Landfill sale draws criticism, but decision won’t be quick

Everything has a starting point.

For the Sallisaw Municipal Authority (SMA), that starting point was May 1 when the board received an unsolicited offer of $21.5 million to purchase the Sallisaw Municipal Landfill facility and the city sanitation collection services.

A second step was taken Monday night at a public hearing to further consider the offer.

Mayor Ernie Martens and City Manager Keith Skelton assured the SMA as well as a full house of concerned citizens that it will not be the last step.

A standing-room-only crowd of more than 60 decidedly partisan citizens jammed the city council chambers to learn more about the future of the landfill, as well as to make sure the board knows how they feel about the proposed sale.

At the public hearing, which lasted more than an hour, the SMA heard comments from 11 citizens, 10 of which left no doubt that they were against the sale, sharp criticism that drew wide applause from the crowd.

But once the public hearing closed and the board moved on to other items on its agenda — one of which was further discussion of the offer from CARDS Holdings Inc. — emotions still ran high.

As the discussion about the landfill waned, board member Josh Bailey revisited what he called “a valid concern” about the possible shortening of the landfill’s lifespan if ownership transferred to CARDS. He also said that he knows of other companies interested in bidding on purchasing the landfill, and that there was one party that believes the landfill valuation “would come in substantially higher” than the current unsolicited offer. Bailey said another interested party claims the landfill “is grossly undervalued,” and that another party “would not even consider selling it for under $120 million.”

“I’m not interested in selling at all, at all,” Bailey told the board. “I don’t even know why we’re entertaining that. Let’s shut it down and get back to business.”

Bailey pointed out that 10 of the 11 who addressed the board during the public hearing were against the sale.

“That tells me all I need,” he said, adding that the majority of his constituents do not want to sell.

Likewise, board member Julian Mendiola said the feedback he’s received since the May 1 special meeting revealing the offer has been overwhelmingly opposed. Board member Kristin Peerson also said “all feedback I’ve gotten has been negative.”

But when Martens, as chairman of the SMA board, tried to end the discussion by recommending the board continue to consider the information previously received weighed against comments made at the public hearing and that the topic would be revisited when the board meets Tuesday for the annual budget retreat, Bailey was having none of it.

“Wait a minute, we just had three say ‘no.’ We’re done. Why are we moving forward? Let’s put this to bed,” Bailey told Martens.

That’s when the Oklahoma Open Records Act provided an unscalable obstacle for the board.

Martens reminded the board, in general, and Bailey, in particular, that a discussion was on the agenda rather than an action item, and there would be no vote taken at Monday’s meeting.

“I feel like it was a wasted night, then,” Bailey retorted.

That’s when Martens assured the board, as well as citizens who remained after the public hearing to witness the SMA discussion, that a decision will not be a quick one.

“There’s a lot of moving pieces on this still,” said Martens, who admitted he remains undecided. “This is not a decision that’s gonna be made in a week, I can promise you that.”

“We’ve got a lot more questions to be answered. We’re not gonna decide tonight,” Martens said. “We need to go through this process. If it takes two months, it’ll take two months.”

Skelton then pointed out that the board does not have all the information it needs to make a decision.

“It’s our responsibility to give you all the information that you need. I have not given you all the information that you need as of tonight. I hope to give you the rest of it Tuesday at the budget meetings,” Skelton told the board. “It’s my duty to bring it to you and discuss it, my duty to provide the information to you. This is strictly an evaluation.”

“Josh did make a good point,” Skelton said, reiterating that it was an unsolicited proposal that initiated board consideration. “This board may decide that, if we wanna proceed, we may wanna get other offers to see what the value is. It’s hard to put a value on this. As we continue our discussions, that may be something that we want to definitely consider.”

Skelton told the board he is continuing to evaluate the numbers so that he can provide the best information possible to the board.

Pros and cons

First to address the board during the public hearing was Monty Lenington, Roland’s town administrator.

“This morning, I started trying to list out some pros and cons of this. On my pro list, I put money, because that’s the big benefit for the city of Sallisaw is the money. But that’s really the only pro I could really write down.

“Some of the cons that I see are, obviously, the landfill’s life expectancy is gonna go down. Right now, my grandkids don’t have to worry about where our trash is gonna go, it’s taken care of for the next 80 years,” Lenington told the board. “The reason we’re here, is because northwest Arkansas does not have that luxury that we have, and they’re looking for a solution to their problem. For $22 million, they’re gonna give us their problem. I do not want to look at my kids 20 years down the road when I’m still here, hopefully, and tell them that we had a chance to not have this problem, and we sold them out, because I want my kids to be able to be here, I want them to have jobs here.

