Long Beach : Bond Rating on Troubled Trash Burner Lowered

The feud surrounding Long Beach’s troubled trash-to-energy incinerator this week caught the attention of a prestigious New York financial institution which downgraded the $170-million bond that funded the facility.

Standard & Poor’s Corp., which publishes financial data and rates bonds according to their investment risks, demoted the bond one step--from an A rating to a BBB in its Oct. 16 publication.

The new rating marks the bond as a slightly more risky investment. A Standard & Poor’s rating can substantially affect the value of a bond, investment officials say.

The Terminal Island plant is embroiled in a controversy between its Pittsburgh-based builder, Dravo Corp., and the city of Long Beach. The builder contends that the facility is finished, but the city says it is full of flaws and has refused to sign it off as complete. The builder last month expressed his intention to sue the city as a result.

Standard & Poor’s cited the dispute as reason to believe the city is less likely to pay off the bond debt on the Southeast Resource Recovery Facility, known as SERRF.

But city officials expect the problems to be resolved within 30 days without harm to the plant or the investors who funded its design and construction, said Bill Davis, solid waste bureau manager.

“I think we have things well in hand to fix the plant and get on with our lives,” Davis said.