May 5, 2014

Why you should care about HWMA and it's bad decisions since 2002 and how it directly affects your pocket

 The Humboldt Waste Management Authority is a joint powers governmental entity created in the late 1990's by an association of the Cities of Eureka, Arcata, Blue Lake, Ferndale and Rio Dell and the County of Humboldt.  Originally, the city of  Fortuna was a member but dropped out.

Around 2002, HWMA sold about $8,000,000 in revenue bonds and purchased its existing transfer station from Eureka Garbage, now called Recology.  As a part of the same deal, HWMA agreed to assume the legal duty from Recology to close and manage the old Cummings Road land fill.  About three years later, HWMA sold another large bond offering (which  was also about $8,000,000) to buy its way out of what it thought was a disadvantageous long term management contract for the operation of transfer station from an entity called Waste Solutions Group.

HWMA has made a series of very bad economic decisions since the beginning. The result today is that its April, 2014 balance sheet is negative, showing total assets of about $16,000,000 and total liabilities of about $22,000,000.

It started when they paid way too much for the transfer station which now needs a large additional cash expenditure for repairs.

Then, when HWMA took over the responsibility for the Cummings Road land fill it received a fund of about $10,000,000 that had been collected by Recology from the rate payers through a special fee to close the old landfill.  HWMA has spent this fund down to about $4,000,000 trying to close the landfill but it currently estimates that completion of this project will cost another $12,500,000.  In addition, HWMA has discovered that there was an old and unknown dump site on the property located about half on HWMA’s property and half on property still owed by Recology.  The estimated clean-up cost for this area is now estimated to be around $4,600,000. HWMA and Recology have agreed to split this cost.

To make things worse, one of the first things HWMA did after it bought the transfer station was to hire Waste Solutions Group to operate the transfer station for HWMA.  This was done on a contract with a 25 year term.  By 2005, for some unknown reason, HWMA decided that this contract was too lucrative for Waste Solutions Group and exercised its right to cancel the agreement.  However, the cost of cancellation was a payment to Waste Solutions Group of about $5,000,000.

 Two recent decisions made by HWMA, one in late 2011 and one this month, directly destroyed about 32 living wage jobs. This loss will have a ripple out impact on the local economy..

Prior to late 2011, the Arcata Community Recycling Center operated a major and modern recycling center in Samoa.  It employed about 17 persons in  living wage jobs.  In the recession of 2009-2010 the market for recycled materials, like a lot of things, crashed and to survive ACRC had to charge to accept recyclable material. However, this cost was always much less that the cost to landfill these items.  By mid-2010, recovery was occurring and Arcata Community Recycling Center dropped the charge to accept recyclable material.   HWMA, using the same consultant it would later use for trucking, put out a request for proposals for recycling and Solid Waste of Willits  made a proposal to buy this material for a floating amount that began at about $8/ton and truck it to its plant in Willits for processing.  The per ton amount has fallen with the passage of time.

In January of 2011, Arcata Community Recycling Center closed for good, defaulted on its purchase of the Samoa facility and 17 people directly lost jobs. These people have not neccessarily been employed back into the local economy. Some who have lived here all their lives left the area. In addition, the closure let to a loss of trucking jobs that were dependent on the transport of processed material to marked.  Arcata Community Recycling Center believed that the process that was used by HWMA that led to its permanent destruction was contrary to legal standards and filed suit in the Humboldt County Superior Court.  That action is still pending and may someday actually go to trial.

Of course, HWMA’s position is that while the loss of jobs was regrettable, economics simply dictated this outcome.  But this is not a sound way to look at the issue and ignores the reality of whose interests need to be considered in making such a decision.  For the most part, the money that flows into HWMA is not government money at all.  It comes from local citizens who are purchasing the necessary service of garbage disposal.  And so how were the interests of the local citizens advanced by this action?  No one’s rates were lowered, in fact, the money now being paid for the local citizens’ separated recyclable material is being kept by HWMA and paid to the cities to be used as they see fit.  No one considered the best interests of the local citizens, whose money this really is.

The second shoe fell this month.  Using the same consultant and the same process, the HWMA claimed to have obtained a 10% savings on trucking and disposal to again use Solid Waste of Willits to provide the trucking and disposal service out of Humboldt County.  As long as HWMA has been in existence, about 10 trucks a day have departed the County being driven and maintained by local people.  About 15 of these also living wage jobs are now about to be lost.

The decision to ship these jobs out through the use of Solid Waste of Willits will result in changing the direction of the haul so that now all trucks 3,300 annual truck trips will go south down highway 101 to a landfill that is 25% further away that the current disposal location.  Solid Waste of Willits’ claims that its price is based upon its trucks burning diesel fuel at the rate of 7MPG, a rate that local truckers with significant experience have stated is a false claim.

Finally, HWMA appears to claim that it can make this decision to significantly increase truck traffic down highway 101 and the burning of diesel fuel in the process without ever performing an environmental assessment under CEQA.

The ultimate outcome of these two decisions is the direct loss of at least 32 living wage jobs.  Just as with the decision to force Arcata Community Recycling Center to close, none of the rate payers who live within our local economy will have their cost of garbage disposal reduced.

As a final impact on the local job market, the HWMA is looking for perhaps two million dollars to pay for its share of the just discovered dump site that was formerly owned and operated by Recology.  At the same meeting HWMA announced it was going to end the use of local truckers, it also announced its intention to borrow this money from the Headwaters Fund.  It is ironic that this will make a significant amount of this fund, that came into existence to provide new local jobs, no longer available to promote local employment. And then the money will likely be spent on out of contractors to do the required work.

Only Rex Bohn from the Board has challenged these decisions. We hear a lot about local jobs and job creations. Have the rest of the elected officials on this board helped or hurt that cause? Should you pay for unsound economic decisions made by government officials.

Unlike the GPU, this issue affects every taxpayer. Where is the outrage and attendance at these meetings?

Check out the videos from April 10 HWMA meeting and listen to 2 public speakers: Allison Jackson who speaks on CEQA issues. The other public speaker is Ron Borges of Bettendorf Trucking.

The following links to articles are only some that support the points above.

In this article, read about costs going up and Jud Ellinwood of Zero Waste Humboldt warns that taxpayers rates will go up

Job loss claim refuted by Boyd says this would preserve local jobs when the opposite has happened.

Lawsuit claims HWMA sabotaged its business to purchase Samoa plant at discounted price

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