Sonoma County, private operator near $547 million deal to run troubled landfill

Republic and Ratto officials expect the decline to continue and have projected lower net profits, at about $50 million and $13 million, respectively.

Garbage industry experts and county officials say the projected profit margins - around 10 percent for Republic and 8 percent for Ratto - are in line with similar deals for waste operations.

"There were a lot of very experienced people that were sitting on the public's side of the table on this," said Stu Clark, a Republic consultant and veteran solid waste official in the Bay Area. "There was a lot of thought put into protecting the public's interest over the long-term."

The county and city decisions are timed to hit in a summer construction window and avoid a looming space crunch at the landfill that could force the county back to hauling all of its garbage out of the area.

Supervisor Zane, who led the advisory group of elected county and city leaders that shaped the deal in public meetings over the past three years, dismissed the claim that it represented another loss in public services.

"There are things that the county does well that we need to continue to do," she said. "Solid waste is a risky business. In this particular service, because we're talking about (garbage) and all of its complexities, I don't think this is something negative."

Aside from a group of neighbors opposed to the landfill expansion, criticism has come mostly from the representatives and members of SEIU Local 1021.

They have echoed past criticisms leveled by city officials, calling out the county for poor landfill management. But privatizing operations, they say, isn't the solution.

"The private operator is not going to do this out of the goodness of their heart," said Stephen Campbell, a county cashier at the landfill and an outspoken critic from SEIU Local 1021 on the deal. "They're doing it for profit."

But supporters tout upgrades and assurances that they said surpass anything the county could have offered. They include:

; A $60 million landfill expansion the the county couldn't afford without support from the cities, many of which withheld support for future county operations.

; Hard targets for increased recycling and plans for a new $5 million material-sorting facility to be built and run by Ratto.

; Launch of a commercial food waste collection service - the equivalent of green bins for restaurants and stores.

; Assumption by Republic of liability for the central site, including $52 million in closure and post-closure assurances. The deal also would provide a revenue stream to settle roughly $40 million in shared county-city liability for seven former dumps across the county. City officials, especially, have been interested in such relief and were unlikely to commit their waste to a county landfill deal without it, sources said.

Ratepayers would see annual increases capped at 90 percent of the rise in annual consumer price index or 3.5 percent, with some exceptions for fuel costs, natural disasters and changes in law.

Final landfill rates are not set, but the initial impact on curbside garbage service is projected to be a 2 to 3 percent increase, or about 30 to 60 cents per month on the average household bill, according to the county.

Basic residential rates in cities currently range from $11.12 in Cotati to $19.23 in Cloverdale. Santa Rosa residents pay $12.51. Curbside service in the unincorporated area can be two to three times higher, but is still comparable or sometimes less than rates in other Bay Area cities and counties.

For self-haulers, landfill rates under the deal would be limited to 5 percent more than what commercial haulers pay. Actual rates likely would be less, according to a Republic manager.

"The question is: Can the county offer that same deal?" said Susan Klassen, who as director of the county's Transportation and Public Works department is the top solid waste official. "The answer is no," she said.

The deal has attracted far less opposition than the county's attempted sale of the landfill - also to Republic - in 2009. That move was shouted down by environmental, labor, consumer and city government representatives.

They were concerned about losing control of a public asset and freedom to direct local solid-waste policy.

An unpopular provision of the sale would have established a so-called "put-or-pay" requirement that could have penalized municipalities for reducing the amount of garbage they sent to the landfill and undermined regional recycling goals. The new deal has no such provision and instead establishes an annual recycling target of 67,000 tons, enforced by a monetary penalty of $50 a ton if the operators fall short.

Those changes, plus flexibility to add new technology, regular reporting on carbon emissions and other provisions, have led many of the one-time opponents to either support the deal or not object.

"I see some risks. There are some opportunities as well. But to the general public, it's going to be invisible, I suspect," said Ken Wells, the former executive director of the Sonoma County Waste Management Agency, who has studied the deal for the Sierra Club.

The effect on long-term rate escalation is likely to be a key point of debate.

County officials say the built-in rate cap will hold down costs better than they could. As an example, they point to the nearly 150 percent county rate increase since 1995, three times greater than the rise in CPI over the same period. In only six of those 19 years has CPI been greater than the increase in county rates, records show.

"We're very sensitive about that," said Windsor Councilwoman Debora Fudge, one of the city leaders who provided input as part of the county-city Solid Waste Advisory Group. "We're looking for some kind of guarantees or protection for rates that have been out of our control."

At the end of the 20-year period the county and cities would have the opportunity to extend their commitment with Republic under the same terms, or get an offer from another landfill that Republic could match. If Republic chooses not to match, the county could use its four rural transfer stations to haul garbage to the competing landfill. Republic could continue to use the central site and its transfer station, but only for in-county garbage.

Critics, however, are more concerned about the first 20 years of rates. They fear Republic will benefit from the automatic rate increases, plus exceptions that allow it pass on costs for natural disasters and increases in diesel fuel above $5 a gallon, to the extent they exceed their annual CPI escalator and total more than $50,000. The authorizing body in those cases would be the Board of Supervisors.

That check and other county oversight could be insufficient, critics said.

"They're a huge corporation that this county thinks it can control," said Campbell, the county landfill cashier. "I don't think they can."

Republic representatives said they would continue to work closely with the county. Their bottom line is at stake as well, they said.

"We're taking on something that has been here for 42 years," said Rick Downey, Republic's operations manager at the landfill. "We're taking it as is. If something does happen out here, we're the ones responsible for it. We're on the hook ... And we have this thing for perpetuity. People have trouble putting their arms around that, but that's a long time."

(You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.)