BKK: caught between two landfills.

The City of West Covina is set to go to trial this month against BKK Corp. in a case which could result in shutting down one of L.A. County's largest landfills.

Since this is BKK's only landfill, "We're out of business if the City of West Covina shuts us down and wins the lawsuit," said Ken Kazarian, vice chairman of the Torrance-based firm. And taxpayers then would have to foot the $60 million bill for the closure.

But at the same time that BKK is claiming it doesn't have the funds to close the West Covina landfill, it is trying to get permits to open another large landfill on the other side of the county.

This case could spell the end for BKK, a 73-year-old landfill business owned by the Kazarian family, which now employs 240 in Southern California. The case could also shut down one of L.A. county's largest landfills and nix plans for another large landfill in L.A. County.

Kazarian said the company will abandon plans to construct the Elsmire Canyon Landfill, planned near Santa Clarita, if it loses the West Covina case.

The trial, set to begin in Los Angeles County Superior Court Feb. 22, revolves around an agreement BKK and the city signed 10 years ago regarding the closure of the BKK landfill in West Covina.

Betsy Dixon, contract city attorney for the City of West Covina, contends BKK signed a memorandum of understanding in which it agreed to close the landfill in November 1995.

BKK attorney Rene Tatro said Superior Court Judge Theodore Piatt ruled last year that the language in the MOU is "ambiguous" on whether the landfill must close in 1995.

"Our position is that the MOU says that if certain triggering events occurred, the parties had to sit down and negotiate a settlement for closure," Tatro said. But those triggering events, which involved the city approving a commercial building development near the landfill, never occurred, Tatro said.

Development an issue

According to Kazarian, the plan was that BKK would build commercial real estate development on land it owns near the landfill. It was expected that revenue from that development would fund the costs of the landfill closure and keep the company in business, he said.

The BKK landfill, which is the company's primary business, has a permit to operate until 2006, Kazarian said. The landfill generates $50 million in revenues a year and therefore has the potential to produce $500 million in revenues between now and 2006, he said.

"It is an insult to think that we would (have the rights to) a half a billion dollars in business and then walk away from it without getting something in return," Kazarian said.

BKK submitted several plans for development of a commercial real estate complex to the city for the land, but all of the plans were rejected, Kazarian said.

Dixon disputed that.

BKK withdrew plans to develop the site because the commercial real estate market "fell out," she said. "The agreement is not contingent on the commercial development," Dixon said. "It says they will have commercial development or 10 years will pass, whichever comes first." BKK is trying to use the fact that it doesn't have the money to fund the closure of the landfill "as a lever to stay open," Dixon said.

BKK "has been required by law to fund it (the closure)," Dixon said. BKK "had the money and they used it on (development costs for) Elsmire (Canyon Landfill)," she said.

Tatro said BKK is not "in any shape or form in violation of any state or federal regulation" regarding the closure of landfills.

Kazarian said in the last year the company has purchased an insurance policy which would cover the costs of the cleanup, but the landfill must stay open until 1999 for him to pay the $10 million annual premium costs of the policy. "We have the money to pay for everything, as long as we have the ability to continue the business (at the West Covina landfill)," Kazarian said.

Meanwhile, Santa Clarita officials were surprised to learn that BKK does not have the money to fund the closure costs of the West Covina landfill.

Santa Clarita residents staunchly oppose the planned development of Elsmire Canyon on unincorporated land adjacent to that city.

Santa Clarita Mayor Jo Anne Darcy said she was "shocked" to hear that taxpayers may have to pay for the closure of the West Covina landfill. "If it that is true, how can he (Kazarian) have the money to build another landfill?" Darcy asked.