EDITOR’S NOTE: The transfer station purchased by the city of Port Angeles has been corrected.
PORT ANGELES — The city of Port Angeles will buy the Transfer and Recycling Station for $3 million and take over garbage collection from its Texas-based owner as of March 1, an arbitrator has decided.
Retired King County Superior Court Judge Laura Inveen, mediating a termination-of-contract dispute between the city and Waste Connections of Washington, also determined Tuesday the city will pay $171,907 in legal fees and $3,421 in costs to the company, reducing the company’s requested amount by $25,869.
Waste Connections had already filed a separate $4.8 million breach-of-contract lawsuit against the city in June 2020. The complaint has been inactive for more than a year.
Waste Connections’ thousands of wheeled garbage and recycling bins that sit outside the homes of city residents will be switched out with city-owned containers of the same size in February, Public Works Director Thomas Hunter said Friday.
“We are not forecasting any changes to existing service,” he said.
“One of the driving factors of the city terminating the contract is we knew the only way to keep rates where they were was to take over the operation. We do not forecast any impacts to solid waste rates.”
Hunter said he did not know Friday how much the service would cost the city but that it will not exceed what’s been paid to Waste Connections.
“We will be able to do it at the same time we are protecting the rate payers from obscene rate increases that would have been the rule had we continued with the Waste Connections contract,” he said.
Waste Connections Rainier Division Vice President Matt O’Connell could not be reached for comment late Friday afternoon.
A reporter contacted Hunter on Thursday about the status of the dispute, and the city on Friday posted a notice at cityofpa.us about its resolution and the city’s takeover of garbage collection and the transfer station on 18th Street in Port Angeles.
The final payment of $3 million for the transfer station is based on an amortization schedule, Inveen said.
Waste Connections designed, developed and built the transfer station in 2005 under a service agreement in which the city agreed to pay a fixed monthly fee over the 20-year term of the pact, which city officials cut short on March 18, 2021 “for convenience” — instead of for cause — as allowed in the agreement, specifying Oct. 21 as the target date.
Unable to reach a termination agreement, the parties agreed to binding arbitration in July.
The city and the company had agreed that legal fees were reimbursable but disagreed on the analysis employed to set the amount, Inveen said.
Of the total in attorney fees Waste Connections will receive, Inveen awarded $12,148 to the company — half the amount requested — after determining the city “was dragging its feet” on moving the issue into arbitration and assigning an arbitrator.
Inveen rejected Waste Connection’s claim for $112,342 for bin pickup.
Hunter said the company will remove customers garbage and recycle bins and the city will bring replacement containers.
He said details will be released on on how the switch will be accomplished and if there will be departures from scheduled service. A date on the exchange has not been set.
Inveen rejected a claim by Waste Connections as compensation for bin pickup.
The company issued a press release Sept. 16 saying it intended to remove the bins and began doing so until the city sought the temporary restraining order that Clallam County Superior Court Judge Brent Basden issued Sept. 24.
The company replaced the bins, estimating removal and replacement at $32,530 and sought an additional $79,811 to remove all the bins as part of the termination of service.
“Neither of these costs are reasonable costs related to the termination for convenience,” Inveen said.
“WCI had the obligation to continue providing service.”
She said the city and company were engaged in good-faith negotiations and that both had invoked the arbitration clause of the termination agreement.
It was unreasonable for the company to rely on Oct. 2 as the date to begin bin removal, and the cost to remove all the bins, as will soon be occurring, was anticipated by the agreement, Inveen said.
The company also sought compensation for settlement of a subcontract with Vancouver-based Dietrich Trucking LLC, which provided hauling services.
Inveen, quoting O’Connell, said he testified he has “negotiated a settlement with Dietrich in which it would accept the depreciated book value of its equipment for the subcontract,” setting the book value at $2.29 million.
“No such cost have been paid, nor has WCI agreed to pay the costs to Dietrich,” Inveen said.
“Dietrich is required to follow the terms of the services agreement which provide no guaranteed minimum and allow for termination for convenience.
“Further, the services agreement requires city approval to terminate and settle subcontracts. No such approval has been sought, let alone given.”
The city and the company also differed on whether a commercial trash compacter at the transfer station should be repaired, restored or replaced, Inveen said.
Waste Connections said its book value when it was moved to the Blue Mountain site was $187,000 and that it had discontinued using it in 2020. It was not needed because it was using an alternative method of transport, the company said.
The company said it had spent $26,155 on maintenance or repair since January 2018. The main barrier to its use was the control system, according to an analysis by Recycle Systems LLC.
Inveen determined that identified deficiencies in the apparatus amounted to “normal wear and tear” as outlined in the services agreement.
The City Council voted March 16 to terminate the contract with Waste Connections, the only action the council has taken in the dispute.
City Council member Mike French said Friday that council members have had several executive sessions since then to discuss the contract termination.
“This has been ongoing for a while,” he said, noting the separate lawsuit is ongoing.
Waste Connections had begun making claims for additional compensation in 2017 that were resisted, City Attorney Bill Bloor had told council members.
Waste Connections filed a breach-of-contract lawsuit against the city in Clallam County Superior Court on June 2, 2020.
The company alleged the city owed it $4.8 million in unpaid fees and cited a collapse in the global recycling market. Waste Connections is entitled to revenues from the sale of recyclable material to offset other costs, according to the lawsuit.
The company in 2018 sought five separate rate and fee increases for commercial and residential recycling and recycling operations at the transfer station. The company sought per-ton and per-hour increases for transport and disposal of acceptable and moderate-risk waste, according to the lawsuit.
The city counterclaimed breach of contract against Waste Connections and asked for dismissal of the company’s claims in an Oct. 20, 2020 answer to the complaint.
That was the last filing in the case.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at [email protected]