• Arne Mortensen

Cowlitz County Landfill update - 18May2018

Recent developments centered on the proposition that Cowlitz County engage a private party to operate the Headquarters Landfill (HQLF) permit me to provide growing amounts of detail without jeopardizing confidentiality. By now most everyone in the County has heard something about the HQLF proposition on the table, and, hopefully, even some of it is correct, but it seems that much of it is negative speculation. For ease of reading, below are points covering the salient questions/issues.

How did all this start?

1. In late 2016, I became aware of an offer to purchase the landfill.

2. Early in 2017 Waste Control approached me to complain about operations at the landfill, asking that something be done about operations.

3. Some short time thereafter, in an executive session, the then landfill manager strongly advised the BoCC to get rid of the landfill because of risks regarding the clean air rule and an inability to secure a steady and valuable waste stream.

4. The interim landfill manager (the previous manager had retired by then) also had the same suggestion.

5. The BoCC decided to respond to these concerns and sought for companies interested in operating the HQLF by issuing a “Request for Qualifications,” (RFQ).

What is the intended process?

1. Issue a request for qualifications, to assess the level of interest in the HQLF. (Completed)

2. Establish a review board to assess the response to the above request. The review board is comprised of Wayne Wooster, a member of SWAC; Arne Mortensen, a commissioner; Axel Swanson, County Chief of Staff; Kurt Williams, County director of financial services; and Steve DiJulio, notable lawyer and expert in landfill issues in Washington State. (Completed) Note: Originally Mike Moss, the director of County Public Works, was on the review board, but he decide that it was best if he removed himself so that he could pursue an independent study of the issue, with an eye toward developing a plan for the County to continue operating the HQLF.

3. The review board keep the Commissioners apprised of issues and details in executive sessions, in preparation for a vote by the commissioners to select a respondent for further discussion. (Completed)

4. Presentation to the SWAC (Solid Waste Advisory Committee) of the findings by the Review Board and commissioner selection of respondent.

5. Presentations to the public as well as a public hearing of the findings, capped with a vote by the commissioners between contracting with Republic Services for the operation of the HQLF or continuing with the County operating the HQLF.

6. If the decision is to go with Republic Services, then there will be extensive negotiations to arrive at a final contract, with an intent for Republic Services to take over operations Jan 2019.

What was the vote that recently was taken by the commissioners?

Eight companies responded to the request for qualifications for the operation of the HQLF. The vote taken was to approve one of the respondents, Republic Services, as the one respondent deemed as the best fit for the County for the next step. The one negative vote was curious in that it responded to a different question than what was asked. I believe Republic Services was a unanimous choice as the best fit for the County of all the respondents.

Here is a link to a video by Republic Services that provides some landfill understanding:

Will the citizens be subjected to new rate increases if RSG (Republic Services) becomes the landfill operator?

NO!!! The facts are as follows: the County citizens (includes commercial and residential customers) will continue to work under the same contract or assumptions that have been in place since the time the HQLF became operational under the County.

Except for:

1. RSG will hold the rates flat for 5 years, and there will be no catch up. At the end of 5 years, rates will go up in accordance with a fraction of the CPI, currently 80%.

2. Detail: the fee a citizen pays is comprised of two major parts; one part is paid to Waste Control, and the other is paid to use the HQLF. The fee to Waste Control (WC) is constrained by the operating agreement with WC. The landfill fee is unconstrained, essentially set the BoCC.

3. If RSG is selected as the operator, the fees will be set by contract and future BoCCs will not be able to change the fees (as they might, say, to solve future budgetary issues).

Why is an operating agreement with RS beneficial to the citizens in the county?

·Risk mitigation: RSG assumes all risk, and, because RSG, is a multi-billion-dollar company, it can stand behind its contracts.

o MARKET RISK: For various technical market reasons, the County will have only limited access to municipal solid waste (MSW) streams from outside the county. It will have access to low yield construction and demolition waste (C&D) that will shrink in an economic downturn. And, what if the market for waste changes for the worse for the County?

o ENVIRONMENTAL RISK: RSG is an expert in landfills and has a stellar record in the management of several hundred landfills. It also manages the waste stream of several thousand municipalities. It will take on the closure and post closure risk. It also has a great record at using landfill gases to produce electricity. RSG works in conjunction with PUDs to generate power from the natural gas from landfill decomposition. At the HQLF, we currently just burn the gas into the open atmosphere. RSG also is looking at even more lucrative uses of the gas, such as feeding back into the main commercial gas pipelines.

o POLITICAL RISK: The politics of the environment leaves us at the mercy of bureaucrats from the Department of Ecology, who, so far, have managed to stifle the development of big projects in Cowlitz County. Despite the recent court ruling, the clear air issues have not gone away, certainly not for good.

