State denies Loudon's request for flexibility in investment of landfill closure funds

LOUDON — Low interest rates and an unfavorable 20-year contract will make it harder for the Loudon County Solid Waste Disposal Commission to raise the $8 million or more needed to close the Matlock Bend landfill.

A recent audit of the landfill indicated that the Solid Waste Disposal Commission is not collecting enough revenue to meet the projected closure and post-closure costs.

The state comptroller’s office has denied a request by the Loudon County Trustee’s Office for more flexibility in investing the closure funds that have already been put aside by the solid waste panel, according to Trustee Chip Miller.

Per the comptroller’s guidelines, the terms of investment cannot be longer than two years.

“The waiver was denied. We’re stuck with 24 months,” Miller said.

The waste commission has about $1.5 million invested in a low-risk local government investment pool that is currently returning around 0.11 percent. The LGIP has averaged a return of about 2.10 percent over the past 12 years.

Another roughly $1 million is held in an operating account at BB&T drawing roughly 0.11 percent. When banking fees are subtracted, the account has been accruing no interest for about six years. The account provides liquidity and practically no risk in the case of short-term cash needs, Miller said.

The goal of the Solid Waste Disposal Commission is to have enough funds for long-term obligations associated with closure and post-closure of the landfill, said Kevin Stevens, attorney for the panel. The state requires that the landfill be monitored for 30 years after closure.

Because most of the obligations of the landfill are long term, it makes sense to look for longer-term investments that will yield a greater return, Stevens said. It’s also important to have sufficient funds on hand to pay for any short- term emergencies, he said.

Stevens said he believes that it may still be possible to get approval to invest closure funds for terms longer than two years.

The waste commission is also working to lower the total closure cost by negotiating with Santek Waste Services of Cleveland, Tenn., the company that runs the landfill, to pay for early closure of some cells in the landfill.

At the core of the closure/post-closure funding challenge is the 20-year contract that lets Santek set the tipping fees and designates the waste commission as responsible for closing costs.

“They got themselves into a bad contract,” Miller said of the panel.

The commission signed a contract with Santek in 2007 that will end in 2027, before the landfill is scheduled to be closed. According to Santek, Matlock Bend is the only landfill the company operates that it does not have responsibility for closure costs.

Under the current contract, Matlock Bend charges an advertised rate of about $27.45 per ton for tipping fees. Santek pays the commission a host fee of 4 percent and a security fee of $1 per ton. Average monthly tonnage at the landfill over May to July was about 22,565 tons.

By comparison, the Scott County Volunteer Landfill charges tipping fees of about $53 per ton. The Alcoa/Maryville/Blount County Sanitary Landfill, operated by the Alcoa Public Works Department, charges $42 per ton for tipping fees, said Sam Holloway, solid waste manager. The rate was set by the city of Alcoa, he said.

County Commissioner Sharon Yarbrough said there are few county commissioners who were in office when the landfill contract was created. She said she would like to convene a workshop so members can learn more about how the waste commission was formed and how the current contract was created.

Ultimately, the county will be held responsible for the closing of the landfill, Yarbrough said. The County Commission needs to be evaluating long-term liabilities to make sure there will be enough money set aside by the time the landfill closes, she said.