Split Contract, Recycling Commitment and Financial Viability Probed at Orcas Transfer Review

Miller: County Prosecutor “Confident” on Flow Control Policy

By Margie Doyle

At the meeting of the Orcas Transfer Station Vendor Selection Committee (VSR) yesterday, Friday, August 17, Patty Miller, who is County Council Chair and Solid Waste Subcommittee Chair, re-stated County  Prosecutor Randy Gaylord’s opinion on “flow control.”

“Flow Control” is the operative policy by which the County Council has prohibited on-island solid waste from going off-island. Miller has stated at a public meeting, “Flow control is designed for small counties to be able to build infrastructure and protects publicly-owned and operated sites. But the County has to own AND operate a site for flow control to be in effect,” she said.

The August 17 VSC meeting was convened to review additional information provided by  the two bidders for management of the Orcas Transfer Station, Cimarron Enterprises, a garbage hauling company based in Anacortes, and Orcas Recycling Services/The Exchange, an island non-profit. The information was provided to answer questions posed by County Council members following a discussion of the original responses to the Request for Proposals (RFP) submitted on July 13.

At the August 17 meeting, Miller said that recently she again consulted with County Prosecutor Gaylord on the “flow control” policy and reported that “even though the state authorizes [flow control policies to counties],” the policy is subject to federal review under the U.S. Constitution. It is Gaylord’s legal opinion that “flow control is not something county can enforce if it doesn’t own the [solid waste transfer] property,” Miller said.

With that authorization subject to case law (judicial ruling on historic cases), Miller said, “I’m going to operate under the assumption that flow control can’t be enforced.”

The matter of flow control has been under scrutiny following a letter from San Juan Sanitation owner Dan Liedecker to the County Council that announces the garbage hauling company’s intention to deal only with Cimarron Trucking.

VSC members present at the August 17 discussion were Lisa Byers, Russ Harvey, Patty Miller and Jeffrey Struthers. About a dozen members of the public were at the review. Going through the questions to both organizations one-by-one, the VSC discussed whether its original recommendation, that contract negotiations be started with Cimarron, would be altered.

After nearly four hours, the group had not arrived at consensus, with Struthers maintaining his original approval of Cimarron, Byers opting for the ORS proposal, and Harvey and Miller advocating a “split” of the contract and services among the two proposals.

The group did approve of the county maintaining operations on at least one parcel of the current transfer station property: Parcel A is the current “parking lot” or toll booth area; Parcel B is currently where the Exchange operates; Parcel C is the area to the north of the Exchange; and Parcel B is the area occupied by the scales and the “tipping floor.” The original RFP dealt only with Parcel B; however, both proposals discussed making use of the other parcels and their suggestions were allowed for consideration.

Seventeen questions were asked of Cimarron and ORS, dealing with financial, operational and advisory strength; capitalization plans; permits, processes, references, past litigation; on-site traffic and operations management; dividing the contract; and the commitment to reduce, re-use and recycle as part of waste disposal operations.

Struthers spoke at length on that commitment, noting that one of the two provisos in the VSC’s original recommendation questioned how Cimarron would work with OSR/The Exchange, should Cimarron be awarded the contract.

Struthers said, “There is a fundamental conflict between a business that involves volume with an organization whose mission is to reduce volume. At some point the hope is that we’ll have incentive to turn waste around before it leaves ‘the Rock’ and find uses for it. “We need to find a way to do that long term: trying to do that in a near-term business arrangement… it’s not going to get done. In the long term we should have some way to say we need to reserve some capability so if the vendor doesn’t go with recycling, we can find some way to determine how to proceed on our own.”

Lisa Byers expressed dissatisfaction with Cimarron’s response to waste reduction and recycling. “Waste reduction is a partnership between people in the community and the provider. It requires constant active engagement in getting that message out.” She described Cimarron’s response as “passive; not an active, highly-engaged activity.”

Miller said there was no additional information in Cimarron’s response to the reduce/recycle question, and a “dismissal of the conflict between waste reduction and higher volume.

