County Closer to Deciding Whether to Sell Landfills

Nearly two years after Orange County’s bankruptcy sparked calls for the privatization of government services, the Board of Supervisors will decide whether to sell one of the county’s most coveted assets: its landfill system.

The decision promises to affect residents as well as business owners, who have seen their garbage bills rise since the December 1994 bankruptcy and could face further rate changes in coming years.

The county Waste Management Commission will take up the issue today; the Board of Supervisors has scheduled a vote for Wednesday.

Critics insist that the public would suffer if the landfills are sold. They predict that if the system is owned privately, investors would attempt to recoup their costs by hiking landfill dumping fees. No selling price has been suggested for the landfills, but last year the county turned down a $300-million offer that would have been paid out over 20 years.

“A private bidder is going to want to make money,” said Stanton Councilman Harry Dotson, who is a member of the Waste Management Commission. “In county hands, the system just needs to break even. A private bidder needs to make a profit.”

But privatization backers contend that consumers would benefit from the market-driven rates that a private operator would charge. Selling the county’s three operating landfills--located in Brea, Irvine and San Juan Capistrano--and 20 closed dumps would also provide millions of dollars that the county could use to pay off bankruptcy-related debts.

“The county has talked a lot about selling things but hasn’t accomplished much. This would be very significant,” said Robert W. Poole, director of the Reason Foundation, a libertarian think tank that last year studied the county’s financial crisis. “I suspect there is a lot of internal resistance to the idea from within the bureaucracy.”

The Reason Foundation and others suggested that the county sell off many government properties and aggressively contract for services in the private sector.

The county has auctioned off more than $16 million in surplus parcels but has sold few other assets. Officials said many of the more ambitious ideas--such as unloading John Wayne Airport--are prohibited by law or don’t make financial sense.

Of the county’s blue-chip assets, supervisors have expressed the most interest in selling the landfills.

A study recently completed by consultants found that a sale is feasible and that waste-management companies would probably be interested in bidding on the landfills.

But the study also warned that a private-sector purchase would require extensive environmental and regulatory reviews that could take years to complete.

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When the Sanitation Districts of Orange County, an independent government agency that handles liquid waste, offered earlier this year to buy the landfills for $300 million the offer was rejected as too low.

The county’s Integrated Waste Management Department recommended this week that before seeking bids from outside companies, the Board of Supervisors first look at improving the flow of trash and money into the landfill system.

A coalition of cities and the county have expressed interest in negotiating long-term disposal contracts, but formal talks have not begun. Such a pact would guarantee cities a fixed dumping fee for trash collected in their communities. The county, meanwhile, would gain a steady, predictable flow of waste into its landfills.

Most cities now send their trash to county landfills. But when supervisors increased the dumping charge from $22.75 to $35 per ton last year, a few cities abandoned the county’s dumps and sent their garbage to Los Angeles County landfills that charged less. The exodus forced the county to cut its price back to $27.

“There are still tremendous advantages for both sides to have disposal contracts,” Brea City Manager Frank Benest said. “Cities gain from the fixed price, and it minimizes the business risk to the county.”

Benest said cities will push for a fixed price in the $22-per-ton range, where it was before the bankruptcy.

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Previous attempts to negotiate disposal contracts have failed. But Benest said that talks are more likely to succeed this time because the stakes are higher.

“Cities are now confronted with the fact that it is viable to sell this asset,” he said. “This is no longer an esoteric discussion of policy. Our residents and business people would lose big time if the system is sold.”

The county’s Integrated Waste Management Department is recommending that the county seek potential buyers for the landfills if there is no contract agreement between cities and the county within 90 days.

The contracts would not provide the one-time windfall of an outright sale. But the county already receives $15 million a year in revenue from the importation of trash from other areas. The revenue is earmarked for bankruptcy recovery efforts.

The county now estimates that revenue from imported trash might exceed $15 million in coming years. Some officials have suggested using any surplus for early repayment of bankruptcy debt and to reduce the landfill dumping rates for local residents and businesses.

“It could be viable,” Supervisor Don Saltarelli said. “We could accomplish lower rates . . . and still have money for [debt] repayment.”

And there is concern about the ultimate impact of turning the landfills over to a private company not directly accountable to the public.

“I’m concerned about losing control of what I consider a very important public asset,” Supervisor William G. Steiner said.