Silver State contract challenge for council

Erin Neff

Tuesday, Jan. 18, 2000 | 11:10 a.m.

The Las Vegas City Council will find itself again treading a delicate line between legitimate business and perceived conflicts of interest when it votes Wednesday on another contract extension for Silver State Disposal Services.

Even as the council considers extending a sludge-hauling contract, the original vote last July to extend Silver State's exclusive trash hauling services continues to dog Councilman Michael McDonald and suggests to some that the city opted for quick park money over long-term competition.

"It looks like a bribe to me," said Art McCammon, who moved to Las Vegas last June and is still angered by the first council action he witnessed. "I bet they will approve the next contract by saying how great it was Silver State gave them money for parks."

Indeed Wednesday's contract vote comes three items before the council is asked to approve allocating Silver State's $5 million "donation" for parks that came with the July trash-hauling extension.

The council is now being asked to approve a five-year contract with Silver State for sludge removal at the city's Water Pollution Control Facility. Silver State would get $1.5 million in the first year of the contract, with a 6.5 percent annual increase.

The contract the council will consider Wednesday also contains three separate five-year extensions, bringing the potential life of the contract to 20 years.

Last June the Clark County Commission voted to extend Silver State's exclusive trash-hauling contract until 2035 in exchange for indemnification from a federal environmental lawsuit and Silver State's promise to spend $36 million cleaning up the Sunrise landfill.

The county opted to extend Silver State's monopoly, in part, because it was named in a lawsuit related to contamination of the Las Vegas Wash.

Silver State's Sunrise landfill was closed and improperly covered in 1993. Heavy rains in 1998 sent debris into the wash that feeds Lake Mead, the valley's drinking water supply.

The city of Las Vegas was not named a party in that lawsuit. However, it also accepted Silver State's offer of indemnification in exchange for a trash-hauling contract extension until 2021. The contract is estimated to be worth $1.5 billion.

Since the landfill is in the county, Silver State couldn't give the City Council any promises of funds for cleanup. Instead, it offered $5.5 million to either build a transfer station in the city or fund needed park projects.

The council opted for park money.

On Wednesday the board will discuss $7.5 million in parks projects funded by $5 million in Silver State money and $2.5 million from the pending sale of Charleston Heights Neighborhood Preservation Park to the state Department of Motor Vehicles for widening U.S. 95.

Although parks once again are dominating discussion related to Silver State, ethical matters are quietly simmering.

Last July both Mayor Oscar Goodman and Councilman Larry Brown abstained from the Silver State trash-hauling vote. Goodman cited his ownership of land near Silver State's Apex landfill and his former law partner's representation of Silver State on other matters.

Brown abstained because he works part-time for the Las Vegas Stars. The Stars play at Cashman Field, where Silver State sponsors Make-A-Wish Foundation nights.

Brown asked the state Ethics Commission in July whether he should abstain on such votes. When the sludge-hauling extension first came before the council in November, Brown said he still had not heard from the Ethics Commission and abstained on a vote to table the item.

However, the biggest ethical issue resulting from Silver State votes has surrounded McDonald.

McDonald chose to vote last July to extend Silver State's trash-hauling contract even though he is friends with several of the company's executives and dates one of its employees. Council members Gary Reese and Lynette Boggs McDonald joined him in voting to approve the contract.

"I have no conflicts," McDonald said.

He is friends with Silver State President Steve Kalish, who threw a fund-raiser for McDonald at his bar during the councilman's re-election campaign last year. McDonald is also friends with Silver State's general counsel Robert Groesbeck and has dated Silver State employee Jennifer Simich.

Silver State and its related entities gave McDonald $36,800 for his re-election campaign. Silver State gave Goodman $15,900 for his mayoral bid and gave $29,700 to Reese's re-election efforts.

The company gave $7,500 to Brown's 1997 campaign and gave Boggs McDonald $1,500 previously for her unsuccessful state Assembly campaign.

City Attorney Brad Jerbic has stated that the campaign contributions do not constitute a conflict of interest. He has also given McDonald the green light to vote on Silver State issues, despite McDonald's friendships.

If past council actions regarding Silver State are any indication, the sludge contract should win approval.

Goodman and possibly Brown will both abstain, leaving five council members to vote on the contract. Wednesday will be the first time new Councilmen Michael Mack and Lawrence Weekly will consider a Silver State item.

McDonald and Reese have already publicly stated support for the sludge deal. Boggs McDonald originally questioned whether Silver State was in compliance with a new city disclosure ordinance, but appears to have no problem approving the sludge contract.

When the sludge contract first came before the council in November, the agreement simply listed Republic Services Inc. as 100 percent owner of Silver State Disposal Services. The new paperwork discloses the principals and partners of Republic Services Inc. as FMR Corp. and Cascade Investment Limited Liability Co.

FMR, which owns 10.1 percent of Republic's common stock is the parent company of Fidelity Management and Research Company of Boston. Cascade of Kirkland, Wash., owns 5.2 percent of Republic's common stock. Cascade is an investment company controlled by former Microsoft Chairman Bill Gates.

"According to our corporate legal department, only the above-referenced companies own 5 percent or more of Republic's outstanding common stock," Silver State attorney Groesbeck wrote in a letter accompanying the company's requested contract.