“In researching this when I heard about it, in 22 years, the United States is gonna be out of landfill space. That’s the estimate right now,” Lenington said, noting that requests for proposals to which cities respond ask only about water plant capacities and sewer, and landfill capacity is never an issue. “We are, to my knowledge, the only spot in the United States that has 80 years that we don’t have to worry about this problem.

“My philosophy in city government has always been it is our job to move things forward. It’s our job to leave things better than what we found it. I have always respected Sallisaw for your ability to see that utilities are important for a city to control. Where you go for your trash is extremely important. Because once the landfill’s full, what’s our option?

“It’s a short-term gain, but at what cost for longterm problems that it’s gonna cost the county, as a whole, and the city of Sallisaw? What are the rates gonna be for residences? I’m hearing $60 and $70 in northwest Arkansas. That’s double what we have,” Lenington said. “If it’s a revenue problem, I can only speak for the town of Roland, but raise my rates. It’s worth it to me. I would much rather give another $10 a ton to the city of Sallisaw and know that we’re sustainable and we don’t have a problem for the next 80 years.

“That’s important that we’re not leaving a problem for our grandchildren. My daughter’s 11 years old. She’ll be 91. Her kids will be in their 60s. We’re talking about a problem for my greatgrandkids, and it’s a problem we don’t have to have,” Lenington concluded.

It’s a gold mine

Daryl Legg, former Sallisaw city councilman and current District 6 councilman for Cherokee Nation, encouraged the board not to sell what he called a gold mine too cheaply.

“There’s something about being self-sufficient. If we have an outside company come here and take over that landfill, we are no longer selfsufficient when it comes to our sanitation,” Legg said. “$29 million is peanuts compared to what we have, that is a gold mine. Maybe not monetarily, but a gold mine in many other ways.

“I can’t speak on behalf of Cherokee Nation on this issue, because we don’t have a dog in the fight, but we do have a landfill in Stilwell, and there’s no way in the world — first off, it’s not the same quality as Sallisaw’s — but there’s no way in the world we’d sell that thing for $29 million.

“If this thing goes away, what are we gonna do? Usually everybody runs to the Cherokee Nation to bail them out. We don’t have land, we don’t have another 1,200 acres for sanitation. We’re trying to maintain the one we got. There’s more value in what we have than what you can express monetarily,” Legg told the board.

Set the money aside

Jim Rogers, District 1 Commissioner for Sequoyah County, acknowledged that Lenington’s remarks “probably hit on most of the things that I’m most concerned about.”

Then he counseled the SMA, pointing out that elected officials have a responsibility to their constituents.

“We’re entrusted by the people that put us in these seats to make good, sound, solid decisions, things that continue moving our county and our cities forward in a positive and productive manner.

“One of the things is, if we are secure for 80 years, we’re willing to sell that 80 years for $22 million. That’s cheap. I know as a county commissioner, when I make decisions, I try to look generations down the line, several generations down the line. Is the decision I’m making, is that a good decision for my children, for my grandchildren, for my great-grandchildren?

“Giving this up, you’re giving up a lot. For you to sell 80 years security for 15 [years] for $22 million, that’s cheap,” Rogers said.

“There’s times when we have to make decisions as leaders, we have to set the money aside and we have to look at it and say, is this an ethical decision that we’re making? This is one of those decisions.”

Small business concerns

Taylor Smith of Sue’s Recycling in Vian believes selling the landfill will harm small business enterprises. Sue’s Recycling is a small, family-owned, veteranowned local hauler that’s been serving customers in and around Sallisaw for nearly 30 years.

“We employ around 60 local residents, most of whom are Cherokee citizens. But more than that, I’m here representing small businesses in Oklahoma that the sale of this landfill will harm,” Smith said.

“Having access to affordable, local disposal is key for independent haulers to be able to remain competitive in our region. Putting it plainly, this purchase attempt is a strategic move by an out-of-state company to gain an unfair advantage in our area. Selling the landfill operations will give them a significant control over one of the largest cost drivers for their competition, and place local haulers, like us, at a significant disadvantage. A foreign company will have pricing power that will directly impact the service cost for residents in and around Sequoyah County, which is good for them, but which is not good for our citizens. It will give them the ability to price-out their competition, which will leave fewer choices for our communities,” Smith charged.

