HAVERHILL — The City Council has approved borrowing $14.4 million to cap one of two giant mounds of trash at the old city landfill on Old Groveland Road.
State and federal regulators are requiring Haverhill and Aggregate Industries of Groveland, which co-owns the 66-acre property, to equally share the cost of capping the dump. That means the city will likely pay no more than $7.2 million for the first phase of the project. The regulators required the city to obtain authorization to borrow the full amount, however.
In 2013, the city will then cap the northern mound, according to the schedule for the project. It is expected to cost another $18.8 million, which Haverhill and Aggregate will also share, to cap the second mound.
The landfill is one of the last unlined facilities of its kind in Massachusetts that hasn't been capped yet, city officials said.
Taxpayers must pay back the loan over the next 20 or 30 years. The state is allowing Haverhill to borrow the money from an environmental fund at either 2 percent for the 20-year loan or 2.45 percent for the 30-year note.
The $14.4 million cost includes about $3 million in contingency funds, which may not needed. That could ultimately reduce the amount the city has to borrow to around $5 or $6 million, city officials said.
Haverhill isn't expected to borrow the money and begin the project until next year, but the council had to give Mayor James Fiorentini the OK to borrow the money by the end of the month to qualify for the special interest rate.
The landfill, which borders the Merrimack River and Johnson Creek at the Groveland line, opened in the 1930s and closed in 1981.
In 1999, the federal government ordered the city to cap the landfill, a combined $33.2 million expense that regulators are requiring Haverhill to share equally with Aggregate Industries.
Aggregate had intended to let the city borrow the full amount from the state fund, then share the cost of paying back the loan. However, at a City Council meeting Tuesday, city officials said Aggregate now want to "pay as they go."
In other words, Aggregate will pay half of each bill that is submitted by the contractor hired to cap the landfill, the city's environmental attorney Michael Leon said. Leon said that's potentially a better arrangement for the city because Aggregate's portion of the cost will be paid when the project is finished in about three years.
"If we had (Aggregate) as a loan partner for 30 years, we'd always be worried about them filing bankruptcy," Leon said. "This gives us more security because they have to write a check every time there's a bill during the three-year construction project."
Leon said the city has always been concerned about "being joined at the hip" with a private company, but that Aggregate has stood by their responsibility for capping the landfill for many years and through many changes in the company.
The first phase of the project, capping the so-called southern mound, is expected to be completed by the fall of 2012.
Fiorentini said the majority of the money to pay back the loan must come from the city's annual operating budget. However, he said officials may be able to pay a portion of the loan from an account funded by sewer and water bills, because the Wastewater Department once dumped sludge at the landfill, he said.
The city and Aggregate Industries have already paid about $6.5 million to remove thousands of barrels of hazardous material buried at the landfill and conduct environmental studies of the land.
Once the landfill is capped, the city must decide on a reuse plan for the property. The mayor has said he favors installing solar panels on the property, which would produce electricity the city could use or sell, he said. Under that scenario, Haverhill would become part of a partnership of "brightfields" that would generate money for the city, he said.
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