By Justin Sondel
Niagara Gazette — A Niagara Falls waste-to-energy plant has been granted a tax break on its infrastructure expansion project by the Niagara County Industrial Development Agency.
The agency's board of directors voted unanimously to enter into a 15-year payment-in-lieu-of-taxes agreement with Covanta Energy Inc. of New Jersey. The company burns waste at its facility located off of 56th Street and converts it to steam and electric energy, which it then sells to a handful of neighboring factories.
Members of the public criticized various aspects of the deal — environmental concerns, questions of the value gained through the abatement — at a recent public hearing and city council meeting.
A project summary from the agency projects the company's total tax savings to be $8 million and the community benefit created by the expansion at $37 million.
The infrastructure expansion will create 23 new full-time jobs, retain the 86 jobs at the facility now and will create 160 construction jobs, according to the project summary.
But company and government documents suggest the expansion plans are not dependent on the tax break. The documents — Securities and Exchange Commission filings, company presentations to stock holders — show the company needs to complete sections of the expansion to meet contracts that it has already entered in to and will complete other sections of the expansion only if it secures garbage contracts in New York City.
Kevin O'Neil, Covanta Energy's business manager at the Niagara Falls facility, said that two sections of the expansion project — the new steam line being built to supply the paper lining factory Greenpac and the natural gas furnace that will act as a back up for the waste incinerators — are already under construction.
"I'm under contract with Greenpac to provide steam," O'Neil said. "I'm going to have to move forward with that no matter what."
O'Neil said the special waste handling facility and rail transfer facility — the two sections of the project that have permanent jobs linked to them — are dependent on the company's ability to secure contracts allowing them to bring waste in from New York City by rail.
"Those projects are still in the planning stages," O'Neil said. "Despite what everyone might think there is no contract with New York City or anyone else at this point."
O'Neil said Covanta has been working on securing the waste contracts in New York City for years and he is confident the company will be able to secure the rights to the waste.
"We're very close to closing it," he said. "I expect we will."
The company will not receive tax abatement on any portion of the project it does not complete.
Henry Sloma, the chair of the agency's board, said the NCIDA needs to make the region more welcoming to businesses because the burdensome nature of New York state regulations keep companies from locating here.
"We need to make them feel comfortable," he said.
Sloma said the board wants to work with companies like Covanta Energy because they have shown a willingness to invest in Niagara Falls, a place that can be a hard sell.
"They're taking their money and investing it in this community," Sloma said. "The investment of dollars. How many people are showing up to say 'there's $30 million'?"
Sloma said the new infrastructure projects will be worth the investment from county taxpayers, in part, because they make the area — a patchwork of brownfields — more attractive to other outside companies.
"When these companies, and they're global companies, look for locations and maintaining those it has to make business sense to stay there," Sloma said. "They don't have any emotional attachment to Niagara County. It's all money."
The agency gives tax breaks to companies to make the Falls a viable location for operations.
"If we can help make business sense through their operator they are going to stay and operate and continue to invest in this community," he said.
Amy Hope Witryol, a retired bank executive and former state senatorial candidate, urged the agency's board of directors to take a closer look at the finances of the deal before making a decision. She believes the numbers presented by the NCIDA underestimate the amount of taxes being abated in the agreement and overestimate the amount of value being created for the community.
"From my view, the IDA voted to send $20 million to New Jersey," Witryol said.
Witryol said the agency's estimates use a much smaller amount of assessed value on real property than it should for the abatement and counts jobs created and retained which would that will remain or be created regardless of the tax break as part of the community benefit.
"All the information the company filed with the SEC and represented to its stock holders contradicts the basis on which this PILOT was approved," Witryol said. "As someone who spent 25 years loaning money I've seen more due diligence on a $200 credit card than was done by this board in reviewing this agreement."Big Red Number $8M Amount in tax savings granted to Covanta on Thursday