Closed Landfill is Short of Cash

Beat & Deadline

Donna Cantrell, landfill manager for the North Arkansas Board of Regional Sanitation, thinks she stands a reasonable chance of holding on to her job until October, but that could change, depending on the rain. 

The landfill, about 15 miles northwest of Mountain Home, has been the bane of the Ozark Mountain Solid Waste District’s existence since it was purchased in 2005 for about $8 million. Eight years later, the landfill is no longer accepting trash and its owner is rapidly running out of money. The landfill has about $180,000 remaining in its accounts, Cantrell said. 

The landfill ceased accepting trash in November after the district’s board members voted to default on more than $12.3 million in bonds — $8 million was used to buy the landfill and its hauling service, and the remainder was earmarked for repairs to the landfill and surrounding roadways that were never completed. 

Nevertheless, the landfill must continue to pay outside providers to haul away leachate — the toxic byproduct created when rainwater filters through the millions of cubic yards of trash stored at the site. Providers remove leachate by the truckload at a cost of about $1,000 per run, taking it to a treatment plant in Springfield, Mo., Cantrell said. Typically, the landfill requires between one and four collections a week — more if there’s heavy rainfall — slowly chipping away at the landfill’s remaining funds. 

“It could wipe us out a lot sooner if we have a lot of rain,” Cantrell said. 

PROBLEMS FROM START 

District board Chairman Jeff Crockett has been openly regretful about his district’s decision to buy the landfill in the first place. He has publicly said that solid waste districts are not practical organizations for managing landfills because their boards typically consist of mayors, justices of the peace and other elected officials whose time in office can often be short. 

“They just don’t have the longevity to be concerned,” said Crockett, who is also mayor of Harrison. “It’s like herding cats.” 

“In hindsight, it was probably not a very wise move,” Crockett said. “We paid too much for it in the first place. It had environmental issues that never got fixed, but the money got spent. Now here we are, several million in debt, with the same problems.” 

Melinda Caldwell, executive director of the Ozark Mountain Solid Waste District, said the district purchased the landfill against the advice of several consultants. 

“When it was for sale, it had overfill issues already,” Caldwell said. “The roads were muddy. Engineers were telling the economic development district, ‘Hey, you’re buying a problem, here.’” 

“There were some red flags,” Caldwell said. 

In a series of inspections by the Arkansas Department of Environmental Quality beginning in 2003, inspectors repeatedly cited the landfill — then owned by RLH Inc. — for failure to adequately cover sections of the landfill, known as “cells,” with dirt once they reached the maximum allowed capacity; for repeatedly exceeding the maximum allowable slope for the trash cells; for inadequate collection measures for leachate; and other infractions. “All available space has been filled since May 2000,” reads a reportfiled June 15, 2005. 

A 2003 “notice of violation” from the department outlined recurring violations in eight sections of Regulation 22, which governs the disposal of solid waste, and two sections of Arkansas Code Annotated. RLH and the department agreed to several remedies in a 2005 administrative order, including an increase of financial assurances on the part of the owner, final closure of one of the landfill’s cells, installation of several groundwater monitoring wells, and payment of $250,000 in fines. 

Bill Lord, director of the Ozark Mountain Solid Waste District from 1993-2009, said the waste management board conducted due diligence leading to its decision to buy the RLH Landfill, which originally went up for sale in 2002. Despite a series of environmental infractions, Lord said the district arrived at the conclusion that the landfill, combined with the hauling service, could be profitable if the district instituted “flow control” ordinances, which would require all trash in the district’s six counties to be taken to the Mountain Home site. 

Lord said the $12.3 million bond amount, which provided roughly $4 million for the landfill, $4 million for the hauling service and $4 million for environmental remediation, was based on revenue analysis that was “historically well-documented.” 

Lord said board members calculated that the “tipping fees” — the amount trash haulers pay to dump waste in a landfill — at the North Arkansas Board of Regional Sanitation (NABORS) landfill would be more than adequate to pay off the bond debt and operate the landfill at a profit. 

“I know there are people out there who are pointing things out, saying, ‘This never should have been done,’” Lord said. “But they don’t know. They weren’t there. They’re all kind of Johnny-come-latelies.” 

The board declined to enact any flow-control ordinances in the district. Most counties nevertheless hauled their trash to the landfill until 2010, two years after the board voted to raise tipping fees from $33 a ton to $42 a ton in 2008, Cantrell said. After the increase, haulers from Carroll, Newton and Searcy counties began taking their trash to landfills in Oklahoma. 

“That didn’t help,” Cantrell said. “It’s like me owning a shoe store, then shopping somewhere else for shoes.” 

Even before that, the landfill couldn’t generate enough revenue to pay the financial assurances required by the Environmental Quality Department to open additional garbage cells. Although the landfill’s 200 acres can accommodate as many as seven cells, administrators could never afford to expand beyond the three in use. 

