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County collects cash from landfill privatization

Nearly a year after the lease of the Ontario County landfill to a private company, county officials have lost the headache of running the day-to-day operations and gained a substantial amount of cash in return.
Casella Waste Systems Inc., of Rutland, Vt., last December took over operations at the Ontario County Recycling and Landfill Management Facility in Seneca, a site that had faced public scrutiny and financial problems.
And while there are public concerns about landfills, Timothy Cretney, regional vice president of Casella, believes many can be alleviated by working together, and the facilities can be a community asset if managed properly.
“Let’s face it, it’s not a glamorous thing,” Cretney said. “But people realize it’s a necessary evil.”
Casella has made efforts this year to improve conditions at the site, and the money they are paying the county to run it has helped taxpayers.
Under the 25-year lease agreement, the county received an up-front lump sum payment of $15 million on the lease and an additional $6 million to cover Casella’s purchase of landfill equipment, liability expenses in finalizing the lease deal and reimbursement for costs associated with negotiating the lease.
Annual lease payments are $2 million, with added payments when fees for haulers outside Ontario County go above $34 a ton. Fees to Ontario County municipalities and haulers start at $26 per ton, with annual increases that cannot exceed the consumer price index. The county will receive $18 million after it gets permits over the next few years that allow Casella to complete a 17-acre expansion of the eastern portion of the landfill. The company has started working on roughly 10 acres.
The agreement is expected to put about $119 million in county coffers before the deal expires in 2028. So far, county officials have been able to use some of the money to pay off debt and put more toward future capital projects.
Ontario County administrator Geoffrey Astles said the decision to lease the landfill came after much discussion among the county board of supervisors.
“We decided to at least explore our options,” said Astles, adding the county sent out a request for proposals regarding the landfill. “Once the proposals came in it was really a straightforward process.”
The county received some six proposals from companies interested in the landfill, Astles said. Three were chosen for a more intensive review, which included further evaluation of the proposals, background checks on the companies and a revenue analysis of each done by an outside consultant.
The lease arrangement has many advantages for the county, the administrator said. If the municipality kept running the site, it was estimated the county would have to subsidize it with taxpayer dollars by 2005.
Instead the county now has a cash windfall from Casella that can pay off debt and help with economic development.
“We were able to take something that was a financial liability and instead turn it into a financial asset,” Astles said.
Under the lease, the county still holds the state Department of Environmental Conservation permit and owns the site.
In addition to the money, the county has the advantage of a well-established company overseeing the day-to-day operations at the site, which employs some 20 full-time workers.
“They really improved the quality of the operations,” Astles said.
Casella, founded in 1975, operates mainly in the Northeastern United States, handling non-hazardous waste for about 293,000 residential and 50,000 industrial and commercial customers.
The company has roughly 2,600 employees and reported sales last year of $439.7 million and a net income of $8.1 million.
According to the agreement, Casella will work within the existing boundaries and permit limits of the 300-acre landfill. The site has a permit from the DEC to accept 2,000 tons of municipal solid waste daily.
Other plans call for Casella to extend sewer lines, upgrade water infrastructure and build a hydroponics greenhouse.
Work is under way on a glass-recycling facility that is expected to electronically sort the materials after they arrive at the landfill, eliminating the need for homeowners and haulers to do the sorting.
Ground was broken this week on the 68,000-square-foot recycling center that is being built next to an existing recycling barn that will be converted into a plant for processing discarded electronics. The existing center is a dual-stream facility that separates newspapers and magazines from glass, plastic and tin.
Recycling is a priority for the company, Cretney said, adding that the building also will include a recycling educational center.
Casella, as a whole, recycles more than 1 million tons per year.
Recycling also is important to county residents, Cretney said. A survey the company completed with the help of Cornell Cooperative Extension showed 95 percent of respondents said recycling should be done.
The building also will provide an opportunity for Casella to try its new patented process of mixing colored glass for resale. Currently, the glass-green, amber and clear-must be sorted, and the green is hard to market, Cretney said.
The new process will allow Casella to sell the glass mixed together, chiefly to bottlers.
The recycling facility, like other parts of the landfill, also will be landscaped, nearly hiding it from view.
“People will know the landfill is there, but they will see a better view than just the landfill and its operations,” Cretney said.
Casella also is working with Innovative Energy Systems Inc., which has a methane-to-energy plant that was built on the site last year and provides electricity from methane gas generated at the landfill to some 4,000 homes per day.
Casella also is renovating a former apartment house, Post Manor, next to the site for offices. Built in 1835, the structure is being restored and converted to its original style, Cretney said.
Seneca Town Supervisor Donald Jensen II said the relationship between the town and Casella has been good, adding that while there are some traffic concerns, other issues, such as odor and litter, have improved.
“You can tell it’s being better managed,” Jensen said.
The town also benefits financially and has seen its host agreement under Casella rise from the one it had with Ontario County. The town receives money for having the operation in its borders. This year, Jensen estimates the town will get nearly $1 million, which is more than the previous agreement.
The money has helped wipe out a town tax rate and is being used to lower residents’ county taxes, Jensen said.
The company also works with a citizens committee that meets monthly to discuss the landfill. It includes residents and Casella representatives.
Astles noted the new projects, such as the single-stream recycling facility, also benefit the environment.
Astles said there was some concern at first among county officials that leasing the facility would mean a loss of control, but he noted that has not been the case.
“So far, it’s been a very good experience,” Astles said.
(adeckert@rbj.net / 585-546-8303)

11/26/04 (C) Rochester Business Journal


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