Overseers of the aging waste-to-energy plant on the banks of the Connecticut River in Hartford expect to issue $333 million in tax-exempt public bonds to finance a proposed overhaul of the facility and a related recycling plant.
That estimate is included in a newly signed term sheet between the quasi-public Materials Innovation and Recycling Authority (MIRA) and its selected construction overseer and facilities operator, Sacyr Rooney Recovery Team LLC (SRRT).
The two sides have been in talks since last year. The negotiations have taken longer than expected, which led lawmakers to probe the situation earlier this year, after which both sides renewed in writing their commitment to work out a deal.
The term sheet signed last week means the parties have cleared the first of two hurdles laid out in their memorandum of understanding drafted back in July.
“We are pleased to reach this milestone in the mission to bring the publicly owned facility back to full and reliable service,” MIRA President Thomas Kirk said in an email to HBJ last week.
Overall, the project is far from a done deal.
Next up for MIRA and Sacyr Rooney is the drafting of a “comprehensive development agreement” or CDA, which would contain more detailed financial information than the term sheet.
The self-imposed deadline for the CDA is Oct. 2020. If a deal isn’t reached by then, the state and Sacyr Rooney would likely part ways, leaving the future of the facilities in question.
“There are significant challenges remaining, the most critical being the cost of the project and the sources of revenue,” Kirk said. “With the recent reductions in wholesale power prices for the renewable energy produced by the facility, the need for additional or supplemental revenue remains a challenge.”
In addition, the tightening of contamination standards by China — a major historical buyer of recyclable commodities — has also squeezed prices for cardboard and mixed paper.
The term sheet also lays out a variety of targets that both sides must hit, including the amount of waste processed per year and how many municipal waste contracts MIRA must corral for Sacyr Rooney. Outreach and talks with towns begin now, Kirk said.
The state legislature’s original intent for the so-called Mid-Connecticut plant was to find a private partner willing to commit capital to the redevelopment in exchange for various revenues on the back end, but the July MOU made clear that taxpayer financing, secured by tipping fees, energy sales and other revenues generated by the facilities, would be a bigger part of the picture.
Sacyr Rooney may end up financing some of the project. According to the term sheet, the company has committed to explore the feasibility of a mechanical and biological treatment and anaerobic digestion facility, which would help divert organics from the waste stream and open up more capacity at the waste plant.
However, if Sacyr Rooney finds that the facility wouldn’t be financially feasible, it would not be required to build it, according to the term sheet.
The term sheet also includes a host community agreements that would pay the city of Hartford an estimated $4 million per year. That’s more than in recent years, but roughly on par with what the plant paid the city in the earlier part of this decade.