UCUA Lease Extension

The following was sent to the Westfield Leader by Bruce Paterson:

As a resident I attended the February 18, 2016 Union County freeholder meeting. At this meeting the freeholders had an ordinance for extending the operating lease to Covanta, Inc who run the county incinerator at Rahway. The incinerator is under the purview of the Union County Utilities Authority (UCUA) which is under indirect control of Union County government. Back in 2011 when the county helped refinance UCUA bonds, the UCUA took on an obligation starting in 2013 to bring in an extra 100,000 tons of waste from outside the county into the incinerator to generate additional profits for operator Covanta due to conditions set by the refinancing.

I also attended those refinance meetings back in 2011. Then all parties agreed that the extra 100,000 ton obligation self-imposed by the UCUA may be hard to retrieve. This would create a shortfall in promised profits for Covanta that the UCUA would have to reimburse. It was explained as such in an Economic Analysis report done in February, 2011. Since Covanta was paying to the UCUA lease payments of $4 million annually the economic report acknowledged that this shortfall, estimated to be around $2.5 million, could easily be covered by the lease payments and the refinancing would still be sound financially.

However, despite facing this near guaranteed shortfall in tonnage of waste, the UCUA instead agreed to distribute $2 million annually from the lease payment over to Union County government for their budget. The irony is that the county does not send county waste directly to the incinerator so did not deserve this “vigorish” they received. On this I wrote a letter in 2011 to the towns saying, if anything, the ratepayer towns should be receiving this extra $2 million and not the county.

Right from the start of the obligation for the 100,000 tons, the shortfall came to fruition as the UCUA could not get any other entities to send their waste to our incinerator as they promised. The UCUA was then forced to pay $ 2.1 million/year to Covanta for the last 3 years out of their surplus to cover the shortfall. The UCUA surplus is now exhausted.

And because the UCUA, which is under the directorship of ex-UC freeholder Sullivan, allowed in 2011 the UC Freeholders to seize the $2 million annually, the UCUA is placed under stress. The UCUA is now forced to extend the lease to Covanta out to 2053 to remove the 100,000-ton waste obligation from the lease. I noted at yesterday’s freeholder meeting that the year 2053 is beyond any of us in the room being around and should not be done since total unknowns will be under this obligation. Why doesn’t the UCUA just take back the $2 million “vigorish” from the county?

I never got to finish the dialogue on the UCUA extension ordinance before it was to be voted and approved by the freeholders since the public is only allowed 5 minutes to explain such an intricate network of incompetency, false promises and thievery. The lease extension left out addressing:

  •  what will happen to ratepayers over the next 37 years
  • the profits from the electricity generation from the 22 year extension, and
  • the possible major failure of an incinerator since this type plant with its high heat furnace and conveyors handling trash is wont for replacement, having operated for 25 years so far and will now have to operate for another 37 years under the lease.

But whatever I may have wanted to say, it certainly would fall on deaf ears since the freeholders would have to vote no on it and it’s the same freeholders that are gaining that free and extra $2 million annually at the expense of the ratepayers. Are they all acting in the best interests of the public?

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One response to this post.

  1. Posted by ReadsLikeAMafiaBook on February 20, 2016 at 10:49 pm

    “Are they all acting in the best interests of the public?”

    NEVER ever

    Reply

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