WIN Waste Innovations’ proposed Modified Host Community Agreement

  (Editor’s Note: The following is the modified version of the Host Community Agreement (HCA) that WIN Waste Innovations presented to the Saugus Board of Selectmen on Tuesday (April 4). Selectmen voted 3-2 to accept the revised proposed HCA, with Board of Selectmen Chair Anthony Cogliano and Selectmen Jeffrey Cicolini and Corinne Riley voting for it. Board of Selectmen Vice Chair Debra Panetta and Michael Serino voted against it.)

Dear Board Members:

  At the Saugus Board of Selectmen Meeting held on January 17, 2023, WIN Waste Innovations (WIN Waste) presented a revised Host Community Agreement (HCA) to the Board. The revised HCA included the originally proposed environmental benefits to the Town as described in Attachment 1 that will commence upon WIN Waste obtaining all approvals necessary to operate the landfill beyond the currently approved Valley Fill project.

  WIN Waste proposed to modify the economic considerations of the HCA terms as approved by the Board of Selectmen on September 24, 2022, to include the items described below, including the acceptance of a 20-year agreement term rather than the 25 years originally proposed and the modification to the financial terms as depicted below:

Scenario A: Capital requirement of WIN for the monofill that is less than $5 million:

– A $1 million payment to the Town within 30 days of obtaining final approvals to continue operating the monofill.

– No cost to the Town for MSW disposal for the life of the project (~$900,000 annually and increasing by the market rate for disposal fees).

– $125,000 per year in annual payments for the life of the operation (escalated by CPI)

– Total annual revenue to Saugus of $1.025 million (escalated by CPI).

Scenario B: Capital requirement of WIN for the monofill that is more than $5 million:

– A $1 million payment to the Town within 30 days of obtaining final approvals to continue operating the monofil.

– WIN will pay the Town of Saugus at a rate of $2.50 per ton over the life of the operation (escalated by CPI) (~$275,000 per year starting in 2026).

– Additional tax revenue per year based on an assumed capital investment of $28 million beyond the life of the project.

  At the January 17, 2023, meeting members of the Board of Selectmen asked for a comparison of the financial benefits to the Town from the two alternatives. They are summarized in the Table below, with Scenario B updated since that meeting.

Comparison of Estimated Payments to the Town under the HCA Scenarios

Scenario A – Project Permitted with no additional liner required

-Initial Payment upon receipt of final permits to operate beyond the Valley Fill: $ 1,000,000

-HCA Payment* $ 125,000*

-Free tipping** $ 900,000**

-Initial Year Incremental Tax Payment*** $0

-Year 20 (Total Payout year 1-20) $34.1 million

-Year 40 (Total Payout year 1-40) $34.1 million

Scenario B – Project Permitted with an additional liner required; minimum $20 million capital expense

-Initial Payment upon receipt of final permits to operate beyond the Valley Fill: $1,000,000

-HCA Payment* $409,500

-Free tipping** $0

-Initial Year Incremental Tax Payment*** $137,000 — $183,741

-Annual Tax Payment once full capital is expended: $602,000 — $993,543

-Year 20 (Total Payout year 1-20) $23.1 – $27.4 million

-Year 40 (Total Payout year 1-40) $41.0 – $49.3 million

*HCA Payment is $125,000 in the first year and escalates each year by CPI. **Free Tipping fees are escalated by projected market rates. ***Incremental tax payments increase with capital invested in the landfill based on completion of capital spend. This amount assumes $20 – $28 million investment with approximately 25% in the first year. Incremental tax revenue continues after the project is complete.

  In addition to asking for a written comparison of the two scenarios, at the January 17 meeting the feedback from the Board was that they wanted the maximum possible benefits to the Town. In response to that, and based on subsequent discussions, WIN Waste has revised our offer, specifically the Scenario B Contingency scenario. Should WIN Waste be required to install an additional liner (greater than $20 million capital expense) to satisfy a permitting requirement, WIN Waste will pay the Town $1 million upon the permits being final, $3.50 per ton escalating by CPI over the 20-year life of the project, and incremental taxes under the existing tax agreement with the Town. An estimate of the financial benefits to the town of this revised scenario are presented in the table above.

