Dump Documents Dispatch #7
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In Dispatch #5 we learned that Georgia-Pacific's requirements were not met by the State's additional offer on December 18, 2003 of $23 million in tax breaks over 20 years -- in the words of G-P manager Rick Douglas, a "good collection of 'singles and doubles'" but "no home runs." Wasn't there something more that the State could do for G-P?
Within a few days the question became critical, since G-P had decided to postpone the closing on the sale of the landfill by G-P to the State. The idea that the deal might fall through at the last minute caught the attention of both the State and Casella. For the State, it meant coming up in early January, 2004 with further financial incentives, totaling $3-4 million per year over the next five years, or $15-20 million above the $23 million offered in December (and above the $25 million paid for the landfill, and above the long-term below-market prices for biomass fuel and sludge dump capacity). For Casella the loss of this deal would mean the loss of the most critical component in its longterm business strategy, a massive boost in its landfill capacity.
Apparently, the critical missing piece in these new offers was actual cash. Please bear with us: the picture is complicated, but it is getting clearer. The entire purpose of the landfill deal was to provide an immediate cash boost to G-P. The State had no cash handy for bailout purposes -- enter Casella, who came up with $25 million for the landfill. This amount may have been enough to pay for the biomass boiler that G-P claimed it needed to reduce its long-term energy costs. But what about adding further capacity to the Old Town mill in the form of new machines or lines, which probably would be started up in Old Town and closed down in their competing sister mill in Plattsburgh, New York? Where would the $5-10 million come from to make that happen?
Because this whole story has never been told publicly, by the State, or by Casella, or by G-P, or by the news media, we can't claim that our interpretation of the documents is true, or that it is the only story that can be told about this deal. The scanned page below, taken from a new proposal made by the State to G-P on January 9, 2004, suggests that the cash G-P needed would soon be forthcoming.
One apparently minor detail in the final transaction has largely escaped public notice. The landfill price had until this time been reported as $25 million. More recent reports put it at $26 million. Where did the extra $1 million come from, and why? In the final Operating Services Agreement, and extra $1 million was added to the contract in the form of a cash escrow account, called the "Improvement Fund," that could be drawn upon by G-P with the Governor's approval, when certain mill improvements were in place. As will be shown in future dispatches (see Dispatch #8 and Dispatch #9) the $1 million was offered by Casella, along with another $5 million, to keep the deal on track. It seems that the "Additional One-Time Funds" referred to in the document below represent the further $5 million cash commitment that was brought forward from Casella.
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