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Pitfalls persist in path to privatization of Orcas dump

By STEVE WEHRLY
June 30, 2013 · Updated 3:08 PM
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Just when one problem at the Orcas dump gets solved, another one seems to takes the stage.

The San Juan County Department of Public Works and Orcas Recycling Services are intent on working out a contract for ORS to take over operation of the Orcas Island transfer station, but major and minor "glitches" keep presenting themselves to Frank Mulcahy, Director of Public Works, and Pete Moe, Board President of ORS.

First, The Exchange, the recycle and reuse subsidiary of non-profit ORS, burned to the ground. Then somebody discovered that federal employment taxes on several part-time workers had not been paid. ORS tax consultants reduced that potential liability from $22,000 to $7,000, but then ORS lost a director when Errol Speed resigned from the Board.

Recently, Mark De Tray, the lead negotiator for ORS, who was expected to manage the Orcas transfer facility, went on "extended leave" from his position. De Tray is expected to be replaced, according to Frank Mulcahy, Director of Public Works.

Mulcahy and Sam Gibboney, Solid Waste Program Administrator the county, reviewed developments at the Tuesday, June 18, meeting of the County Council.  They announced that Pete Moe, ORS board president, was now the point of contact for negotiating the contract turning over control and operations of the solid waste transfer station to ORS.

Mulcahy, who said he remains optimistic that all problems can be solved, was told by Moe that De Tray might return to ORS, but that for now the board would look for a replacement. Members of the ORS Board, including Moe, would work on details of the transfer station, including contract negotiations.

The contract between the county and ORS may not be finalized until August or September, said Gibboney, who acknowledged sticking points regarding a performance bond, liability and transportation insurance, provision of sufficient operating capital and completion of a satisfactory operational plan.

Orcas councilman Rick Hughes voiced continuing support for ORS, saying he was confident that Moe and the ORS board would resolve both operational and financial problems. "We'll be out of the garbage business soon," said Hughes.

Disposal of solid waste operations at the San Juan and Orcas transfer stations have been a persistent issue for Mulcahy and the county council since voters rejected a council-proposed property tax increase in November, 2011. Mulcahy joined Public Works as director of the county's single-largest department two months before.

Mulcahy and Gibboney reported progress in contract negotiations with Lautenbach Industries of Mount Vernon for private operation of the San Juan Island solid waste transfer station owned by the Town of Friday Harbor, but they told the council that contract negotiations with ORS for Orcas operations would be delayed for several weeks.

The contract between San Juan County and Lautenbach Industries is on track for completion, according to Mulcahy.  Mulcahy and Gibboney submitted lists of potential contract provisions to the council for both San Juan and Orcas transfer stations, and lease provisions for the San Juan Island site. Contract language should be ready for council review later this month, with a public hearing and final council approval tentatively scheduled for early July.

"We expect to sign a ten-year contract with Lautenbach in July or early August," said Mulcahy, who added that provisions of a lease agreement with the Town of Friday Harbor were in the final stage of staff approval. "We've had unprecedented cooperation from Duncan Wilson and the Town of Friday Harbor on the lease agreement," Mulcahy said, which must be approved by the town and the county before the contract with Lautenbach can be executed.

The lease for the Sutton Road site calls for lease payments of $1,300 per month. Lautenbach must complete construction of a tipping floor within 18 months and obtain Solid Waste Handling and Stormwater Discharge permits from the state Department of Ecology within six months of contract signing.

Mulcahy said the target date is September 1 for Lautenbach to take over operations at the Sutton Road transfer station.

The several contract problems may delay private operations at the Orcas dump until October, Mulcahy acknowledged. Some problems, such as the employment tax liability problem, have been resolved, but ORS has been unable to secure a performance bond and will have to substitute an escrow deposit of $50,000 in lieu of a performance bond, said Gibboney.

"The situation with ORS is serious, but ORS insists the escrow and working capital money is available" said Mulcahy. Asked about a fall-back position by Councilman Jarman, Mulcahy told the council that both Cimarron Trucking, which provides hauling services under the current solid waste disposal contract with Waste Management, and Lautenbach Industries have expressed interest in operating the Orcas facility if ORS falls by the wayside.

 

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