  Also, at the January 17, 2023, Board of Selectmen meeting there were a number of questions raised about the Tax Agreement (Agreement Clarifying the meaning and effect of the agreement of the Town of Saugus and RESCO and DeMatteo dated June 4, 1984) executed on July 28, 1994. We have reviewed the tax agreement and confirmed that the capital investments made at the monofill in connection with the project are fully taxable and pursuant to the terms of the Tax Agreement. The Agreement remains in effect between the Town and the successor company – WIN Waste Innovations. During the Selectmen’s Meeting on January 17, 2023, some aspects of the Agreement were significantly mischaracterized, and I have attached a second addendum to this letter with the clarifications.

We look forward to discussing this revised offer with the Board of Selectmen.

Sincerely,

James J. Connolly

VP Environmental Compliance

WIN Waste Innovations

Attachment 1 – Environmental Benefits Proposed in the Host Community Agreement

Environmental Considerations

  WIN Waste will voluntarily reduce our permitted NOx emissions to 175 ppm (30 day rolling average) below the current permitted limit of 185 ppm and will conduct an optimization study to identify potential further reductions in the permitted level.

  WIN Waste will voluntarily reduce permitted emissions levels of lead (Pb), Cadmium (Cd), Dioxin and particulate to levels required of new waste to energy units under the Federal Clean Air sub part Eb regulations. See Table below:

NOx New Limit: 175 (30-day rolling average) Current Limit: 185

Cadmium (Cd) New Limit: 10 Current Limit: 35

Lead (Pb) New Limit: 140 Current Limit: 400

Particulate New Limit: 20 Current Limit: 25

Dioxin New Limit: 13 Current Limit: 30

  Compliance with these reduced limits will be by methods described in the DEP permit. WIN Waste is working with the DEP to incorporate these limits into the permit.

  WIN Waste will fund the installation of an ambient monitoring station to measure and record levels of NOx in the ambient air in the Town of Saugus. The instrument will be equivalent in quality to ambient monitors used in the Massachusetts DEP’s monitoring network. The specific location will be decided by the Saugus Board of Health.

  WIN Waste will ask the Massachusetts Department of Public Health to update its 2016 health study of Saugus as part of the permitting process.

  WIN Waste will provide $26,000 per year (escalated by CPI) to fund a qualified, independent third-party consultant to inspect the waste to energy facility and the monofil, to review regulatory submittals and to report to the Board of Health.

Attachment 2 – Tax Agreement Clarifications:

  The clarifications presented below are based on the Tax Agreement (Agreement Clarifying the meaning and effect of the agreement – of the Town of Saugus and RESCO and DeMatteo dated June 4, 1984) executed July 28, 1994.

–The agreement covers both the waste to energy facility (referred to as the “RESCO Property”) and the landfill (referred to as the “Wheelabrator Property”) – see paragraph I.3.

–The initial value assigned to the properties in the agreement was $75 million and this initial value includes “all recent improvements” which would include the landfill’s groundwater protection, barrier wall system and leachate collection system and other capital improvements in place by July 28, 1994. —see paragraph II.A.7.c.

–The tax basis value of both the RESCO Property (the plant) and the Wheelabrator Property (the landfill) are adjusted every year based on the previous value plus the fair cash value of capital improvements to both the “RESCO Property” (the plant) and the “Wheelabrator Property” landfill). The value is increased by the full fair cash value of the capital improvements – see paragraph II.A.7.c. Every August, Win-Waste provides the Town with a document describing the capital added in the prior year and the assessed value is adjusted by that amount. The Town can inspect the facility to confirm the projects described and the value added.

–The agreement remains in effect for the landfill until the property is developed for some other purpose than the disposal of combustion ash residue. – see paragraph II.A.8.a

–The agreement contains a clear definition of “capital improvement”. See paragraph II.D.1.

–The agreement states that capital improvements “required for compliance with the law (which would include those required by permits issued under solid waste laws) shall be taxed as capital improvements”. – see paragraph II.D.4