Departing director addresses future of state landfill
Expansion, increased costs in cards for facility
Things are changing at the Rhode Island Resource Recovery Corporation’s Central Landfill (RIRRC), and after 10 years of service the organization’s Executive Director, Michael OConnell, is retiring.
“Well, I looked in the mirror and said, ‘Hey, this guy should retire,’” said OConnell. “I’m 71, it’s time for me to go.”
OConnell has seen many changes during his tenure, and he expects many more in the coming years. While his last workday is March 10, he told the RIRRC Board of Commissioners he’d be available to help with the transition until June 30. But before he leaves, he reflected upon how far the corporation has come in the last decade and provided insights into what’s ahead for New England’s largest landfill.
While working for a private company headquartered in Atlanta for 12 years flying all over the country, OConnell decided to move north to be closer to his children. As he started to look for a job, he found he didn’t want the fast track of a corporate environment. He discovered the opportunity at RIRRC, and thought that it would be a “nice job for a hobby” and that it “would be the most cushy job.” He soon found that his assumptions were wrong.
“When I came here, the place was just rife with corruption; everywhere you turned there were problems. It was run by people who were put here politically that were looking to self deal, looking to get a quid pro quo,” he said. “It became apparent to me after about six months this place was just being poisoned from the inside out by corruption. Half the people that worked here were put here by politicians. They didn’t feel they had to work, and those who were workers felt like, why bother?”
OConnell made changes, beginning with an opportunity to get a couple members of the Board of Commissioners to resign. Others who were appointed by Gov. Donald Carcieri were told by the governor not to attend any more board meetings, effectively dissolving the board.
“For over two and a half years I reported to the governor. So I was able to get things done and restructure the place, get the cronies out, we got about 40 people out of here, about a third of the employees, and brought in people from the private sector, brought in people that were professionals,” said Oconnell.
“We started replacing people and my philosophy was I want better people, fewer people, more highly compensated people to the extent we could in a public sector company. We started to do that and developed a merit-based philosophy where those people who produced would be the people who were rewarded.”
With that philosophy in place, OConnell began to see integrity return which translated into cost saving efficiencies and a better-run organization. He feels one of his biggest successes was focusing on changing the organization to a merit-based philosophy, rewarding people who produced and continuing to weed out marginal performers.
“We have to justify our fees, so doing that and making all the improvements and running it professionally is one of the things I’m proudest of,” said OConnell. “We’ve been able to offer cost effective services to our residents, Johnston pays zero for tipping fees, and we’re happy about that, and the rest of the municipalities pay $32 [per ton] which is less than half of the market rate.”
Tipping fees and their price of $32 have remained constant for the last 25 years, which OConnell considers to be a bargain. But soon those prices will rise to $39.50 per ton in the 2017-2018 fiscal year, followed by an increase to $47 per ton in the 2018-2019 fiscal year.
“That’s going up, and we’re still happy about that, too, because here in Rhode Island you get a bargain. I came here and thought, “Wow, we’re number 50 on everything that’s good, we’re number 1 in everything that’s bad. We like being able to offer something to the citizens at a cheaper rate, it’s going to have to go up, but it’s still going to be a bargain,” he said.
OConnell explained that RIRRC is not like a regular company that wants to sell or produce more to receive more money. RIRRC wants to sell less so they get less waste, so they have to make more cuts or have more revenue coming in from fewer customers in an effort to try to minimize and save the asset: the landfill itself.
“We don’t control our pricing, that’s done by the board and state, but the state has overridden it for the last 25 years. So we don’t control our destiny like we would in a private sector company on the revenue side,” said OConnell. “On the commercial side we do, but we’re still trying to offer the best, most cost-effective arrangement for even our business customers. We don’t want to be anti-business.”
RIRRC also offers many services for free. According to OConnell, recycling is free, the eco-depot is free, leaf and yard waste dropoff is free until reaching a certain peak. But after 25 years, RIRRC has had to expand, construct a new pretreatment plant, which cost $40 million, and there are still other expenses.
“Capital is a big deal here, so we have gone as far as we could without raising the price, and now we have to,” said OConnell.
“When we had all the corruption in the beginning, and we estimate conservatively that $75 million walked out of here, we have recovered so far through insurance $24 million, of which we’ve netted about $16 million. So we’ve taken that $16 million and delayed that increase as much as we can.
In a presentation for a Joint Hearing of the Senate Committee on Environment and Agriculture and the Senate Committee on Finance in 2015, RIRRC stated that they will be “unable to meet its financial obligations beginning July 2017 and shortly thereafter will become insolvent.”
“Part of the reason we need the increase in tipping fees is because we’re in this capitol intensive period. We borrowed $40 million to put the sewer infrastructure in to meet the new regulatory requirements. That I believe will be the last of the money we can borrow because the lenders won’t provide us any more,” said OConnell
“That was back in 2012 or so, and we got a loan at that time. It was a 10-year loan at 2.7 percent but now we’re getting closer to the end of the life and they see that the state wants to take more money there’s opposition for the tip fee, there’s a bill in the legislature this year for Johnston to take another $6 million, and so when they see all of that they think we have no control of our finances so your projections mean nothing, we can’t loan you money.”
Without cash on hand, OConnell said there are two funding opportunities: one would be to get a subsidy from the state, which is allowed by the legislation, and the other would be to lower prices, bring in more waste, and “squander the space that’s left but be able to meet our capital requirements.”
