Editor’s note: This is the third of a three-part series examining the effort being made by Blythe Township and a private entity called FKV LLC to develop the Blythe Recycling And Demolition Site (BRADS), and the battle the neighboring Borough of Saint Clair is waging to stop it.
The BRADS landfill project started with a pact between friends.
“Al and Adam and I started this and we’re just finishing what we started,” David A. Ventresca, one of the partners in the development firm FKV LLC, said March 10, referring to two of the supervisors of Blythe Township, Albert J. Lubinsky Sr. and Adam J. Nothstein.
If the township can get through the appeals filed by the Borough of Saint Clair, the township will have to secure a bond to pay for the development of the construction and demolition waste recycling and disposal facility it wants in Silver Creek.
That will cost more than $20 million, Steven Field, one of the partners in FKV, said March 10.
“And that includes paying us back,” Field said, referring to the private money FKV spent so far on engineering, legal and expert witness fees. So far, FKV spent “in excess of $2.5 million,” Field said.
FKV would not release its invoices to The Republican-Herald. Field said FKV is a private firm and since the township has not yet covered the cost of those invoices, they are not public.
Edward J. Brennan, solicitor for Saint Clair, isn’t sure how the township will find the money.
“This all hinges on them getting financing. And they say that’s not going to be a problem. I think Blythe Township, by itself, doesn’t have the ability to finance this. They’re going to have to use the promise of making a lot of money in this landfill to get financing,” Brennan said March 8.
“We’re working on that right now,” Field said.
Recently, township officials and FKV representatives offered insights into the project, their contract and what the project will mean for the township. And they are looking into whether or not the debt question will have to go on the ballot.
“The Local Government Unit Debt Act, administered by DCED, provides the procedure for Pennsylvania’s local government units to issue debt and tax anticipation notes. The act also provides the borrowing limits for the local government units,” according to the website for the state Department of Community and Economic Development.
“Right now, the township is in receipt of a final non-appealable permit. The permit is still pending before the Environmental Hearing Board. I think, to some degree, it’s a little premature to discuss financing. But I would envision that any future financing would be non-recourse to the township. And if there are any requirements regarding LGUDA, they will be complied with. But so far no referendum has taken place. I wouldn’t envision a need for one,” Gino O. DiNicola, Pottsville, township solicitor, said Monday.
Origins
Blythe is a township with 987 residents, according to www.census.gov, and its 2016 budget is $396,264.69, according to Lubinsky.
The landfill concept was proposed by Lubinsky and Nothstein. On Jan. 9, 2003, the township entered into an agreement with FKV LLC to develop the landfill on a 252-acre site. Since then, the township acquired the land from the Blythe Township Municipal Authority, Lubinsky said.
FKV is made up of three principal investors: Field, West Brunswick Township, the president of Weiner Iron & Metal of Pottsville; William F. King III, Princeton, New Jersey, president of a real estate development firm, King Interests; and Ventresca, Pottsville, the former owner of Pottsville Sanitation.
Ventresca retired from Pottsville Sanitation in 1988. Since then, he’s become an investor and developer, and projects he’s been associated with include the development of the Pine Grove Landfill and Seiders Hill.
King’s firm “built Luther Ridge, an assisted living facility at Seiders Hill,” Ventresca said.
BRADS was inspired, in part, by the development of the Pine Grove Landfill in the 1980s, according to Ventresca. But, while Pine Grove Landfill LLC sought to develop an independent operation, FKV is developing one that will be paid for and owned by Blythe Township.
“If this is such a good deal, why isn’t FKV doing it on their own and simply promising to pay Blythe Township $1 a ton as the commonwealth does in Foster Township?” Brennan asked.
“Al and Adam and I started this and we’re just finishing what we started. FKV was started because when Al and Adam approached us to do the landfill, I went to Steve and Bill and said ‘Look, these guys are good guys. Let’s help them, but let’s do a public-private partnership.’ And that’s what we did. We did a public-private partnership,” Ventresca said March 10.