“We have the highest tipping fees of any county in state. My hope would be that we can find new ways to reduce waste —  or leverage value in that waste — to be of benefit to public as well as to the provider’s profit: that benefit would be passed on to public,” she said.

Discussion about the provisos in the first VSC recommendation brought out some confusion as to how the self-hauled waste process would take place for both solid waste and recyclables. Byers said, “I  thought by this answer Cimarron is saying it would give all the self-haul process to The Exchange; that if the county gives the contract to Cimarron, they are saying, ‘We’ll improve the parking for The Exchange, and look for waste stream diversion and process;’  but there are no contractual obligations. It would come down to interpersonal relationships on the site as to how that would happen.”

Harvey and Struthers both maintained that such considerations are to be hammered out in the negotiation process. Harvey added, “There is a wide range of services  offered with both entities; we don’t need to spell it out. I see them talking about recycling materials with self-haul, not the tipping floor.”

Reviewing the responses from ORS led the committee to question ORS’ ability to implement $190,000 in capital projects with a $100,000 capital basis. Byers said there are reductions in costs that can be achieved with local equipment and expertise. An example that arose was the  installation and calibration of the waste scale: Cimarron estimated $50,000 cost; ORS estimated $16,000.

Where San Juan Sanitation fits in ORS’ operations also comes into question, though The Exchange manager Mark DeTray said that had been calculated both ways, and even without a relationship with SJ Sanitation, ORS would maintain over $200,000 in its general fund balance.

Struthers expressed doubts that “a boot strap model will work; cash flow is going to kill us here.” Byers said she agreed, but she added, “You make adjustments based on the current reality.”

While praising ORS’ proposal for its environmental perspective, Miller brought up contractual and governmental requirements, asking “Is there a viable financial plan to execute on the things they have to do?”

Those considerations came to light as the committee discussed dividing the RFP and entering into contracts with both organizations.

Miller said, “The logical place to split [the contract for management of the Orcas Transfer Station] is for Cimarron to operate the tipping floor [where solid waste is dumped prior to being transferred to the mainland for final disposal] to receive San Juan Sanitation garbage, and to contract with ORS to handle re-use and re-cycle.”

Lisa Byers then questioned the economic incentive for the transfer agent to separate and sort. Jeffrey Struthers said, “The easiest division of labor is to get self-haulers to sort.” His sense is that the public is “quite willing to do that; particularly if we get a break in doing it.”

Miller returned to the fact that “a certain level of tipping fees” is needed, and questioned San Juan Sanitation’s willingness to work with ORS. “I think it’s extremely unfortunate that San Juan Sanitation chose sides,” she said.

Byers agreed, saying “I don’t know that their letter of intent is a letter of commitment.”

Miller will draw up a report on the meeting to submit to the County Council, which is scheduled to meet Tuesday, August 21 and act on the VSC’s input; the four committee members in attendance on August 17 will each attach a brief perspective on the process.

The San Juan County Council will conduct an Early Start Special Meeting on Tuesday, August 21, 2012 in the Legislative Hearing Room, 55 Second Street, Friday Harbor beginning at 9 a.m. Special Meeting Agenda item: Discussion and possible action on Orcas Transfer Site Vendor Selection and Discussion of San Juan Site Vendor Selection Committee. The Special Meeting is scheduled to be videoconferenced on Orcas and Lopez Islands at the Public Libraries from 9 a.m. to 3 p.m.

Access to County Council meetings by videoconferencing is offered, however it is not guaranteed due to potential technical difficulties. Citizen access and public testimony can only be guaranteed by submitting written comments or attending the Council meeting in person in the Legislative Hearing Room, 55 Second Street, Friday Harbor.

The Council’s regular meeting agenda will follow and begin at 10 a.m.

The agenda and related materials may be obtained 3 days prior at the County website at www.sanjuanco.com/council/default.aspx or at the Council offices during each business day between the hours of 8:30 a.m. and 4:30 p.m. For more information please contact the Clerk of the County Council at (360) 370-7472.