Cities Are Warned on Contract for Trash Plant Loan

North County’s city officials were warned Friday that a contract the County Board of Supervisors is poised to sign will commit county funds to guarantee repayment of a $140-million loan to build a trash recycling facility in San Marcos.

Carlsbad City Atty. Vince Biondo told the officials at a meeting that the county is about to pledge its “full faith and credit” to ensure that banks providing the funding under state-approved bonds will be repaid.

The problem with that, as Biondo sees it, is that such a repayment guarantee would give the banks first claim to county funds that are needed to provide other services.

“Some slick Swiss bank lawyers pulled something over” on the county, Biondo said.

“I don’t know where (county) solid waste people got their doctorates of jurisprudence, but what they have been saying bears little or no resemblance to what this (repayment contract) is about,” he said.

County solid waste management officials earlier told city officials that the repayment agreement was not important and that it created a $10-million fund to back promises that the county will deliver sufficient amounts of trash to the facility to allow it to operate profitably.

Biondo said he realized he was violating an agreement by his City Council not to oppose the county trash recycling project, but he told county Supervisor John MacDonald, “I have to speak out because you have been given some very bad legal advice.”

MacDonald said he would attempt to delay the vote on the repayment contract, scheduled for Tuesday, for a week to investigate Biondo’s warning, but he advised city officials that “the majority of the board is against me in this matter.”

Biondo said his analysis of the contract is that it commits the county’s credit to back the loan for the recycling plant.

The plant, to be built and operated by Boston-based Thermo Electron, is the surviving part of a proposed $300-million trash-to-energy facility at the site that was abandoned by the county because of fierce North County opposition.

Four North County cities that opposed the plans to build the plant at the San Marcos landfill dropped out as parties to lawsuits challenging the project. Three of those cities, including Carlsbad, also agreed not to oppose the recycling plant if the trash-burning facility was eliminated.

Carlsbad Mayor Claude Lewis assured Biondo that he would “easily get a 5-0 vote from the City Council” to allow Biondo to appear before the Board of Supervisors Tuesday to give his legal opinion of the proposed contract.

Bill Worrell, deputy director of the county’s solid waste division, said Friday that the county’s general operating funds were in no way committed to guarantee repaying the loan.

“I don’t know where Biondo is getting his ideas. There is language in there that specifically limits the county’s obligations to the enterprise fund,” Worrell said. The enterprise fund is money collected from trash haulers using county landfills.

Worrell said the county “is on a very tight schedule” to obtain the supervisors’ approval of the financing agreement. Any delay in Tuesday’s approval vote “will mean we lose the state bonds.”

A state agency Wednesday approved the county’s request to release the bond funds for the recycling plant.

The low-cost bond financing would reduce the cost of the project, which proponents say will be paid for by “tipping fees” paid by commercial trash haulers using county landfills.

Oceanside Councilwoman Melba Bishop also attacked the recycling plant agreement, pointing out that trash collection fees countywide would escalate drastically to help pay for building and operating the recycling plant.

She also argued that the plant would remove only a small portion of waste from the county’s trash and thus do little to ease the landfill crisis. The San Marcos landfill, the only trash dump in North County, is nearing capacity and will be closed early next year unless state and federal permits are granted to expand it.

Incorporated cities now control the trash generated within their limits, and the county controls the landfills. Bishop proposed that North County cities get together and provide their own disposal facilities, getting out from under “a very badly run county operation.”

“Frankly, what is lacking in this whole process is guts,” Bishop said. “The cities are afraid to step forward and take a risk. They don’t want the responsibility for disposing of trash.

“My solution is that we give up on the county, and the cities join together and find a landfill site ourselves, because, when we don’t, and the county starts raising rates sky-high, who’s going to get the calls? Not the county. It’s going to be us city people that take the heat.”