HomeMy WebLinkAboutItem 1 - Agenda 05-05-2004MEMORANDUM
To: John Link, County Manager
From: Gayle Wilson, Solid Waste Management Director
Subject: Report - Waste Reduction, Reuse, and Recycling Fee Recommendations
Date: April 13, 2004
This memorandum presents the culmination of the staff 10 -year financial analysis of the
Orange County solid waste management enterprise fund and provides information on:
• current and future anticipated expenditures /revenues,
• projected revenue shortfall,
• a proposed reduction, reuse and recycling collections fee structure that would provide
supplemental income to the. fund and eliminate the projected revenue shortfall relative
to recycling services,
• highlight the many assumptions necessary to conduct such a financial/fee analysis,
• other related issues, and
• proposed schedule /timeline /process
Staff requests that the Board of County Commissioners review the analysis, examine the
assumptions, consider the staff recommendation, and provide feedback to staff as
necessary in order that the supplemental financing process may continue toward a final
decision that would allow a fee to be included on the 2004 property tax bills.
Background
Discussions of the need to provide supplemental financing to the solid waste enterprise
fund have been taking place since at least 1993, when the Landfill Owners Group
conducted its initial discussion of the topic. In 1996, once it was acknowledged. that
Orange County would be unable to successfully site a new Mixed Solid Waste (MSW)
landfill, discussions began again. Prior to 1996 it was generally understood that a new
in- county landfill would generate surplus revenue that could substantially fund recycling
and waste reduction programs indefinitely.
In 1998 an Alternative Finance Committee was formed to consider the issue of how to
provide additional revenue to the solid waste enterprise fund. This Committee was
comprised of Managers, Finance Directors, Elected Officials, and a county citizen.
While the Committee held numerous meetings, conducted substantive discussions, and
thoroughly examined the issue, it did not complete its work or issue a finial report, as the
member governments' focus at the time shifted to resolving matters related to shifting
primary solid waste management responsibility to Orange County.
In 2001 the BOCC requested that the Solid Waste Advisory Board take up the issue and
offer recommendations to the BOCC. On January 27, 2003, staff presented a preliminary
estimate of per household (phh) fees that would be necessary to completely fund
recycling in each of those sectors:
Urban Curbside - $64.50 Rural Curbside - $46.00 Multi- Family - $34.00
At that time, the Basic Services Fee (previously referred to as a Universal Services Fee)
component that would fund the drop -off sites, hazardous waste collection, public
education and supporting services had not been completed. In February 2003, the SWAB
presented alternative financing recommendations to the BOCC that included a prepaid
tipping fee component, making comparisons of those fee estimates with current fee
recommendations irrelevant. The prepaid tipping fee would have had the effect of
eliminating landfill fees and ensuring long -term stability and predictability of the overall
solid waste enterprise fund.
Following the discussion last winter /spring, staff have had the opportunity to further
consider the various issues raised, have conducted ongoing discussions with the SWAB,
have received informal Commissioners' feedback, communicated with the County staff
that will have billing and collection responsibilities, and spoken with the Manager and
various citizens on the subject.
Based on this continuing deliberation staff prepared and presented a preliminary proposal
regarding a fee assessment methodology to the BOCC on November 10, 2003. At that
meeting the BOCC agreed in principal with the staff approach and directed that the'
analysis be completed and a formal proposal be brought back to the BOCC for
consideration.
While no specific fees were presented at the November 2003 meeting because the
analysis was not complete at that time, staff s rough estimate of the possible magnitude
of the fees was in the neighborhood of $45 /phh.
Staff's understanding of the Board's direction from the November 2003 work session
included:
• It would be a fee rather than a tax.
• It would be assessed on all improved properties, including tax - exempt, residential,
non - residential.
•. It would be billed on the tax bill, beginning in 2004, but identified as a Waste
Reduction, Reuse, and Recycling Fee.
• The fee would not be assessed to the University.
• Philosophically, the intent is that you will pay for the services you receive, that are
available to you, or that are performed on your behalf.
• There would be four categories of fees:
2
• Basic Services Fee (B) — services provided to or on behalf of everyone. Examples
are HHW, electronics, drop -off site services, food waste and other recycling
administration/education.
• Rural Curbside Services (R) — Those who receive or have available biweekly
curbside recycling collection in the unincorporated areas.
• Urban Curbside Services (U) — Those who receive or have available weekly
curbside recycling collection in the incorporated areas.
• Multi - Family Services (M) — Those who receive or have available
apartment /condominium type recycling services.
• All improved properties would receive the B fee. Those properties that also fall into
one of the other three categories would also receive that fee. Some properties would
only receive the B fee.
• The University is excluded from fees due to their having their own comprehensive
recycling program and their paying a disposal tipping fee of which a significant
portion is used to fund local recycling services /programs that they receive no benefits
from
• In FY 2004/05 the non - residential sector would only pay the B fee. Due to the
significant variety of commercial establishments staff proposes to conduct further
analysis and offer a refinement of fees for FY 2005/06 or later.
• Upon the BOCC final decision regarding the fee staff will initiate a broad -based
public education and outreach program to explain the need for supplemental
financing and the new fee system. The outreach efforts would begin immediately
upon the BOCC reaching a decision on the fee. It would include at least the
following:
• Local media editorial briefing,
• Articles in local news media,
• Availability of staff to conduct radio interviews or presentations,
• Providing information to Orange County employees,
• Press releases to local media,
• Paid advertising,
• Meeting with Town Managers to explain fee structure /policies,
• Coordination with Revenue Collection Department regarding all information
released
• Additional staff person in Revenue Collection Department specifically assigned to
VVRRR Fee issue, and
• Insert in tax bills to explain fee
Note: According to Revenue Collection /Tax Assessor staff a final fee decision in April
(consistent with the BOCC 's November 10 agreement in principal) would allow the
billing to proceed with a higher degree of accuracy and without unnecessarily delaying
tax billing. If the BOCC's final supplemental financing decision features another
3
approach that radically alters base assumptions of the current financing framework, or is
unduly delayed, administrative planning for billing may not be completed in time for the
normal billing cycle.
The Environmental Finance Center of the Institute of Government (EFC) at UNC has
been providing county staff assistance over the past several months in developing the
financial database used in the analysis and offering general financial information and
guidance. The specialized financial- assistance provided by the EFC has been invaluable
in our efforts to provide accurate and reliable financial information and policy advice to
the BOCC. The EFC's expertise in governmental financing has resulted in several
recommendations regarding financial assumptions and responsible financial management
practices for enterprise funds.
Statement of Problem
The solid waste management enterprise fund will be unable to continue providing the
same level of service in FY 2004/05 as is now provided without major financial decisions
that provide additional revenue. It should be noted that no state or general fund
appropriations are provided to fund recycling, nor waste reduction activities within the
enterprise fund, with the exception of state reimbursements of an advance disposal fee for
white goods and scrap tires and some small grants received on a competitive basis.
Reimbursements for scrap tires and white goods only partially fund those programs.
