Councillors voted six to four last week to proceed with the project, which aims to divert 900,000 tonnes of food and garden organics from landfill over 25 years.

The council says the facility will save ratepayers $24 million in operational costs and $32.5 million in state government levies.

Victorian-based Barpa Pty Ltd, which has designed 120 composting facilities worldwide, was chosen ahead of three other less expensive tenders, including one from the company that built the Awaba waste management facility.

The company's tender was $7million more than the cheapest bid.

A City of Newcastle spokesman said the higher price reflected the council's decision to invest in a fully enclosed facility to avoid odour issues that had plagued other councils, including Lake Macquarie.

"Other councils admitted that their open air facilities had created significant odour issues for local communities," he said.

"Lake Macquarie City Council staff were candid in their learnings and experience of building an organics facility. City of Newcastle made a decision to construct a facility using a technology different to that proposed by the local builder who built Lake Macquarie's organics facility."

But Councillor Allan Robinson, who branded the project 'a waste of money' said he was appalled by the decision to choose a Victorian contactor.

"It's an absolute disgrace," he said.

"Lake Macquarie doesn't have a fully enclosed facility like Newcastle will have, but are they happy with it?"

Part of the council's approval for the project included a stipulation that preference must be given to local companies when the builder tenders trade packages for the construction of the project.

Councillor John Church was similarly scathing of his assessment of the tender process.

"Council should have made its specifications clear and put that out to public tender. Instead they have walked away from the lump sum tenders and chosen to work with a company whose tender was $7million (or 50 per cent) higher than the lowest bid. Council has lost the competitive tension an open tender provides and there are fears that the final costs could exceed $24million," he said.

"There has been no detailed comparison between the different technologies given to councillors that explains the costs and benefits between the different options, and why a 50 per cent more expensive option is the better way to go. The (Local Government) Act requires Council to approve the best value-for-money solution. Councillors were not given the information, or opportunity to do this."

City of Newcastle agreed to a Newcastle Herald request to release a redacted version of the project's previously confidential 20 page business case report and an internal memo containing return on investment modelling.

The operational cost of the facility is estimated to be $4.8million annually.

The council's business case argues this is $6million less than the alternative option, which is to continue to transfer waste to Ravensworth in the Upper Hunter and pay the state government's food waste levy.

In addition it argues it will collect $18million in compost sales resulting in a net favourable impact of $24million.

A further net benefit will be the avoidance of $18million in landfill construction costs.

But Councillor Church said the report provided to councillors did not provide a cost benefit analysis, discounted cash flow estimates, escalation factors, and formal identification of markets for the compost.

He also described the revenue forecasts as vague and not substantiated.

"An estimate of return on investment was provided just hours before the meeting. These needed to be provided for each option, including continuing the existing arrangements with Ravensworth, and food waste to landfill," he said.

"For a $24.5million project the due financial diligence undertaken and provided to councillors was laughable. Under the Local Government Act councillors are required to be fully informed to enable them to make responsible decisions. I feel that was not the case here."

Councillor Kath Elliott expressed similar concerns.

"I'm not against recycling but I'm concerned the financials of this project do not stack up particularly regarding the return on investment," she said.

The City of Newcastle also defended the community consultation process for the project in the face of criticism.

A spokesman said the council had engaged in extensive consultation since the project was announced two-and-a-half years ago.

This included a Herald news report and editorial in December 2017.

"As recently as last September, a survey of more than 500 residents found 98 per cent of the community consider it important that the city diverts waste from landfill, which is the primary focus of the organics facility," the spokesman said.

But the independent councillors who voted against the project argued the community had not been made aware of the specific risks, costs and consequences of this decision.

"Asking if residents support a general principle around diversion of landfill and informing them about the specifics of a project are two different things," Councillor Church said.

"I too support diverting waste from landfill. The reality is that council has been talking up diversion of waste, while at the same time accepting large volumes of landfill waste from Sydney, the Central Coast and Maitland. The landfill at Summerhill is a finite resource and should be managed for the long term benefits of Newcastle residents.

"Council should have been involving the community in the decision making process much earlier."

The contract with Barpa has been divided into two stages - design and approvals and construction and commissioning.

It is proposed onsite recycling of garden organics will begin at the Summerhill facility in 2022 before food organics are added four years later, following community consultation.

Initially diverting around 20,000 tonnes of garden organics from landfill each year, the facility will grow in capacity to process around 50,000 tonnes annually.

While you're with us, did you know the Newcastle Herald offers breaking news alerts, daily email newsletters and more? Keep up to date with all the local news - sign up here