Does Detroit's incinerator deserve tax credits?
Published: March 23, 2011
It was supposed to be a public hearing about state brownfield tax credits, and whether the new owners of Detroit's waste-to-energy facility deserved to receive them.
Instead, the meeting held last week turned into a contentious, emotionally charged debate about whether the facility itself is desirable.
That dispute has been hashed out often over the years, and it has been covered extensively in this rag. So News Hits is going to keep focused on the issue immediately at hand: $4.1 million in tax credits.
But here's the deal: Owners of the facility say that they don't really need the tax credit. It's just something that they would like to have.
The trash incinerator, since last November, is owned by Detroit Renewable Power (DRP), a subsidiary of Detroit Renewable Energy (DRE). The latter also owns Detroit Thermal, which buys steam from the incinerator and then sells it to customers on a loop that goes from downtown to the New Center area.
Until last year, the incinerator and Detroit Thermal were separately owned. By putting the two operations under the same corporate umbrella, a viable business model was established, says Steven White, chairman of DRE.
Asked by Metro Times what the company would do with the tax credit money, White responded with an e-mail saying:
Detroit Renewable Power (DRP) has identified several key areas that need significant investment in order to restore the plant to functional condition and improve the operations, with an emphasis on processing efficiency and employee working conditions.
"These include: 1) engineering, and implementing a new combustion air design system that further reduces the plant's odor potential; 2) engaging industry experts to redesign the critical boiler superheaters for extended operating life; and 3) installing several new systems to optimize performance beyond the facility's current levels.
And what would happen if the credits aren't granted?
Given the age and condition of the energy-from-waste facility, without the tax credits, Detroit Renewable Power may need to delay future capital investments to ensure that the facility reliably meets the waste disposal needs of its municipal and commercial customers and the energy demands of its steam and electric power consumers. The benefit of the tax credits allows us to proceed more quickly with our investment, and to cover any unexpected capital needs that may arise.
What won't happen, assured White during the public hearing, is the facility's closure. It's not like they are a manufacturer that can close shop here and move production to Mexico.
Either they make a go of it in Detroit, or they are out of business.
And, if White is to be believed, the company is going to be making money, with or without the tax credits.
Immediately following last week's public hearing, a citizen advisory panel, by a vote of 5-2, approved granting the tax credits. Approvals are needed next from the Detroit Brownfield Authority and then the Detroit City Council. Final approval is in the hands of the Michigan Economic Growth Authority (MEGA) Board.
Opponents, for the time being, are looking to the council to help stop the giveaway. Margaret Weber, with the pro-recycling group Zero Waste Detroit sent a letter this week to City Council President Charles Pugh.
In part, she said:
The owners of the incinerator stated publicly at the hearing on March 17, 2011, that "they do not need the credits to be viable" or words to that effect. Given the financial straits of both the city and the state, giving credits/abatements to this business seems unwise. Those limited tax advantages should be reserved for endeavors that depend upon the credits/abatements in order to function and that truly demonstrate an environmental benefit to the city and its residents. DRP is seeking a Brownfield credit of over $4M — that is a great deal of money for an entity that claims viability without it.
Council, are you listening?
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