UPDATE: City board approves recycling deal with Covanta

Members of the Indianapolis Board of Public Works encouraged residents to continue alternative recycling methods even as they voted Wednesday in favor of a contract that encourages the city to send as much household waste as possible to incinerator operator Covanta.

The board voted 4-1 for the agreement, under which Covanta will build a $45 million facility next to its Harding Street incinerator to recover recyclable goods from household waste. Covanta currently burns all the city's household trash, but also wants to get into the recycling business. Covanta would sell the recyclables it claims from the trash stream and sell them on the commodities market.

The new “material recovery facility,” or MRF,  would pluck out 80 percent to 90 percent of paper, plastics, cardboard and metal, Covanta spokesman James Regan told IBJ in June. It would not recover glass, but the company, based in Morristown, N.J., could recycle glass in the future, he said.

The center is expected to be completed by 2016. The contract, which lasts through 2028, is worth an estimated $112 million or more to Covanta.

Responding to an apparent outpouring of opposition, board of public works member Robert Parrin said residents seemed to be under the impression that the new program, in which residents won't need to separate recyclables from trash, and traditional curbside recycling are mutually exclusive.

"I, for one, will continue to do it," Parrin said of curbside recycling.

The city offers curbside recycling through Republic Services Inc., which charges a separate monthly fee to households. Under the Covanta contract, the city can continue all its current recycling programs, including dropoff points and Republic's service, but the city is is prohibited from launching new programs. There are also financial disincentives to diverting recyclables away from Covanta. 

The city will continue to receive a share of Covanta's revenue from selling steam to Citizens Energy Group, but that will be reduced if the total amount of solid waste drops below 260,000 tons a year. The city's share would also be reduced if participation in the Republic's curbside program grows by more than 5 percent from the 2013 participation rate.

Steam is a big source of revenue for Covanta, which sent the city $2.4 million last year under its current contract.

Jeremiah Shirk, chief of staff in the Department of Public Works, told Parrin there is nothing in the new Covanta contract to prohibit the promotion of curbside recycling. Earlier in the board's discussion, he said revenue sharing is one reason to sign the Covanta deal.

The lone vote against the contract was by board member Gregory Garrett, a City-County Council appointee who questioned provisions of the deal, including liquidated damages of $333,333 a month if the city starts another recycling program. Shirk said the liquidated damages are necessary to protect Covanta's $45 million investment.

The board took no testimony on the contract. City attorney Alex Beatty said the board is not legally required to hold a public hearing on the Covanta deal, which is an amendment to the current contract running through 2018. Testimony that was heard on July 23, he said, was a "public comment opportunity." At the time, terms of the deal were still being negotiated. 

Carey Hamilton, executive director of the Indiana Recycling Coalition, said some industry partners who oppose the Covanta deal, are questioning the legality of the contract approval process.

As an amendment to a Department of Public Works contract, the deal wasn't subject to City-County Council approval. She said members of her coalition are questioning whether the deal should be treated as a new contract because it deals with recycling for the first time.

Historically, Indianapolis hasn’t recycled much, but total tonnage appears to be increasing. In 2009, the city generated 7,279 tons of recyclables from curbside and free bins. Currently, it's about 13,000 tons.

Covanta says it can boost total tonnage by five times under the new agreement.

“Today’s vote marks a giant leap forward for Indy’s efforts to boost recycling rates,” Indianapolis Office of Sustainability Director Melody Park said in a prepared statement issued Wednesday afternoon. "Immediately upon its opening, the Covanta Advanced Recycling Center will boost the rate of homes recycling from 10 percent to 100 percent. Even more, the center boosts our position as a national leader in sustainability. Years from now, Indianapolis will be recognized as a front-runner in innovative, game-changing recycling technology that benefits communities, the environment and taxpayers.”