HomeMy WebLinkAboutAgenda - 02-10-1998 - Attachment 3ia
/itto c art'
dZ-
An inquiry from Mr. Roger Barr was received regarding the estimated costs that will be
incurred for the closure and post - closure care of the existing Orange Regional Landfill
site. The inquiry was related to cost data that were presented in the Permit Renewal
Closure Plan, "Attachment V -E, Financial Assurance Cost Estimates" (May 19, 1997,
Revised September 16, 1997).
Funds related to closure costs (installation of final cover, gas venting or collection
system, etc.) are included in the annual budget for the Orange Regional Landfill under
the line item "Contribution to Eubanks Construction Reserve ". For the 1997/98 Fiscal
Year, this line item was $400,000.
North Carolina Solid Waste Management Rules and Law includes a "Financial
Assurance Rule" (1994/97 NC SWM Rules and Law, Section .1628) related to costs for
closure and post closure care.
Briefly, the "Financial Assurance Rule" consists of five main sections, including:
(a) Applicability and Effective Date;
Memo: Citizen Inquiries 1
k.
(b) Financial Assurance for Closure;
(c) Financial Assurance for Post - Closure Care;
(d) Financial Assurance for Corrective Action; and
(e) Allowable Mechanisms.
The "Allowable Mechanisms" section provides several options for how the financial
assurance related to closure and post - closure care of municipal solid waste landfill
( MSWLF) sites may be ,provided, including specific provisions for sites that are owned
by local governments. The option that has been selected for use by the Orange
Regional Landfill is the "Local Government Financial Test ".
Under the Local Government Financial Test, "an owner or operator of a MSWLF which
is a unit of local government may satisfy the requirements of the Paragraph by
demonstrating that it meets the requirements of the local government financial test as
described in this Part." A copy of the complete text related to the Local Government
Financial Test has been attached.
Memo: Citizen Inquiries 2 2/6/98
EBNR „�O M WASTE MANAGEM ff 9I 104194 71S
value of the polio. a suffident,to covet the remaining costs of dosure
or post-closure. Bare, acid if justification and docuaaanation of the cost
is placed in the operiting reeoid. The owner or operator must
document in the operating record that reinnbursemeat and Division
approval has been received.
(v) Each policy must contain a provision allowing assignment of the policy.
to a successor owner or operator. Such assignment may be conditional
upon consent of the Insurer, provided that such consent Is not
unreasonably refused.
(vi) The msuranc a policy must provide that the insurer may not cancel,
terminate or fail to renew the policy except for failure to pay the
premium. The automatic renewal of the policy avast, at a nsinimum,
provide th insured with the option of renewal at Uw face amount of the
expiring policy. If there is a failure to pay the premium, the insurer
may =el the policy by sending notice of cancellation by certified
mail to the owner nand operator and to the Division 120 days in advance
of cancellation. If the km= cancels the polity, the owner or operator
mist obtain alternate financial assurance as specified in this Rule.
(vii) For insurance policies providing cove2ge for post - closure care,
comnancing on the date that liability to malice paymem pursuant to the
policy accrues, the insurer shall thereafter annually increase the face
amount of the policy. Such increase must be equivalent to the face -'
aniount of the policy, less any payments made. nwItiplied by an amount
equivalent to 85 percent of the most recent invesunent rate or of the
equivalent coapontissue yield anmmcW . by .the U.S. Treasury for
26 -week Treasury securities.
( viii) The owner'or operator may catered the insvrmce policy only if alternate _
financial assurance is subsdtated as specified in this Rule or if the -
owner or operator is no lower required to demonstrate financW
responsibility in accordance with the requirements of Pacagrapb (b)(2),
(c)(2) or (d)(2) of this Rale.
(E) Corporate Finanial Teat.
eel
r
Local Government Financial Test. An owner or operator of a MSWLF which
is a unit of local govern may satisfy the requirements of this P=Waph by
demaauratithg *a it moots the requirensents of the local govanag financial
test as specified in this -Part. Financial terms used in this Part are m be
interpreted consistent with gentrally accepted accounting principles. The text
consists of a financial component, a public notice component, and a record -
keepmg and rung component. A unit of local government sha11 satisfy
each of the three meats annually to pass the test. ,
(i) Financial Component. In order to satisfy the .financial component of
the test, a unit of local government shall meet, the criteria of either (I)
or (I) of this Subpart and in addition shall meet the conditions outlined
in (HO of this Subpart.
