Gov. Jon Huntsman Jr. signed a resolution last week granting the final go-ahead to build a nonhazardous waste site in Tooele County that over time is expected to pay millions in royalties to the school trust land funds.

But the approval spelled bad news for East Carbon, home to about 1,400 people. The city is the site of East Carbon Development Corp. (ECDC), a landfill that currently gets thousands of tons of garbage a day from the Wasatch Front. The city collects a fee for every ton.

East Carbon is on the hook for nearly $8 million in outstanding loans used to boost infrastructure around the landfill, and if the waste site loses business - and it could lose two-thirds - the city may not be able to pay back its loans.

Allied Waste, the nation's second-largest waste company, which owns ECDC, plans to start building its new landfill in Tooele County in April and when it is finished, waste that has been sent to ECDC instead will head to the new site. That means less money coming into East Carbon.

"We'll have to start figuring out ways to increase the money," says City Councilwoman Joyce Caviness. "I don't know how one does that."

But East Carbon has been in danger of losing its main source of revenue for years as costs increased to transport the waste by rail and slowdowns hampered the shipments. Allied Waste had a 20 percent hike in its costs in 2003 and other increases are likely.

"There was no end in sight to the rail increases and the equipment problems," says Allied Waste's Utah director, Kory Coleman.

Recognizing years ago that the costs were spiraling, the hunt started for new sites closer to the Wasatch Front. And there began an effort with political dimensions that ended with Huntsman's signature.

Trash to cash: In January 2003, a group of lobbyists formed a company called Wasatch Regional Solid Waste Management Corp. and sought out property in Tooele County owned by the Schools and Institutional Trust Lands Administration (SITLA).

The deal was novel: SITLA would sell Wasatch Regional a unit of land as the company expanded its landfill and Wasatch would also pay a percentage to the trust lands on every ton of waste disposed.

"This is a very good transaction for us," says SITLA's associate director, John Andrews. "Very, very good."

In September 2003, Allied Waste wanted a piece of the action. The company, facing increasing costs to keep shipping its waste elsewhere, looked at three pieces of property, but narrowed the list to SITLA property.

Already under contract with Wasatch Regional, SITLA said it wasn't interested.

So Allied took a different route, offering to buy Wasatch Regional's landfill in a deal that would make its investors wealthy. Those investors are former legislators and lobbyists Kevin Garn and Mel Brown, and lobbyists Dave Nicponski and Jodi Hoffman.

"They had a good business plan," says Coleman, Allied's Utah director. "What I gave them is insurance because I had the waste to bring to the landfill."

None of the principals will reveal the terms of the sale. But SITLA was able to squeeze more in royalties from the deal.

Allied and Wasatch weren't the only ones looking to develop a landfill.

Around the same time, Metro Waste, which also serves Wasatch Front communities, decided it needed a facility and proposed a site on the Goshute Indian Reservation.

"The people at Metro recognized that the Goshutes were in need of an economic development opportunity that would be friendly to the state," says Tim Layton, managing director of Sorensen Capital, a significant investor in the landfill, which opened in December to construction and demolition waste.

Metro's site will start taking municipal waste in April, reducing the amount of trash headed for city and county landfills and possibly leading to layoffs at those waste sites.

Tooele County Commissioner Matt Lawrence says the county didn't want more landfills, but it couldn't do much to block them. Even so, Lawrence says Allied's purchase of the Wasatch Regional site is tolerable. Lawrence is not pleased with the Goshute facility.

"We get nothing, the state gets nothing and the schoolchildren get nothing," he says.

Getting approval: While Metro Waste, based in Salt Lake City, sought and received approval from the U.S. Environmental Protection Agency, the company didn't need approval from state lawmakers or environmental regulators.

Wasatch Regional, did, however. Wasatch got a license from the state to operate a landfill for municipal waste, but when Allied entered the deal, the company wanted to seek a different type of license so it could use its own transfer station, a move prohibited under the lower license.

That sparked concern on Capitol Hill and in the Governor's Office because the other license allowed out-of-state waste. Gov. Jon Huntsman Jr. balked, saying he didn't want to turn the state into the nation's "dumping ground."

But Wasatch Regional soothed the concern and lawmakers approved the license. Huntsman signed on, but only after Wasatch Regional and Allied vowed not to take out-of-state waste.

It still didn't appease East Carbon.

"All I have to say is that New York and Chicago have nothing over on Utah when it comes to crooked politics," East Carbon City Mayor Dale Andrews was quoted as saying in the local newspaper, the Sun Advocate. "It appears to me that a number of former legislators have lined their pockets in this matter."

On the hook: While the Tooele County site won't take out-of-state waste, ECDC already does and will continue to take it.

Coleman says his company will attempt to find more out-of-state waste to bring to the East Carbon site, but it will be difficult to do so given the flow of waste out of places like California has waned in recent years. Allied wants to keep ECDC working, Coleman adds, because the company has pumped millions into its operations.

"You don't just invest that much money in a site and then walk away," Coleman says. "It's important for us that the facility succeeds, not only for the residents there but from a company standpoint as well."

State Sen. Mike Dmitrich, D-Price, who represents the area, has been trying to work out a deal so the city wouldn't default on any loans, and state Treasurer Ed Alter says there are options such as stretching out the loans for a longer period or removing any interest attached to the money.

"We have a very distinct interest in making sure that these entities have the ability to make their debt service payments," Alter says, noting the state bankrolled the loans.

But until the Wasatch Front's waste stops flowing to East Carbon, city officials and residents will just have to wait to see what happens.

"It's a little bit sticky, but I guess somebody will figure it out when we need to," says Councilwoman Caviness, who worries residents will be stuck with the bill or the city could default on the loans. "When we can't make [a payment], I guess we find out."

tburr@sltrib.com