SOMESVILLE, Jan 1, 2021 – It will be a full year for the 115 towns which share waste disposal operations to be without recycling – from May 2020, when the “single-stream” Fiberight plant in Hampden closed, to May 2021.
Stakeholders are hopeful a contract will be executed in the first quarter with a new buyer whose name has been kept secret by the 115-town consortium managing agency, Municipal Review Committee, the same folks who were accomplices in the massive and embarrassing collapse of the $90 million plant in May.
MRC was never a conduit for transparency. Nor many of the towns in the consortium. I went to recycle my waste at the Northeast Harbor dump in the spring until suddenly I couldn’t. I was told to dump my waste in Southwest Harbor and it didn’t matter whether I sorted the waste. That’s when I found out that recycling was inoperative on MDI. So I posted it on QSJ.
On Dec. 29, the MRC board voted unanimously to approve a memorandum of understanding with a buyer of the defunct plant, but refused to disclose its name, nor investors.
This is same agency which essentially allowed Fiberight to control the public spin for years. As recently as April the plant was operating as if all were normal, even announcing that it was taking on waste from more municipalities. At its April 20, 2020 board meeting – one month before the plant closed – board members appeared to have no clue as to the dire situation of the plant owners. One board member, Bob Butler of Waldoboro, was effusive in his praise of Fiberight executives. “I am very encouraged, very relieved and impressed,” he said after a Fiberight vice president signaled that a $14.5 million bridge loan from bondholders could close that week. Clearly, the bondholders had deep concerns about the enterprise. It sent shock waves when it turned down the bridge loan, forcing the plant closing.
MRC voiced no such skepticism. It had loaned the plant operator $1.5 million as a bridge in February. What was the due diligence performed? What did the bondholders know that MRC didn’t?
Since then questions abound. But answers are few.
Binary partnerships are complicated enough beasts. But the level of complexity goes up in a multi-player deal.
There is the 115-town agency, MRC, which owns the land the plant sits on and holds the contract for the towns that have signed on to do business with the plant. So MRC is both landowner and customer. There is the Fiberight Corp., parent of Coastal Resources of Maine, the plant operator which closed in May. In the summer a court-appointed receiver acting on behalf of the bondholders was appointed to oversee the plant. Then there are the bondholders, a trustee of the bondholders and a private equity firm.
In watching the replay of the board’s April board meeting (see attached) it will be apparent that this board does not have the management wherewithal to handle such difficult negotiations and ongoing challenges. After the Fiberight VP presented, not a single board member had any questions.
They were put on the board with the best of intentions. Many had hard public works experience which was invaluable when the plant was coming online.
But this is now a different set of challenges. What if this single-stream recycling plant is simply not economically viable? What contingencies must be negotiated if that is the case? What losses are the investors willing to take? What losses are we willing to insist upon? Does the state possess any power to help the towns seize the plant for the great good of the public?
What is the status of the various encumbrances, including a $1.2 million lawsuit from the company CRM hired to operate and staff the plant, NAES Corp., over unpaid expenses?
Mount Desert Islander reported that CRM has been in violation of its contract with the MRC since June 26.
“Even though the facility’s shuttering constituted an unacceptable breach under the terms of the supply agreement, committee legal counsel Jon Pottle said last month, the contracts in place make reopening the facility a worthwhile endeavor,” the Islander reported.
“We don’t believe [terminating the agreement] makes sense while we’re undertaking these efforts and while there’s a reasonable prospect to reopen the facility,” Pottle said. “We’re going to continuously monitor those and evaluate and re-evaluate that, but that is the current posture.”
How much overhead cost is there in paying for the incinerator and keeping the CRM plant in mothball? How much legal and consulting fees has the MRC wracked up?
Calls Thursday morning to Michael Carroll, executive director of MRC, and to Tony Smith, Mount Desert representative to the MRC, were not returned. Carroll in an earlier conversation blamed the travails at CRM on “poor management.”
It’s reasonable that MRC would not want negotiations with the new buyer to be conducted publicly. But why not disclose the buyer and investors? No doubt the acquiring party of a failed plant is going to seek multiple concessions from MRC to take over a failed enterprise.
A future QSJ article may explore how a charismatic founder and CEO of Fiberight Craig Stuart-Paul managed to sweet talk local Maine folks into building the $90 million plant.
In June the Bangor Daily News ran a comprehensive history of the plant’s troubles. https://bangordailynews.com/2020/06/22/news/bangor/heres-what-went-wrong-at-the-shuttered-90m-trash-processing-plant-in-hampden/
When the plant closed, the consortium of 115 towns returned to the incineration plant in Orrington which it used for 30 years. Some towns hauled their garbage to a landfill in Norridgewock, a town half way between Bangor and Augusta. The consortium pays $60 a ton for the 400 tons of garbage it produces a day. The incineration plant was happy to take that windfall.
Where does it leave us?
The Hampden plant never reached 100 percent of its capacity nor capability. A question remains on whether it ever will.
The decision of the MRC board to conduct business in secret is a mistake. The public’s business ought to be conducted in public, reasonably of course. This board has been given multiple chances. It’s time to invite public scrutiny and help. The MRC is simply over its head.
Bangor Daily News asked MRC Executive Director Michael Carroll whether there was an exemption in Maine’s Freedom of Access Act that prevented the memorandum of Understanding from becoming public. He did not answer.
QSJ has requested guidance on FOI disclosure of imminent buyers. QSJ figures it can’t do worse than the status quo.