Pittsfield Subcommittee Endorses Plan To Save Covanta
Mayor Linda Tyer said the city's role is just one in a collaborative effort to keep the company operating and if successful, the city would advert a large annual increase in cost.
The City Council subcommittee voted 4-1 in favor of allocating the money from the Pittsfield Economic Development Fund to help Covanta replace a backup boiler, and cover the area recyclables are processes to comply with a state requirement.
In return, the company promises to stay open for at least the next four years.
"I think that in many ways, I feel like we've gotten a stay of executions," said Mayor Linda Tyer.
The city's funds are just part of a "three-legged stool" which aims to keep the company in operation. Covanta notified its employees earlier this year that the waste burning plant is eyed to close the facility in March of 2017.
Among the waste collected there, it is also where where Republic Services disposes of some 17,000 tons of trash collected from the city's curbside pick up. Many other companies from neighboring communities pay to dump there, some of which goes back to the city.
Between the revenue from other towns and a projected increased price for waste disposal, Tyer estimates it will cost the city an additional $960,000 per year should the plant close, and leave yet another large industrial facility vacant.
"If we can create a situation where Covanta can stabilize their viability, then that is a win for us," Tyer said.
Since July, the city, Covanta, and the companies which buy the steam, Crane & Co. and Neenah Technical Materials, have been meeting to discuss the options. Covanta says the plant was no longer financially viable. The waste-to-energy facility is one of the smallest the company runs throughout the country.
State officials stepped in to help with the passage of an omnibus energy bill which includes new tax incentives for those facilities. That serves as one leg of the stool.
Crane & Co. and Neenah both stepped in to renegotiate their individual contracts - upping the revenue for Covanta - to serve as the second leg. And the city's capital investment is eyed to be the final piece to keep the plant from closing.
"Without these three things, we wouldn't be able to operate," said Ken Ryan, Covanta Pittsfield's business manager.
Richard Rowe, president of U.S. Government products with Crane, said his company hired a consultant to help find alternatives, but to no avail. The consultants couldn't find another company to buy the facility, and it was determined to be a "challenging plant" to run.
Then the state's energy bill opened a door, he said. All sides started meeting to craft a plan which serve all parties.
"In the end, I think this is the right answer," Rowe said. "We have to make a decision very soon. The clock is ticking."
Not the entire committee, however, is supportive of the expense. Councilor At Large Melissa Mazzeo voiced concern that Covanta wouldn't be required to stay open for an extended amount of time.
"I feel like I need to have more guarantees. I need to really know that this is going to be a viable business for longer than four years," Mazzeo said.
Mazzeo said the city hasn't looked for other companies to take it over, and doesn't have a clear picture of Covanta's finances to know if even in four years if the company will still be operating. The $560,000 expense to help the company does include some clawback provisions should the company close before then, but does not specifically restrict the company from closing at all.
"We don't really know what was said in there, how much they are paying, how much they are not paying," Mazzeo said of the new agreements with Covanta and the private companies for the steam. "We are the only ones talking out loud about how much we are ready to invest."
The contract with the city only requires a 150-day notice for Covanta to close, which is intended to give the city a chance to seek out alternatives for pick up.
"We haven't officially notified the city of the closure," Ryan said, clarifying that those days haven't begun when it comes to this proposed closure.
Ryan said the company is committed to stay in Pittsfield for the long-term, and now with these other options for assistance he believes it can. He said the company agreed to the city's four-year agreement because that coincides with other contracts needed to keep operations going.
Mazzeo, however, isn't so sure. The city's $562,000 isn't going to help the revenue stream whatsoever, she said. The company plans to use the city's funding to replace the backup boiler which is used rarely, when the primary boilers are malfunctioning. And the money is going to help the company comply with the Department of Environmental Protection's request to enclose all processing areas, an environmental project and not financial.
"Nothing we are doing is going to increase productivity or the bottom line," Mazzeo said.
Ward 6 Councilor John Krol said that while he doesn't like the position the city is put in because of situation, the move does make financial sense. The city receives some $250,000 in revenue from "host community fees" which comes from $3.42 cents per ton that goes to the facility from outside waste haulers - such as private collections in nearby towns. That is compounded with more than $700,000 in increased cost per year to haul the city's garbage elsewhere.
Essentially, Krol said that by voting against the $562,000 expenditure now that is essentially adding $900,000 to the annual budget while getting no additional services.
Ward 3 Councilor Nicholas Caccamo said the investment made both financial and environmental sense.
Councilor At Large Peter White said the one-time expenditure will keep 25 local jobs as well as help Crane & Co and Neenah, which offer high-paying jobs to many city residents. He said essentially that translates to the city paying $22,480 per Covanta employee to keep the jobs here for at least four more years.
"To me the benefits are overwhelming on this," White said. "We may want to look more into what could be done but this is four years."
The fund has been used for a number of different projects over the years, including helping Barrington Stage or Ice River Springs. Mayor Tyer said this investment may be even more important than those because of the far-reaching impacts Covanta has on the city and neighboring towns.
"We are investing in a company to keep it open, to keep people employed. It is a lot easier to do that than recruit new businesses," Tyer said.
Ward 3 Councilor Nicholas Caccamo added that keeping the plant open has environmental benefits. He said every ton of waste combusted at Covanta offsets a ton of carbon dioxide going into the environment.
"This has some far reaching environmental benefits we have to be keenly aware of," Caccamo said. "It is a good investment economically, and it is a good investment environmentally."
Caccamo added that by making capital investments in the facility, that enhances the opportunity for another company to take it over should Covanta still find the location to be a losing venture.
"These investments make the plant more attractive to a new buyer," Caccamo said.
None of the committee members liked the provision in the contract that the company notifies the city with just 150 days. But, that is a separate contract. That provision is included with the city's contract with Covanta through 2020.
However, Crane & Co. requires a full year's notice, so if Covanta later determines it is still not working, Crane will be notified early enough to let the city know.
"I do not like to spend any money. So I see $562,000 as a significant amount of money. But, I see it as an amount of money we need to spend," Amuso said.
The request will now go to the full City Council on Tuesday for approval. Meanwhile, the Resource Recovery Committee has been called back together to consider all possible changes to the trash collection system, whether or not Covanta closes or not.
