SMA rejects landfill valuation proposal

As far as Sallisaw Municipal Authority board member Josh Bailey is concerned when it comes to the municipal landfill facility and the fees customers are charged, which part of “no” do you not understand?

Bailey has been one of the most outspoken and ardent critics of talk about selling the landfill since CARDS Holdings, LLC tendered an unsolicited $21.5 million offer in February 2023 to purchase the facility and the city’s sanitation collection business.

In the wake of a May 8, 2023, public hearing that drew sharp criticism and an overwhelming rebuke of the purchase offer followed on June 5, 2023, by the SMA summarily rejecting the offer and the decision to “keep it in the family,” there was little wonder that when the landfill was the first agenda item to be considered at Mon- day’s monthly meeting, Bailey was characteristically incredulous.

When Sallisaw City Manager Keith Skelton presented a proposed letter of agreement for the SMA board to engage consulting firm Willdan Financial Services to perform a market valuation and cost of service study for the landfill, Skelton’s explanation to the board that the resulting $58,980 report would “once and for all tell us what that facility’s worth, and what our rates and operations need to look like going forward,” Bailey had heard enough.

“I’m not interested in this at all,” Bailey told Skelton, leaving no doubt about his convictions regarding the landfill. “What I recall from those earlier meetings is 100% of our voters were against selling it at all. The only reason we would want to evaluate it is so we could sell it. The only reason I care about what my properties are worth is if I’m interested in financing or selling.”

“We’re not talking about selling the landfill,” Skelton retorted, attempting to assuage Bailey’s fears.

But Bailey was having none of it. “Then why do we want to know what it’s worth?”

“Don’t you want to know what your business is worth?” Skelton asked Bailey.

“Not unless I’m trying to refi it or sell it,” Bailey fired back.

Undeterred, Skelton tried to appeal to Bailey’s business sense.

“Well, to me, you got to know what your business is worth,” the city manager explained. “And the cost of service study, you got to know if your rates are sufficient to cover your needs going into the future.”

Not only does Bailey not want to consider selling the landfill, he contends there’s nothing to be gained by conducting a cost of services study.

“I’m not an econ[omics] major, but we’re right at our local surrounding landfill prices,” Bailey countered. “If we go above them, we lose to them. It seems simple to me. I ain’t got to pay somebody $58,000 to tell me we got to stay below Fort Smith.”

‘Not For Sale’ sign

Still hoping to find common ground, Skelton told Bailey, “I don’t know if that’s a true statement or not.”

Bailey then concluded his verbal duel.

“That $58,980 could go further somewhere else — in equipment we’ve been needing,” he said. “I’m far more interested in putting a ‘Not For Sale’ sign out there [at the landfill] and let’s not bring it back up.”

But Skelton remained pragmatic. “Sooner or later, we will be approached again about it, and we’ll have the same conversation again,” Skelton said of possible future suitors. “What we’re proposing here tonight is just basically have an outside set of eyes take a look at it.”

Recalling discussions about city projects addressed at the city commissioners meeting earlier in the evening, SMA board member Kristin Peerson asked Skelton about delaying the landfill valuation and cost of service study.

“Can we push this back, and get all our pool and all that stuff finished — I know we’re behind on the budget there — so can this wait a couple more years?”

“We can put it off, but the question is still going to be there,” Skelton replied.

Mayor Ernie Martens asked the board if there was interest in pursuing only the cost of service study, which might be more cost effective.

“I’m like you,” he said, siding with Bailey. “I think the $60,000 or whatever it is, is a lot of money to spend on this.

“You guys have done research on what other landfills are charging and what they’re doing. I’m like Josh, that’s a lot of money to spend. I just don’t see we’re getting the bang for the buck for it. That’s a chunk of change to lay out there for something we could be part of ourselves.”

SMA board member Ronnie Lowe was unconvinced that Willdan’s services were unnecessary.