(1) A ratio of the current cast estimates for closure, post•dosure,
corrective action, or the aura of the combination of such costs
to be covoved, and any other eavkonme mal obligates assured
by.a financial „test, to total - revenue [as .stated on the Local ..,;
Govaammt , _qommiss ion's Annual Financial . -JnfotmsWu ;
_ R406ii (AFlit) Pact 21 leas than or equal to 0.43; a ratio of
:oPu=duE cash Plus invesanaem (as stated on the AM Part T) .
to total operating =peodnturea (as Stated on the AFIR Part 4
Page 114
2
.��JVA - aukja AA M A(;"ENT 01/04 /iii T1SA 132.1600
V?
(ii)
(Iii)
(iv)
Columns a and b and Part 5 for municipalities or Part S
excluding educational capital outlays for counties) greater than
or equal to 0.05; and a ratio of annual debt service (a$ stated
on the AFIR Part 4 Section A to total operating expenditum
less than or equal to 0.20.
(II) A current bond rating of Baa or above as issued by Moody's,
BBB or above as issued by Standard & Poor's. BBB or above
as issued by Fitch's, or 75 or above as issued by the Municipal
Coin; a ratio of the current cost estimates for closure, post-
closure, corrective action, or the sum of the combination of
such costs to be covered, and any other environmental
obligations assured by a financial test to total revenue less than
or equal to ^.43.
(III) A unit of local government must not have operated at a total
operating fund deficit equal to five percent or more of total
annual revenue in either of the past two fiscal years; it must
not currently be in default on any outstanding general
obligation bonds or any other long4mm obligations; and it
must not have any outstanding general obligation bonds rated
lower than Ban as issued by Moody's, BBB as issued by
Standard & Poor's, BBB as issued by Filth'& or lower than 75
as issued by the Municipal Council.
Public Notice Component. In 3rder to satisfy the Public Notice
Component of the tat, a unit of local government shall disclose its
closure, post - closure, and corrective action cost estimates and relevant
information in accordance with generally accepted accounting
Principles- '
Record - keeping and Repotting To demonstrate that, the
unit of local government meets the requirements of this test, a letter
signed by the unit of local goveinmeat's chief financial offim (CFO)
and worded as specified in Part (e)(2XG) of this Rule shall be placed
in the operating record in accordance with the deadlines of Subpart (iv)
of this Part. The letter shall:
(1) - List all the current cost estimates covered by a financial test,
as described in Subpart (v) of this Part;
(in Provide evidence and certify that the unit of local government
mess
the -conditions of either Subpart (j)(n or Q)(II) of this
Part; and
(III) Certify that the unit of local government meets the conditions
of subpart (IXUD of this Part.
In the case of -closure and post - closure care, the Chief Financial
Officer's letter shall be placed in the operating record before the initial
receipt of waste or by April 9, 1994, whichever is leer. In the case
Of corrective action, the CFO's letter shall be placed in the operating
record no later than 120 days aster the corrective action remedy has
been selected in mordancx with the requireumb of Rule .1636.
When calculating the "current coat estimates for closure, pm-'
corrective action, or the sum of the combination of such costs to be
Cove red, and any other environmental, obligations assured a financial
test" • referred tom Part 0Ot of this Paragraph, the unit of local
Sov= meat shall include cost is required for municipal solid
waste management facilities under 15A NCAC 13B Section .1600, as
well as cost estimates required for all other enviroamenfai obligations
Page 115
(v)
4 .
Columns a and b and Part 5 for municipalities or Part S
excluding educational capital outlays for counties) greater than
or equal to 0.05; and a ratio of annual debt service (a$ stated
on the AFIR Part 4 Section A to total operating expenditum
less than or equal to 0.20.
(II) A current bond rating of Baa or above as issued by Moody's,
BBB or above as issued by Standard & Poor's. BBB or above
as issued by Fitch's, or 75 or above as issued by the Municipal
Coin; a ratio of the current cost estimates for closure, post-
closure, corrective action, or the sum of the combination of
such costs to be covered, and any other environmental
obligations assured by a financial test to total revenue less than
or equal to ^.43.
(III) A unit of local government must not have operated at a total
operating fund deficit equal to five percent or more of total
annual revenue in either of the past two fiscal years; it must
not currently be in default on any outstanding general
obligation bonds or any other long4mm obligations; and it
must not have any outstanding general obligation bonds rated
lower than Ban as issued by Moody's, BBB as issued by
Standard & Poor's, BBB as issued by Filth'& or lower than 75
as issued by the Municipal Council.
