Plans for a new waste-to-energy plant in Hampden are moving full-speed ahead after the company was approved for tax-free debt financing to the tune of $45 million.
Maryland-based Fiberight applied for the bond from the Finance Authority of Maine, a quasi-independent agency that provides financing and education to local businesses, in January. In its application, the company said the pass-through financing was an “important feature to the minimum profitability required by the project investors.”
The total capital cost for the solid waste facility is $69 million.
The Municipal Review Committee, a nonprofit group that represents the solid waste interests of 187 municipalities across Maine, plans to send its trash to Fiberight when its contract with the Penobscot Energy Recovery Co., or PERC, ends in April 2018.
The committee has said this is the most financially viable option for its member towns, as Fiberight offered a tipping fee of about $70 per ton on a 15-year contract. Towns that sign a 15-year agreement with Orrington-based PERC will pay a tipping fee of $84.36 per ton after 2018.
“(The authority’s) commitment to it is just one more sign of strength that, as a collective, we’ve made a wise choice,” said Greg Lounder, executive director of the municipal committee.
The finance authority said in its decision that Fiberight will “make a material contribution to the economic growth of, control of pollution in, and the betterment of the health and welfare of the inhabitants of the State of Maine.”
It cites the lower tipping fees, the construction jobs the project will create, the people it will employ year-round and the property taxes it will pay to Hampden as economic benefits to the state. It also cites Fiberight’s technology as a benefit to the environment, as it will create a lower amount of waste by-product compared with PERC.
The decision to build the plant, which will convert trash into biofuel after sorting out recyclables, has been controversial. A number of communities were skeptical of the switch, forcing Fiberight to scale back the plant for the 115 municipalities that have signed on for post-2018.
Its competitor, PERC, also appealed state approval of the facility, while a statewide environmental group balked at the state’s approval of the permits. The permits were approved last year, but critics continued to question the relatively untested technology that will be used and the lack of specific financing information. Both appeals were dismissed, and the deadline for further appeals has passed.
While PERC and others wrote testimony in opposition to the tax-free bond, the authority said it didn’t consider some of the arguments, which challenged the project’s feasibility, to be “relevant.” The authority’s task, it said, was to determine potential public benefits, and not whether the project was viable.
The authority also found that the project would not have a “materially adverse effect on PERC,” though it did say that there is little doubt it will “have an adverse economic impact” on the competing company. It argues that PERC’s pricing changes, and not the Fiberight project, are to blame for the loss of customers.
Meanwhile, the committee completed the first phase of construction for the road and utilities for the site in January, in accordance with the development agreement. The board will discuss phase two, which will finish the road and complete sewer and water infrastructure, at its next meeting, according to Lounder.
The board also will receive an update on the financing for the project, which Fiberight CEO Craig Stuart-Paul has said couldn’t be finalized because of the appeals. Stuart-Paul did not immediately return a call to comment on the status of the financial close.
The bond from the finance authority will let Fiberight avoid federal income taxes, according to a previous interview with Christopher Roney, general counsel for the authority. Investors will give money to Fiberight through the authority, but Fiberight will pay the investor back directly, thus not impacting the state’s credit.
“We are delighted to pass one more milestone toward completion of our project,” Stuart-Paul said in a news release. “We, and (the Municipal Review Committee), are now full-speed ahead with our goal to achieve this most important milestone by April of next year.”
Madeline St. Amour — 861-9239