The proposed fee will provide the funding necessary to fund the current and future
shortfall in revenue caused primarily by:
• the success of local waste reduction programs in reducing waste being disposed,
resulting in corresponding reductions. in tipping fee revenue that has historically
funded solid waste programs /services,
• investments in recycling and waste reduction programs whose recovered materials
market value is significantly inadequate to pay for those recycling and waste
reduction programs /services, and
• Orange County tipping fees are higher than other regional disposal options
Figure 1 represents an illustration of the projected county recycling expenditures and
revenues over the next nine years, which forms the basis for the need for supplemental
income for these financially non - sustainable programs /services.
Figure 1
Cost and Revenue of Recycling
6,000,000
5,000,000
4,000,000
U)
c 3,000,000
0
2,000,000
1,000,000
0
2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013
Year
Revenue
Cost
Most other counties already utilize (many for several years) some type of availability or
other fee to fund solid waste services. e lists examples of fees existing in
other jurisdictions. This list is not a comprehensive statewide inventory of supplemental
solid waste fees, but only a sampling.
Fee Recommendations (FY 2004/05)
Basic Services (B) Fee = $36 /per each improved property unit, regardless of location in
the county or tax status (exempt or not)
Urban Curbside Services (U) Fee = $39 /improved property unit within urban services
area (We note a duplex would receive two fees as each side of the duplex is eligible for
individual curbside recycling services)
Rural Curbside Services (R) Fee = $16 /improved property unit within rural services
area
5
Multi- family Services Fee = $14 /improved property unit with multi - family services
available at each apartment dwelling unit, occupied or not. Mobile home parks are
proposed to be billed for each mobile home occupying a lot, not for unoccupied lots as
declared by the park owner in the required annual statement to Orange County.
Each improved property unit will receive the $36 (B) fee. Those improved property
units within one of the other three service areas will also receive a second fee that is
additive to the. (B) fee._
Note: Due to .a projected surplus of tipping fee revenue over landfill operating expenses
for the next five years, staff believes it possible to maintain the above fee structure for
five years without adjustment. In FY 2009110 the tipping fee revenue surpluses will no
longer be available and significant fee increases will be likely.
Statement of Assumptions
The following is a compilation of fundamental assumptions related to the 10 -Year
financial analysis of the solid waste enterprise fund and calculations of anticipated
revenue shortfall. The assumptions are organized in the following categories:
General
Revenues
Expenditures
Reserves
Programs /Services
Fee Customer Classes
Fee Calculations
GENERAL AS SUMPTIONS
• Supplemental financing is essential for FY 2004/05 in order to continue existing
services /programs.
• 10 -Year Plan Financial Analysis corresponds to 10 -Year Solid Waste Management
Plan submitted to State, with year 1 being 2003/04.
• Fee will be transmitted on the annual property tax bill, listed separately as a Waste
Reduction, Reuse, and Recycling Fee.
• The Waste Reduction, Reuse, and Recycling Fee (WRRRF) will be adopted in
conjunction with the FY 2004/05 budget process and included on the 2004 tax bills
mailed in July /August 2004.
• County Public Works Sanitation Division operations /estimates of revenue or
expenditures are not included in the WRRRF model.
• A WRRRF appeal process will be established as part of a schedule of values to
efficiently address citizen billing questions /problems.
• For reference, the average property tax bill for a Chapel Hill resident is $4,336.50.
The proposed $75 fee (B plus U) represents 1.7 percent of that average tax bill. The
:1
6
e property tax bill of a resident of unincorporated Orange County is $2,447.
averag p p y �
The proposed $52 fee (B plus R) represents 2.1 percent of that average tax bill.
REVENUE ASSUMPTIONS
• UNC will continue to deliver MSW to the Landfill
• MSW tonnage will escalate at 1.7% annually
• C &D tonnage will escalate at 1% annually
• Recycling revenue estimates based on the continued operation of the existing sorting
pad, and its projected 2008 relocation
• Reimbursement for the jointly owned portion of the Green Tract assumed to be
received beginning FY 2004/05 over a four year period
• No assumption made regarding reimbursement for 60 acre County owned portion of
Green Tract
• Franchising private company MSW haulers is not assumed, however, it could
represent an additional $250,000 annually in tipping fee revenue and an estimated
reduction in the Basic Services Fee (if fully applied there) of approximately
$4.50 /phh
• Tipping fees, fund balance and recycling revenues will continue to be utilized to the
extent practicable, with WRRRF financing only a portion of the projected shortfall of
revenue used to fund recycling collection, reduction and reuse functions
• Recycling revenue estimates based on reasonably conservative material market values
• Tipping Fee Assumptions $$ /ton:
EXPENDITURE ASSUMPTIONS
• Administrative expenses are split evenly between recycling and disposal and include
administrative staff, education and outreach programs, utilities, financial management
and planning, clerical, telephone services, and related functions. Staff analysis
VA
MSW
C &D
Veg. /Clean Wood
04/05
45
41
15
05/06
46
41
15
06/07
47
41
17
07/08
48
41
17
08/09
49
43
17
09/10
50
43
19
10 /11
51
43
19
11/12
52
43
19
12/13
53
43
19
EXPENDITURE ASSUMPTIONS
• Administrative expenses are split evenly between recycling and disposal and include
administrative staff, education and outreach programs, utilities, financial management
and planning, clerical, telephone services, and related functions. Staff analysis
VA
8
showed that this split reasonably reflects an accurate allocation of administrative staff
time between the two functions.
• Debt financing of land improvement /acquisition (Transfer Station, C &D Resale
Store, Administration Office Building, land acquisition, Relocation of Processing
Pad, Closure) is assumed at 6 percent.
• Debt financing of future equipment and vehicles is not a fundamental assumption
(beyond the equipment debt already being financed), however; based on level of
reserve balance and favorableness of loan rates, various equipment may be
periodically debt financed.
• Analysis assumes and has incorporated new costs associated with implementation of
the WRRRF such as a new (time- limited) position in Tax Collection that will serve as
administrative support for the WRRRF program.
• A Gantt chart a = �n ffl) is provided to indicate schedule of key new
expenditures over the planning period.
RESERVES ASSUMPTIONS
• Fund Balance (undesignated) is estimated to be maintained at a minimum 14 percent
• Equipment reserve fund for both disposal and recycling is assumed to be established
as a restricted fund to finance capital equipment and vehicles purchases and to
minimize variability in revenue requirements
• Projected existing June 30, 2004 fund balance of $1,963,201 is to be applied toward
maintenance of minimum 14 percent fund balance for entire fund (including recycling
division), reestablishment of landfill equipment reserve fund, and subsidizing
recycling fees for five years
• No landfill closure reserve fund is proposed or included in any expenditure estimates
PROGRAMS /SERVICES ASSUMPTIONS
• No assumptions are made regarding new emergency storm debris management
facilities /services
• C &D recycling functions are integrated into disposal operations and are not included
in recycling expenditure /revenue estimates; these recycling activities are not funded
by recycling fees
• No additional materials are assumed to be added to existing recyclable materials
presently collected during the 10 -year planning period, with the exception of batteries
at curbside and drywall
• A Materials Recovery Facility (MRF)and its attendant program expansions are not
included in this 10 -Year Plan — Recycling program expansions have been minimized
in response to elimination of expanded processing capabilities
• Minimal program expansions are assumed in the financial plan including:
• 500 homes /year plus in -fill for existing routes added to rural curbside program
• in -fill development and annexations only in urban curbside program
• 2 sites added in FY 04/05 and no additional expansions for food waste program
• no net expansions of the restaurant and bar glass program
C
• approximately 100 new multi - family units on -line annually
• development of Hampton Pointe and Southern Village drop -off recycling centers
CUSTOMER CLASS FEE ASSUMPTIONS
• Assumes four categories of fee recipients:
• Basic Services Fee(B) — Imposed on all improved property except that owned by
UNC that does not receive recycling services
• Portion of Mebane located in Orange County will only receive (B) fee
• Portion of Chapel Hill in Durham County will receive (B) and U or M fee as
appropriate
• Each commercial improved property, regardless of size or intensity of use,
will receive the same (B) fee until such a time as a more equitable fee
structure can be developed, estimated 2 -3 years
• An improved residential property with more than, one home will receive the
assessment on each habitable residential unit (i.e. property with one primary
home with two mobile homes on the same property will result in property
owner receiving 3X fee)
• Sororities/Fraternities and Elderly Assisted Living —.4 persons = 1 unit for
billing purposes
• Granville Towers —13 students = 1 unit for billing services
• Tax- exempt/public housing/land trusts —1 unit = 1 unit for billing purposes
• Carol Woods —1 unit = 1 unit for billing purposes
• Personal Property (single -wide mobile homes) —1 unit each for billing
purposes. Where single -wide mobile homes are located in mobile home
parks, the park owner shall receive the bill for all homes in the park, as no
locations for mobile homes are yet designated for personal property tax bills.
