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HomeMy WebLinkAboutAgenda - 01-27-2003-2ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 27, 2003 Action Agenda Item No. SUBJECT: Introduction to Solid Waste Alternative Financing Issues DEPARTMENT: Solid Waste Management PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Draft PowerPoint Slides Notebook with Solid Waste Alternative Financing Background Materials provided to SWAB (under separate cover) INFORMATION CONTACT: Gayle Wilson 968-2885 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To provide an introduction/reorientation to the Board of Commissioners regarding the need for supplemental financing for the solid waste enterprise fund and the options being considered to provide additional funds in FY 2003-04 for existing and future solid waste programs and services. BACKGROUND: Environmental stewardship has been a high priority goal for the Board of Commissioners for many years. Among other notable examples has been the goal of reducing per capita disposal of solid waste by 61 percent by the year 2006. Orange County recently became the first of North Carolina's 100 counties to achieve the State's goal of 40 percent per capita solid waste disposal by 2006. The County has developed and implemented a wide range of effective recycling programs that led to this achievement. The FY 2002-03 budget for recycling is about $2.5 million, almost all of which is funded by tipping fees generated from disposal of mixed solid waste and construction and demolition waste. Reduced solid waste disposal has led inevitably to the need to identify and implement other sources of revenue to underwrite the County's solid waste enterprise fund, particularly for recycling programs. Substantive discussions of the need for solid waste alternative financing have taken place intermittently since 1998. The Landfill Owners Group (LOG) formed an Alternative Finance Committee in February 1998. This Committee performed extensive evaluations of financing options, but disbanded in early 1999 prior to reaching a conclusion or drafting a final report, as LOG members turned their collective attention to the priority task of resolving the future governance of solid waste management throughout Orange County. In 2002, the BOCC assigned to the Solid Waste Advisory Board (SWAB) the task of evaluating options for providing alternative financing to the enterprise fund. The SWAB is currently preparing a final report of their findings to be presented to the BOCC within the next few weeks. 2 FINANCIAL IMPACT: There is no financial impact associated with receiving this report. However, the financial impacts of identifying and implementing alternative financing are substantial. They will be addressed in a more detailed substantive presentation, tentatively slated for the Board's February 26, 2003 work session. Some type of supplemental funding will be essential in the FY 2003-04 budget if the County is to continue current and planned solid waste and recycling programs. RECOMMENDATION(S): The Manager recommends that the Board receive and review the background materials (also previously prepared and distributed to the SWAB) in the solid waste alternative financing notebook, receive the staff presentation, and identify additional information needs and any direction to staff regarding preparation for the February 26 work session on this matter. DRAFT Orange County Solid Waste Management Enterprise Fund Introduction to Alternative Financing Presentation to the Orange County Board of County Commissioners Solid Waste Management Department January 27, 2003 Alternative Financing History 4 DRAFT June 1997 Carrboro, Chapel Hill, Hillsborough and Orange County adopt Solid Waste Management Plan which includes: • 61% Waste reduction goal • Expansion of existing waste reduction / recycling programs • Initiation of new programs, especially in commercial sector • Significantly enhanced materials processing capabilities February 1998 Landfill Owners Group forms Alternative Finance Committee • Formed to recommend financing mechanisms to fund plan implementation • Diverse membership from across jurisdictions • Utilized a solid waste financial consultant • Final report submitted December 1998; Two follow-up reports to Chapel Hill Town Council in 1999 • Last met January 1999 • Focus of governing boards shifts early 1999 to reorganizing LOG and Interlocal Agreement negotiations - Alternative Finance discussions discontinued 2 - 5-DRAFT September 1999 Solid Waste Advisory Board Established • Two representatives appointed by each of the governing boards of the County, Carrboro, Chapel Hill and Hillsborough • Non-voting representative from UNC (University has not signed Interlocal Agreement) Spring 2002 Solid Waste Advisory Board undertakes as its priority discussions about alternative financing • Enlisted the assistance of the Institute of Government's Environmental Finance Center • Plans to present final report to the Board of Orange County Commissioners on February 26, 2003 tO DRAFT Why is Alternative Financing Necessary? Recycling and Waste Reduction • Growth of recycling programs / increasing expenditures over the last 12 years • Fiscal 2002-03 recycling budget of $2,468,031 • Minimal revenue from recycling programs • Tipping fee revenue reductions due to significant waste reduction success • C&D recycling facilities / equipment investment • Funding plan implementation to reach 61 % goal • High citizen expectations for service and a high community environmental ethic 4 1 DRAFT Disposal • Development of a new C&D Landfill • Upcoming landfill closure costs • 2009 MSW landfill closing meaning loss of surplus revenue stream • Need to develop transfer station / increased disposal cost for transferring waste • Leakage of waste to local out-of-county facilities • Potential export of county dollars to out-of-state facilities Other Considerations • Draw down of reserves and lost interest income on reserves • Funding of neighborhood public water project • Need for relocating Departmental administrative offices by 2006 • Re-establishment of equipment replacement reserve • Proceeds not yet distributed to enterprise fund from disposition of Greene Tract • Supplemental funding necessary regardless of degree to which Solid Waste Plan is implemented 5 8 DRAFT Options being considered by the Solid Waste Advisory Board Basic Financial Objectives • Fund current and projected shortfall between future expenditures and revenues • Improve public understanding of general costs of solid waste services • Assure supplemental funding be available for Fiscal Year 2003-04 budget 6 9 DRAFT Final options under consideration • Property taxes (including District Tax) • Availability fees • Combination of property tax and fees • Prince William County, VA Fee Model (includes prepaid MSW disposal fee) Preliminary Estimate of Scope of Hypothetical Tax Impact. • Hypothetical Increase in property tax - FY 2003- 04 - Estimated .0236 per $100 value • Hypothetical Increase in property tax - FY 2008- 09 - Estimated .03 64 per $100 value OR • Hypothetical tax increase - level over 5 years - Estimated .0302 per $100 value 7 1o DRAFT Preliminary Estimate of Scope of HY-Pothetical Availability Fees • Urban curbside service $64.50 • Multifamily unit customer $34.00 • Non-residential (commercial and tax exempt) $209.00 avg • Rural curbside $46.00 • Residential (no curbside) $8.00 Key Issues Identified by the Solid Waste Advisory Board • Education and Outreach • Waste Dynamics • Implementation and Administration • Finances 8 D.; R A F T Education and Outreach • General Public perception that recycling is free • Need for careful public education about selected alternative financing method • Need to consider the University interests and participation Waste Dynamics • Most communities long ago implemented supplemental solid waste financing • Consistency with Interlocal Agreement • How to address waste leaving the County and avoiding fees / regulatory compliance • Looking at Orange County Solid Waste Management as an integrated system • Failure to implement for FY 2003-04 could necessitate major program reductions 9 la r? 7's Implementation and Administration • Enterprise funds have been significantly reduced • Whether to establish restricted reserves for closure, mitigation, or equipment replacement • Include anticipated cost of implementation and administration • Certain appealing fee options can't be implemented in 2003 - 2004 • Whether to include other County government solid waste functions / operations in financing Finances • Preference for using annual tax bills as billing mechanism • Should non-taxable properties / entities pay? • Will owners or occupants assume primary responsibility for paying? • Level of debt financing /bonding to include • Need to provide for a level or gradually increasing fee rather than have extreme annual fluctuations 10