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Complicated compost case comes to a close

Amanda Coyne
Amanda Coyne photo

There used to be machines moving things at the piece of land on the tip of Anchorage close to the airport and next to Clitheroe treatment center. Big machines with big mouths, swallowing earth and then spitting it out again in another place. Big dump trucks dumping big loads of wood, of pallets, of construction debris. Subarus dropping off yard waste, horse owners dropping off their horse waste. Some of them in exchange for bags of dirt. Black dirt. Compost. Black gold.

Now, it's as quiet and still as nature will allow. An abandoned, rusty Quonset hut sits next to a dilapidated trailer. Bottles float on a fetid pool of water. At one point, a bulldozer that was in the process of moving glass looks like it got tired and quit.

In fact, the whole area has that quitting feel: the big mounds of old wood, of dirt, bags of sand left open, a few books with pages flapping in the breeze.

It was once the site of a big dream for Pete Kinneen, president of Environmental Recycling, Inc. A big dream where his company would use that piece of city land to provide the whole state with a product that would do some good. It was a dream that eventually turned into a litigious nightmare, followed by a three-week-long court battle that wrapped up Sept. 23, ending one of the longer and more-complicated cases ever to involve something as innocent as compost.

The case began in 2007. Bob Owens, the Anchorage city attorney who tried it, described it as "the Energizer Bunny of cases." It involved allegations of slander and favoritism by then-Anchorage mayor and now-U.S. Sen. Mark Begich, violations of contracts and much more.

The jury didn't findy anyone guilty of anything nearly that sexy. After five years of motions and counter-motions, it awarded Kinneen $861,975 and found the city guilty of "nondisclosure" when it terminated Kinneen's lease on that piece of property in 2007. With lawyers' fees, interest, and court costs, he'll likely be getting about $200,000 more than that.

But it didn't all go Kinneen's way. The jury ordered him to pay $200,000 to defray the costs of cleaning up the area and another $3,600 for back-rent. The city was asking for more than $1 million.

The jury foreman in the case was James Armstrong, who's no stranger to Alaska politics. Armstrong has worked for Mayor George Wuerch, a state senator, and now for Rep. Bill Stoltze where he develops the capital budget for the State House of Representatives.

"Both sides handled this situation badly," Armstrong said. "This was the biggest waste of taxpayer money ever," he said.

Kinneen's composting dream

As complicated stories often do, this one starts long before it really gets started. It starts with a man named John Dean who had an idea. He wanted to prove that composting is possible in a winter city. To that end, he got a three-year permit to lease land at Point Woronzof from the city with approval from then-Mayor Rick Mystrom. It was good for the city, which began dumping lawn waste in the area for less money that it was paying the landfill. It was good for consumers, who wanted to compost. It was good for the environment and it was at a perfect location, away from houses and from businesses.

If things went well, the lease would be extended from three years to 10 years, to expire in October 2007. There was a condition, however: the operation would need to move if the airport expanded.

Dean had some success, but kept his operation small, making compost mostly out of leaves, grass and horse manure.  In 2000, he was diagnosed with cancer and began looking for a successor. Enter Kinneen in 2002, with his big machines and big ideas.

Kinneen had been working at a wood lot, where the dead trees go. He had his own grinder, a huge hulking piece of machinery with teeth called a tub grinder. All told, he brought to the project about $1 million worth of machinery, he said. He planned to continue selling the compost that came to the site to gardeners. But the real market, he knew, was composting all that wood from the woodlot, and using compostable construction material that is normally dumped in the landfill. After his compost was ready, he would then sell it to state and to builders for erosion control -- material that's all the rage in erosion-control circles.

To do that, however, he would need to create big heaps, which on first glance might look like mountains of trash. However, those great big heaps are cooking, literally, and turning all that mess into something usable. The bigger the pile, the more heat that's generated and the faster the mess turns into earth.

It's a process that takes awhile, however. In a winter city like Alaska, it's about two years from the time you get your pile together with the right ratio of carbon to nitrogen, until the pile has turned into earth. In the meantime, you create other piles, and more piles. So when Kinneen entered into talks with the Wuerch administration --which had then taken over -- to assume control of Dean's operation, he got assurance from him and those around him that his lease would be extended and that he wouldn't be kicked out before his piles matured.

In quick order, he did what he told everyone he would do: he created a mountain -- a 50,000 cubic yard Mount McKinley of a trash heap that was far bigger than the 400 cubic yards he inherited.

