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Wednesday, 26 January 2011 20:13

Selling landfill space gains traction in Haywood

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Haywood County is seriously considering turning over operations of the county landfill to a private company in hopes of saving money.

The proposal also includes selling space in the landfill, allowing other locales to ship their trash here for a fee. Commissioners have been exploring the idea for nearly a year, and are now closing in on a final plan.

In a work session on the issue last week, commissioners reviewed proposals from private companies interested in taking over the landfill. Of the three companies that showed interest, only one presented a plan that would save the county money, according to Tax Administration Director David Francis.

The clear front-runner among the proposals was from Cleveland, Tenn.-based Santek Environmental Services, a big player in the trash business with 14 disposal sites in eight states.

Santek pitched a full takeover of the county’s White Oak landfill, including the environmental monitoring that has caused the county woes — and fines — in recent months. The company would also install new scales and a scale house for weighing, which are needed to continue operations, Francis said.

The landfill’s roads are notoriously bad and difficult to navigate for residents coming to dump trash. Santek would build a public drop-off station to close the working face of the landfill to traffic. They would also install a truck wash to prevent larger trucks from tracking dirt and other contaminants into the environment when they leave.

 

Selling off landfill space

The real money spinner of Santek’s proposal, however, is letting out-of-county garbage be dumped into the landfill for a fee.

But selling landfill space is a contentious issue. Detractors are concerned that such a move would be the first step towards making the site a kind of megadump, a stream of unsightly truckloads of trash rolling through the county.

The companion concern, of course, is longevity. At current capacity, Solid Waste Manager Stephen King has said that the site could last the county another 30 years. Santek has promised to maintain that number, even with the increased volume.

Bringing in more trash from outside not only provides a revenue stream, but it also allows the landfill to realize an economy of scale. To some extent, overhead to operate the landfill is the same regardless of how much trash is coming in. More volume means each ton of trash costs less to handle.

The county generates 150 tons a day of its own trash. Santek said once the landfill hits a critical mass of 325 tons per day, the cost to the county might start going down.

Once the 325-ton mark is reached, Santek will foot the bill for landfill expansion and closing costs associated with the end of the landfill’s life — two of the largest trash-related expenses.

The county would need to save $454,500 every year for the next 30 to cover the landfill’s projected closing costs. Since the county can’t borrow against the landfill, it must all be saved in advance.

So commissioners were suitably impressed by Santek’s promise of such large savings without losing landfill life.

“So we’re looking at a situation that we can potentially save Haywood County taxpayers a tremendous amount of money and still guarantee the same life?” asked Commissioner Michael Sorrells, to which the answer was yes, according to Santek’s proposal.

The county’s staff analysis of the proposal put savings at $480,000 for a 20-year contract and $462,000 under a 10-year agreement.

Initially, commissioners seemed wary of the promise to maintain a 30-year life. If they can, the question was posed, why can’t we?

And the answer boiled down to expertise.

“They have more available resources than we actually have,” said King, noting that the cost of improving county resources to that level of efficiency would be exorbitant.

The other major asset the Santek plan will pay for is landfill expansion, which Francis said could cost $15.5 million over the next 30 years.

All told, the Santek proposal would save residents $24 yearly on their annual fees compared to maintaining the status quo of county operations.  

Francis cautioned commissioners that, while the Santek option appears to offer significant savings, it won’t fix every problem at White Oak.

“This is not a silver bullet that will solve everything,” said Francis. “There will be some time there that they need to get up to that 325 [tons].”

 

Santek’s track record

As the 39th largest waste company in the nation, Santek already runs several other landfills.

Bradley County, Tenn., contracted with the company over a decade ago, after the City of Cleveland, their biggest landfill customer, started trucking their waste elsewhere, leaving the county hemorrhaging money on the site.

County Mayor Gary Davis said that he was initially reluctant to open the dump to out-of-county waste, but saw few alternative options to keep the budget from dipping into the red.

“I was torn. I want the landfill to last forever, but at the same time there has to be enough going into it to produce the revenue to offset those costs,” said Davis, though he said he’s happy with the way Santek’s been operating, and even happier with the no-cost situation it puts his county in. “Bradley County has no cost, period.”

Crawford County, Ohio, went into business with the company because of repeated run-ins with the Environmental Protection Agency and the small matter of an $8 million debt on their landfill.

Crawford County Commissioner Mo Ressallat said his board felt uncomfortable with competing against the private sector, so when the choice came down to going into the trash business to stay afloat or turning over operations to Santek, they chose the latter.

“It was the cost factor,” said Ressallat. “Because we thought the government really shouldn’t be doing business, competing against the private.”

He said that since then they’ve been pretty happy with the arrangement.  “It’s been a good marriage, really.”

In Rhea County, Tenn., the county waste disposal department was running at a $370,000 loss in 2010. But waste officials maintained that it wasn’t the fault of the Santek-run landfill, which they say is profitable. The county’s nine convenience centers were, apparently, to blame, and all are run in-house.

Back in Haywood County, that’s a concern for commissioners, too. Santek’s proposal, unlike some others, didn’t touch the transfer station, so the county will have to make a separate decision about whether or not to close it.

At the work session, Francis clarified that the station would always stay open to individual residents, but “large haulers,” like commercial dumpers and municipalities might no longer get to use the facility, which is another controversial element to the plan.

The Solid Waste Committee is expected to bring recommendations to the board in early February.

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