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City’s Covanta deal discourages rival recycling programs

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The city of Indianapolis faces financial penalties if it launches alternative recycling programs, under a pending deal with incinerator operator Covanta.

The Indianapolis Board of Public Works will vote Wednesday on an agreement that’s worth more than $112 million in revenue to Covanta, which would become the city’s main residential recycling provider for the next 14 years.

Covanta is proposing to build a $45 million recycling facility next to its incinerator on Harding Street. Under the deal negotiated by Republican Mayor Greg Ballard's administration, the city would continue to send all household waste to Covanta, but the company would pluck out recyclables and sell them on the commodities market.

Companies that rely on recycled goods oppose the deal because they say Covanta’s facility would generate sub-par material for their industries. But the Department of Public Works says it’s a way to boost the city’s overall recycling rate without requiring residents to sign up for a separate curbside service.

Curbside recycling is currently available for an additional monthly fee through Republic Services, but participation is low.

Democrats on the City-County Council want the city to pursue other alternatives, but that would be impossible under terms of the Covanta deal, which were made available to the Board of Public Works on Friday.

The agreement prohibits the city from launching new recycling programs, and it provides that Covanta could receive $333,333 a month in liquidated damages.

“In other words, if a future administration wants to switch to a better recycling program, it will have to pay off Covanta to the tune of $4 million per year,” Fred Biesecker, general counsel to the city council, said in a memo to Democratic Councilor At-Large John Barth.

The majority of the members of the Board of Public Works are appointed by Ballard. The panel is expected to approve the Covanta deal Wednesday.

Barth acknowledged that the council has no authority over the Covanta contract. He complained that terms of the agreement weren’t known when the Board of Public Works held a public hearing on the issue July 23.

“It concerns me that the whole process of agreeing to this contract has been behind closed doors with no public input on the details of the contract,” Barth said.

The Department of Public Works didn’t respond this morning to questions about the Covanta deal.

Covanta spokesman James Regan said via email that, while the company is guaranteeing it will recycle 18 percent of the waste stream, "It’s in our best interest to do better—to recycle as much material as possible."

Biesecker also said the contract provides a financial disincentive for the city to significantly boost participation in the current curbside program. The city will receive a cut of the revenue Covanta generates by selling steam produced by its incinerator to Citizens Energy, but that could diminish, according to other terms of the contract.

Also under the new deal, the city could receive a share of Covanta’s recycling revenue. Carey Hamilton, executive director of the Indiana Recycling Coalition, said the hurdle provided in the contract is too high.

“Industry tells me the city will very likely never see a dime based on the parameters in the contract,” Hamilton said via email.

Here’s a breakdown of key points in the contract:

* City will continue to pay tipping fees, which are $30.04 per ton of trash in 2014. That would generate about $8 million for Covanta, based on the city’s waste stream last year, which was 267,158 tons. The contract would last through 2028, making it worth at least $112 million.

* City will no longer have to meet a quota to provide 300,000 tons of waste.

* City will continue to receive a share of steam revenue. City’s share will be 10.8 percent, if it delivers at least 260,000 tons of trash. That share will increase or decrease 0.4 percent for every 10,000 tons over or under that minimum. Steam revenue may be reduced further if curbside recycling tonnage exceeds the 2013 amount by more than 5 percent.

* Covanta must pull at least 18 percent of waste for recycling.

* City and Covanta will share recycling revenue after the sixth full year of operation if 18 percent of the waste stream is recycled and Covanta receives $225 per ton (net of recovery costs) for the material.

* City will continue to pay Covanta’s real and personal property taxes (as provided in earlier agreements), not to exceed $4 million.