Beginning in 2008, the board began considering bids from several private solid-waste management companies to run the landfill. In 2009, David Kline, director of corporate development for Tennessee-based Santek Waste Services, made a full proposal to the Ozark Mountain Solid Waste District board, outlining costs, potential revenue and the benefits his company could offer to the district. 

“In December, we did a full presentation before the board,” Kline said. “They voted to work up the contract in the morning. In the afternoon, they voted to rescind it.” 

Kline said the board members seemed torn between a desire to see someone simply take the problem off their hands and the hope that they could run the landfill themselves at greater profit. 

“There was definitely dissension and infighting on the board,” Kline said. “It just seemed that the folks from Baxter County were just absolutely sure they could run the landfill and make a profit.” 

Santek walked away empty-handed in 2009. Over the next few years, the landfill continued to struggle in terms of profitability and meeting environmental regulations. Although the solid-waste board continued to court private waste-management companies, including Santek again in 2012, it failed to reach agreements with any of them to either manage the landfill on the district’s behalf or purchase it outright. 

“It was the biggest mess I’ve ever been involved with, with public officials,” Kline said. “They certainly have a failed operation on their hands. We tried to help them — our primarily goal is to work with public entities deal with solid waste. We’ve been pretty successful for 26 years. But they wouldn’t work with us. They failed in their endeavor.” 

Kline said that from 2007-12, Santek spent about $300,000 on testing, engineering services, travel and lodging in the development of proposals for the Ozark Mountain Solid Waste District. 

In January 2011, the board laid off six of the nine office workers at the North Arkansas Board of Regional Sanitation, Cantrell said. When the solid waste board finally closed the landfill in November 2012, most of the approximately 30 employees were also laid off, although about eight were kept on the payroll temporarily, Cantrell said, to help collect all of the district’s containers and roll carts from around the six-county area. 

Today, Cantrell is the sole employee in the NABORS hauling operation office in Mountain Home. Two employees — landfill manager Marvin Harrison and an assistant — monitor the landfill, testing leachate levels in a series of well monitors and maintaining the slope gradients surrounding the three trash cells. 

Between 2010 and 2012, the Environmental Quality Department filed another three consent administrative orders against NABORS Landfill. In February 2013, the department filed suit against the solid waste district, citing overfill conditions at all three of the landfill’s cells, repeated failure to take remedial actions ordered by the department in consent administrative orders and a lack of adequate financial assurance funds to cover the costs of potential environmental remediation. 

The department’s suit requests eight actions on the part of the solid waste district, including that it come up with nearly $2.2 million, in addition to the $2.3 million the board says it has on hand, to cover the estimated $4.5 million cost to adequately close and “cap” two of the three cells at the landfill. 

In a response filed by the solid waste board’s attorney, John Verkamp, the district admits to more than 100 allegations in the department’s complaint, with only a handful of caveats. Addressing the costs associated with complying with the state’s requirements, Verkamp wrote, “The sole source of revenue for the Defendant is woefully insufficient to maintain minimal adequate financial assurance for post closure alone. … If the Court entered an Order compelling the Defendant to comply with the CAOs, regulations, and statutes, the Court would be mandating the impossible.” 

The Environmental Quality Department filed for a summary judgement. 

A request for a 60-day extension to respond to the request, filed by Verkamp, was granted in May. 

LOOKING FOR OPTIONS 

Crockett said the district is in negotiations to ameliorate the bond situation and find a waste-management organization to take over operation of the landfill. 

Crockett said the district is hoping to negotiate with bondholders through Bank of the Ozarks, which operates as the bond trustee, to accept a reduced interest rate of return on the bonds and an overall reduction in the amount of capital returned. The bonds were originally sold with a yield between 4.5 percent and 4.8 percent, according to public records. In April, Bank of the Ozarks filed a notice of acceleration, essentially demanding immediate repayment of the balance of the $12 million bond issue. 

Susan Blair, a spokesman for Bank of the Ozarks, declined to comment. 

Crockett said the district is also in talks with representatives of the Texas-based waste management corporation Inland Service Corp., which Crockett said he hopes will take over operation of the landfill. Inland Service operates dozens of waste management sites across the country, including the curbside recyclable collection service in Rogers. 

Representatives with Inland Service did not respond to requests for comment. 

On Monday the Ozark Mountain Solid Waste board voted to allot $17,500 for Fayetteville-based engineering firm FTN Associates to conduct a study that will determine the cost to permanently close the landfill’s three active cells and to open new cells, board member Phil Jackson said. 

“If this deal gets put together and it works, a contractor will come in, reopen and start taking trash again,” Crockett said. “They know what it takes. They’ll have to turn enough profit to correct some of these things, to continue to pump leachate, to generate enough cash flow in the long run to pay the bondholders back. Unfortunately, it’s going to take some money upfront.” 

“Some would look at it as throwing good money after bad,” Crockett said. “Is it worth it? If it’s not, it’s hard to tell where we’ll go from here.”

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Originally published Aug. 4, 2013 in the Northwest Edition of the Arkansas Democrat-Gazette

Last modified onTuesday, 12 January 2016 00:28
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