It will be the responsibility of the mobile home park owner to pay the bill and
distribute the costs accordingly.
• Urban Curbside (U) Fee — Imposed on those residences in the incorporated areas
of the county that have curbside recycling services available; property owner will
receive a fee for each residential unit on property
• Rural Curbside (R) Fee — Imposed on those residences in the unincorporated areas
of the county that have rural curbside recycling services available; property owner
will receive a fee for each residential unit on property
• Multi- family Fee — Imposed on those residences, including both incorporated and
unincorporated areas that have multi - family services available; property owner
will receive fee for each residential unit on property
Special multi - family assessments are:
• Sororities/Fraternities and Elderly Assisted Living (not nursing homes) — 4
persons = 1 unit for billing purposes
• Granville Towers —13 students = 1 unit for billing purposes
• Tax - exempt/public housing/land trusts —1 unit = 1 unit for billing purposes
• Carol Woods —1 unit = 1 unit for billing purposes
E
r2
• Personal Property (single -wide mobile homes) — 1 unit each for billing
purposes (except for those outside mobile home parks and outside areas
receiving rural curbside service)
FEE CALCULATION ASSUMPTIONS
• Objective is to maintain rates unchanged for five years
• 88 percent recovery rate assumed for collections (due to lack of statutory authority to
collect as taxes)
• Fee is calculated by dividing each category's revenue shortfall amount by # of units
in customer class
• Staff will continue service area assessments /data base computations in order to refine
the number of units used for calculating fees in each service category, so the actual
number of units to be billed (billing database) will continue to be perfected until the
time of billing
provides a summary of the comprehensive �,
financial analysis and
illustrates projected revenues /expenditures by program
LEGAL AS SUMPTIONS
• That the WRRR Fee will be structured so that legal collection options will be
maximized, however, WRRRF do not have the same collection options -as those
available for the collection of taxes or availability fees
• The County- Attorney has included a letter that further discusses the legal issues
related to the proposed fee aff a.
Key Issues
• .Billing will likely generate increased demand for services that will be unable to be
met immediately. If fee generates income over what is necessary, additional revenue
could be used to expand services beyond those modest expansions already assumed.
• Difficulty in maintaining ongoing estimates of separate programs because of trend to
integrate (Drop -Off Site, MF, Rural Curb., etc.) services for efficiency.
• Current solid waste programs and services are based on street address at point of
service. Tax billing database based on property identification numbers. Significant
effort underway to convert physical addresses to PIN numbers. Additionally, many
tax - exempt properties do not have assigned PIN numbers or are missing other key
information such as whether it's improved, etc.
• Tax Assessor recommends that m order for the 2004 tax bills to be distributed on
time, that the BOCC make a final decision on the WRRRF by early to mid April,
assuming only minor modifications to staff assumptions. In order for the bills to be
distributed on time (first week in August), the billing database needs to be finalized
10
before May 30. Depending on the scope of possible modifications of various
assumptions by the BOCC and progress toward completion of the development of the
billing database, tax bill distribution may be delayed or billings may be made less
accurate
Interlocal Agreement Obligations
The Interlocal Agreement allows Orange County considerable flexibility and discretion
regarding system financing. The section of the agreement titled "Other Fees" seems to
apply to the WRRRF proposal. Staff provides a summary of how this section of the
Interlocal Agreement may apply as follows:
• County must give the parties at least 30 days notice of the effective date of the
proposed fee
• County must request that the SWAB consider the proposed fee and, if the SWAB
approves the fee, then the fee will be considered fully approved when the BOCC
subsequently approves it
• If the SWAB disapproves of the fee, then the fee may take effect only if the County
and at least one other Party subsequently approves it
• The fee will take effect at the end of the notice period, or, if later, the date of the last
Governing Body approval necessary
Next Steps
BOCC to review recommendation and provide addition guidance and direction to
staff regarding fee recommendation and assumptions.
Staff from Land Records, Tax Collection, Tax Assessor, County Attorney,
Information Systems and Solid Waste will continue to:
• prepare and refine the billing database and reconciling PIN numbers with service
area addresses for each of the service sectors
• work out necessary policies /practices regarding collection for non - payment
• develop detailed schedule of values relative to who /what /when/how fee
assessments are determined and applied
• consider how the tax bill document can be modified to plainly list the fee along
with a possible insert explaining the fee
• examine the process for inclusion the portion of Chapel Hill falling within
Durham County
• develop an appeals process to consider citizen complaints /inquiries
• consider other legal issues as necessary
• Following BOCC endorsement of the staff recommendation, to initiate a
comprehensive public education and outreach campaign
Staff is available to answer questions or discuss any aspect of the recommendation.
