Since 1925, the Fairfax County Chamber of Commerce has advocated on behalf of business by encouraging a fair and free market. In the last thirty years, the Chamber has been a proponent of public-private partnerships after the standard model of public procurement shifted in the 1980s to encourage private investment in infrastructure. The private sector delivers cost-effective and efficient services to constituents with limited risks to the locality.
Twenty-two years ago, Fairfax County entered into a public private partnership with Covanta Fairfax, Inc. where Covanta owns and operates the I-95 Energy Resource Recovery Facility in Lorton, Virginia. This facility turns trash into energy and has been an example for a successful public-private partnership with competitive below market rates.
In May of last year the County explored purchasing the facility and in December, as part of that process, the fair market value was assessed at $417.5 million. County staff has recommended that the Board of Supervisors vote to move forward with the purchase based on assumptions previously rebutted by industry experts. In response, the Fairfax Chamber formed a coalition in opposition to ensure the facts were properly presented to the Board of Supervisors and County residents.
The coalition is concerned that County staff’s objective is to own this facility regardless of the facts, especially knowing that government control of prices and markets historically leads to higher costs, a decline in service and reduced consumer option.
Covanta Energy has patiently and respectfully tried to negotiate a new long term agreement with County staff to continue the successful public private partnership. The parties were not far apart and the County had within its grasp a stable long term contract with below market rates for trash disposal. It is the coalition’s understanding that the proposal is still on the table with modifications that benefit the County, such as waste volume commitment flexibility, termination rights and a sharing in the savings in the recently paid off project debt service.
Further, the coalition believes Fairfax County staff’s proposal would lead to higher prices and more risk for Fairfax County taxpayers. County staff has stated they will raise trash disposal rates to pay for the debt service banking on current pricing flow control laws. These laws could be dissolved, as they were in the mid 1990s, at which time the County struggled with project system costs, which could cause a project default and/or require county funding through the general fund. Additionally, they are betting on energy prices to increase at a rate of 4 to 5 percent annually over the next 30 years, something that has never happened and energy experts are not predicting.
Lastly, financial risk for the County and its citizens will increase because County staff’s debt financing plan requires a certain number of tons of trash to be processed at the facility and if those tons are not achieved, trash rates will need to increase still further. If not, the County may need to use general funds that are used for core services to pay the debt. These core services include funding for schools, police and fire departments and even environmentally friendly programs such as parks and recycling programs.
County staff’s proposal with higher cost and higher risk comes in spite of the outstanding operational and environmental record of Covanta Energy. The company is a world leader in the energy from waste business. Covanta Energy has received recognition and awards for its exceptional environmental record including the Energy Innovator Award from the U.S. Department of Energy (DOE) and was honored by the U.S. Environmental Protection Agency (EPA) for continuous improvement and exceeding regulatory requirements.
Fairfax County’s citizens and businesses will end up on the losing end if the Board of Supervisors agrees to the County staffs’ proposal. We hope the members of the Board of Supervisors are able to see through the County staff’s overly optimistic assumptions and misleading facts and reject this ill-advised proposal.
Join the coalition at www.fairfaxchamber.org
Twenty-two years ago, Fairfax County entered into a public private partnership with Covanta Fairfax, Inc. where Covanta owns and operates the I-95 Energy Resource Recovery Facility in Lorton, Virginia. This facility turns trash into energy and has been an example for a successful public-private partnership with competitive below market rates.
In May of last year the County explored purchasing the facility and in December, as part of that process, the fair market value was assessed at $417.5 million. County staff has recommended that the Board of Supervisors vote to move forward with the purchase based on assumptions previously rebutted by industry experts. In response, the Fairfax Chamber formed a coalition in opposition to ensure the facts were properly presented to the Board of Supervisors and County residents.
The coalition is concerned that County staff’s objective is to own this facility regardless of the facts, especially knowing that government control of prices and markets historically leads to higher costs, a decline in service and reduced consumer option.
Covanta Energy has patiently and respectfully tried to negotiate a new long term agreement with County staff to continue the successful public private partnership. The parties were not far apart and the County had within its grasp a stable long term contract with below market rates for trash disposal. It is the coalition’s understanding that the proposal is still on the table with modifications that benefit the County, such as waste volume commitment flexibility, termination rights and a sharing in the savings in the recently paid off project debt service.
Further, the coalition believes Fairfax County staff’s proposal would lead to higher prices and more risk for Fairfax County taxpayers. County staff has stated they will raise trash disposal rates to pay for the debt service banking on current pricing flow control laws. These laws could be dissolved, as they were in the mid 1990s, at which time the County struggled with project system costs, which could cause a project default and/or require county funding through the general fund. Additionally, they are betting on energy prices to increase at a rate of 4 to 5 percent annually over the next 30 years, something that has never happened and energy experts are not predicting.
Lastly, financial risk for the County and its citizens will increase because County staff’s debt financing plan requires a certain number of tons of trash to be processed at the facility and if those tons are not achieved, trash rates will need to increase still further. If not, the County may need to use general funds that are used for core services to pay the debt. These core services include funding for schools, police and fire departments and even environmentally friendly programs such as parks and recycling programs.
County staff’s proposal with higher cost and higher risk comes in spite of the outstanding operational and environmental record of Covanta Energy. The company is a world leader in the energy from waste business. Covanta Energy has received recognition and awards for its exceptional environmental record including the Energy Innovator Award from the U.S. Department of Energy (DOE) and was honored by the U.S. Environmental Protection Agency (EPA) for continuous improvement and exceeding regulatory requirements.
Fairfax County’s citizens and businesses will end up on the losing end if the Board of Supervisors agrees to the County staffs’ proposal. We hope the members of the Board of Supervisors are able to see through the County staff’s overly optimistic assumptions and misleading facts and reject this ill-advised proposal.
Join the coalition at www.fairfaxchamber.org
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