Lessons learned at Puuanahulu


HILO — April 23 marks the 20th anniversary of the West Hawaii Sanitary Landfill in Puuanahulu, an ambitious public-private contract born of necessity and forged through a lawsuit over union labor.

As Hawaii County looks at privatizing other solid waste functions, such as green waste, compost, organic solids and oils, and possibly a waste-to-energy facility, some officials are looking to the lessons learned from the Waste Management contract before privatizing other long-term projects.

One thing Mayor Billy Kenoi would like not to see repeated is a contract with no expiration date. Waste Management has the West Hawaii contract for the life of the landfill, with contract extensions following the first 30 years of the original contract.

The 82-page contract and addendum, signed by then-Mayor Steven Yamashiro, sets a county-paid disposal fee that ranges from $48.72 per ton for 200-249 tons per day, to $33 per ton for 350-399 tons per day, adjusted annually for inflation.

The contract goes on to specify that in the event the average daily tonnage during any month is less than 150 tons or more than 400 tons, “the parties acknowledge and agree that fees will be negotiated in good faith by the parties.”

The county and Waste Management also are allowed to renegotiate fees on the 15th anniversary of the contract and every 10 years thereafter, under the terms of the contract.

“One of the real challenges is it’s so open-ended,” Kenoi said in a recent interview. “All parties are looking for some degree of predictability. … My job upon taking office was to work with what we have here, to run as efficient an operation as possible.”

Joseph Whelen, general manager of Waste Management Hawaii, estimates the landfill has another 30 years or so left in its lifespan, as new cells can be opened as the old ones fill up.

Since 1993, the county has paid Waste Management more than $89.4 million to construct and operate the landfill, according to data provided by the county Department of Environmental Management. The contract is for the life of the landfill and also includes closing it — when that time comes.

The original plan was for Waste Management to use its own employees for the entire operation. But in 1997, the Hawaii Supreme Court found that the contractor’s operation of the Puuanahulu landfill violated civil service laws by privatizing functions that were “customarily and historically” done by civil service employees.

Waste Management could handle cell preparation, closure and post-closure maintenance, according to the ruling. However, the “waste intake services” of “spreading, compacting, and covering” refuse were determined to be civil service work and thus, assigned to the county.

It’s difficult to tell if privatizing the landfill has saved taxpayers’ money. Even the private-sector rank-and-file employees at the landfill must be paid union-scale wages, under the terms of the contract.

Whelen acknowledges it “was certainly our intent” to operate the landfill start-to-finish. But even with the hybrid arrangement required after the lawsuit, the company’s involvement is helping keep costs down, he said.

“I think it’s been a good management over the years. Because we’re private, we try to be competitive,” Whelen said. “As a rule, we usually have less people and are more efficient than others.”

The county paid Waste Management $5.1 million, and it paid 13 county staff working at that landfill $556,850 in the fiscal year that ended June 30. Salary and wages for 61 county staff at the Hilo landfill ran about $2.5 million that year. The cost for the county-run Hilo landfill, including transfer stations around the island, totaled $11.9 million, according to the county budget.

That’s from a budget that anticipated a total of $6.9 million in tipping fee revenue from both the Hilo and Puuanahulu landfills. The rest of the $28.3 million solid waste budget comes from the county’s general fund, except for $915,000 coming from state grants.

One other advantage Waste Management brings to the table is the ability to keep up with the ever-changing regulatory landscape, Whelen said. He said his company is active in advising the state Department of Health and others on how proposed changes affect the operation of landfills. Keeping pace with new rules and regulations takes a very specialized knowledge, he said, and the ability to quickly understand how changes can affect Waste Management and county operations.

“That’s part of our value,” Whelen said.