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July 11, 2019

Bigger public buy-in may resolve trash-plant redevelopment stalemate

Photo | Pablo Robles MIRA's Thomas Gaffey reviews a bale of recyclables at the quasi-public agency's single-stream facility in Hartford.
By Matt Pilon

Connecticut taxpayers may take on more financial risk than originally anticipated when it comes to a $300-million-plus overhaul of an aging waste energy plant in Hartford’s South Meadows.

Under an agreement inked this week between the state’s selected developer, Sacyr Rooney, and the quasi-public Materials Innovation Recycling Authority (MIRA), which oversees the Mid-Connecticut plant and related facilities, MIRA agreed to finance the waste-to-energy portion of the project entirely on its own -- a cost estimated at between $120 million and $140 million.

Meanwhile, Sacyr Rooney has agreed that it would privately finance a mechanical-biological treatment (MBT) facility intended to remove organics and other recoverable materials out of the Mid-Connecticut plant’s inbound waste stream, trucked in from more than 50 municipalities and other customers.

Cost estimates for the MBT facility are less solid, MIRA President Thomas Kirk said Thursday, but he guessed it could be “close to the same range” as the waste-to-energy plant investment.

That deal structure is “somewhat different from what DEEP had originally envisioned,” said Lee Sawyer, director of planning for materials management at the Department of Energy and Environmental Protection. “It requires greater investment of public funds through MIRA revenue bonds.”

However, that doesn’t appear to be a dealbreaker for DEEP, which had encouraged project bids that covered much of the costs, but left open the door for an unspecified amount of MIRA-issued bonds.

DEEP has been pressuring MIRA and Sacyr Rooney to come to terms on a deal since they missed a contract deadline nearly 11 months ago.

Amid the delays, the plant suffered a major equipment failure late last year that led to an approximately four-month outage. A legislative attempt to force MIRA to sign a contract came soon after, but the bill died in the legislature.

“The bottom line is this agreement is the best way to get this facility renovated and meet environmental improvements DEEP has prioritized,” Sawyer said.

The project is still far from a certainty. The memorandum lays out a timeline for negotiations stretching into 2020. 
The deal could still fall apart, but it’s still a good sign, Sawyer said.

“It demonstrates a shared commitment to moving forward with the project,” he said. “It’s a public demonstration that the logjam has been broken and they are both sincere about negotiations.”

Photo | Contributed
MIRA's trash-to-energy plant on the Connecticut River in Hartford's South Meadows.

A major sticking point for MIRA’s board of directors has been concerns that any contract reached provides adequate public oversight of the operations and protections for its customers. 

Kirk said the memorandum addresses those concerns. If the project moves forward, MIRA would have more oversight over Sacyr Rooney than some had originally envisioned.

“Initially, there was a gap between what the counterparties believed to be sufficient supervision and control,” he said.

The waste-to-energy plant would receive the highest priority. The intent is to overhaul the facility first. The MBT facility would come after.

Sacyr Rooney would operate the waste-to-energy plant, receiving a flat fee and taking on some operating risk, Kirk said.

More public borrowings, even those backed by a dedicated revenue stream from the facilities, present a greater risk to taxpayers, but Kirk said that it was assumed from the beginning that there would be at least some public money involved.

Sacyr Rooney’s operating experience and expertise in diverting recyclables and unwanted materials from the waste stream will be a key asset, in addition to their financial commitment, he said.

“It was always about finding a qualified experienced partner, a contractor to be able to apply new technologies, increasing diversion, and upgrading a publicly owned facility to serve a public need,” he said.

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