Pittsfield Council Grants $562K to Help Covanta Stay Open
The Hubbard Avenue facility is now expected to remain open following actions from private companies, the city, and the state Legislature to help make it more economically viable.
The council on Tuesday approved the expenditure from the Pittsfield Economic Development Fund, which was created as part of the settlement with General Electric years ago, to help the company replace a boiler, and comply with state regulations to enclose the area where recyclables are sorted.
The money is part of what officials called a "three-legged stool" with private companies, the state Legislature, and the city coming together to keep the facility economically viable.
Covanta notified its employees earlier this year that the waste-burning plant is eyed to close in March 2017. The plant is one of the smallest and the oldest the company runs nationwide and it was determined that keeping up with the repairs and continuing to run the operation just wasn't financially viable anymore. The Hubbard Avenue facility incinerates 85,000 tons of waste per year and turns it into steam energy, which is then sold to Crane & Co and Neenah Technical Materials.
Republic Services hauls the city's curbside collection there, including recyclables that are stored and later shipped out in bulk to the Springfield Materials Recycling Facility. About 17,000 tons of the trash burned there is from the curbside collection program. Republic Services estimates that with additional miles to travel to the next nearest facility in Canaan, N.Y., and taking more trips with smaller vehicles to Springfield with recyclables would cost an additional $462,000.
Additionally, the city receives about $240,000 a year through a host community fee — a service fee paid to the city for trash brought to the facility from out-of-town haulers — and around $175,000 in taxes and fees such as sewer and water. In total, it is estimated by the Office of Community Development that over the next four years, the closure would cost the city $3,559,951 more, averaging $889,987 per year.
"When it is all said and done, $900,000 annually is a huge amount," said Council Vice President John Krol. "That would absolutely bust our budget ... a vote against this is to essentially add $900,000 to our budget every year with no additional services."
Greg Yon sits on the city's Resource Recovery Committee and says the $462,000 additional cost just for hauling is a "conservative number" and former City Councilor Jonathan Lothrop said not only would the allocation avoid such budgetary impact but also save 25 blue-collar jobs.
"We have the opportunity tonight to spend $550,000, we are partnering with Crane and Neenah, to at least have four more years of low-cost trash disposal," Lothrop said.
Beyond that, there are a number of businesses and landlords who pay for private hauling, which would see an impact on those bills. Lothrop said the expenditure serves both the public interest as well as saving jobs, both criteria for spending the Economic Development Fund money.
That money was just part of the plans to keep the plant operating. The state Legislature included new tax incentives for waste-to-energy facilities in its omnibus energy bill. And Crane & Co., which subcontracts the steam energy with Neenah, renegotiated its contract with Covanta to provide the plant with more revenue.
"The magnitude on an annual basis is similar to what the city of Pittsfield is looking at on an annual basis," Richard Rowe, president of U.S. Government Products for Crane Currency, said. "We have stepped up to the plate."
Rowe said once informed of the closure, the company looked at the expenses of buying a boiler to run on their own and determined it was better to join in on the plans to keep Covanta open. That started with the tax incentives and talking with state Legislatures about the needs. Then, the company renegotiated its contracts, which Rowe did not disclose, and the city was the final piece to the puzzle.
In return for the efforts, Covanta promised to stay open for four more years or else pay back money the city granted it. Those four years will take it to the end of the city's current contract and the end of Crane & Co.'s contract. From there, Ken Ryan, Covanta Pittsfield's business manager, said the hope is to continue to run the plant for years to come.
Ryan agreed when Krol suggested that Covanta's annual operating cost isn't what is leading to the closure but rather the need for the capital repairs to the boiler and the state Department of Environmental Protection's mandate of an enclosure for the recyclables.
"The issue is the capital," Krol said.
Councilor at Large Melissa Mazzeo, however, voted against the city's spending the money. She says she has concerns that the city doesn't have a guarantee and that nobody else is joining the council in helping to save the plant. Mazzeo spent much of Tuesday's meeting asking questions from an array of representatives from Crane, from Covanta, and from the city, emphasizing her concerns with the lack of a guarantee the plant will remain open.
"If they still close in four years or two or three, we are right back where we started," Mazzeo said.
Mazzeo said the city "panicked" when news broke of Covanta's closing and quickly started looking for a way to save the company without thinking all aspects through. Particularly, she wanted details on the contracts between the private entities and wants other commercial haulers to contribute.
"We're really the only one who stepped up and is trying to help," Mazzeo said. "I think everybody has to step up to the table and have a conversation. I really want to put the brakes on a bit until we do have that conversation."
Ward 1 Councilor Lisa Tully, however, refuted Mazzeo's claim that nobody else is involved by citing the input from the state and Crane & Co. She added that the Resource Recovery Committee is continuing to examine the city's trash collection to find ways to save money in the future.
"Even if we pass this, it is not going to stop there. We are going to keep on moving forward in how we can save money with garbage," Tully said.
Resource Recovery Committee Chairwoman Rhonda Serre said the closure would throw a massive hitch in the group's efforts to find cost-saving measures with the curbside trash collection. That group was asked by Mayor Linda Tyer to research and issue a report on the city's trash program by December. The group has been most recently looking into moving toward a tote system, as proposed by Ward 3 Councilor Nicholas Caccamo.
"The commission feels these funds are critical," Serre said, calling the financial repercussions of the closure "catastrophic" to the city's finances.
Meanwhile, Ward 4 Councilor Christopher Connell wanted more details on the revenues of the business. He suggested the company could raise the $3.42 per ton community host fee by $2 and pay the city back in a loan-like program for the upfront capital investment.
"It is just part of what they pay us, we pay back to the city," Connell said.
Ryan responded saying the prices the company sets are determined by the market, so it can't just raise the fees as much as it would want at any given time.
"We set our prices based on what we think we can get for that material. If we set our prices too high, they will go to another facility," Ryan said.
Other discussion centered on the existing agreement with the city and Covanta regarding the plant. The company was required by contract to provide the city 150 days notice of a closure, which many councilors said they felt was too little. Ryan said the company is willing to amend the contract to provide a full year notice in the future.
But ultimately,it came down to basic cost analysis for Councilor at Large Peter White who said spending $140,500 each year for the next fours is $3 million less over the same time period than if the city doesn't give the grant. He said the closure of Covanta impacts the entire city from the taxpayers paying for curbside collection to the businesses to the landlords.
"We have the chance here to save 25 jobs plus some part-time jobs at a time when we are losing too many jobs in this county," White added.
In the end, only Mazzeo opposed the use of the funds.
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Tags: recycling, waste collections,
