$150 million may end recycling 'death spiral.' (North County Recycling and Waste Reduction Facility)

Trash: Supervisors hope to sell N.C. plant

The North County Recycling and Waste Reduction Facility will be bought for $150 million then shut down in an unprecedented move to ply San Diego County from what officials call the trash system's "death spiral."

The county Board of Supervisors voted unanimously May 30 to buy, then close, the San Marcos recycling plant, which originally cost $139 million, saying there was no other. option to gain control of the county's trash system.

The action was taken to avoid defaulting on bonds sold to build the plant. A 24-year contract with the plant's owner and operator, Thermo Electron Corp. of Massachusetts, calls for the plant to pluck recyclables from 550,000 tons of trash a year. Because the annual tonnage processed was substantially less, under 450,000 tons, the county was in danger of creditors declaring it in default of its contract with Thermo.

The supervisors vote means the county would use general fund money to cover the debt payment if dump fee revenues fall short. Dump fees go into the Solid Waste Enterprise Fund to pay for county trash operations. The city of San Diego handles its own trash.

The county is expected to complete negotiations by July 1 with Thermo Electron.

To close the plant, the county will secure $150 million in certificates of participation secured by $200 million in property collateral, including the George F. Bailey Detention Center and the County Operations Center.

The tax-exempt "lease-back" bonds will be paid off over 30 years.

County officials say the debt refinancing plan will eliminate the plant's $13.5 million annual operating costs and reduce debt payment on the facility from $13.5 million a year to $7 million, for a total annual savings of $20 million. The county's annual debt payment would be a maximum of about $10 million by the year 2005.

The plant opened in February 1994 and officials immediately began calling it the biggest drain on county trash operations. Debt payment on the plant accounts for $27 of the $47.50-a-ton dump fee. (The per-ton fee was $55 until a new, lower fee was approved last month.)

Before the San Marcos plant opened, the potential for systemwide revolt germinated in a 1992 federal court decision, which declared that cities were not required to commit their trash to any one entity, but could be free agents.

Armed with this new freedom, cities began scouting for cheaper trash disposal options, tonnage committed to the system dwindled and so did revenues from dump fees. As a result, 10 cities and the county became embroiled in a legal battle over trash.

Mickey Cafagna, a member of the San Diego Solid Waste Authority, is confident the battle can be resolved and former customers of county dumps can be wooed back into the fold.

"The supervisors' decision allows us to reduce the tipping fee," Cafagna said. "We're going to be reducing costs again, with our goal to be down to $40 a ton by July 1996.

"Opening the plant in the first place was a decision made in different economic times and it was a big mistake. But I think the plant will open again someday."

The two-part plant was designed as a so-called "trash-to-energy" facility where recylables would be culled from mixed waste and the leftover gunk would be burned to produce energy.

After widespread opposition to the trash-to-energy portion of the facility, only the recyclable-plucking portion was left intact, and the result was a facility that was not cost-effective, Cafagna said.

"Also, there were 2.5 million tons of trash systemwide, now there's 1 million," Cafagna said. "Tonnage was lost because of the slump in the economy, the downturn in the building industry, and the success of curbside recycling. The system started to collapse."