million was used to pay fees and less than $2 million went into project accounts.
Doesn't take much imagination to hear a choo-choo whistle coming up at high speed, either.
2 comments:
This is pretty good evidence against the argument that government should provide certain services that the private sector cannot provide at a profit.
If it can't be provided for at least a "break-even", maybe it's not necessary.
The local "metropolis" - of also limited population like Harrisburg also had an incinerator. The usual suspects were pushing city and surrounding counties to pony up mulit-millions to overhaul it. They were using Harrisburg as a success story. Don't know how, but somehow the elected officials had a moment of lucidity and chose to shut it down instead. Amazing.
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