County, Firm in Tug-of-War Over Landfill

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. 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.

Taxpayers’ Interests Cited

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 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 District’s 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 likely would be determined in court.

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. BKK estimates that, in addition to the cost of developing the landfill, it would take more than $300 million to operate, close and subsequently maintain the facility.

Funds for Waste Disposal, Parkland

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.

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 to 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-disposal sites and owns a solid-waste transfer station and trucking fleet, which service the West Covina dump.

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.

But 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.”