Harrisburg (9661MF) gave Morgan Stanley, KKR & Co. (KKR) and 18 others permission to bid for its parking system, water and sewer operations, and the incinerator that drove the Pennsylvania capital into insolvency.
Out of 14 would-be bidders for the parking assets, 12 can submit offers for a long-term lease or sale, according to a list posted yesterday on the website of David Unkovic, the city’s receiver. One is a partnership between New York-based Morgan Stanley and Central Parking Corp. (PK) of Nashville, Tennessee.
Selling or leasing assets is part of Unkovic’s plan to deal with more than $300 million in incinerator-related debt, five times Harrisburg’s general-fund budget. The community of 49,500 residents backed financing an overhaul of the waste-to-energy plant, which doesn’t produce enough revenue to cover the cost.
“I’m feeling confident,” Unkovic said by telephone before posting the lists. “So far, so good.”
Harrisburg skipped $5.27 million in general-obligation bond payments due March 15, Unkovic said in a March 9 notice. The money saved will provide enough cash to pay for vital services such as police and firefighters, he said. State law bars the city, where 30 percent of residents live below poverty level, from seeking bankruptcy-court protection before July.
Aiming for June
Unkovic has said he expects to close any transactions by June, subject to approval by the state’s Commonwealth Court.
Once he knows the value of the assets, Unkovic has said he’ll determine how to tackle the remainder of the city’s debt. His plan for fiscal recovery was approved by the court, which deals with state legal matters, on March 9. While Mayor Linda Thompson supports his plan, it has been opposed by the City Council president, the controller and treasurer.
Harrisburg has 10 garages, five surface lots and 1,250 metered spaces, which provide 72 percent of the public parking in the city. In 2010, the Harrisburg Parking Authority, which owns the facilities, reported $13.8 million in revenue.
In Chicago, a different Morgan Stanley (MS) venture may reap $9.58 billion in profit over a 75-year lease of city parking facilities, based on documents from the group. The bank, joined by the Abu Dhabi Investment Authority and Allianz Capital Partners, set up a venture to lease the Chicago operations in 2008. The profit was estimated based on projections in a 2010 offering document.
Along with Morgan Stanley’s group, qualified parking bidders from New York were listed as the National Development Council, a community organization, and a venture from Guggenheim Partners LLC, a financial services company, called Harrisburg First LLC. Those from Pennsylvania include Brandywine Realty Trust (BDN) in Radnor and Boenning & Scattergood Inc., a securities broker in West Conshohocken.
Also listed were InterPark Holdings Inc., a parking manager and developer in Chicago; NW Financial Group LLC, a Jersey City, New Jersey-based investment bank; a partnership between the Ontario Teachers’ Pension Fund and Vancouver-based Impark Parking Corp. (2896591Q), and QIC Private Capital, part of the Australian fund manager QIC Ltd.
Firms calling themselves Harrisburg Forward LLC, Harrisburg Parking Partners LLC, and Keystone Parking Group were also cleared to bid, according to the list, which didn’t say where any of the companies are located.
For the incinerator, which is run by a unit of Covanta Holding Corp. (CVA), four parties can bid: Cambridge Project Development Inc. of Miami and Energy Investors Funds; Interstate Waste Services Inc., an American International Group Inc. (AIG) unit in Ramsey, New Jersey; the Lancaster County Solid Waste Management Authority (26675MF) in Lancaster, Pennsylvania; and Wheelabrator Technologies, a Hampton, New Hampshire-based part of Waste Management Inc. (WM)
Another four can make offers to run the water and sewer systems. They are a venture of New York-based KKR and United Water, an affiliate of GDF Suez (GSZ) and located in Harrington Park, New Jersey; Aqua America Inc. (WTR) of Bryn Mawr, Pennsylvania; a CH2M Hill Cos. unit in Englewood, Colorado; and Pennsylvania American Water in Hershey, part of American Water Works Co. (AWK)
The incinerator and water and sewer operations each drew interest initially from five different entities.
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