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Report Cites Obstacles to Landfill Sales

Government: Consultants' data is due today regarding means of using the county system to aid in bankruptcy recovery.

September 30, 1996|SHELBY GRAD | SPECIAL TO THE TIMES

SANTA ANA — Efforts to sell or lease the county's landfill system could face regulatory barriers and have only a moderate chance of succeeding, according to a long-awaited consultant's report.

Two mergers-and-acquisitions firms spent the last two months studying the future of the county's Integrated Waste Management Department, or IWMD, which consists of four operating landfills and more than 20 closed dumps.

Ever since Orange County plunged into bankruptcy in December 1994, officials have been discussing the idea of selling the system--considered one of the county's most valuable assets--and using the proceeds to help pay off debts.

The consultants, A.G. Edwards & Sons Inc. and Alex, Brown & Sons Inc., will unveil their complete findings today at a meeting of the Orange County Waste Management Commission. The thick report does not recommend a specific course of action, but analyzes several possible scenarios.

A summary of the report obtained last week said that keeping the landfills in county hands under IWMD control, or by hiring a new management company, was a "high probability" scenario.

Yet negotiating long-term contracts with cities that would secure a steady flow of trash to the landfills had a "low probability" of success, according to the consultants, because the contracts could prove difficult to work out.

Exiting the landfill business by selling or leasing the system was viewed as a "medium probability" scenario. The consultants examined a variety of possible transactions involving all or part of the system and both public and private buyers.

Selling landfills to a private company would likely face the toughest regulatory barriers, which could take years to overcome.

Earlier this year, the Sanitation Districts of Orange County proposed purchasing the entire landfill system for $300 million paid out over 20 years. Backers said the sale to a public agency that already handles the county's sewage would result in few regulatory delays. But supervisors rejected the bid, saying the price was too low.

Some city officials and trash haulers oppose selling the landfills to a private firm, fearing that such a company would reduce environmental standards and attempt to monopolize the waste business.

The public will have an opportunity to review the consultants' report over the next few weeks before the Board of Supervisors takes up the issue in late November.

Besides assessing the likelihood of a sale, the study examines the costs of maintaining closed dumps, tipping fees and how public control of the landfills would differ under the various scenarios.

The IWMD is already generating revenue for bankruptcy recovery efforts by importing trash from out-of-county haulers at a discounted rate of $18 to $20 per ton.

In March, the county reduced the dumping fees for trash generated from inside the county from $35 to $27 after several cities abandoned the county system in favor of dumps in Los Angeles and San Bernardino that charge lower rates.

The IWMD also embarked on a restructuring plan this year designed to reduce overhead costs and keep its rates competitive with other jurisdictions.

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