11
Revenue Requirement
# Units
WRRR Fee
Total Fee Revenue
Difference
Revenue Requirement
# Units .
WRRR Fee
Total Fee Revenue
Difference
Rural
Revenue Requirement
# Units
WRRR Fee
Total Fee Revenue
Difference
Revenue Requirement
# Units
WRRR Fee
Total Fee Revenue
Difference
Disposal
Surplus /Deficit
June 30, 2004
Total Undesignated Fund Balance Available
Recycling Subsidy Need
Undesignated Fund Balance
Total Minimum Undesignated Fund Balance
Shortfall
Total Disposal Shortfall
Financial Summary Analysis
04105
05/06
06107
2,057,486
60,208
36
2,167,488
- 110,002
07108
2,123,124
61,412
36
2,210,832
+87,708
08/09
2,348,292
62,640
36
2,255,040
- 93,252
09/10
2,442,184
63,893
38.22
2,255,040
0
10111
2,512,962
65,171
39
2,512,962
0
11/12
2,589,927
66,474
39
2,589,927
0
12113
2,636,751
67,803
39
2,636,751
0
2,148,918
57,870
36
2,0831320
- 65,598
2,185,101
59,027
36
2,124,972
- 60,129
980,386
16,500
39
643,500
- 336,886
1,048,854
16,960
39
661,440
- 387,414
1,117,244
17,420
39
679,380
- 437,864
1,189,244
17,880
39
697,320
- 491,924
1,264,089
18,340
39
715,260
- 548,829
1,342,805
18,800
71.43
715,260
0
1,424,636
19,260
73.97
1,424,636
0
1,510,174
19,720
76.58
1,510,174
0
1,599,569
20,180
79.27
1,599,569
0
353,111
10,900
16
174,400
- 178,711
417,262
11,760
16
188,160
- 229,102
456,551
12,620
16
201,920
- 254,631
498,278
13,480
16
215,680
- 282,598
556,339
14,340
16
229,440
- 326,899
603,476
15,200
39.70
603,476
0
652,474
16,060
40.63
652,474
0
702,567
16,920
41.52
702,567
0
755,108
17,780
42.47
755,108
0
6
357,342
13,500
14
189,000
- 168,342
372,990
13,600
14
190,400
- 182,590
383,635
13,700
14
191,800
- 191,835
353,792
13,800
14
193,200
- 160,592
268,050
13,900
14
194,600
- 73,450
220,549
14,000
15.75
220,549
0
358,049
14,100
25.39
358,049
0
402,825
14,200
28.37
402,825
0
417,143
14,300
29.17
417,143
0
+443,218
1,963,201
2,406,419
- 749,537
1,656,882
31%.
+617,607
1,656,882
2,274,489
- 859,235
1,41 5,254
25%
+1,075,492
1,415,254
2,490,746
- 994,332
1,496,414
25%
+561,720
1,496,414
2,058,134
- 847,406
1,210,728
18.8%
+1,662,422
1,210,728
2,873,150
- 1,042,430
1,830,720
28.6%
- 1,258,186
1,839,720
581,534
0
581,534
14%
- 1,203,658
581,534
- 622,124
0
0
14%
- 806,578
0
- 806,578
0
0
14%
- 921,185
0
- 921,185
0
0
14%
- 682,376
- 1,299,083
- 1,349,542
- 1,404,081
- 682,376
- 1,921,207
- 2,156,120
- 2,325,266
Fee Summary Sheet 3 04.xls03/30/2004
Solid Waste Management 10 Year Plan New or Expanded Capital /Personnel
Administration and Landfill Operations
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010 -11
2011 -12
2012 -13
Administration
Construction of Admin Building $660,000
(Payments begin for 10 Years @ $89,672)
$89,672
`
}
New SW Telephone System $55,000
$55,000
Additional Personnel Office Asst II (Part-Time)
$15,0001Yr
A
a,F
_
Additional Position in Revenue Coll/Tax Assessment Dept
$46,6601Yr.
- NAWA
�
MSW
Install leachate sewer line $155,000
$155,000
n
Land Acq. Adjacent Property for Potential Mitigation Activities
$150,000 (Payments begin for 5 years @$35,609/yr)
$35,609/Yr.
`0� '`',''r.j=
Asphalt Northside to C &D $175,000
$175,000
Last Year of Active Landfill*
NA
Switch to Transfer Station July 09
N/A
Add 1/2 FTE to Monitor Landfill Site
$29,9591Yr
Transfer Station
Transfer Station Design & Permitting
$265,000
-
Equipment Purchase 2 Front End Loaders
$381,922
Equipment Purchase Yard Tractor
$77,613
Transfer Station Construction $2,325,000
(includes paving from entrance to HHW and crew building)
(Payment begins for 15 years @ $239,389/yr)
$239,389/Yr
Opening Transfer Station July 09
N/A
Hauling and Disposal Fee $34.00 /ton
$2,166,854/Yr
Construction & Demolition Landfill
Bid and Construction of C &D Resale Store $325,000
7
(Payments begin for 5 years @$77,153)
$77,153/Yr,
Purchase Drywall Compactor
$28,943
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt ChartAs
03/30/2004
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt Chart.xls
03/30/2004
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010 -11
2011 -12
2012 -13
Recycling
Universal Services
Construction of Hampton Point Recycling Center
$100,000
Purchase 8 Cardboard Containers @$600.00 ea.
$4,800
One Antifreeze Tank
$2,700
One Antifreeze Tank
$2,732
Construction of Southern Village Recycling Center
$130,000
Rolloffs, Dumpsters for Southern Village $55,331
$55,331
One Antifreeze Tank
$2,814
Relocation of Recycling Facilities $500,000
New building and all associated improvements
(Payments begin for 5 years @ $118,698)
$118,698
Urban Curbside Collections
Batteries picked up at the curb
NIA
Rural Curbside Collections
Battedes picked up at the curb
NIA
Multifamily Collections
NIA
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt Chart.xls
03/30/2004
Solid Waste Management 10 Year Plan New or Expanded Capital /Personnel
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010 -11
2011 -12
2012 -13
Administration and Landfill Operations
Administration
Construction of Admin Building $660,000
(Payments begin for 10 Years @ $89,672)
New SW Telephone System $55,000
$89,672
$55,000
Additional Personnel Office Asst II (Part -Time)
in Revenue Coll/Tax Assessment Dept
$15,000/Yr
$46,660/Yr.
Additional Position
MSW
Install leachate sewer line $155,000
$155,000
Land Acq. Adjacent Property for Potential Mitigation Activities
$150,000 (Payments begin for 5 years @$35,609/ r)
$35,609/Yr.
}
"
Asphalt Northside to C &D $175,000
Last Year of Active Landfill*
$175,000
NA
Switch to Transfer Station July 09
Add 1/2 FTE to Monitor Landfill Site
N/A
$29,959/Yr
tlxf''rt
`~
t x
Transfer Station
Transfer Station Design & Permitting
$265,000
Equipment Purchase 2 Front End Loaders
Equipment Purchase Yard Tractor
$381,922
$77,613
Transfer Station Construction $2,325,000
includes paving from entrance to HHW and crew building)
r
(Payment begins for 15 years @ $239,389/yr)
$239,389/Yr
Opening Transfer Station July 09
N/A
Hauling and Disposal Fee $34.00 /ton
$2,166,854/Yr
Construction & Demolition Landfill
Bid and Construction of C &D Resale Store $325,000
(Payments begin for 5 years @$77,153 )
$77,153/Yr,
Purchase Drywall Compactor
$28,943
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt Chart.xls
03130/2004
Recycling
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010.11
2011 -12
2012 -13
Universal Services
Construction of Hampton Point Recycling Center
$100,000
Purchase 8 Cardboard Containers @$600.00 ea.
