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Landfill faces mounting financial woes

Friday, May 11, 2012

Idled fuel pellet operation major culprit; 14 employees laid off

Drastic changes are continuing at the Cherokee County Landfill and Recycling Center as the governing Cherokee County Solid Waste Commission scrambles to stamp out several threatening financial fires burning out of control at the landfill operation.

At issue is the landfill's fragile financial situation caused by a variety of circumstances both in and beyond the Commission's and landfill management's control.

The largest debt load, and one that has nearly broken the bank, is the landfill's pellet producing machine that today sits idle - a gigantic "white elephant" in the room that has drained the landfill coffers because it didn't create the anticipated windfall revenue stream that was initially forecast.

That, coupled with cheaper than anticipated natural gas, and a weakened ethanol/biodiesel economy, combined to negatively impact the landfill operation.

The pellet machine was purchased and installed a few years ago by the Commission with the promise of user fees more than compensating for the up-front expense and ultimately handsomely feeding the operation's coffers.

In 2009, Cherokee County initially issued an estimated $3 million, 10-year G.O. Bond to finance the pellet system, and then last May rolled it over to 20 years for capitol to compensate due payments.

Also last May, the Commission requested and received another $427,000 to pay construction fees on a new cell for the landfill. The County issued a separate G.O. Bond not to exceed $450,000 to cover that shortfall.

Among the anxious users lined up initially to purchase the pellets made from garbage to be burned for fuel was a proposed Biodiesel Fuel plant near Marcus, a new boiler system for the Cherokee Mental Health Institute, and a handful of other prospective high-volume users who would purchase and truck the pellets from Cherokee to their facilities to be used to fuel their heating systems.

However, in the midst of it all, the Biodiesel plant and MHI furnace never came to fruition, State taxation regulations ate into the budget, and the Environmental Protection Agency (EPA) instituted new and stricter regulations on the fly alleging that the pellets now did not satisfy air quality regulations.

The pellet system takes in municipal solid waste, removes the recyclables and toxic materials, and condenses the remains into a solid fuel pellet then burned in a boiler for fuel.

In a report to the Cherokee City Council Tuesday night, Council member and Solid Waste Commission member Mick Mallory outlined the reasons for the pellet machine's failure and the resulting budget crunch crashing down on the landfill operation.

Because of this, a few months ago the Commission began exploring ways to increase revenue, including raising user fees for area counties hauling their garbage and/or recyclables to Cherokee County's landfill.

Plymouth, Buena Vista, and Ida bring their household waste to Cherokee, but Plymouth quit the practice with their recyclables as soon as the Commission proposed the rate increase, which further dented the landfill's revenue stream.

As a result of the financial hardships now facing the Cherokee landfill, the Commission laid off 14 of its 25 employees in April because they were no longer needed with the downturn of business and the non-functioning pellet operation for which many of them were hired. According to the meeting minutes, the lay-offs came at the discretion of landfill manager Brent Kash.

"The landfill has lost big money the last three years," said new Commission member Mallory to the City Council Tuesday night. "Things got out of control out there. There was a lack of attention, some mismanagement. It's really kind of a mess. We've negotiated with the area counties dumping here to maybe level the pay scale but none were receptive."

Mallory said accountants have told the Commission that landfill fees must increase by 40-percent to help the operation get back to solvency, if nothing else changes in the expenses versus revenue sweepstakes. He said the Commission already has hiked tipping (dumping) fees for users to $42 per ton.

"Changes need to be made and are in the works," explained Mallory. "It's going to take more money to correct the problems, but I think we're headed in the right direction.

In response to Mallory's candid report, City Administrator Don Eikmeier said both the City and County need to better monitor the landfill operation and in the future receive quarterly or bi-annual reports on the operation.

The Solid Waste Commission is an autonomous 28-E governing body functioning on its own, but Eikmeier said the City and County have too big a stake in the landfill not to stay in communication concerning the day-to-day operations.

Commission members include representatives from all cities in Cherokee County and the Cherokee County Board of Supervisors.

They include Mick Mallory (Cherokee), Don Parrott (Washta), Mark Leeds (County Supervisors), Les Pedersen (Cleghorn), Roger Smith (Meriden), Steve Galigan (Marcus), Jeff Bowen (Aurelia), and Larry Nelson (Quimby).

John P. Loughlin is Secretary/Counsel, and John M. Loughlin is alternate Secretary/Co-Counsel.

Mallory this year replaced Ken Slater as the Cherokee member, and Leeds has been named the new Commission Chair, replacing the outgoing Slater, who was not reappointed by the Cherokee City Council and had been considering retiring. Jeff Bowen was elected Vice Chair, and Parrott appointed Commission Treasurer.

Commission members are paid $40 per meeting and mileage, depending on their distance from the landfill.

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