Blast from the past – the organics plant’s shaky beginning

Posted October 17, 2013

Reproduced column published in the Guelph Mercury December 10, 2011 with updated notes

By Gerry Barker

The smells emanating from the new Organic Waste Processing Facility (OWPF) on Dunlop Drive have oozed into the hallowed halls of city hall. The odour of voodoo financial management pervades as the city released a Question & Answer (Q&A) statement about the plant.

It is revealing what the city-supplied (Q&A) fails to answer.

The city acknowledges that the composting odour comes from the new plant. This is different from the first response in which it blamed the nearby Cargill plant for the problem.

The new plant stopped receiving green bag waste November 25 and that feedstock is now shipped to a St. Thomas landfill. This cost is stated “about $61 a tonne”. What is left out is the cost of shipping the clear bag garbage to St. Thomas, a practice that has been going on since cancellation of the contract to incinerate the waste in a New York State facility. That cost was $85 a tonne.

It is estimated by city officials that the contractor, Maple Reinders, will take at least six months to fix the odour problem and meet Ministry of Environment specifications. That could be sometime next May (2012) provided the repairs are completed.

Update note: That occurred in March 2012 when more than 900 tonnes of wet waste was shipped from Hamilton to test the new organic waste facility.

The city says the cost of processing the green bag waste at the new plant is “about $79 a tonne”.

This is where things get murky.

Not included in that $79 operational estimate is the cost of borrowing the $32 million capital cost, depreciation of the facility, maintenance and insurance. Another fact is the cost of road repairs in the city caused by trucks delivering Waterloo waste to the Watson Road plant.

The interest rate must be included in the cost of operation of the facility. For example, let’s assume the city has borrowed the $32 million at an interest rate of 4% per annum. That is $1,280,000 in interest alone not including repayment of principal.

The lifespan of the plant is estimated to be 20 years. If the $32 million debenture borrowed matures in that time frame, the cost of this misadventure is more than $57,600,000. That does not include the $15 million to be spent switching from plastic to green cart/bins.

It gets more interesting. The Q&A does not reveal the terms of the agreement with Maple Reinders.  This contractor controls an outfit named Aim Environmental Group and its subsidiary Wellington Organix.

All three of these entities are getting a piece of the pie. Maple Reinders is designer and contractor to build the facility. Its subsidiary Wellington Organix operates the plant. And Aim Environmental negotiated the $117 price per tonne for the City of Waterloo to send its wet waste to Guelph.

That arrangement includes guaranteeing Waterloo access to two-thirds of the plant capacity.

Update Note:  Waterloo missed its target of 20,000 tonnes in 2012 shipping only 9,100 tonnes.  Terms of the contract require the Region to pay for 20,000 tonnes regardless. The Region believes it is losing more than $1.6 million per year because it is unable to meet the contracted 20,000 tonnes.

So the taxpayers of Guelph have financed a $32 million organic waste composting plant to provide a service to another municipality that does not cover the real operating costs of the plant. All liability lies with the taxpayers of Guelph.

If the city is paying $61 a tonne to send green bag waste to a St. Thomas landfill with no maintenance, depreciation or cost of capital affecting the price, one can only conclude the alleged $79 operating cost of the new plant is vastly understated. Hey! These aren’t my figures but are found on the city website.

This is a project that has been riddled with lies of omission, secrecy, and management bungling. The only solution to clear the air is to hold a judicial enquiry to investigate what happened and expose the expenses of this failed project.

Update Note: Instead of a judicial enquiry, concerned citizens have sent a petition to the Ministry of Municipal Affairs and Housing requesting an audit of the city finances and operations.

That giant sucking sound you hear is your tax dollars being flushed down the toilet.

 

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