State may get stuck with $4.5M for rest stops' cleanup
Published 10:50 am, Wednesday, April 14, 2010
The winning bidder in a 35-year deal to overhaul and manage Connecticut’s highway rest stops has balked at the state’s request that it foot the bill for millions of dollars of environmental cleanup at the 23 stations.
Project Service LLC has refused to pay for the work, which will cost at least $4.5 million.
“I don’t think it’s appropriate for us to clean up someone else’s mess,” said Project Service President Paul Landino. “If that had been the deal, we would not have been interested.”
That has left the state trying to negotiate with Exxon Mobil Corp. to pick up some or all of the expense of cleaning up contaminated groundwater and soil at the rest stops. Exxon Mobil held the previous, 22-year rest stop contract and will continue, through a subcontractor, as Landino’s gas supplier.
Late last year, the Rell administration entered into a 35-year contract with Connecticut-based Project Service to renovate the state’s highway rest stops and provide fuel, food and other services to motorists. Exxon Mobil and McDonald’s held the prior contract.
Legislators are beginning to ask questions about the duration of the deal and whether it made economic sense for a state grappling with an historic fiscal crisis.
Under the contract, the state agreed to cuts in rent and sales revenues from gas, food and other amenities in return for Project Service’s investing $188 million to renovate the deteriorating rest stop facilities.
The Department of Transportation also tried to convince bidders to assume environmental remediation costs, but neither Project Service nor its competition for the rest stop contract – HMSHost Family Restaurants – would agree to those terms.
Because of the ongoing talks with Exxon Mobil, state officials were reluctant Tuesday to explain the type, cause or extent of the contamination or estimated clean-up costs. A state report on the overall condition of the rest stops issued in September 2008 concluded, “Many of the study sites have been identified as having ground water contamination.” Leaky underground fuel storage tanks were found at 15 locations.
Officials at Exxon Mobil did not respond immediately to requests for comment.
According to the contract with Project Service, the state is on the hook for at least $4.5 million worth of environmental remediation. The Rell administration is seeking authorization from the General Assembly to borrow that amount.
“The bond authorization is in case the state has to do part of the cleanup,” Beckham said. The original, 1988 rest stop contract would appear to hold Exxon Mobil liable for maintaining underground tanks and addressing fuel spills. But state officials declined to confirm that interpretation.
“Many of these rest stations face remediation issues that could be expected from their long-term use as gas station facilities,” said Dennis Schain, a spokesman for the state Department of Environmental Protection. “As a new contract is being negotiated for them, DEP is working with DOT to make certain there are provisions for any necessary remediation work on these sites. The specific details of responsibility are being worked on now by DOT.”
Asked why DOT initially wanted to require the new rest stop operator to take on the cleanup, DOT spokesman Judd Everhart said: “The state believed it was worth trying to achieve, while also building enough flexibility into the Request for Proposals that if it was rejected by proposers, as it was, the state could ’peel’ the request back. If an innovative approach to the environmental aspects of the deal could be incorporated into the deal, it could have been beneficial to all stakeholders.”
Sen. Eileen Daily, D-Westbrook, co-chairwoman of the legislature’s Finance, Revenue and Bonding Committee, hoped the Rell administration will be more forthcoming about the cleanup during an informational hearing on the rest stops scheduled for Monday.
“Since it was indicated the developer (Project Service) was putting up all the money for improvements, the question looms large about why” the state may need to borrow the $4.5 million, Daily said.
Staff writer Martin B. Cassidy contributed to this story.