“If we have to have a loan to expand the landfill, aren’t we going to need to know the cost of worth of what the landfill is to receive a loan to expand that landfill?” he asked.

“It’s certainly a possibility,” Skelton admitted. “Typically the loans we get are backed by the revenues of the city, in this case, it would be backed by the revenues of the landfill. It’s a possible question they could come back and ask us if we went through a local bank or some other type of lending mechanism.”

SMA board member Julian Mendiola, who had not offered his opinion during the discussion, then broke his silence.

“I’m kinda in the middle, I understand both sides of this. The more that I’ve thought about it, like Josh says, we had to lower our shingles [per ton rate] down just to get some businesses to come back. I’m not sure we could go any higher than what we are right now. The whole estimate of the landfill what it’s worth — I’m right there, I think, with everybody. I’m not really sure I’m ready for that. I don’t really see the need in it at the moment,” Mendiola said.

Bailey then made a motion not to approve the proposed letter of agreement, and Peerson seconded the motion. Bailey, Peerson, Mendiola and Martens all voted not to approve the agenda item, while Lowe was the only dissenting vote.

Landfill history

The SMA received an unsolicited offer in February 2023 to purchase the landfill as well as sanitation services for $21.5 million.

When a heated public hearing in May 2023 made clear that citizens did not want to sell the municipal facility, the SMA a month later rejected the unsolicited offer, deciding to “keep it in the family.” The decision effectively gave notice to other possible suitors that Sallisaw is firmly in the landfill and sanitation collection business without any assistance from anyone else.

But Sallisaw City Manager Keith Skelton cautioned the SMA that the landfill operation, while it may not technically be broken, it’s also not on the firmest of financial footings. He warned at the time that if things didn’t change pretty quickly, the facility will be broke and will need to be fixed.

“Contrary to what a lot of people are thinking about us making tons of money on the landfill, we don’t make tons of money on the landfill,” Skelton told the SMA. “Every piece of equipment out there is half a million dollars [to replace].”

Skelton said the capital needs of the landfill during the next seven years are great, “and the environmental liability that we would maintain is also great, and that’s going to increase to millions of dollars that will greatly affect the budgets in years to come.

“There’s a way we can finance stuff. We can go in debt, we can issue debt. But right now, the landfill doesn’t provide enough net revenue to cover debt service, the amount of money that we need. For example, around $6 million over 10 years, that’s a little over almost $700,000 in debt service a month, so our landfill netted less than $600,000 last year in revenues,” Skelton explained.

Other business

In other business, the board:

• Approved advanced metering infrastructure (AMI) submittals for both electricity and water to the Grand River Dam Authority (GRDA). Utility Technology Services, Inc. (UTS) has been selected to provide the AMI system for both the electric and water utilities.

Due to the need to implement the system as quickly as possible, installation of the meters will be contracted out with UTS, which will use a contractor that has had a long-standing relationship with UTS and is dependable.

Cost for the electric meters and the data collection system is $1,582,760, which GRDA will finance for five years with zero percent interest. The city will budget about $300,000 per year to pay the debt through the SMA.

Cost for the AMI water meters is $1,514,300, which would be paid with a state revolving fund (SRF) loan the city is seeking through the Oklahoma Water Resources Board (OWRB), and the purchase is contingent upon the city receiving the OWRB loan. If awarded to the SMA, the loan would be forgiven at the end of the project.

• Approved reinvestment of a SMA certificate of deposit with Local Bank for 280 days at 5.47% interest. Quotes were requested for reinvestment from Armstrong Bank, Local Bank, Firstar Bank and National Bank.

• Approved (contingent upon receipt of insurance documentation) a lease agreement between the SMA and the Oklahoma Junior Rodeo Association for use of the rodeo grounds for the J.P. Wickett Memorial Junior Rodeo on May 4-5 during Diamond Daze.

• Approved (contingent upon receipt of insurance documentation and payment) a lease agreement between the SMA and Ralph Jones for use of the rodeo grounds for a rodeo on May 10-11.