“Before that, we were going to put a regular municipal landfill in, and that would have included East Norwegian Township. It was going to start in East Norwegian Township down below and work its way up,” Lubinsky said March 10.
Commitment
Since 2003, the township has had two contracts with FKV. The second was approved in October 2007.
“The reason it was amended was a representative of the DEP was persnickety about the relationship between the township and FKV,” Field said.
In the contracts, that relationship is described in numerous ways.
“Consultant,” Ventresca said, describing FKV.
“Developer,” Field said, describing FKV.
Primarily, FKV is the “seller,” according to the contract.
FKV signed on to develop the landfill, be responsible for all sales and marketing regarding it and “periodically audit the operation and maintenance of the facility,” according to the 2007 pact.
The township is listed as the “buyer” and “will be responsible for the operation and maintenance of the facility. Financing of construction and equipping of the facility will be made through Blythe Township,” according to the October 2007 contract.
If the township is ultimately allowed to install the landfill, the township will have to pay FKV for its services to date. That can be done in two ways, according to the October 2007 pact:
“A sum equal to the greater of seventy-five cents per cubit yard of permitted capacity for the first pad or phase of the facility or the actual cost shall be due and payable at settlement hereunder, as adjusted in accordance with the agreement, to be funded from the proceeds of financing and repaid as a portion of the debt service component of operating expenses.”
Brennan believes the “greater” sum would end up being the “actual cost” FKV spent working to establish the landfill since 2003.
“Actual costs shall mean the actual costs as itemized by invoices and incurred by seller associated with the acquisition of the property and development of the facility, including without limitation, all permits and approvals and financing for the facility and an interest cost of five percent per annum of such actual costs,” according to the October 2007 contract.
When the landfill is operational, FKV will make 50 percent of net operating revenue and the township will make 50 percent, plus $1 a ton, according to that contract.
“There’s a dollar a ton host municipality fee on MSW (Municipal Solid Waste) sites. There’s no dollar a ton host fee on C&D (Construction and Demolition Waste) sites. We chose to give the township a dollar a ton host municipality fee. And we restricted that dollar. The supervisors recognized they won’t be supervisors forever, so what they did is they took the dollar and they divvied it up, so much to the water authority, so much to the public works, so much to the police department,” Ventresca said.
“And the senior citizens and the fire company,” Nothstein said.
Lubinsky believed the township would make “a million or a million and a half” dollars on the project.
“Well, we hope so. Again, with any business enterprise there’s no guarantee. We’re very optimistic on the viability of the project,” Field said.
“Part of the original deal was this concept that the project, when financed, has to be done in a way so that there’s no real financial chasing back to the taxpayers if there’s an issue,” Field said.
“Are you familiar with self-liquidating bonds, like for sewer authorities? That’s what they do,” Ventresca said.
“The collateral will be land and the facility itself with all the improvements and all the contracts and the revenue streams,” Field said.
“Right. That’s the collateral,” Ventresca said.
“If we really got in trouble, we’d probably have to sell it. It’s like any other business,” Field said.
“There’s no guarantee the landfill will succeed. And if it doesn’t, under the terms of this agreement, Blythe Township is left holding the bag,” Brennan said.
If Saint Clair manages to defeat the township’s quest to build a landfill, Field said FVK may negotiate with the township to turn the 252-acre site into a residential development.
“But that’s not really viable,” Field said.
Field remains confident in the project, and has kept case files regarding Saint Clair’s appeals. State Environmental Hearing Board Judge Bernard A. Labuskes Jr. wrote the following comment, when one appeal was dismissed May 20, 2015:
“St. Clair’s lack of credible evidence is fatal to meeting its burden of proof. As we reiterated in Brockway Borough Municipal Authority v DEP, when an appellant raises technical or scientific objections to the issuance of a permit, it must then substantiate those objections with technical and scientific evidence.”