“I understand that city management has specific concerns about the rising cost of operating. As a business owner, I completely relate to those worries, because we have them, too. Selling the landfill will not insulate the city from these price increases, but it will remove the leaders from a position of control over when price changes are applied.

“Unfair or unreasonable disposal costs will negatively impact city and county budgets, affecting citizens in and outside the city limits. It also poses a very real threat to small businesses like ours, which are already doing their best to operate within difficult economic times.”

Smith said his review of the 2023 SMA budget showed revenue from the landfill and sanitation operations accounting for 8% of the city’s revenue. He said projected revenues for the landfill and sanitation operations grew an average of 4% per year over the past four years, and that actual revenue from those sources exceeded budget projections by 8% from 2019 to 2021.

“So despite rising costs, these departments are strong financial performers, and I believe it’s a mistake to divest at this time. Short-term infusion of cash from this sale will not offset the long-term loss for this revenue-producing asset,” Smith said.

“I truly believe the sale of this landfill and sanitation operation will negatively impact the residents of Sallisaw and the surrounding rural communities. I’m here to warn you that giving an out-of-state competitor direct control over one of the largest cost drivers in our industry is granting them the ability to quickly and severely harm Oklahoma-based small businesses that employ hundreds of residents.

“Rising costs are affecting everyone, including this potential buyer. I believe the Municipal Authority can make adjustments to offset these increases while maintaining ownership and control of the landfill and sanitation operations,” Smith said.

“Please protect small businesses and local haulers, protect the landfill and sanitation crews, and please vote ‘no’ on this.”

Considering both sides

Former Sallisaw Mayor Shannon Vann pointed out the difficult decision to be made, noting that it is a board decision, not a staff decision.

“Anyone who thinks this is about rates, and so-and-so private company is gonna leave the higher rates than what the city maintains, they’re underestimating what the city’s needs are gonna be operating this landfill in the future. It’s incumbent on this board to be willing to make those rate changes to make sure that we’re accounting for future investment that’s gonna be required to expand,” Vann explained, and said most projections about the landfill’s life expectancy are inaccurate.

“The only way this works is if we bring in trash from other areas. We do need trash from other areas, otherwise you wouldn’t have this landfill as it exists today if it wasn’t for that ability. We bring in 100% of LeFlore County now, we bring in most of Sequoyah County and we’ve had contract haulers from Fort Smith and other areas over the years. It’s imperative that we have volume to sustain the operation that’s out there.

“So keeping this, selling it, we do have a lot of market risk in keeping it. There’s risk of competition, somebody could go out and, theoretically, start another landfill — it takes a long time to do that, takes a lot of investment — but entities do exist.

“You have environmental risk. Risk of keeping it, you’ve got ever-changing and enhanced environmental regulations that cost money to keep up with. That’s a risk for the city, it’s a risk for private operators, too. The question is, who’s best able to deal with those regulations in the future?” Vann asked.

“There’s a lot to be said for the flexibility of the city retaining control, just simply for the flexibility to make decisions about use, residential and commercial pick up, level of service and quality control obviously stays in your hands.

“There’s also an opportunity cost. The money that you invest in that landfill is money that does not go to be invested in other areas of the city that are just as important as the landfill. “I’m not here pro or con. I think you’ve got a whole lot more homework to do before you make a decision as a board. I think there’s a lot of financial analysis, I think there’s a lot of legal analysis to be done, I would recommend possibly bringing in third parties for both of those to analyze it more indepth than what the staff currently done. This is an extremely large decision, probably the largest financial decision you’ll make as a board,” Vann said.

Lost revenue stream

Former Sallisaw City Commissioner Jim Hudgens warned the SMA about giving up a valuable revenue stream.

“If you sell the landfill, you’re losing a revenue stream. You do not need to do away with a revenue stream that you’re gonna need 20 or 30 years down the road. To me, it would be unconscionable to sell a revenue stream that you know that you’re gonna need. My advice to you is, don’t let the money get in the way. If I was making the decision, my answer would be ‘no,’ I would not sell the land. I’m glad it’s your decision and not mine, because it is a momentous decision.

“Remember, your ability to pay for future governmental functions is based on the revenue that you can generate, and you do not need to do away with a revenue stream that helps you pay for those function costs,” Hudgens said.

