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Contract snags slow handover of Orcas, San Juan dumps
By Steve Wehrly, Journal reporter
Eighteen months after voters rejected the County Council's plan for financing solid waste disposal operations with a property tax parcel fee, glitches in negotiations and financing are causing frustration and impatience on all sides, as schedules slip and costs mount in the county's ongoing effort to privatize solid waste and recycling operations on Orcas and San Juan islands.
But county officials and future site operators insist progress is being made, and that privatized operation of the Orcas transfer station and the San Juan drop-box facility will occur "this summer" despite delays.
Orcas Recycling Services has not made required state and federal tax payments for past operations and has not completed an operations plan, as required by the county, before a contract can be executed authorizing ORS to assume operating responsibility for the Orcas transfer station. The tax liability question arose when ORS hired part-time employees in recent years to help community volunteers with increased garbage and recycling flows.
"The worst case scenario for all ORS tax liabilities from past operations is about $22,000," said ORS Board Chairman Pete Moe. That number includes penalties and interest, which, according to Moe, ORS accountants hope to further reduce.
Mulcahy and new solid waste chief Sam Gibboney are also running into headwinds in three-way contract negotiations with the Lautenbach-KenTec partnership and the Town of Friday Harbor for operation of the town-owned Sutton Road solid waste facility.
"We have some things we want in that contract," said town Administrator Duncan Wilson, "but the county is doing the negotiations and we think the results will work for us, the county and Lautenbach."
Privatizing solid waste operations was mandated by the County Council after voters in 2011 rejected the council's property tax parcel fee to fund solid waste handling. In mid-2012, the Department of Public Work solicited proposals from private companies interested in operating the Orcas and San Juan Island transfer stations. Meanwhile, community activists on Lopez Island devised and won council and voter approval for a Lopez Solid Waste Disposal District to operate the Lopez dump.
In late 2012, the council instructed Public Works to negotiate contracts for the Orcas and San Juan Island facilities with Orcas Recycling Services and a partnership of Lautenbach Industries of Mount Vernon and Kentec Energy of Seattle, respectively.
Public Works Director Frank Mulcahy at that time projected that private operations would commence by April 1, but operational and contractual problems have pushed start dates into June or July.
Adding to the problems for the Orcas Island group are fallout from the fire that destroyed the Exchange, criminal charges now being faced by a director of ORS, and a delay in completing an operations plan by URS Corp., the consultant hired by ORS to prepare that plan.
County Councilwoman Patty Miller doesn't think the Orcas contract is in danger of being canceled, but, she says, "It's time that ORS provides the council with its plan of operations and an accounting of its tax liabilities."
Gaylord said he understands the tax liability ORS faces is an estimate and that the council wants a complete and thorough accounting before they decide to go forward with a contract.
"The council must be satisfied that the contract and the plan of operations is financially sound and in the best interests of the citizens of San Juan County," said Gaylord, who advises the council on the legalities of its actions.
Gaylord also said that because the allegations against ORS board member Errol Speed involve making false statements county offices, the council should take the charges into consideration in their deliberations over ORS' operation of the Orcas facility.
ORS board chairman Moe recognizes the need to deliver the plan and says that full accounting and explanation of the tax situation will be provided to the council. He said that consultants retained by ORS have finished a "draft" operations plan and are working on emergency and contingency plans, all of which will be delivered "in the next few weeks."
Moe supports Speed as a "valuable" member of the board, which, he noted, is not asking Speed to resign.
"We're aware of the situation and we will wait to see what the council says," he said. "I'm extremely confident the project will proceed as planned." Meanwhile, the county is paying Waste Management and Cimarron Trucking almost two-and-one-half times the amount paid under its previous contract with Waste Management, which expired at the end of 2012.
But because of 2012 increases in the solid waste tax and in recycling fees, Mulcahy said, "we're just about breaking even."
The problem with contract negotiations for the Sutton Road facility is wrangling between Lautenbach and county Public Works about construction of a roof on the tipping floor and compliance with state environmental requirements for the site.
"We'll get these contract terms ironed out," Mulcahy said, "but we've got to negotiate the best result for the people of San Juan County."
Wilson, the town's representative on the selection committee that recommended Lautenbach, is also optimistic that the problems can be resolved.
"Lautenbach is a competent outfit and the town is confident that the county will negotiate an acceptable deal," he said.
Still, he acknowledged that if an agreement can't be reached, either the town or the county can step in to run the facility, if necessary.
Rick Hughes, Orcas Island's representative on the council, is working to resolve the operational and financial problems.
"I've been working with Pete Moe and the ORS board since before I was elected last November and I think they're doing things right," he said. "Orcas will be best served if local people do the local work. We'll figure out a way to make it work."