A Focus on Financial Issues
In the previous chapter, the decision to abandon numerous WTE projects in the latter 1980s and early 1990s was viewed in relation to various socioeconomic parameters. This chapter focuses specifically on financial trends that occurred during this time period and on the financial barriers that may have contributed to WTE project cancellation. In addition, this chapter examines current and anticipated financial trends and their potential impacts on the long-term viability of incineration with heat recovery.
Three major financial trends played a role in decisions about WTE projects in the late 1980s and early 1990s and are the primary focuses of this chapter. First, the costs of WTE facilities escalated rapidly during this period, primarily in response to requirements for more sophisticated environmental controls and the movement toward large mass-burn and RDF technologies. Second, federal tax policy took a major turn in 1986 with the enactment of the Tax Reform Act (TRA86), which made it more difficult for local governments to finance capital-intensive WTE facilities with bonds that were exempt from federal taxes. Some projects had to turn to higher-cost financing options. Third, changes in intergovernmental aid and local fiscal policy occurred that made it more difficult for communities to finance WTE facilities, aside from their increasing costs and difficulties in obtaining tax- exempt financing. For example, communities were faced with increasing across-the-board demands from federal and state governments to respond to numerous environmental concerns, while at the same time federal and state governments were taking various actions to make the financing of those projects more difficult and costly. "Lumpy" capital expenditures, tax and expenditure limitations, and the inability of some communities to access national capital markets placed financing restrictions on some jurisdictions.