Middletown energy plant proposal in arbitration

A proposal to build a waste to energy plant in the city of Middletown is awaiting resolution. 

Back in 2004, when the contract was freshly inked, the deal between the city of Middletown and Pencor-Masada Oxynol L.L.C. to build a $200 million waste to energy plant to create clean burning ethanol seemed like a win-win situation. It would provide revenue to the city, while helping other communities in Orange County dispose of their solid waste by turning it into a useful commodity.  

Yet today, there is still no progress toward opening the facility on 22 acres of an old city landfill off Dolson Avenue within the five-year deadline agreed to in the contract. The city and Masada Resource Group are in arbitration to resolve a contractual dispute centered on the apparent lack of financing to build the facility and the company”™s bid to instead create a solid waste transfer station at the site, as a step toward eventually building a waste to energy plant.

The arbitration is in its early stages and there is no time line for resolving the dispute. 

Yet, last month, Masada offered $3 million to the city as a down payment on its host benefit fee, and urged the city put the money toward helping senior citizens meet upcoming heating costs.   

But city officials say despite the upfront payment offer there is no movement toward resolving the core disputes. “The concerns have always been the same, that there is no financing in place to build the facility as originally planned,” said Alex Smith, city corporation counsel.  “And the reason we are in arbitration is we did not want a transfer station, a minor facility, as opposed to the full facility that was agreed upon.”Â 

Donald Watkins, CEO of Masada Resources Group L.L.C. in Birmingham, Al., did not return calls left with his receptionist at a number listed on the company Web site.

The 25-year contract signed in 2004 called for Masada to pay the city an annual $1 million host fee in order to construct and operate a waste-to-ethanol plant that would process 700 tons of solid waste each day. Since Middletown itself produces only some 50 tons of waste daily, the Masada Resources Group had commitments from 15 towns or villages to take in and process their trash. Middletown was going to pay Masada $65 per ton, while the tipping fee at the time at the Orange County landfill was $75 a ton. 

Before the contract was signed, the project was debated for a decade with opponents pointing out there is no other plant like it actually operating anywhere and questioning its safety and efficacy. Some influential environmental groups supported it as a progressive way of dealing with solid waste. The City Council in a 5-3 vote in December 2003 agreed to empower then Mayor Joseph DeStefano to sign a contract. Council President Marlinda Duncanson voted against the plant, she is now Middletown”™s mayor.  She did not return a call placed to her office seeking comment on the matter.

The contract between Middletown and Masada representatives under the business name Pencor-Masada Oxynol L.L.C. was signed in early 2004. But by September 2004, Alabama entrepreneur Daryl Harms, the financial backer and driving force behind the waste-to-ethanol proposal in Middletown was found to be terminally ill and died a short time later. The project idea has endured, but it has not made significant progress. 

Even so, on Aug. 8, the company offered to provide the city $3 million in advanced payments for the host community benefit, to be used for social needs, including helping senior citizens pay for heating fuel this winter. The offer was originally made in 2006 and was reiterated by the company”™s local spokesman Timothy Judge, the chief operating officer of Masada Resource Group.

Watkins, the Masada CEO, said in a statement released that night that “our corporate investment dollar will go to Middletown community service agencies first. The needy and elderly will have a committed guardian who truly cares about their ability to buy fuel and stay warm during the winter seasons.” The statement added the company hopes to quickly move forward with the project, which it estimates will take two years to build.

However, in 2007, the company filed an arbitration claim charging that Middletown was improperly interfering with its project. That matter went before an arbitrator this summer and is in the early stages of an arbitration proceeding, Smith said. He said no decision has been made to accept or reject the $3 million upfront fee offered by Masada. “That”™s under discussion.”Â