Jul 24, 2008

Recycling center price tag questioned

Cost estimate more than doubles in a year

By Mark Abramson / Daily News Staff Writer

The skyrocketing cost estimates for building a regional recycling plant has raised a red flag with a Burlingame official.

Jesus Nava, the city's representative on the South Bayside Waste Management Authority's board of directors, said he will ask the city council to vote against authorizing $8.6 million in bonds to foot the city's share for the new plant. Burlingame is one of a dozen cities and special districts on the Peninsula that make up the authority.

Nava, who is also Burlingame's finance director, said the plant's price tag has more than doubled from $25.9 million in April 2007 to $53.9 million last month.

Authority members voted 10-0 in June to proceed with the plant's construction. Nava said he voted in favor because doing so simply moved the matter to the city councils and special district boards. He has contacted the board's chairman, San Mateo Public Works Director Larry Patterson, about the price.

"I seem to be the only one raising objections about the cost, and I call (Patterson) to say, 'Is it just me, or is everyone so committed to the project?'" Nava said.

"The problem I have with the SBWMA is there doesn't seem to be any certainty with what the price will be. It makes me wary of any of the numbers that are coming out in terms of this project," he said. "I'm feeling this project is too expensive."

The financing plan for the 72,000-square-foot facility on Shoreway Road in San Carlos needs to be approved by eight board members. Construction could begin in February 2009 and be completed by summer 2010; the recycling equipment would be installed by fall 2010.

The authority's executive director, Kevin McCarthy, said he was surprised by Nava's stance and noted no other board member had expressed similar concerns. The cost has increased because early estimates were very preliminary, McCarthy said.

"They are planning numbers only, and they excluded a lot of the costs, which we had no idea what they would be," he said. "We had no idea what the cost would be to buy the new recycling equipment that would be installed. I could understand if somebody hypothetically looks at those numbers and says, 'Wow, there has been a huge change.'"

The bond debt will be passed to ratepayers in the form of an estimated 5.85 percent increase for collecting recyclable material, McCarthy said.

Only San Mateo and Redwood City would have to issue more bonds than Burlingame for the new single-stream recycling plant, which is designed to eliminate the need to separate recyclable materials, such as bottles and paper.

Redwood City's representative on the board, Finance Director Brian Ponty, said he was not surprised by the cost increase.

"The scope of the project has not increased since we fist started discussing this, what has happened is the cost of the project has gone up, which is not atypical," Ponty said.

Ponty attributed the increases to the rising costs of high-demand construction materials. While Nava's objections should force the authority to look at the finances, the project should continue, he said.

"We have reached a point of no return on this project. If we are going to do single-stream recycling, this is what the cost is going to be," he said. "These commitments have been made."



E-mail Mark Abramson at mabramson@dailynewsgroup.com.