Public Notice Component. In 3rder to satisfy the Public Notice
Component of the tat, a unit of local government shall disclose its
closure, post - closure, and corrective action cost estimates and relevant
information in accordance with generally accepted accounting
Principles- '
Record - keeping and Repotting To demonstrate that, the
unit of local government meets the requirements of this test, a letter
signed by the unit of local goveinmeat's chief financial offim (CFO)
and worded as specified in Part (e)(2XG) of this Rule shall be placed
in the operating record in accordance with the deadlines of Subpart (iv)
of this Part. The letter shall:
(1) - List all the current cost estimates covered by a financial test,
as described in Subpart (v) of this Part;
(in Provide evidence and certify that the unit of local government
mess
the -conditions of either Subpart (j)(n or Q)(II) of this
Part; and
(III) Certify that the unit of local government meets the conditions
of subpart (IXUD of this Part.
In the case of -closure and post - closure care, the Chief Financial
Officer's letter shall be placed in the operating record before the initial
receipt of waste or by April 9, 1994, whichever is leer. In the case
Of corrective action, the CFO's letter shall be placed in the operating
record no later than 120 days aster the corrective action remedy has
been selected in mordancx with the requireumb of Rule .1636.
When calculating the "current coat estimates for closure, pm-'
corrective action, or the sum of the combination of such costs to be
Cove red, and any other environmental, obligations assured a financial
test" • referred tom Part 0Ot of this Paragraph, the unit of local
Sov= meat shall include cost is required for municipal solid
waste management facilities under 15A NCAC 13B Section .1600, as
well as cost estimates required for all other enviroamenfai obligations
Page 115
j = EHNN - SOLID WASTE MANAGEMENT DI /04/91 TI SA • 13B 1600
it assures through a financial test, including but not limited to those
associated with hazardous waste treatment, storage, and disposal
facilities under 15A NCAC 13A Rules .0009 and .0010, petroleum
underground storage tank facilities under 15A NCAC 2N Sections f
.0100 through AM, Underground Injection Control facilities under
15A NCAC 2D Section .0400 and 15A NCAC 2C Section .0200, and
PCB storage facilities under 15A NCAC 20 Section .0100 and 15A
NCAC 2N Section .0100.
(vi) Annul updates of the financial test letter shall be placed in the
operating record within 120 days after the close of each succeeding
fiscal year.
(vii) If the unit of local government no longer meets the requirements of
Parts (i), (ii), and (iii) of this ". ragraph, the unit of local government
shall notify the Division of intent to establish alternate financial
assurance within 120 days after the end of the fiscal year for which the
year-end financial state show that the unit of local government no
j - -- longer meets the requirements. The unit of local government shall
provide alternate financial assurance within 150 days after the end of
said fiscal yeas.
(viii) The unit of local government is no longer required to comply with the
requirements of this Put if alternate financial assurance is substituted
as specified in this Rule or if the unit of local government is no longer
required: to demonstrate financial responsibility in accordance with
Paragraph (b)(Z), (c)(2) or (d)(2) of this Rule.
Corporate uat -aw.
[Resetveod]
(H) Local Government Guarantee.
[Reserved]
(1) Capital Re terve Fund.
(i) MSWLF units owned or operated by -units of local government or
public authority may satisfy the requirements of this Paragraph by
establishing a capital reserve fund which conforms to the requirements
of this Part. The unit of local government or public authority must be
an witity which has the authority to establish a capital reserve fund
under authority of G.S. 159 and whose financial operations are
regulated and examined by a State agency. The capital reserve fiord
roust be established consistent with auditing, budgeting and government
accounting practices as prescriber] in G.S. 159 and by the Local
Government Commission. A copy of the capital reserve fund
-- ordinance or resolution with a certified copy of the meeting mimrstes
and a copy of documentation of initial and subsequent year's deposits
must be placed in the MSWL.F's operating record_
(ii) Payments into the capital reserve fund must be made annually by the
unit of local government or public authority over the term of the initial
permit or over the remaining life of the MSWLF unit, in the case of a
capital reserve fund for closure or post - closure care, or over one -half
of the estimat!ed.leegth of the corrective action program in the case of
corrective action for kwwa rdeasrs. This period is referred to as the
pay in period. The pay -in period shall not extend beyond December
31, 1997 for an existing MSWLF unit not designed and constructed
with a base liter system approved by the Division.
(iii) For a capital reserve fund used to de moaaarate ftnancW assurance for
closure and post - closure care, the first payment into the fund must be `—
Page 116