Trash-Burning Plant Pact Reached : County Must Approve Compromise for San Marcos Site

Negotiators for county government and the proponents of a private trash-burning power plant reached a compromise Tuesday that both sides said would enable the controversial project to move forward.

The project, approved earlier this year by the San Diego County Board of Supervisors, was stalled because its backers could not obtain the $200 million in financing needed to build the power plant on the site of the San Marcos landfill.

Tuesday’s agreement, if approved next month by the board, would prohibit the county from receiving profits on the power plant’s operation until after the developers meet the required debt payment on building the plant. But the county’s eventual share of the profits would be higher than it is under the current contract with the builder, North County Resource Recovery Associates (NCRRA).

In addition, the county agreed to share with the developer the risk that federal, state and local law changes might drive up the cost of operating the plant and thus reduce its profits.

The tentative agreement was reached just in time for a meeting Tuesday afternoon of the state Pollution Control Financing Authority in Sacramento. The panel approved NCRRA’s application for the issuance of $185 million in tax-exempt pollution control bonds.

In interviews Tuesday, representatives of North County Resource Recovery and the county described the new deal as fair to both sides.

“It was a give and take,” Wes Peltzer, an attorney for NCRRA, said. “I think we arrived at a middle position where no one’s entirely happy or entirely unhappy.”

David Janssen, the county’s acting chief administrative officer, said the agreement was “an excellent one” for the county, given the fact that the absence of a new deal could have scuttled the project.

“It’s a good deal when studied on its own merits, and it’s even a better deal when you consider the alternative--the cost of siting another landfill,” Janssen said. County officials have said a new landfill would be needed by 1990 if the trash-burning plant is not built.

Although the deal was hammered out by a county team that included Supervisors Paul Eckert and Susan Golding, Golding said her involvement in the negotiations should not be considered an endorsement of the agreement. She said she intends to study the financial figures in the new contract and reach a position over the Thanksgiving weekend. Eckert could not be reached for comment.

Michael Hogan, a leader of a group that has long opposed the project, declined to comment Tuesday afternoon because he said he had not seen the new agreement.

Among the agreement’s highlights:

- The county would receive royalties from the sale of energy produced by the plant only after the operating expenses and debt service on the project were paid. In exchange, the county’s share of the royalties would be increased by 50% over the first 10 years of the project.

- NCRRA would guarantee certain levels of efficiency and energy production that were not part of the original contract.

- Increased costs that could result from changes in federal tax laws would be shared by NCRRA and the county, with the county not paying more than $2 per ton of trash processed at the plant.

- The two parties would also share the risk of changes in environmental laws.

- NCRRA’s exclusive right to handle trash generated in North County would be limited to 580,000 tons of waste each year. Any amount over that would be processed at the county’s discretion.

- The county would own the plant after 40 years rather than the 55 years called for in the current contract.