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  • Actually a good idea
    If you really think about it this is a no brainer and something like this should be mandatory for all waste to every plants like Covanta Indy. Curbside recycling programs in even the strongest areas like CA have very like recycling rates. This 18% is what gets recovered out of the garbage and recycled as opposed to burning. So it's really 80-90% of all potential recyclables gets reused as opposed to always getting burned if someone doesn't participate properly in the curbside program, which from experience is the case everywhere in America. What COVANTA is proposing is exactly what is being done in Europe for almost a decade already. The technology has improved to make this system work and it's been proven in Europe so why not in INDY?!
  • Disgusting
    More corruption from the Ballard administration...http://www.indystar.com/story/opinion/columnists/matthew-tully/2014/08/05/tully-big-pay-day-former-greg-ballard-aide-outrageous/13617591/
  • Greg Ballard
    My oh my. If you took all the negatives of a Democrat and combined them with the negatives of a Republican, you would get Greg Ballard. Tax and Spend, corrupt, crony capitalist, privatization of public entities to enrich and benefit the few (his buddies and campaign contributors). I don't know if Joe Hogsett will be a great mayor, but good lord, Indianapolis needs a change!
  • Not so fast
    I would say the "open market" is only open in favor of a rejigger contract with Covanta that demands tonnage or risks having to pay Covanta vast sums for not supplying them with garbage. 18% is a paltry recycling rate plus there is no contract stating they would actually have to meet that over the span of the 14-year contract. WAKE UP INDY - recycling means using the material again, not just feeling good that a company more interested in burning your refuse might turn it into landfill cover someday.
  • Covanta
    As a small business owner in Marion county, all I can say is that all who are opposing this are just afraid of having to compete on the open market as all of the rest of us small business owners have to do every day. Without all of the subsidies they receive now I doubt the nay sayers would be as efficient as what Covanta will be. Also why would we the citizens oppose something that is sustainable and cost us no money to do it. The only ones complaining seem to be the recyclers that have their best interest at stake(not ours,the residents) in not competing in our country's greatest asset, ingenuity of the business community. Finally, this project does not get rid of curb side recycling at all, it just provides an alternative. So let the free market prevail as it should in our great country. Not something propped up by subsidy. Thank you
    • Covanta Deal Bad for Taxpayers
      This deal is awful. Just found this petition which already has nearly 900 signatures. Sign to oppose now before this deal goes through. https://www.change.org/petitions/board-of-public-works-member-lori-miser-support-recycling-in-indy-mixing-recyclables-with-trash-will-negatively-impact-recycling-for-decades-to-come-please-vote-no-on-covanta?utm_campaign=buffer&utm_content=buffer67927&utm_medium=social&utm_source=facebook.com
    • want some more champaign with that wine.
      Democrats are popping the champaign bottles without realizing the city itself cant enter into a rival contract. That doesnt mean a non profit cant encorage recycling for the individual. Also Ruth democrats arent getting a monoply of Indianapolis Government. If they do then the Indiana statehouse can intervene like they did with the 4 at large seats. This time the statehouse can remove party labels from Indys government (Good luck pulling a straight ticket then)
    • Impeach Ballard
      This Mayor has no limits.... This latest contract and the $750K consulting deal for the justice center lobbying are just obscene!! Can't the Council do something the STOP THE MADNESS???
    • Incentives for me at least
      This will be the deal that has been going door-to-door stumping for Joe Hogsett.
    • Ballard
      Not surprised. Sad for all of us
    • The Jig Is Up
      The guys who run and profit from the Ballard Administration know that the game is up and come January 2016 the party will be over. They are stuffing themselves now knowing they will be a long time on the outside looking in. Too bad citizens will be paying for generations to come for the looting that is going on today.
    • Ballard Legacy
      Ballard's administration is either lazy or less that prudent in all these one sided deals he signs. The Eastside police/security center, handing over a parking garage to a political buddy, parking meters outsourced for decades and now a waste management contract that limits the city for years to come. Ballard contract is up next year!
    • Ballard
      It's things like this deal that will bring a Democrat mayor and supermajority to the council. Great column on that topic is here... http://www.ogdenonpolitics.com/2014/08/will-indianapolis-council-republican.html
    • Ballard
      The Ballard administration is out of control. The citizens of this city are going to be paying for his crony capitalism for years and years to come.

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