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  • Arne Mortensen

The abbreviated history of the Headquarters Landfill

Prologue:

My principal objective is to make the very most possible value of the landfill for the public, all 108,000 county residents. That has been my objective all along and continues to be my objective. I derive NO personal gain for accomplishing this mission, but I do derive a workman’s satisfaction of a job well done.

I recommended an operating contract so that the County retained control of the landfill. I said my piece on how to accomplish that goal and put it before the people. Once a path was chosen, even though against my advice, I continued with my principal objective to make the very best of the landfill, but now under direct operation by the county. To that end, I feel we all are lucky because the current PWD director Mike Moss shares the very same desire, to make our landfill a world class productive asset. We work well together toward that goal.

I think if people knew the whole truth, they would be quite upset. I have written plenty about this topic, but its dissemination was swamped by a PR firm out of Vancouver hired to stop any action, regardless of truth, toward an OPERATING contract at the landfill. I believe this PR firm to be “Strategies 360,” and the contact person to be Page Phillips.

Preface:

The Headquarters Landfill (the landfill) originally was owned by Weyerhaeuser and licensed only for industrial waste. The only entity which could license this for municipal solid waste (MSW) was the County. Over the strong objections of the citizens, the Board of County Commissioners (BoCC) bought the landfill with $27.22 million in general obligation bonds in March of 2014 (2014-a), plus a smaller bond (2104-b) issue for $5.82 million (b) and proceeded to license the landfill for MSW.

By October 2015, the BoCC had contacted a law firm to inquire about the consequence for the bond holders if the county sold or turned over the landfill to Waste Connections Inc (WCI).

The timing of the purchase in view of the proposed sale to WCI bears some consideration. Was there a deal already struck before the purchase of the landfill from Weyerhaeuser? Did the public know about all this?

Notice that the proposed price for the landfill at the time was a one-time payment of $30 million, plus paying off the bonds. The total roughly was $62 million.

I do not know what happened to this sale exploration by the BoCC.

After the election, before I took office:

Just to be clear: elections are done in early November, but elected persons do not take office until the first of January. During this time interval there is considerable activity in preparation of the assumption of office.

One evening after I was elected, but before I took office, I received a call at my home from Eddie Westmoreland from WCI. He wanted to take me out to dinner and explain to me some important issue about the landfill. I refused the dinner and said that I would talk to him in Olympia during the orientation for new commissioners.

We met at the hotel where the training was being done. He explained to me that:

  1. I, as a commissioner, had the legal right to sign a sole source agreement with WCI to sell the landfill to WCI.Of course, he needed one more commissioner’s signature.I don’t know what he planned there.

  2. He said that they would pay $90 million for the landfill and that represented a great return on investment, and I could take credit for such a feat.

I have considerable experience in business and anyone asking for sole source raises a very strong red flag.

After I took office (1Jan2016):

One of my first visitors, Kevin and Joe Willis, owners of Waste Control, introduced themselves to me and took the opportunity to complain about the operations of the landfill.

Not long thereafter, the landfill manager presented the BoCC an analysis and recommendations that we should consider making changes in the disposition of the landfill.

Decision to explore the real value of the landfill:

So, I have been given an offer for the landfill, complaints about the operation of the landfill, and concerns about managing the landfill. Therefore, I started the process to see if there was interest by third parties in the landfill.

The public made it clear that, while they had not wanted to buy the landfill, now they did not want to sell it at ANY price. I agreed with this and all through my involvement, I never considered any proposal to sell the landfill.

The BoCC restricted the exploration for outside interest to a long-term operating lease. Contracting for services is standard. For example, our PWD contracts the building of bridges, slide repair, etc.

Because this effort involved competitive bids and potential company proprietary information, the BoCC formed a committee to evaluate responses to a request for qualifications (RFQ) that would be issued. A committee of five was formed: one member from the Solid Waste Advisory Committee (SWAC), one commissioner, the best MSW lawyer in the state, the Chief of Staff, and the head of the County Public works department (PWD).

Before long the head of PWD decided to withdraw as he wanted to be considered in the mix as one of the respondents. If I recall correctly, we added a county finance person as a replacement.

The respondents to the RFQ:

The County received 10 responses. After some study the list was reduced to 5, the top three waste companies in the nation (Waste Management, Waste Connections, and Republic), Recology, and Waste Control, known to all of us here.

After this down-selection, the committee invited the successful respondents to an interview process.

Oddly, Waste Control refused to participate and dropped out of the process. This act leaves room to question motivations.

There were two interviews for each of the respondents. One with me alone and one with the entire committee.

The last interview produced material offers from each of the respondents.

Based on the money, the experience, and the ideas of the respondents, the committee unanimously selected Republic as the choice for the next step.

The next step:

The next step was to present the findings to the public and to vote on whether to proceed to develop a contract, which would then be presented to the public in hearing. The BoCC vote was 2 against. I wanted to see what binding offer would be developed with further negotiations. Any formal offer would have been brought before the people in multiple sessions for explanations and discussion.

What were some of the terms that had been stipulated before the potential final negotiations?

  1. Upfront payment of $15 million

  2. Guaranteed payment of $6 million per year, regardless of any unforeseen events

  3. Full indemnification of any liability

  4. Annual payment to be 20% of the gross revenue or $6 million whichever is greater

  5. No price increase for 5 years for in-county waste

  6. All employees would be made whole and could go to Republic or stay with the County at their choice

The bottom line is that we learned that the landfill under Republic would have given the county no less than $500 million over the estimated 80 years, but more likely more than $700 million based on the share of the gross revenue. That is much better than the $90 million of Waste Connections’ 2017 offer.

Where are we today:

The County PWD runs the landfill and is doing a good job. I have supported the PWD in this effort with no reservation.

So far, the PWD has raised rates to bring the fees up to the market price of disposal, but it still is bound by the residual contracts that badly impact the lifetime of the landfill. These were problems that Republic would have taken off our hands. Now we must wait for these contracts to expire and suffer the damage.

Risks:

One of the goals with the proposed operating contract was to eliminate the risk that our landfill would be legislated closed or that some act of God would make the landfill unusable. Currently, the County uses money from the landfill to pay the ~$2.5 million/year bond payment and to contribute $3.5 million to the general fund. The loss of the income from the landfill would be disastrous to the taxpayers and residents of the county. We face that risk from politics (e.g. clean air rule), from acts of God (e.g. Corona Virus), and from economic debacle (e.g. what is happening right now).

Currently there is a cap and trade bill and a clean air rule that, if passed, can render the landfill largely ineffective. If the clean air rule alone is applied to the landfill, we face an estimated $5.5 million dollar annual fine (beginning June 1, 2021). If we pay that fine with landfill rates on county MSW, our rates will have to rise from the current $25/ton to $45/ton (rough numbers).

Conclusion:

The county landfill went from a poorly managed and poorly understood enterprise to a recognized asset worth hundreds of millions of dollars. Barring risk events, the landfill now provides a long-term reliable flow of significant money to the general fund.

Because in government there is a limited possibility for reward for a job well-done, staff that has the vision and desire to run an enterprise as a competitive business is rare. We have that rarity here in our PWD.

I am pleased that my efforts played a key part in making our landfill operate better and increase greatly in value to the county.

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