By BRADEN LAMMERS
> SOUTHERN INDIANA —
Among several other deals that are pending between Clark County and the city of Jeffersonville is an agreement that could cost all of the county taxpayers if it goes bad.
In 2011, Clark County agreed to issue bonds for $9.1 million to help expand the Clark-Floyd Landfill, LLC and install a slurry wall — a requirement deemed necessary by the Indiana Department of Environmental Management.
According to an agreement in place with the city of Jeffersonville, the city was to take all of its solid waste to the Clark-Floyd Landfill. However, the city stopped taking its trash to the landfill last year under the previous administration.
Subsequently, the exclusive agreement between the city and the landfill expired Dec. 31, 2011.
Why did the city pull out?
According to city officials, Jeffersonville stopped taking trash to the Clark-Floyd Landfill because of repeated damage to vehicles when they were dumping.
Councilmen Dennis Julius and Mike Smith said the issues included popped tires, broken axles and trucks getting stuck in the mud at the landfill. Both said the issues have since been resolved, but the city is no longer obligated to take its waste to the Clark-Floyd Landfill.
“The deal has expired, but there was a contract in place prior to the new administration coming into office,” said City Attorney Les Merkley.
But because the city was not taking all of its trash to the landfill in 2011, there has been a threat of a lawsuit.
“It was supposed to be an exclusive contract,” said County Attorney Greg Fifer.
And the city is not interested in re-entering a deal because of the cost savings that it has gained by not taking its trash to the Clark-Floyd Landfill.
“It was quite a bit more expensive to take it to Clark-Floyd,” said Jeffersonville Mayor Mike Moore.
He said to take the city’s trash to Louisville it was $3.25 cheaper. In addition, the maintenance costs for the city’s damaged vehicles was also factored into what Moore said was about $60,000 in savings annually.
“It was more than just the price per ton,” he said.
Smith agreed that the rate needs to be competitive in order for the city to keep its waste in Clark County.
“Over the year, and the tonnage, that’s a lot of dollars,” he said. “I think it needs to be competitive.”
The larger implication for the city and the landfill is whether or not without Jeffersonville’s revenue, the landfill could cover its bond debt obligations.
Why were the bonds issued
The Clark-Floyd Landfill was seeking a $15.1 million bond financing to complete an expansion project at the site off Ind. 60 near Borden.
The original bond approved for $9.1 million in October 2010 estimated the desired expansion would add 20 years of capacity to the landfill. But by expanding the size of the project, landfill capacity is estimated to be extended until 2036. But an additional $6 million was sought to install a slurry wall that would keep the contaminants in the landfill from leaking out of the site, per an Indiana Department of Environmental Management requirement.
To cover the cost Clark County had asked Floyd County to bond out the remaining $6 million of the project, but Floyd County never agreed to issue the bonds despite receiving 40 percent of the landfill’s revenues.
The Clark County Council also voted in 2011 against bonding for the additional $6 million. Opposition to the increased amount for the bond centered largely around a provision in the bond ordinance that offered a property tax backup for repayment via Clark County residents if the landfill defaulted on the loan.
Gary Malone, certified public accountant and partner with Umbaugh and Associates — an Indianapolis-based accounting company -- said previously that the average bond payment per year would be $1.25 million, which included $100,000 being set aside for closure costs of the landfill. And Clark-Floyd Landfill’s current annual revenues are $4.4 million, enough to cover the annual bond payment.
If a property tax rate increase ever became necessary, the most that rate would be is .017 cents per $100 of assessed valuation Malone explained when the bonds were issued.
The county and city have differing views on how imperative it is for the landfill to receive the city’s revenue, thus not needing the taxpayer’s revenue as backup.
“They bonded on the understanding that this is their revenue,” Smith said, referring to the landfill. “By us not using the landfill, basically they’re going to be short.”
Fifer disagreed and said the landfill would still be able to cover its expenses.
“That wouldn’t be a big enough hiccup to not be able to cover the bond debt,” he said. “I don’t think that would jeopardize the bonds that are out there now.”
But still looming for the landfill and the county is the additional $6 million needed to complete the landfill expansion project.
Clark County Commissioner Les Young said it is likely that the additional bond will need to be issued soon.
“At some point we’ll have to,” Young said. “I’d say pretty soon. I’d look for it anytime.”
But Young added, “we still feel the landfill will be able to cover costs” if the city does not bring its solid waste to the landfill.
Julius said there has been a threat of a lawsuit related to the city not taking its trash to the Clark-Floyd Landfill in 2011, but nothing has been pursued yet and the city has no current contract that ties it to taking its trash to a specific location.
“The county floated bonds based on the city being part of the landfill,” he said. “If the county can’t cover its bonds it’ll raise taxes.”
He estimated with an exclusive agreement in place about $500,000 in revenues would go to the landfill from the city.
Merkley declined to comment on the potential lawsuit and said city is going to go with whichever provider can offer the best price.
“Right now, the administration is satisfied with the arrangement [in place],” he said.
A new deal
Details of a new deal were not provided to the News and Tribune, as it was stated the entities were still in negotiations.
“We proved that it’s cheaper,” Julius said.
He said a spreadsheet was developed to show the cost of taking the trash to the Clark-Floyd Landfill was cheaper than having the city transport the trash over to Louisville.
Young agreed and said multiple factors need to be weighed.
“It’s a better deal at Clark if he’ll consider everything,” Young said of Moore. “I think they were hoping they would bring it back.”
While council members have been working to reach a potential deal the decision lies with the mayor.
“Ultimately it’s [Moore’s] decision,” Julius said. “We can present him with something, but we can’t enter into contracts.”
Messages left with President and Owner of the Clark-Floyd Landfill Robert Lee were not returned as of press time.