Board Makes Right Decision on Covanta


During our meeting last week, the Board of Supervisors made the right decision when we opted not to purchase the Covanta incinerator, and instead agreed to a new long-term lease.

Some background: twenty years ago, under an agreement between the County and Covanta, County revenue bonds - backed by the anticipated revenue stream generated through tipping fees (the money trash companies pay to dump the trash) - were used to build the incinerator in Lorton that burns most of the trash produced in Fairfax County. The County did not use tax revenue to make those bond payments. State law provides the County with the authority to require all trash companies in the county to take their trash to the incinerator, thus “guaranteeing” a revenue flow to support the bonds. The energy produced by burning the trash is sold to Dominion and Covanta and the County split the profits. It’s been a mutually-beneficial relationship.

The contract stipulated that at the end of twenty years - when the bonds were paid off (now) – ownership of the incinerator would pass to Covanta unless the County purchased the facility. The purchase price, $417 million, would be determined by a formula in the contract, so this spring, we were faced with the decision whether to purchase, or allow Covanta to receive ownership, with its operating agreement with the County set to expire in 2016.

Negotiations grew serious last year when the County indicated it may exercise its option to buy. Subsequently, Covanta offered the County a new contract under which the County would lease the facility from Covanta, and receive an extended operating agreement for Covanta. The new lease terms are more favorable to Covanta than the old lease, and this was the source of some Board members’ desire to purchase.

However, even though the lease extension is less favorable to the County than the old lease, it still costs residents less money than buying the facility, at least for the next twenty years. Had we purchased the facility, we would have made money after twenty years if the facility was profitable at that time. But, if things changed and it was not profitable, the County would have been stuck with the costs of owning a 50 year old incinerator. Not a good risk in my book.

I argued in closed session in favor of the lease extension, and that position prevailed. Our partnership with Covanta will continue, and we did not take on a needless risk. It was a good day for the County.


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