$4,800
One Antifreeze Tank
$2,700
-
One Antifreeze Tank
$2,732
Construction of Southern Village Recycling Center
$130,000
0
Rolloffs, Dumpsters for Southern Village $55,331
$55,331
One Antifreeze Tank
$2,814
Relocation of Recycling Facilities $500,000
New building and all associated improvements
(Payments begin for 5 years @ $118,698)
$118,698
Urban Curbside Collections
Batteries picked up at the curb
N/A
Rural Curbside Collections
Batteries picked up at the curb
N/A
Multifamily Collections I N/A I I I I I I I_ 1 I 1
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt Chart.xls
03/30/2004
Solid Waste Management 10 Year Plan New or Expanded Capital /Personnel
Administration and Landfill Operations
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010 -11
2011 -12 1
2012 -13
Administration
Construction of Admin Building $660,000
(Payments begin for 10 Years @ $89,672)
$89,672
"TM
New SW Telephone System $55,000
Additional Personnel Office Asst II (Part -Time)
$55,000
$15,000/Yr
Additional Position in Revenue Coll/Tax Assessment Dept
$46,660/Yr.
r �
MSW
Install leachate sewer line $155,000
$155,000
Land Acq. Adjacent Property for Potential Mitigation Activities��
$150,000 (Payments begin for 5 years @$35,609/yr)
$35,609/Yr.
r
Asphalt Northside to C &D $175,000
$175,000
Last Year of Active Landfill"
NA
Switch to Transfer Station July 09
N/A
Add 1/2 FTE to Monitor Landfill Site
$29,959/Yr
jp
7'
Transfer Station
Transfer Station Design & Permitting
$265,000
Equipment Purchase 2 Front End Loaders
$381,922
Equipment Purchase Yard Tractor
$77,613
Transfer Station Construction $2,325,000
(includes paving from entrance to HHW and crew building)
(Payment begins for 15 years @ $239,389/yr)
$239,389/Yr
Opening Transfer Station July 09
N/A
Hauling and Disposal Fee $34.00 /ton
$2,166,854/Yr
Construction & Demolition Landfill
Bid and Construction of C &D Resale Store $325,000
Payments begin for 5 years @$77,153
$77,153/Yr,
Purchase Drywall Compactor
$28,943
Rebecca Holdway
Solid Waste Management 10 Year Plan Gnatt Chart.xls
03/30/2004
Recycling
Budget Cost
2004 -05
2005 -06
2006 -07
2007 -08
2008 -09
2009 -10
2010 -11
2011 -12
2012 -13
Universal Services
Construction of Hampton Point Recycling Center
$100,000
0
Purchase 8 Cardboard Containers @$600.00 ea.
$4,800
One Antifreeze Tank
$2,700
One Antifreeze Tank
$2,732
Construction of Southern Village Recycling Center
$130,000
Rolloffs, Dumpsters for Southern Village $55,331
$55,331
One Antifreeze Tank
$2,814
Relocation of Recycling Facilities $500,000
New building and all associated improvements
Payments begin for 5 years @ $118,698)
$118,698
Urban Curbside Collections
Batteries picked up at the curb
N/A
Rural Curbside Collections
Batteries picked up at the curb
N/A
Multifamily Collections
N/A
0
Rebecca Holdwa)
Solid Waste Management 10 Year Plan Gnatt Chart.xh
03/30/2004
City or
Type of
Annual Fee
Who Pays
What it covers
Comments: provided from jurisdiction
County
Fee
Wake County
Household
$20.00
All residential
Non - landfill related
Fee began 1995. In the past, revenue from the $20 household fee has not
Ken McArtor,
Fee
occupied units
programs
been "ear- marked" for certain programs, but has been considered revenue
Finance Dept.
incl. Multifamily
(including; School
to the Enterprise
(919) 856 -7117
Recycling Program.
Fund as a whole. This year the household fee will be compared to the
Convenience Center
total cost of services for all the programs it is supposed to fund. A fee
Program, Multi-
adjustment will be
Material Drop -Off
requested where necessary over the 3 -yr budget.
Facilities,
Household
Hazardous Waste
Program, Special
Collections, Solid
Waste Education,
etc.
Chatham
Availability
Two fee system:
Fees are only for
Fees along with
When this structure was set up, we were receiving General Fund money.
County
Fee and
Availability Fee
"all" dwelling
recycling revenu
Programs such as Environmental Enforcement, Environmental Education,
Robert Holden,
Disposal Fee
$81 covers the
units in
es should cover
HHW,
Solid Waste
costs of the
unincorporated
Hauling (H) and
access to the collection centers etc. that everyone in the County has access
Director
collection
areas. Mobile
Disposal (D) costs.
to, was being paid from the General Fund. Those who benefit pay.
(919) 542 -5516
centers. Charged
home parks are
Availability fee:
This year with NO general fund money, policies did not change. County
to all dwelling
charge per utility
Current disposal
tried to get payment from Town residents, but failed. When combined
units in
hook up. Multi
cost = 23% of
with recycling revenues, the fees will cover the costs of the collection
unincorporated
family houzing
budget covers those
centers, hauling and disposal.
areas.
complees are
costs.
An additional
charged per unit.
Disposal Fee
Availability fee is
{$34} is charged
69% of revenues
to "dwelling
units" in the
Other 8% of
unincorporated
revenues from other
area who do not
sources.
have a private
garbage hauler.
Durham County
Solid Waste
$65.00
Single family
Convenience center
Fee in place since 1993. This is not the only source of funds, SWCCs
Tom Bryant
Fee
unincorporated,
operations (4) and
collect motor oil, batteries, pesticide bottles, site attendants, recycling
Solid Waste
trailer parks,
curbside recycling
staff (in house for County buildings).
Director (919)
exemption for
14,000+ hh's
560 -0430
vacant pads, not
vacant trailers.
City or
Type of
Annual Fee
Who Pays
What it covers
Comments: provided from jurisdiction
County
Fee
City of
Recycling
$27.00
Single family
Curbside recycling
Covers cost of contract only, no administrative or education costs. Billed
Kernersville
Fee
households.
on property tax bill.
Mylinda
Duplex pays two
Jacobsen, Solid
fees (2 carts)
Waste Director
�
336 996-6417 -
City of
Solid Waste
$229.20 for 90g
Single family
Residential solid
Billed on water bill monthly. The solid waste dept pays the City
Wilmington
Fee
roll out garbage
households or
waste, yard waste,
$400,000 year for
Bill Reid
cart
others who can
curbside recycling,
HR services, IT services, billing, and other services.
Superintendent
$193.20 for
use roll out carts
bulky, all admire.
of Operations
smaller 40g cart
e.g. small
Overhead.
(910) 790 -2376
General fund
business
pays public waste
and dead animal
fees.
Cumberland
Solid Waste
$48 per year per
All single family
Residential solid
Commercial Transfer Station Tip Fee = $37.ton. City does not pay for
County
Fee
household.
households in
waste disposal
residential waste because it's already covered in the household fee.
Charles
the County
(Town doesn't pay
Whittenton
except Town of
tip fee), use of
Solid Waste
Spring Lake
landfill,
Director
(they pay tip
convenience centers
(910 321 -6830
fees) Complexes
and HHW program.
of eight or more
units are
commercial and
must provide
their own
collection.
Washington
Solid Waste
$175
Residential
Contracted door to
Commercial Landfill Tip Fee. Ten year contract with hauler. In -town
County
User Fee
units. Pay per
door collection of
pays on its own.
Chris Coudriet
unit
waste & recycling
(252) 793 -5823
unincorporated
hauling to regional
areas only.
landfill landfill and
Optional for
tip fee. White
small business.
goods, brush and
bulky item
collection on -call.
1�
a
City or
Type of
Annual Fee
Who Pays
What it covers
Comments: provided from jurisdiction
County
Fee
Polk County
Availability
$35 for every
All improved &
Cost of building
Commercial haulers will pay separate tipping gee at Transfer Station
Karim Shihata
Fee
improved parcel
taxed properties.
and operating new
when it's built.
