Deal to privatize county landfill operations now before cities

The fate of a long-sought deal to privatize the operation of Sonoma County’s landfill now rests with the nine cities that are being asked to commit their garbage to the operation for the next 25 years.

Negotiations between the cities and the county over potential future landfill liabilities have dragged on for more than a year, delaying plans for Arizona-based Republic Services to take over the troubled Meecham Road facility long-term.

Santa Rosa, which has taken the lead in those negotiations, is set to be the first city to consider a series of agreements that aim to resolve the outstanding liability issues. The deals could also boost the estimated value of Republic’s proposed contract by more than $100 million.

The Santa Rosa City Council is taking up the complex set of agreements Tuesday night.

“This is a huge milestone because obviously the largest contributor of waste to the county system is Santa Rosa,” said Susan Klassen, transportation and public works director for Sonoma County, which will continue to own the landfill.

Klassen said she is optimistic that if Santa Rosa agrees to send its garbage to the central landfill that most other cities in the county, with the possible exception of Petaluma, will sign on to the deal. Petaluma currently sends its garbage to the Redwood Landfill in Novato.

Agreement by the cities would allow Republic Services to move forward with its plans to develop new areas of the landfill, a step the county wants to see happen soon to avoid hauling more garbage out of the county. Due to space constraints at the dump, in recent years about half the county’s waste stream has gone to a Solano County landfill.

The most significant outcome of the negotiations with cities is the move to extend by five years the length of the agreement with Republic Services, the country’s second-largest solid waste firm. The county’s April 2013 deal with Republic was for 20 years, contingent upon enough cities committing their waste to the landfill to make the agreement financially viable.

That agreement was valued by a consultant at $547 million in gross revenue over its life. Using that analysis, an additional five years would be worth an estimated $109 million, for a total contract value of $656 million in gross revenue over the life of the contract.

County officials did not have an updated value for the contract and Republic officials could not be reached Monday.

As part of their negotiations with Republic, the cities sought the right to use the county’s five transfer stations once their waste agreements with Republic expired, according to Santa Rosa City Attorney Caroline Fowler. Securing those rights was important to the cities because it gives them future access to the waste stations should they later opt to send their garbage elsewhere, Fowler said.

Without that right, cities would face the daunting task of permitting and building their own transfer sites. In exchange for the right to share the stations with Republic at fair market value, the cities agreed to lengthen the term of their waste contracts to 25 years, Fowler explained.

Other key terms of the agreement struck between the county and Republic last year remain the same. They include Republic’s agreement to:

- Spend $119 million to expand the landfill, including the development of a materials recovery facility to increase recycling.

- Accept full responsibility for an estimated $52 million in estimated landfill closure and post-closure costs.

- Increase recycling and other reuse of landfill waste by 55,000 tons annually to achieve a rate of 80 percent diversion.

That last provision contains significant financial penalties should Republic fail to meet the diversion goals, Klassen said.

“They were not happy with that and we held the line,” Klassen said. “We wanted to make sure they have a very big financial incentive to meet those goals.”

Another key provision of the deal includes a settlement agreement between the cities and the county that releases or limits the liability cities may have related to seven closed landfills.

The cities have long been worried that they could be held liable by the county for future costs associated with those closed sites. The concern stretches back to the 2005 closure of the central landfill by water quality regulators and the discovery that the county had not been saving enough money for closure and post-closure costs.

Under the release, the county would agree to set aside 70 percent of a $9.25 per ton “concession fee” the county will receive from Republic toward future closure costs. The county will be allowed to spend the remaining 30 percent on landfill administration and oversight, but only if it can demonstrate the need, Fowler said.

In addition, the cities agreed that $5 per ton will be set aside in a contingency fund to protect them in the event Republic goes out of business or otherwise can’t pay all the closure and post closure costs.

She said the concern that the cities would be left holding the bag given all the money Republic is already required to set aside is “a pretty remote possibility.” Nevertheless, city officials felt it was the prudent thing to do given the uncertainty over the length of Republic’s post-closure obligations.

In the event the funds are not needed, they would be returned to the cities in proportion equal to the amount of garbage each put into the landfill, Fowler said.

All told, the fees charged to trash haulers at the landfill gate are slated to increase by nearly 11 percent. The current tipping fee is $114 per ton and the new one will be $126.10. From there, the fee will increase annually by 90 percent of the consumer price index, with a cap of 3.5 percent.

The tipping fees are just one component of the rates charged to residents for garbage pickup. For Santa Rosa residents, the residential garbage rates for typical 32-gallon cans will increase initially by about 35 cents per month.

Because of the modest increases to ratepayers relative to the benefits of the deal, there is unlikely to be any significant opposition, said Ann Hancock, executive director of the Sonoma County Climate Protection Campaign.

The requirement for Republic to increase diversion of organic material from the landfill, especially construction debris, will significantly reduce emissions from methane gas, Hancock said.

Hancock, who was one of many who opposed a 2009 plan to sell the landfill to Republic outright, said she was proud to see the county finally find a solution to such a long-standing problem.

“It almost defies comprehension how complex this thing was,” she said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.