BKK Fears Losing Dump Project to County

Efforts to develop Elsmere Canyon into Los Angeles’ primary landfill have quietly evolved into a high-stakes tug of war between Los Angeles County and a leading Southern California waste-disposal company.

BKK Corp. says it realized Elsmere’s potential as a landfill six years ago, purchased access property, began the permit process and started negotiating to acquire the 1,300-acre site.

But the county, faced with a critical shortage of landfill space, is pressing BKK to sell its interest for a fraction of the revenues that the company had hoped to realize by operating the dump, representatives of both sides confirmed last week.

“The one thing that will have us kicking and screaming will be for anyone to try to walk in now and try to take the project away from us,” BKK President Kenneth B. Kazarian said during a 2 1/2-hour interview in Washington.

Losing Elsmere would drive the company out of the garbage-disposal business, its stock in trade since his grandfather began the family-owned firm in 1922 with a horse and wagon, Kazarian said.

But county and Los Angeles city officials contend that taxpayers’ interests are best served by a publicly owned and operated landfill with assured public access and reasonable dumping rates, which could help constrain the fees charged by competing private dumps.

The county maintains that it has offered BKK a fair price for its interests--nearly $50 million, plus reimbursement of the Torrance firm’s costs, along with a reasonable profit on its investment.

Some public officials familiar with the talks say privately that BKK’s demand for a buyout of $200 million to $225 million is excessive, although the Los Angeles County Sanitation Districts staff had recommended such a settlement. Kazarian said BKK has invested “a couple of million dollars, maybe a little more,” with costs expected to escalate in coming months.

BKK is weighing the county’s buyout offer. If the two sides cannot come to terms, the county has the power to condemn BKK’s access land to the proposed dump site and pay the company at market value. The amount BKK ultimately might receive for its interests would in all likelihood be determined in court.

Kazarian, in turn, has vowed to fight the county through legal and legislative channels if the firm’s interests are not adequately addressed.

At stake is a desperately needed 190-million-ton landfill for the city and county in the Santa Clarita Valley that is expected to generate as much as $7.5 billion in gross revenues from dumping fees during its projected 50-year lifetime. In addition to the cost of developing the landfill, BKK estimates that the cost of operating, closing and subsequently maintaining the facility would exceed $300 million.

Under public ownership, surplus revenues would be used for new waste-disposal initiatives. Officials have also said that funds could be set aside to acquire parkland as environmental mitigation for turning Elsmere into a landfill, and to develop the long-neglected Hansen Dam recreational area in the northeast San Fernando Valley.

If BKK gains an ownership stake, on the other hand, the company would be entitled to considerable profits.

The negotiations over Elsmere are part of a complex land-swap measure that the county, the 27 sanitation districts that operate within its borders, the city of Los Angeles, federal authorities and politically influential private interests have been trying to hammer out for months.

Under the present proposal, the city and county would set aside their longtime rivalry and operate Elsmere together with the sanitation districts through a joint powers agreement.

The two governments are reportedly close to reaching an agreement. Under one scenario, the city would acquire Elsmere from the U. S. Forest Service--which owns most of the proposed landfill site--through a bill sponsored by Rep. Howard L. Berman (D-Panorama City).

Another possibility, if BKK comes to terms with the county, would be for the company to conclude its negotiations with the Forest Service to acquire Elsmere on the county’s behalf.

BKK has entered into a non-binding agreement with the Forest Service to purchase privately held parcels in the Angeles National Forest that the Forest Service wants. The company would swap those properties for Elsmere, a transaction that the Forest Service has the authority to approve.

Stepping up their public lobbying last week, BKK executives said they aim to retain a stake in running Elsmere--not turn a quick profit by selling out. BKK’s remaining solid-waste disposal site in West Covina, its major revenue producer, will close in 1995.

The company had hoped to have Elsmere open by that time. BKK, which said its annual revenues are about $50 million, also operates hazardous-waste sites and owns a solid-waste transfer station and trucking fleet, which service the West Covina dump.

In a Sept. 11 letter to County Board of Supervisors Chairman Ed Edelman, a copy of which was provided to The Times, Kazarian proposed six alternatives.

“We believe our basic goal is consistent with that of the county,” Kazarian wrote, “to provide an environmentally safe landfill to avert an impending crisis from the shortage of waste disposal capacity in the county.”