"I was tasked in taking a failing operation because it was too small," he said. "We ramped up the production and we did it in a safe and professional manner. We took a hobby and turned it into industrial scale." He was, he said, the second largest compost producer in the state. "We were doing what everyone wanted us to do," he said.

He was selling some of the compost -- called "Black Gold" -- in bags to local nurseries, where it did well, said Peter Hitchens, manager of Alaska Mill and Feed. Compost was also beginning to be used on larger scale projects, and he had also gotten licensed to sell Filtrexx, a widely used technology designed for erosion control.

Jeff Lowenfeld, Anchorage gardening guru and Anchorage Daily News columnist, said Kinneen might have gotten over his head (a characterization that Kinneen mightily disputes). However, Lowenfeld said that Kinneen wanted to do something good. "His heart is pure," he said. "If everybody had some Pete Kinneen in him, we'd all be composting, which is a good thing."

But then another mayor came along, with different ideas of what constituted success, and purity, and a good heart.

The smoking gun

When Mark Begich was elected in 2003, Kinneen said he had a good relationship with the administration. He had a meeting with some of Begich's people in 2003 and they assured him that everything was fine. According to court testimony, they told him that if there was a problem, the city would give him plenty of notice.

Unbeknownst to Kinneen, however, the Begich administration knew that everything wasn't fine. Mary Jane Michael, Begich's head of Anchorage economic and community development, testified that a decision was made in either 2003 or early 2004 that Kinneen's lease wouldn't be renewed in 2007 under any circumstances.

That, jury-foreman Armstrong said, was the "smoking gun," in the case.

The jury charged that the city had misrepresented what it knew about the lease. It would have been OK had the city changed its mind and told Kinneen. But, instead, it continued allowing Kinneen to operate and put money into the business, knowing full well it wouldn't renew his lease.  

It's unclear why the city refused to extend Kinneen's lease and why they didn't tell him its plans. Kinneen believes the plan was to give the property to Alaska Waste, owned by John Rubini and Leonard Hyde, patrons and former business partners of Begich.  

There is no evidence to back Kinneen's accusations. Neither Rubini nor Hyde returned a phone call requesting comment. Alaska Waste did have plans to build a composting facility, and have since done so on a smaller scale. But Begich's administration rejected those initial plans and Begich denied that there was any agreement.

That said, Armstrong said that the jury found Begich's decision so early in his administration "odd."

"We couldn't figure it out," he said. "They (Kinneen's company) are very good at what they do. They were making compost."

Then again, Kinneen might not have been the best with details. He didn't have workman's compensation insurance for his operation. He let his business license expire. Begich spokeswoman Julie Hasquet said there were "numerous" reasons the lease wasn't renewed including late rent and compost piles encroaching over the property line. 

Armstrong believes that it was, in fact, simpler. "Both sides were exercising dominance," he said.

Something that wasn't brought out in trial, however, was Kinneen's numerous attempts to try to settle. The terms the city set -- including demanding a $250,000 bond -- were ones that, were "commercially unreasonable and took away any possible that we could have a settlement," said Bill Royce, Kinneen's lawyer.

Jury: We were put through a 'tub grinder'

Kinneen was informed in May 2007 that he had to vacate the property by October. To move then would have required about 10,000 dump loads. He didn't feel that he could do that in five months, nor did he feel that city was playing fair. So Kinneen, acting as his own lawyer, sued for breach of contract. Eventually guards were posted to keep him from entering the property and removing his equipment.  

Kinneen lost the contract case, but a judge and the city continued to grant him extensions. During that time, he fulfilled a few contracts that he had signed with local construction firms to take their material, and did his best to attend to the compost piles, according to court documents. If not attended to, compost facilities can catch fire. He did not want to be blamed for that.

He was out completely by July 2008. The area has been vacant since. Mounds of compost, some half finished, some finished, remain. The city is looking at its options. A report released in 2008 said that the cost of building a compost facility from scratch will be about $2 million a year.

For his part, Kinneen is now starting another composting facility on the Kenai called Fish & Chips that will make compost out of fish and wood waste. He's satisfied with the jury's decision, but said he never wants to be a tenant of the city again and would still like an apology from Begich.

"I'm owed that," he said.

Judging from Begich's spokesperson's response, that doesn't seem likely to be coming anytime soon.

The judge talked to the jury before he dismissed them on the last day of the three-week trial. He asked them if they had anything to say about what they learned or what they felt. Armstrong said that he told the judge, "We feel like we've been put through a tub grinder."

Contact Amanda Coyne at amanda(at)alaskadispatch.com