Posted on: Tuesday, November 2, 2004
State orders recycler off Sand Island site
By Rod Ohira
Advertiser Central O'ahu Writer
The low bidder to process material collected through the city's upcoming curbside recycling program has been ordered to vacate its Sand Island facility because of numerous state violations.
June 16, 2004. A letter from state Deputy Transportation Director Linden H. Joesting notified Island Recycling president James Nutter that IRI had encroached on three parcels, for which it owed the state $322,958 in back rent. If IRI pays its back rent, it will likely receive permits for those three parcels, Joesting wrote.
July 12, 2004. Joesting notified Craig T. Kugisaki, Nutter's attorney, that the state is willing to accept his offer of $64,221 to settle the issue of encroachment and back rent. Further use of one parcel would require a $500,000 cleanup bond, Joesting said in the letter. Also, the rental paid to the state would increase. July 16, 2004. Kugisaki acknowledged the state offer, saying that Island Recycling is agreeable to paying the proposed permit fee and obtaining the cleanup bond but that it cannot make the additional $64,221 settlement payment within 30 days. Island Recycling sought more favorable terms. Sept. 8, 2004. In a letter to state Transportation Director Rod Haraga, Nutter said Island Recycling had applied in March for permits to allow the company to add certain parcels to its recycling business. Island Recycling has not yet received a response to those applications, said Nutter in the letter. Nutter asked in the letter that his company be allowed to remain at its Sand Island facility for five years. (The length of the city's islandwide curbside recycling program is also for five years.)
Oct. 12, 2004. State terminates Island Recycling revocable permits at Sand Island. There was only one other qualified bidder for the project that the Harris administration wants to start as soon as this month. No contract has been issued yet.
It is unclear exactly how much time Island Recycling has to move.
In a letter from the state Department of Transportation dated Oct. 12, Island Recycling was ordered to vacate within 30 days, but department spokesman Scott Ishikawa said the company will be given "reasonable time" to relocate and clean up the area without jeopardizing its chances to handle the islandwide residential recycling project.
Meanwhile, the city administration is moving toward signing a five-year deal with Island Recycling, despite City Council opposition. The council maintains that it is not legal for a company cited for state violations to be awarded a city contract.
Rod Haraga, state transportation director, notified Island Recycling Inc. president Jim Nutter by letter on Oct. 12 that the firm had to move for the following reasons:
• Continued unauthorized encroachment onto Department of Transportation property despite orders to vacate those parcels. • Continued failure of Island Recycling to comply with city building permit requirements, despite being ordered to do so by the city and the DOT. • Nullification of the company's special management area permit — which allows it to operate on Sand Island — because of the building permit violations. • Continued failure of Island Recycling to comply with Hawai'i's water pollution law despite a notice of apparent violation from the state Health Department. • Construction of fixtures on the property without DOT approval. In an Oct. 20 response to Haraga, Nutter argued that his company had no pending city building violations, was still covered under the special management area permit issued by the city, and had responded to a request from the Health Department for more information on its water pollution problem. Nutter said a 30-day deadline would put him out of business and leave 65 people unemployed.
The city's schedule calls for a six-step phase-in of islandwide recycling in which some collection could begin as early as this month in Central O'ahu; neighborhoods across the island would be phased in by next summer.
Concern about Island Recycling's violations caused the City Council to attach a proviso to the 2004-05 budget stating, in part, that no parties awarded a contract under the recycling program "have any violations issued by federal, state or city agencies in the year preceding the issuance of the contract." The proviso passed 7-2 on May 24, with Charles Djou and Gary Okino opposed.
Mayor Jeremy Harris vetoed the proviso June 21, basing his decision on the city corporation counsel's opinion that it violates the state procurement code because "no criteria may be used in bid evaluation that are not set forth in the invitation for bids."
The argument is that the city cannot change the rules about who is qualified to make a bid after the invitation to bid has been made. The invitation to bid was posted on March 10.
The bids were opened April 7. Island Recycling bid $36.50 a ton to process the aluminum cans, glass containers, plastic bottles, newspapers and corrugated cardboard to be collected in 64-gallon curbside bins. Honolulu Recovery System bid $68 a ton. The difference amounts to about $1 million a year.
Five days after the bids were opened, Honolulu Recovery System sent a letter of protest to the city's Department of Budget and Fiscal Services, seeking to have Island Recycling disqualified, citing several permit violations, according to a corporation counsel report.
The mayor's veto was overturned July 14 by the City Council, 6-3, with Barbara Marshall, Mike Gabbard and Okino casting dissenting votes.
Nutter, 58, said he plans to invest $1.3 million in new equipment to do the islandwide project.
"Because of the machinery, we can do a much better and cleaner job as to what the end product is that we sell," Nutter added. "All the newspaper that comes out, the cardboard, the aluminum cans, the glass bottles are sales items for us. The cleaner we get it, the higher the price we can get for that material."
When asked about the record of violations, Nutter described his actions as "non-intentional."
"Basically, we see ourselves as very good corporate citizens," Nutter said. "We do a lot for the land. We recycle almost 100 million tons of material a year that would otherwise go to the landfill."
Reach Rod Ohira at 535-8181 or rohira@honoluluadvertiser.com.
City spokeswoman Carol Costa said, however, that even if Island Recycling has to move, it would not place the islandwide recycling program in jeopardy. "We're hearing he'll get nine months (to move), which is better than two weeks, so it's not a death knell," she said.
TIMELINE OF ENCROACHMENT ISSUE
