Truth takes a back seat in ongoing incinerator saga

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Last week Carroll County paid $1,000,000.00 to exit as Frederick’s partner in the 1,500 tons-per-day regional trash and tire incinerator planned for location at the McKinney Industrial Center south of Frederick City. The facility will be owned by the Northeast Maryland Waste Disposal Authority.

If this is as wise an investment as Mike Marschner, Frederick County’s Special Projects Manager (and former director of the Division of Utilities and Solid Waste Management), and Frederick County BoCC President Blaine Young have claimed, then why was Carroll County willing to pay to withdraw from the project? In fact, the Carroll County commissioners had already voted to put aside $3,000,000.00 to pay the maximum cost that might have been required to withdraw from the contract.

In contrast, in Frederick County, Blaine Young and Mike Marschner have purposely and repeatedly tried to deceive the public with false claims about the the economic viability of this project.

The original approval for the project in 2009 was substantially based upon an economic model in which short and long term financial projections were calculated based on assumptions about numerous key variables, such as population growth rates, average household waste generation, recycling rates, how much electricity would be produced, the market value of the electricity, as well as many others.

In the five years since the incinerator was approved (construction bonds have not been issued and construction has not begun), the original economic model has been proven to be far off the mark from the beginning.

Mr. Marschner and Commissioner Young have attempted to reassure concerned citizens, saying the financial model would be updated after the required permits for water discharge, air emissions and ash disposal have been issued. Those permits were finally issued two months ago, on February 21, 2014. However, now citizens are being told the financial projections will be revised after a new partner is found to replace Carroll County. This is in stark contrast to what they have been telling the public until now.

It is clear that no other county possibly interested in partnering with Frederick County would do so without a new, rigorous and detailed financial analysis and risk assessment of this massive project, especially since the original analysis and projections have been demonstrated to be so inaccurate.

Here are a few important items about which Marschner and Young are fully aware, but have not shared or discussed with the public.

Financing

Commissioner Young has frequently asserted the bonds are not a debt of the county (and its taxpayers). While this may be technically accurate, because the financing will be revenue bonds issued by the Northeast Maryland Waste Disposal Authority (the “Authority”), and secured by the incinerator’s revenue stream, the Authority has always known that the incinerator’s revenue from electricity production and the sale of ferrous metals would not be sufficient to pay the operating and maintenance expenses and the bond debt.

To address this shortfall, the Authority presented Frederick County with a Energy Recovery Contract, signed and dated July 29, 2009, which includes the debt service as a component of the “Energy Recovery fee” which Frederick County is obligated to pay directly to the Authority (“NEA”).

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In other words, no matter how you slice it, Frederick County is paying the debt service for this project. And that means residential and business taxpayers are fully responsible for the project’s debt and ongoing expenses.

Project Security

Mr. Marschner has told Commissioner Young and the public that Wheelabrator was going to contribute $73 million to the construction of the project. This is false.

Section 6.3B of the Service Agreement shows the $73 million is Wheelabrator’s construction commitment to provide security in the event they were unable to complete construction. The Service Contract between the Authority and Wheelabrator allows Wheelabrator to provide a letter of credit for the $73 million. However, the counties must pay the Authority $111.8 million over a twenty year period regardless of whether any of that construction commitment was actually needed and spent.

Ash Disposal

Mike Marschner omits the fact that the Authority plans to import about 300,000 tons of trash annually because Frederick does not produce enough waste to maximize the incinerator’s capacity. He also fails to inform the public that the Authority plans to burn about 2,000,000 tires in this incinerator, every year.

Michael Marschner told Blaine Young and the public that the participating counties would be hauling incinerator ash to their own landfills. This is true. But Mr. Marschner omitted the fact that there were only two participating counties: Frederick and Carroll. Now that Carroll is no longer a partner, Frederick is the sole Participating County. Mr. Marschner did not tell the Board of Commissioners and the public that under the existing contracts, Frederick County is responsible for disposing of all the incinerator ash, including ash created by burning trash imported from outside jurisdictions.

Frederick County will either have to bury the resulting ash in the Reich’s Ford landfill, or pay to have it hauled out-of-state. In its financial projections the Authority did not include the value of the depletion of the County’s landfill and/or the cost of long hauling the ash. The ash disposal costs amount to several million dollars per year.

Operating Costs

The facility will cost about $2 billion to operate over 30 years. One of the sources to pay this cost will be the System Benefit Charge found on the property tax bill of every property owner in the county. In comparing this facility to the Montgomery trash incinerator, the amount of this subsidy is estimated to be tens of millions of dollars annually.

The Authority negotiates the electricity sales agreements for the Dickerson incinerator in Montgomery County, yet even with this knowledge, it used inflated electricity prices on the spreadsheets presented to the county officials. If realistic electricity generation and prices had been used, the spreadsheets would have shown the incinerator was NOT financially viable without assessing county property owners significantly higher System Benefit Charges.

Both Marschner and Young have been informed that the incinerator’s projected electricity revenue is grossly overstated yet they choose not to disclose that fact.

Savings

Marschner and Young created a video puff piece shortly after the permits were issued wherein Mr. Marschner spoke about the savings the county will realize by using the Authority’s incinerator. As he spoke about long haul costs, the number $83 million appeared up on the screen. This is a number Commissioner Young has referred to often, as well.

But neither Marschner or Young have put that number in context.

Last year, for instance, Frederick County spent $7.1 million to haul most of the solid waste that was not recycled or composted to out-of-county landfills. The $83 million figure represents about ten years of hauling waste out of the county (much of which could also be recycled or composted here).

Marschner also commented that long hauling trash means Frederick County is paying for somebody else’s landfill. However, he fails to mention the County will be paying a lot more for somebody else’s (the Authority’s) incinerator.

Alternatives

Under the newly revised Memorandum of Understanding signed with the Authority, Frederick County can walk away from this project for free after July 31, 2014 if no replacement partner is found.

If Blaine Young is serious about waste disposal alternatives, Frederick County should explore the possibility of a different partnership with Carroll County, this time to utilize the Resource Recovery Park that has been proposed for the old Northern Landfill.

This park would operate as part of a sustainable alternative approach, emphasizing waste reduction, reuse, recycling and composting. It would offer waste disposal options that are far more flexible, less expensive, much less risky, and more environmentally responsible than incineration or landfilling.

This is the future of solid waste disposal, and it’s already happening in many places.

So why are Marschner and Young continuing to deceive the public? And why are they so reticent about exploring alternatives to incineration?


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February 4, 2014

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September 19, 2013

Incinerating trash is an expensive, inefficient and environmentally unfriendly waste of resources!
September 12, 2013

Another chance to do the right thing, and say no to the incinerator
August 1, 2013

Arizona Court Overturns Renewable Energy Credits for Incinerators: A Lesson for Frederick County and Maryland?
July 29, 2013

Frederick County Ignores Major Flaws in Financial Plan for Incinerator
June 21, 2013