(828) 894 -3301
in the County
transfer station. Set
regardless of type
up new Department
$40 additional
of Environmental
fee in
Services to mitigate
unincorporated
old landfills, other
area for those
environmental
without garbage
issues.Fee will pay
service to use
mitigation expenses
County Transfer
for old landfills
Station/Conven-
from this new
ience Center.
enterprise fund.
Macon County
Annual
$60 for use of all
All households
Use of Solid Waste
Multi family are billed to property owner according to number of units in
Joel Ostroff
household
the County
in Macon Co.
Convenience
building and each unit is billed at variable rate depending on size e.g. one
Recycling
user fee.
convenience
Supports
Centers and can
bedroom unit might pay $6 while two bedroom unit pays $10. Range per
Coordinator
centers. It also
convenience
bring scrap metal,
unit is $6 -$10 so a whole building's fee will typically be small.
(828) 349 -2252
allows dropoff of
centers 'as
tires, white goods
jostroff(E�macon
other materials
enterprise fund
and appliances to
nc.org
e.g. scrap metal.
(no general tax
landfill with this
at center.
money included)
permit.
Craven County
Annual
$32 billed on tax
Residents and
Cost of curbside
Some municipalities in Craven County don't participate. Have their own
Solid Waste
residential
bill. Supports
small business
recycling.
program and can opt out of the fee.
Authority
recycling
curbside
that uses roll
(252) 636 -6659
program fee.
recycling
cart or garbage
Stuart Daniels
Billed as
program.
can (not
sdanielsQco.
"Recycling
dumpster) are
craven.nc.us
Fee'
billed.
City of Hickory Solid Waste $67.56 Single family Curbside recycling Billed on water bill. Individual bills sent to those on private wells.
Tim Bennett Fee households, Includes other It does not cover enough, 'about hal'. Should be charging about $121 -
Solid Waste multifamily recycling programs, $144/ year) for the level of service provided and covering overhead, HR
Supervisor under six units residential solid costs, etc. Subsidizes all
(828) 323 -7439 some small waste, bulky goods, Solid Waste programs for disposal and recycling The fee is collected as
businesses and white goods, yard part of enterprise fund used to pay for curbside recycling plus residential
other non- waste and commercial waste collection and disposal. Any shortfalls are
residential that absorbed by general fund.
use one roll cart Set up in about 1996 and was in the $2 -$3 /month range then.
Revised March 5, 2004
LAW OFFICES
COLEMAN, GLEDHILL, HARGRAVE & PEEK
A PROFESSIONAL CORPORATION
129 E. TRYON STREET
P. O. DRAWER 1529
HILLSBOROUGH, NORTH CAROLINA 27278
919 -732 -2196
FAX 919 - 732 -7997
www.cgandh.com
March 23, 2004
Mr. John M. Link, Jr.
Orange County Manager
Mr. Rod Visser
Assistant County Manager
Post Office Box 8181
Hillsborough, North Carolina 27278
Mr. Gayle Wilson
Solid Waste Director
Post Office Box 17177
Chapel Hill, North Carolina 27516 -7177
RE: Waste Reduction, Reuse and Recycling Fees
Dear John, Rod and Gayle:
2,)—
FROM THE DESK OF
GEOFFREY E. GLEDHILL
E -MAIL: geoffrcygledhill @cgandh.com
This letter provides my analysis of the legal issues
pertinent to.the Orange County staff-recommendation to implement
Waste Reduction, Reuse and Recycling Fees ( "WRRR fees "). In a
letter dated February 7, 2003, a copy of which is enclosed with
this letter, I discussed how the Agreement for Solid Waste
Management among Orange County, Carrboro, Chapel Hill and
Hillsborough ( "Agreement ") addresses other fees. It is my view
that the WRRR fees recommended by the staff are "other fees" as
discussed in the Agreement. They therefore may be created or
changed by the County by giving the other parties*to the
Agreement 30 days notice of the fee or the proposed fee change.
If the Solid Waste Advisory Board recommends the change be
approved, then the change can take effect if the County
subsequently approves it. On the other hand, if the Solid Waste
Advisory Board recommends that the fee or fee change not be
approved then the change may take effect only if the County and
at least one other party to the - Agreement approves the fee or
fee change.
Page 2 13
March 23, 2004
Counties are given express authority to establish and
operate solid waste collection and disposal facilities. Counties
and cities may establish and operate joint collection and
disposal facilities by joint agreement. The Agreement is such an
agreement. The Board of County Commissioners is empowered to
impose fees for collection of solid waste, use of disposal
facilities and the availability of disposal facilities all
related to.solid waste. However, "recovered material" is not
considered solid waste in this regulatory scheme and is not
regulated as such.- Also, solid waste in this regulatory scheme
means non - hazardous solid waste and does not include-hazardous
waste.
Fees for handling recovered material and household
hazardous waste are not subject to the.limitations placed on the
County's ability to charge fees for the collection of solid
waste, the use of a-solid waste disposal facility and the
availability of a solid waste disposal facility. Those
limitations are discussed in my February 7, 2003 letter and
relate principally to the inability to charge persons not using
County solid waste disposal facilities and the availability of
those facilities.
A recovered material is a material that has known recycling
potential, can be feasibly recycled and has been diverted or
removed from the solid waste system stream for sale, use or
reuse. To qualify as "recovered material:"
(1) a majority of the recovered material at a
facility shall be sold, used or reused within 1 year;
(2) the recovered material or the products or by-
products of operations that processed recovered materials
shall not be discharged, deposited, injected, dunked,
spilled, leaked, or placed into or upon any land or water
so that the products or by- products or any constituent
thereof may either enter other lands of be emitted into the
air or discharged into any waters including groundwaters,
or otherwise enter the environment or pose a threat to
public health and safety; and
(3) the recovered material shall not be a hazardous
waste or have been recovered from a hazardous waste.
The board of commissioners of a county has broad power to
charge fees for services. N.C. Gen. Stat. 9 153A -102 provides:
"the board of commissioners may fix the fees ... charged by county
Page 3
March 23, 2004
officers and employees for performing services or duties
permitted or required by law...." Providing waste reduction,
reuse and recycling services for recovered material and
household hazardous waste are both services counties are either
permitted to provide or required.by law to provide. Therefore,
in my opinion, the County has the power to charge WRRR fees. The
division of the fee into the four categories as recommended.by
the County staff establishes a WRRR fee. system that is both
reasonable and related to the services provided by Orange County
to the improved property in the County and the cities and towns
in the County whose owners receive and have the applicable
services available to them. Part of Chapel Hill is located in
Durham County. Since the WRRR services covered by the fees
recommended by staff are provided to all of Chapel Hill, it is
my opinion that those properties can be made subject to the same
fees as other properties receiving the same services in the rest
of Chapel Hill.
Since the WRRR fees are not solid waste collection,
disposal or availability fees they are not covered by N.C. Gen.
Stat. § 153A -293. That statute authorizes a county to adopt an
ordinance providing that a solid waste related fee may be made
payable in the same manner as property taxes and, in the case of
non payment collected in any manner by which delinquent personal
or real property taxes can be collected. Therefore,' collection
of unpaid /delinquent WRRR fees will have to be accomplished by
using other remedies. The staff has projected an 88o collection
rate for these fees for that reason rather than the over 980
collection rate which is typical for property taxes in Orange
County.