Others addressing the board Monday included Kelli Navratil from the city of Muldrow, Reece Bush, J.W. Fleetwood and Allen Lee.

CARDS’ plan

Dan Christensen, president of CARDS Holdings, believes his company will be a good partner for Sallisaw, and shared some of his plans should the SMA accept his offer to purchase the landfill.

“While some of the comments may have seemed adversarial, they are good to hear. They help us form a definitive agreement, if we’re able to do so, that meets the needs of all the citizens.”

Regarding sanitation rates, Christensen said “in order to remain competitive, rates would need to remain where they are in comparison to the nearby competing landfills. It would not be our position to try to drive business away from the landfill.”

He then attempted to assure citizens that employees will still be needed at the landfill.

“Whether it’s us or someone else providing the services, someone has to provide the services, it may be a different colored shirt that these folks are wearing, but the job will still be in existence.”

And Christensen said being a community partner is important to CARDS.

“It’s our intention to beautify the area and make an investment in the landfill on a continuing basis, to make this a showplace for both the state and any regional visitors as well as those who use the landfill.”

The city’s plan

“The Board of Trustees and city staff are in the early stages — and I stress, very early stages — of evaluating this offer,” Skelton said in an opening statement for the public hearing. “Our intent is to ensure the offer is properly vetted, and that Sallisaw, Sequoyah County and all our current landfill customers are properly protected with continued use of the landfill. Early review of financial numbers, and future projections of the landfill and collection services show the offer to be very beneficial to the city in the long term financially.

“Included in the offer is a tonnage royalty for the city of $1 per ton covering all tonnage brought to the landfill after the sale. The offer also includes city retain age of 100% of all methane royalties once the methane collection system is operational.

“For tonight’s public forum, the city has made available draft numbers related to the offer. Please note these numbers have changed daily since May 1, and will change more as we continue to evaluate the offer. Some revenue and budget numbers that benefit the city are very conservative and will only grow as time goes by,” Skelton said.

“For the cash received at closing, we will have an investment strategy ready to make a large financial investment that will generate an annual return that can be used in city operations. Our desire is that the principal invested would never be touched, and only increased in the future. The balance of the funding, which would be approximately 8 to 10 million dollars, depending on investment, would be used on approved projects in the community. A ‘first draft’ list of project ideas has been given to the Board of Trustees tonight. This is the first time they have seen this list. I fully expect the list will be discussed at next week’s budget meetings. It may be discussed some tonight as we take up the next agenda item.

“As I have stated, it is a working draft.”

It’s still early

“I hope this first presentation and handout clears up a lot of questions that some of you may already have,” Martens told the full house for the public hearing. “I think that what we saw on social media, that most people were just assuming that we were gonna sell the property and walk away from it and not have any … that was never, never part of the intent, part of the plan to just walk away from it and not have any collection services on our own.

“This is very early in this process, like Mr. Skelton said. We’ve got a big decision to make, and we’ve got a lot of negotiations to take place with this potential buyer before we come up with something that’s beneficial for the city and beneficial for our citizens at the same time. So I hope that this kinda clears the air with some of you just a little bit,” Martens said.

“This could potentially be a game changer for the city as far as what we would have for investment money for the future and the quality-of-life projects that we’d like to finish and move forward with. Just the interest income alone would be astronomical or would be a lot of money for us as far as interest income we would have off of the money we could invest.”

The numbers examined

Skelton told the SMA there were 10,000 transactions at the landfill from July 1 to April 30. Each transaction was “just under 1 ton per transaction.” The largest customer is LeFlore County Solid Waste, a contract customer. Sue’s Recycling and CARDS are also customers.

“This is the very early stages of evaluating this,” Skelton reiterates, “and we have yet to really get into a lot of negotiations and back and forth between the two parties. That $20 million is not set in stone.”

Skelton said the landfill decision will be discussed Tuesday when the Board of City Commissioners, which is the same members as the SMA, conducts its budget retreat.

Meanwhile, Martens assured the the board and citizens that Sparq Renewables is committed to the city reaping the royalties from harvesting methane gas at the landfill “forever. It could be anywhere from $300,000 to $500,000 a year just on the methane gas production at the landfill. As the landfill grows, the methane gas grows also,” Martens said.

“Rest assured, this decision is not going to be made quickly. This council is taking this very, very seriously. This decision will not be made quickly, and it won’t be made lightly, and it will be made carefully with the best interest of this city and our citizens that we can come up with.”