Trash Talk Wearies Council

By Blair Clarkson
Staff Writer

Jan. 22 -- While there was plenty of talk about trash, the thorny issue of whether to privatize the City’s waste management and recycling services got buried Tuesday night, prompting the City Council to send staff back to dig for more information.

Council members appeared dissatisfied during the two-and-a-half hour study session to help them weigh the drawbacks and benefits of building a new recycling and transfer station to replace the out-dated and inefficient operation at the City Yard, explore multiple public and private alternatives or go out of the trash business altogether.

While City staff provided overviews of the history of the City Yard, facts regarding its current operation and details of a proposed new facility, council members felt they did not address the key issue: Should the City turn its lucrative transfer and recycling operations over to Southern California Disposal, which operates a competing transfer station adjacent to the City Yard?

“This is interesting as general knowledge,” said Council member Ken Genser, “but the issue we have to deal with is whether we construct our own transfer facility or contract out for that service. Does this information have any bearing on that?”

“I’m a little perplexed,” echoed Councilmember Herb Katz. “We asked you to go back and analyze it from a public/private standpoint, and give us answers as to why we should just stay public or have a partnership, and we’re not getting that tonight. When do we get this?”

Tuesday’s study session came five months after the council directed staff to include in its presentation a discussion of franchising options, land uses and other potential alternatives to SCD’s proposal to privatize the City’s services.

Instead, City staff stuck to its recommendation to construct a city-owned and operated facility at an estimated cost to $7.5 to $8 million, arguing that the City would reap the long-term benefits when more business comes its way.

“We’re not going to talk about alternatives,” said Craig Perkins, the director of Environmental and Public Works Management. “The best way to achieve our target” is to build a new facility.

Tuesday’s study session marked the latest round in an often-contentious eight-year debate about the future of the City’s waste management transfer and recycling operations.

In 1996, when the City began addressing the necessary rehabilitation of the City Yard facility, two plans emerged. The first proposed construction of a new transfer station. The second proposed building a recycling facility at the Yard and leasing SCD’s transfer station.

The City Council approved the two design options in October 2000, and directed the City Manager to negotiate an agreement with SCD to lease property and facilities and to compare long-term revenues, costs and benefits to the City.

After more than a year of negotiations, City staff determined that building a new recycling and transfer station would be more advantageous to the City than leasing the SCD facility.

Worried the leasing option wouldn’t pencil out, SCD offered a long-term contract that would close the City Yard and pay the company to transfer and process all of the Santa Monica’s waste and recyclable materials currently being handled at the City’s transfer station.

But City officials doubted that SCD’s facility, which is smaller than the City Yard, could process all the waste collected by the company and the City without adversely affecting road congestion and environmental regulations.

More importantly, however, was the broader debate that ensued over the potential advantages and disadvantages of the City electing to privatize a profitable municipal service to the only transfer facility on the Westside other than the City Yard.

Many cities across the country have opted to privatize municipal services due to economic constraints and tightening municipal budgets, but that wasn’t the case in Santa Monica, where trash could mean big money.

In addition, City officials remained concerned that privatizing the transfer and recycling facility would make SCD the only game in town, and without competition, the City’s negotiating power would be diluted in the event the contractor chose to increase prices or allow its services to decline.

Without competition, City staff worried, the public could be forced to pay higher costs for disposal services. In addition, the City would relinquish direct control of how waste is disposed, processed and recycled. It also would lose the revenue from lease payments from the Solid Waste Fund for use of the City Yard, which amounts to approximately $588,000 a year.

By continuing to own and operate its new, larger transfer facility, the City could accept additional tonnage from the public and surrounding cities, Perkins said. It would also give the City the option to require future franchised commercial haulers to use the new transfer station, thus garnering additional revenue.

A financial analysis commissioned by City staff in response to Council requests in 2003 indicated that an extra 248 tons per day could generate more than $2 million dollars in additional net revenue annually.

The station currently handles approximately 352 tons per day, but closes to the public at 2 p.m. to accommodate City needs.

“Practically every day, customers arriving after 2 p.m. must be turned away,” according to a City staff report.

A new station would operate at a 600-ton daily capacity and extend its public hours, thereby increasing the amount of waste accepted.

SCD countered that a contract to privatize the service would save the City millions in building and operating costs, and would free up land at the City Yard for other purposes, such as surface parking, playfields or office space.

But the proposal didn’t pencil out for City officials, who calculated that none of the alternative uses would generate the same amount of revenue or savings for the General Fund than keeping the recycling and transfer facility open.

Staff’s financial analysis concluded that constructing a new City transfer station would result in lower net costs to the City than contracting with SCD for disposal services if the City realizes the projected additional tonnage from new public customers and from the increased local demand caused by the anticipated closures of area landfills in Bradley, Sunshine Canyon and Puente Hills.

“Even if additional tonnage is not received,” according to the report, “a new transfer station may still be the better option in order for the City to retain control of waste processing and disposal options and maintain long-term availability of City’s transfer services and future needs.”

Armed with this data, City staff concluded in November 2002 and again in August 2003 that a contract with SCD for transfer station services would not be as beneficial to the City in the long-term and recommended that the City Council approve the conceptual plan for a new recycling and transfer facility (the Santa Monica Active Recycling Recovery Transfer Station – SMARRTS) to be built at the City Yard.

However, in both instances the City Council remained unconvinced by the presentations and requested further analysis of additional options and alternatives.

Tuesday’s study session, which “took a step back” to review the City’s current policy and transfer operations, apparently felt like Groundhog Day for several frustrated Council members.

“I think we know as much about solid waste now as any council in any city,” said Robert Holbrook. “But I’d still like a glimpse of where we’d be 20 years from now.”

“The presentation is lovely,” added Katz, “but it doesn’t do much for me tonight.”

“I’m struck by the lack of information about alternatives,” noted Mayor Richard Bloom.

“We’re moving nowhere slowly,” said Genser. “I don’t think anybody doubts that we need a new transfer station. The question is do we build one or do we contract for it.”

That question, it seems, will remain unanswered for the time being.

The council concluded the session by directing staff to return with a more inclusive comparison and cost analysis of additional options, including a municipal consortium and offers from multiple private contractors.