The Board of Commissioners may want to consider, either in
the near term or the longer term, seeking legislation that would
provide that any fee authorized by and imposed pursuant to N.C.
Gen. Stat. 153A -102 can be collected in the same manner that
solid waste related fees can be collected.
The WRRR fees, if approved by the Board of Commissioners,
should be established and maintained annually with the adoption
by the Board of the Orange County Budget Ordinance.
Page 4
March 23, 2004
�-15
If you have any questions about any of this, please advise.
GEG /lsg
Enclosure
lsg :letters \linkvisserwilson.ltr
Very truly yours,
COLEMAN, GLEDHILL, HARGRAVE & PEEK, P.C.
ledhill
LAW OFFICES
COLEMAN, GLEDHILL & HARGRAVE
A PROFESSIONAL CORPORATION
129 E. TRYON STREET
P O. DRAWER 1529
HILLSBOROUGH, NORTH CAROLINA 27273 FROM THE DESK OF
919- 732 -2196 GEOFFREY E. GLEDHILL
FAX 919 -732 -7997
WEBSITE WWW.CGANDH.COM E- .VL-IL: veo[frey- 1edhi11rxgandh.com
February 7, 2003
Mr. John M. Link, Jr.
Orange County Manager
Mr. Rod Visser
Assistant County Manager
Mr. Gayle Wilson
Solid Waste Director
Mr. Jan Sassaman, Chair
Orange County Solid Waste
Advisory Board
Post Office Box 8181
Hillsborough, North Carolina 27278
RE: Solid Waste Alternative Financing
Dear John, Rod, Gayle and Jan:
This letter is a summary of the research that I have done
concerning solid waste alternative financing. It will proceed in
both outline and narrative form and is intended to be an
overview of the result of my research. Further direction by the
Solid Waste Advisory Board, the Manager and the Board of County
Commissioners will demand additional work and fine - tuning.
I. Agreement for Solid Waste Management.
The Agreement for Solid Waste Management among Orange
County and the Towns of Carrboro, Chapel Hill and Hillsborough
provides the s.tepping -off point for discussion of solid waste
alternative financing. The Agreement makes clear that the County
operates the solid waste system in Orange County and generally
has both authority and discretion in operating the system. The
Page 2
February 7, 2003
1�, /
Agreement further contemplates that the system will be operated
as an "enterprise" and that the County has discretion in setting
rates, fees and charges. There is an overriding limit on this
discretion. The County may not put into effect any Material
Financing Change unless the County first obtains the consent of
all the parties to the Agreement. Since the financing
alternatives discussed here will not, in my mind, affect a
Material Financial Change, that limitation on operational
control of the system does not pertain. The notion that the
County's solid waste system will be operated as an enterprise;
is also the solid waste system method of preference in State
law. Chapter 130A of the North Carolina General Statutes,.which
mandates that each county and municipality operate solid waste
management systems and.provide for their financing states that
counties and municipalities are encouraged to operate their
solid waste management systems through use of an enterprise
fund.
The fee options that have been presented to the Solid Waste
Advisory Board, to the Manager and to me fall into the category
of "other fees" in the Agreement. Generally, these fees may be
created or changed by the County by giving the other parties to
the Agreement thirty days notice of the fee or the proposed fee
change. If the Solid Waste Advisory Board recommends the change
be approved,.then the change can take effect if the County
subsequently approves it: If the Solid Waste Advisory Board
recommends that'the change not be approved, then the change may
take effect only if the County and at least one other party to
the Agreement approves the change.
"Other fees" do not-include taxes. That is, the Agreement
does not prohibit funding the solid waste system with taxes.
However, since the solid waste management system is to be
operated as an enterprise, the only taxes that fit the model are
district taxes. The Agreement expressly provides that special
district taxes related to the system are not covered by the
Agreement. However the Agreement notes, correctly, that North
Carolina law requires consent of a town for the property located
in the town to be included in any special tax district. Once a
town consents, then the county controls the special district
tax, in its discretion.
t e
Page 3
February 7, 2003
II. The Prince William County, Virginia Model.
I have studied the materials made available to me.
concerning-the fee system established by Prince William County,
Virginia. I have also reviewed the Code of the Commonwealth of
Virginia to determine the legal framework for the Prince William
County system. Further I have contacted the New Hanover County
Attorney's office because I have been told that that office has
found "no legal impediment" to implementing the Prince William
County, Virginia system in North Carolina.
My research tells me that Prince William County, Virginia
created a sanitary district and that the sanitary district model
available in Virginia, is similar to the sanitary district model
in North Carolina. Prince William County, Virginia petitioned
the courts of Virginia for the creation of this sanitary
district and upon receiving the court's approval, the sanitary
district created can finance its system activities either by
charging rates (fees) for the use of the system and /or by
levying taxes on property in the sanitary district. The Prince
William County Sanitary District has apparently elected to use
only fees to finance its solid waste system.
North Carolina law provides for the creation of sanitary
districts which when created have taxing and other governmental
powers, including the power to charge fees for system services.
A sanitary district under North Carolina law is essentially a
local government independent of the county or the city where it
is located. Sanitary districts as a model are, in Orange County,
I believe, obsolete. Since Virginia sanitary districts are akin
to North Carolina sanitary districts and since sanitary
districts in Orange County, North Carolina are essentially
obsolete, the use of the Virginia model is not helpful.
The rest of this document therefore focuses on the two
other possibilities which are helpful and could be used
independently or together. It also includes a brief discussion
of franchising as a method of addressing financing solid waste
in Orange County. Incidentally, during my conversation with Holt
Moore with the New Hanover County Attorney's office, I was told
that he did not recall opining about the applicability of the
Prince William County, Virginia model for New Hanover County.
And in the end, New Hanover County went to a franchise system
q
Page 4
February 7, 2003
after determining that the Prince William County model was not a
practical solution to New Hanover County's solid waste financing
concerns.
III. Fees for Service.
North Carolina law enables counties to charge collection,
disposal and availability fees to finance solid waste
enterprises. Solid waste collection fees are outside of the
scope of the County's responsibility under the Agreement and are
not discussed further. The' County can impose a fee for the use
of disposal facilities provided by the County. This fee may not
exceed the cost of operating the facility and may be imposed
only on those who use the facility. The fee can vary based on
the amount, characteristics-and form of recyclable materials
present in solid waste. This fee is essentially a-user fee not
applicable to persons not using the County's solid waste system.
The Board of Commissioners.may also impose a fee for the
availability.of a disposal facility provided by the County. This
fee may not exceed the cost of providing the facility. This fee
is not directly a user fee. Rather it is imposed on improved
property in the County that benefits from the availability of
the facility. This fee may not be imposed on property whose
solid waste is collected by a city or a private contractor for a
fee if the fee imposed by the city or the private contractor for
the collection includes a charge for the availability and use of
a disposal facility provided by the County. Furthermore,
property served by a private contractor who disposes of solid
waste collected from the property in a disposal facility
providedby the private contractor is not considered to benefit
from a disposal facility provided by the County and is not
subject to a fee imposed by the County for the availability of a
disposal facility provided by the County.