“We’re not trying to make a profit, we’re just trying to have enough funds to put the infrastructure in to get us through this capital intensive period. Putting in the initial infrastructure, the new cell, the capital is skewed toward the beginning,” he said. “Once you put the initial infrastructure in, the rest is more paced out. I believe with the higher prices we can handle that.”
RIRRC is currently undergoing an expansion of its operating footprint. Its expansion includes growing by about 102 acres in increments of about 25 acres, which will expire in 2038 when capacity will be reached. Expansion will call for removing and relocating significant on-site infrastructure that had been built over the last 25 years. RIRRC recently had to blast ledge for the project, which has caused concerns for some nearby residents.
“We tell the citizens that we’re going to do that at a certain time; we don’t think anything is even noticed but it might be. But we’re very conscious of the citizens here because they’re paranoid about us because no other city in the state has a landfill. And at landfills, we’re not burying perfume, we’re burying nasty stuff. It’s food and waste and it can turn and decompose into nasty stuff, and we’re conscious of that.”
OConnell said it costs more than $1 million per acre to build a cell and prepare the land in an engineered way so it’s protective of the environment.
“We have a lot of regulations we follow. DEM [the Department of Environmental Management] will tell you we are the most regulated agency they have; we are. Our runoff water, we have subsurface water, we have air, we have trash, we have semi-hazardous material, and we still have a good relationship with them,” OConnell said. “But we believe we’re approaching what we think is the final phase. We don’t believe there’s any more room to grow.”
Could they build up?
While the landfill continues to sprawl outward, and its capacity set to be reached in about 20 years, OConnell believes that now is the time for the state to take a hard look at what it will do with its waste once the landfill is full, including growing upwards.
“It’s a possibility, we’d still have to get some FAA approvals, we still would have to get the town approval because while you can’t see from most places in the town the hill, if we take the maybe 75 acres that are on the top flat and build up, I think it would be another 100 feet plus up and you would more than likely see it in town.” OConnell said. “So it would be a visual that would need to be approved, whether or not it would be approved is problematic, we won’t know until we attempt to do it. But we’ve talked with DEM about it and they haven’t ruled it out. That’s something that’s going to have to be wrestled to the ground probably in another five to 10 years.”
OConnell stated that RIRRC’s long-term plan is to provide an updated recommendation that is due in 2020 for what happens after 2038. That may require a recommendation to go vertical, or to try and put another slice of landfill in some “problematic areas” that haven’t been used and may require moving a creek or overcoming other obstacles.
“We’ll explore that between now and then, and if those aren’t possibilities and they end up not being able to implement, then we really have two choices: ship our waste out of state, which becomes quantitatively much, much more expensive, or have a waste processing plant to burn it. Even then you still need a landfill, even an incinerator has 25 percent ash, so you have to have a landfill.”
Is incineration an option?
“A lot of people think, why don’t you just build a waste processing plant, you can sell the energy and be fat and happy, but that’s simply not the case; that’s a myth,” said OConnell.
According to OConnell, a waste energy plant recently built in Florida was the first one constructed in 19 years because they’re expensive. In the 1980s and ’90s, when most waste energy plants were built, they weren’t very well regulated and new environmental requirements were placed on them
“So now landfilling by far is the cheapest. If you want the cheapest disposal it’s landfilling. We had a study done here that if we wanted to burn the trash it would be about $111 a ton on average,” said OConnell. “We’re talking about building a facility at a cost of $450 million. The one that they built in Florida was over $680 million for 3,000 tons a day. We’d probably have to do 2,500 tons a day. So where’s that cash coming from, who is going to pay down the debt, do we require every town to bring their trash here? There’s a whole bunch of things that need to get vetted in the next 10 years.”
Who will lead RIRRC?
RIRRC received 80 applications from parties interested in OConnell’s job, which have now been narrowed down to four. The decision to hire falls to the board of commissioners.
“I think it’s a big loss that we’re losing him. Mike’s a great guy and he was always good to the town and he always respected the town, unlike his predecessors who really couldn’t have cared less for the town, really tried to jam us up, disrespected the residents. Mike is just the opposite,” said Johnston Mayor Joseph Polisena. “Mike’s going to be a big loss because he ran Resource Recovery like a business and he took over at a bad time in 2007-2008 when we started to see the economy crash. His predecessors did nothing, they mismanaged $75 million, and no one went to jail and they wonder why people are cynical in this state.”
Both Polisena and OConnell were complimentary of their working relationship, highlighting the development of the industrial park near Route 295’s exit 5, extending sewer lines on Central Avenue, and the construction of the new fire station on Hartford Avenue.
“I’m a realist, and the landfill isn’t going anywhere. There’s no way that 72 representatives, excluding our three representatives, are going to vote to move it somewhere else, and there’s no way that 37 senators – excluding ours – are going to vote to put it somewhere else. So it’s going to stay there and we have to make the best deal possible for the town.”
Polisena said that going forward, whatever decision is made with the landfill, he would be looking for more money and compensation for Johnston and its residents.
“I don’t know who they’re going to pick. I know they’re in the process of interviewing people. I’m just hoping, not that I have a say, but I’m just hoping it’s somebody I can work with because if it’s not then I will draw a line in the sand and they’ll see a side of Joe Polisena that they’ve never seen before,” he said.