·Stable Income: The County is in dire financial straits. For 2018, the BoCC took $2.5 million from the road fund and $3.0 million from the landfill fund just to balance the General Fund. Without this money, there would have been significant lay-offs, and none of the BoCC thinks treating employees this way is decent or good practice.

o Up-front payment – RSG will make a onetime payment of $15 million to secure the operating contract.

o Minimum annual payment – RSG will pay the county at least $6 million for each year that it operates the landfill. This floor is regardless of any of the above mentioned risks.

o Base payment – RSG will pay $4/ton of waste currently secured with contracts, and $3.5/ton for “new” waste they bring in.

o Sharing of the Gross – In addition to the above dollars per ton, RSG will pay the County 20% of the gross revenue of the landfill.

o Projected 2019 annualized payment – RSG estimates that the first year (2019) the sum of the per ton plus the sharing of the gross will be $8.3 million. (So, the minimum payment will not even come into play on day one.)

·Lifetime of the HQLF

o Current estimate – the 2017 filing with the Department of Ecology gives an estimate of 72 years for the lifetime of the landfill. Last year the County actually put about 675,000 thousand tons of waste into the landfill, far more that the amount that comes only from Cowlitz County.

o RSG estimate – RSG sees the landfill lifetime to be about 80 years. The difference is that RSG will fill with mostly with MSW, which has a great compaction ratio, plus it decomposes which creates additional airspace. C&D waste does not compact or decompose to a significant degree.

What about the current county employees at the HQLF?

RSG is a very good employer, including being named to the Forbes Best Large Employers List, and they will keep any current staff who wants to go with RSG, subject to normal hiring requirements qualifications. BTW, RSG’s employees at Roosevelt Regional Landfill (Washington State along the gorge) make 37% more than similar landfills in the region. RSG will honor the current CBA.

Optionally, the current county employees at the HQLF can choose to stay with the County, in which case they will continue to be with public works.

What is the downside of an operating agreement with RSG?

I can’t think of any. The county retains ownership and control of the landfill, while having a private firm do the work and take the risk.

Why are city elected representatives asking to slow down the process?

I guess this is why government is viewed as moving at a snail’s pace?

Seriously, it seems to be an objection to the process that has taken place not an objection to any of the specific items outlined above. How can one object to a guaranteed and insured payment, participation in growth of an asset, and indemnification from risk? Furthermore, I am puzzled by their request, when they have been apprised of the issues.

When process works for us, then we do well, but if we work for process, then we are diminished. The real issue is the not whether someone’s notion of a process was followed, but whether the “deal” is good for the County.

Another point to mention is that the County currently is at risk in the landfill, while the cities bear no direct risk. The county is responsible to all county residents/industries, and it must act to protect every county entity.

What is the story about previous County Commissioners writing to the current BoCC telling them not to sell the landfill?

In letter dated June 6, 2017, previous commissioners Karnofski, Swanson, Raiter, and Misner advised the current BoCC not to sell the landfill, but they stated directly that they had no opposition to seek a private operator. Although this letter was not signed, it was read into the record by George Raiter at the Tuesday regular hearing (see ).

Any objection they express currently to engaging a private operator is contrary to their previous advice.

Couldn’t the County do all this without RSG?

That is highly unlikely for several reasons. But to those asking this question, let me ask why do we have an operating agreement with Waste Control for trash handling? Could not the County have done that themselves? (Similarly, we franchise, say, the cable companies, etc.)

RSG is a proven expert with stellar credentials and an affinity for community involvement. They have the expertise as well as the financial strength to operate the landfill properly and profitably.

Last year the HQLF had a “profit” of about $4 million, already considerably less than the minimum guaranteed payment from RSG of $6 million. To step up to an RSG class operation, the County would have to invest considerable capital for equipment, increase staff, and put in three or more years. The County does not have the money to do that, nor does it have the time.

What will the County do with the money from an RSG agreement?

That is a good question with many answers being discussed. Some ideas are covering long neglected maintenance on facilities, financing the building of the morgue (avoiding yet another bond indebtedness), improving the cost and function of county employee health insurance, and not taking from the road fund. Basic idea is not to “squander” the money with items that beget more costs, but to stabilize the county (no lay-offs) while looking for further opportunities to reduce costs by proper investments.

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