Summarizing, an availability fee could be charged to
everyone in orange County whose solid waste is not collected by
a private contractor delivering the materials to a disposal
facility provided by that private contractor. And, if the
availability fee were to be applicable in the Towns of Chapel
Hill, Carrboro and Hillsborough, the fees charged by orange
County for delivery of solid waste to the County landfill would
have to be adjusted to eliminate the cost of the availability of
Page 5 `®
February 7, 2003
the disposal facility. That is, if the County intends to
continue its tipping fee while imposing an availability fee, the
services covered by the availability fee even though charged to
the landowners in Orange County, would have to be "backed -out"
of the tipping and other fees now charged to the towns.
The statute authorizing local governments in North Carolina
to charge fees for solid waste is, at least in part, responsive
to federal flow control requirements created by the federal
courts which requirements are premised on Congress's ability to
control commerce. Flow control principles generally do not
become a problem under the North Carolina solid waste fee system
because the statutory limits on fee - setting mirror, or at least
capture the sense of, flow control. A fee system has at least.
one advantage over a tax system in that the fees are charged to
the persons using the County solid waste system, even where the
property where the solid waste is generated is not taxable. A
fee system may also please the towns in Orange County because it
would almost certainly result in a reduction to tip fees.
Solid waste fees would be established by County ordinance
and, may be billed with property taxes; may be payable in the
same manner as property taxes; and, in the case of non - payment
may be collected in any manner by which delinquent personal or
real property taxes can be collected. All of these features of a
fee system would be set out in the ordinance which creates the
fee. The ordinance would further make clear that delinquent fees
are a lien on the real property described on the tax bill that
includes the fee. Therefore, fee collection rates should be
comparable to ad valorem tax collection rates.
Fees under North Carolina's solid waste fee system,. without
franchising being a part of that system, will only stop Orange
County solid waste from leaving Orange County if they are
competitive with the private sector, however. And, unlike
property taxes, fees are not deductible for federal and State
income tax purposes.
IV. County Solid Waste Service Districts.
Service districts are a viable option for Orange County and
create only a tax boundary with all of the governmental
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February 7, 2003
activities being performed by the County. Orange County could
create solid waste service districts that are defined by the
level of solid waste service provided to the district. However,
before solid waste service districts can be effective in the
towns in Orange County, the towns would have to consent to their
being included. Service districts under North Carolina law are
special tax districts only. They are not units of government
which can charge fees for services. The use of service district
taxes as an alternative financing method is discussed below.
County service districts for solid waste collection and
disposal systems can be created based on the service provided.
That is,-each district would vary depending on whether the
property owner had access. to the rural solid waste collection
system, rural curbside collection or town curbside collection.
As mentioned previously, before a county service district can
include land in a city or town, the city or town must agree to
its being included within the district. All aspects of the
property tax generally pertain to service district taxes. That
is, properties that are exempt from property taxes generally
will be exempt from service district taxes. And, property
valuation will be the same as for property taxes generally.
Therefore, for example, property in the use value program or
homestead exempt property would be taxed at its use value or net
of the homestead exemption.
County service district tax rates are considered together
with other County taxes for tax rate limitations. They are'in
the same category as 153A- 149(c) functions that may be paid -for
with county taxes, which have a combined rate limit of $1.50 per
$100 of valuation. They would appear on the tax bill as a
separate line item and would be collectible in the same manner
as other property taxes. Service district taxes are deductible
as are other property taxes for State and federal income tax
purposes.
.A service district tax should be relatively easy to
administer because of the advanced GIS technology available to
Orange County to identify and map the districts. Although
service district taxes will not capture entities otherwise
exempt from property taxes, they will tax all other persons
using the County's solid waste system. They are, in that regard,
a flow control technique which I think would avoid federal flow
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February 7, 2003
control problems. And, they would provide significant incentive
to the use' of the County's solid waste system. Also,. presumably,
any service district tax in the towns would be accompanied by a
reduction in the landfill tip fee charges to the towns. Without
those reductions the towns would, in all likelihood, not agree
to being a part of the service district system.
V. Franchising.
Creating a franchise system whereby all solid waste has to
be collected and /or hauled by franchisees is not a direct
alternative financing method. Fees can be charged in the
franchising process but they are minor in amount-and would be
imposed mainly to cover the administration of the franchising
process. On the other hand, requiring in a franchise system the
solid waste hauler to deliver all of the solid waste collected
and hauled to the Orange County.solid waste facilities puts off
for the foreseeable future Orange County's need for alternative
financing for its solid waste system.
Hillsborough successfully used a franchise system when it
got out of the commercial collection business. Pursuant to the*
Hillsborough franchise ordinance and the franchise granted by
Hillsborough, all commercial solid waste collected in
Hillsborough must be delivered to Orange County solid waste
facilities. This is the method elected by New Hanover County.
That is, New Hanover County's franchising system requires that
all the waste in New Hanover County be delivered to its
incinerator. Interestingly, there is a local bill applicable to
New Hanover County which allows its solid waste franchising
authority to include the City of Wilmington. Thus, New Hanover
County has completely addressed its solid waste financing
through the franchising process.
Although Hillsborough has successfully implemented a
franchising system for its commercial solid waste collection
activities and although New Hanover County has also implemented
a franchising system, franchising squarely puts at issue federal
flow control law. A franchise which requires the waste to be
delivered to the Orange County facilities would prohibit out of
County disposal of County solid waste altogether. Hillsborough
implemented its franchising system without flow control
complaint from the franchise bidders, and the bidders in
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February 7, 2003
all of the major private collection companies operating in this
area. However, New Hanover County has been put on notice by the
private haulers in that area that their franchising system
violates federal flow control requirements. Similarly,
Wilmington is making noises about undoing the system. Before New
Hanover County enacted its franchising system it had adopted a
"pure" flow control ordinance. That ordinance was challenged in
federal court resulting in a consent order the gist of which is
New Hanover County has repealed or suspended the enforcement of
its flow control ordinance. Solid waste and flow control are
ongoing issues in New Hanover County. It is my opinion that
although this method of franchising may be an attractive
response to solid waste system financial problems, it is too
risky presently to attempt.to implement particularly given the
amount of time Orange.County has to respond to its solid waste
financing needs.
There is another franchising model (and variations of this
model) which has passed flow control review by the United States
Circuit Court of Appeals for the Second Circuit. In both of the
cases considering variations of this model that I am aware of,
the United States Supreme Court, which created the flow control
doctrine, declined review.
This model.begins with the creation of franchise districts
and the awarding of an exclusive franchise to one solid waste
collector /hauler in each district. The franchise granted
requires the franchisee to operate a recycling program according
to the County's specifications and requires that all waste be
disposed of in the County's solid waste disposal facilities. Key
to this model is that the County pays the franchisee for
performing this service. The'County in turn charges the
residents of the County a fee or fees in the same categories as
discussed in the Fees for Service section of this letter. Using
this model results in no non -users of the County's solid waste
system. Therefore, everyone pays fees.
Similar to the Hillsborough franchise system, this is a
cutting edge approach and not without risk. I also am unable to
predict how much time it would take to implement in Orange
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February 7, 2003
3�
County. In that regard, like the district tax approach, this
franchising model would not work without agreement by the towns.
Very truly yours,
COLEMAN, GLEDHILL & HARGRAVE, P.C.
Geoffrey E. Gledhill
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