Under BKK’s preferred option, it would develop and own Elsmere but let the county set the dumping rates--estimated at $18 to $20 a ton--with increases tied to the consumer price index.

The proposed rates are comparable to those that would be charged under public ownership, officials said. Private landfill tipping fees now range from $18 to $28 a ton; county-run facilities charge $11 to $16 a ton.

Sale Opposed

Four other plans advanced by BKK call for various public-private partnerships, including a 50-50 joint venture. BKK’s least-favored choice would be to sell the firm’s interests, which include part of the landfill site, access property from a proposed new freeway interchange and options on 300 to 400 acres near Elsmere that would serve as environmental buffers.

Robert K. Tanenbaum, an attorney retained by the county to negotiate an agreement, told BKK’s attorneys Tuesday that as far as the supervisors are concerned, there is only one option.

“Elsmere Canyon must be held in public hands to protect the interests of the public,” Tanenbaum said in an interview. “Part of this process is to ensure that the landfill be kept in public hands.”

Los Angeles Deputy Mayor Mike Gage said the city also “has a requirement that it be publicly owned and a strong preference that it be publicly operated.”

Buyout Price

Faced with this reality, BKK and the county sanitation districts reached a tentative buyout price of $190 million--$1 a ton over the life of the landfill--plus reimbursement of its costs.

The deal, which has not been presented for Sanitation District Board approval, would be contingent upon BKK obtaining all the necessary permits as well as the project site from the Forest Service.

Tanenbaum rejects the $190 million figure. He said he arrived at his offer of 25 cents a ton, or nearly $50 million over the life of the landfill, by estimating the risk that BKK had taken and the interest income and potential financial opportunities that the company sacrificed by investing in Elsmere.

Further complicating the talks, real estate developers Ray A. Watt and Donald Albrecht, who have rights to 630 acres in Whitney Canyon adjoining Elsmere, have sought to cut their own deal involving Elsmere to win city and county approval for their controversial bid to build 500 high-priced homes in Mission and Mandeville canyons in the Santa Monica Mountains.

The developers have proposed swapping scenic easements that would prohibit development on environmentally sensitive land owned by Albrecht and other ranchers near Jackson Hole, Wyo., in exchange for Elsmere and other forest lands in Wyoming.

They would trade Elsmere and their Whitney property to the county and city for support of development in the Santa Monica Mountains.

“We are hopeful that we can bring all of the competing interests to the bargaining table and strike a global transaction,” Tanenbaum said. He added that he hopes to avoid a legal battle with BKK or congressional opposition from Watt, who, Tanenbaum said, has “substantial connections politically.”

Watt’s Santa Monica company, Watt Industries, is a major contributor to the campaign committees of County Supervisor Deane Dana, Los Angeles Mayor Tom Bradley and other elected officials.

On a smaller scale, BKK and its executives have given thousands of dollars to Dana and Bradley; the firm reportedly also has leverage with Supervisor Mike Antonovich, whose district includes Elsmere.

Congressional Scrutiny

Even if an agreement is reached in Los Angeles, Berman would still have to steer a land-swap bill through Congress, where members are likely to scrutinize whether the federal government is getting a fair exchange for the valuable Elsmere property.

U. S. Sen. Malcolm Wallop (R-Wyo.), meanwhile, was poised to introduce a bill at Albrecht’s behest to exchange Elsmere for the scenic easements in Wyoming. A letter opposing this measure from Bradley, City Council President John Ferraro and Dana, however, persuaded Wallop to shelve his bill, at least temporarily, according to legislative assistant Stephenson Emery.

Although the two private interests have been viewed as rivals, Watt and Albrecht met Monday with Kazarian and his father, BKK Chairman Ben K. Kazarian Jr., at Watt’s initiative, Kenneth Kazarian said.

Peace Efforts

“The conversation was real simple,” Kazarian said. “ ‘Is there any way we can make peace with all the various government agencies and jointly go forward?’ My feeling is we are best served if we distance ourselves by separating the issues and individually proceed.”

Any agreements or legislation involving the landfill would not override the need for local and state permits, processes that include public hearings. BKK is conducting an environmental impact review of the site, which it expects to complete in early 1990.

Faced with choices they term unpalatable, BKK executives say they erred in making Elsmere so attractive as a potential dump that the public officials want to take it away from them.

Kazarian said: “It’s like a cute, little, cuddly bear that everybody’s going to hug to death.”