Transcript Commercial Disposal Charges

and
their Impact on
Customers, Waste Haulers and the SWA
Overview of Budget Development
Overview of Assessments and Tipping Fees
Impact of Changes in Tipping Fee Rates on
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SWA
Commercial Customers
Haulers
Impact of Waste Diversion
Alternatives for Securing Waste Flow
Economic-Tipping Fees
Statutory –Enhanced Scrutiny and Enforcement
Contractual-Franchise Contracts
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The SWA is a dependent special taxing district that
was created by an act of the State Legislature in
1974.
Since 1991, the SWA has been classified as
“dependent” because its governing board, although a
separate and distinct body, is comprised of all the
members of the Palm Beach County Commission.
While dependent by definition the SWA is entirely
independent financially. The SWA receives no
financial support from any other source.
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The SWA has 2 primary functions:
◦ Disposal countywide; and
◦ Collection in the unincorporated areas.
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Disposal was the SWA’s original function.
In 1988, the SWA and PBC entered into an interlocal
agreement transferring the County’s responsibility for
the collection of solid waste in the unincorporated
areas to the SWA.
As two distinct enterprises, their sources and uses of
funds cannot be commingled.
This presentation will focus on the Disposal function.
For more information regarding the Authority’s
responsibilities for waste collection please
see our web site @:
www.swa.org/site/collection_service/collection_service.htm
If the Board wishes we can arrange for a subsequent workshop
to discuss the Collection function.
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Annually, the SWA prepares a budget to generate all
the funds needed to carry out its responsibilities.
Funds are needed each year to pay for Operating
Expenses, Contractual Obligations, Debt Service and
Capital Expenses.
For the coming year that amount is projected at
$222,948,070.
2012/2013 Approved Disposal Budget
Expenditures
Operating
Fixed Cost and Contracts:
Contract Facilities
Debt Service
Capital and R&R
Total Fixed Cost
Total Expenditure Budget
$ 65,212,880
52,584,760
91,496,100
13,654,330
157,735,190
$ 222,948,070
Determining Assessment and Commercial Tip Fee Rates
Total Budgeted Expenditures
◦ Less Revenues other than Assessments & Commercial Tip
Fees:
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Electric Revenue
Recovered Material Revenue
Non Assessable Tip Fees
Other Non Assessable Revenue
Carry-forward of Reserves
Equals
Assessments and Commercial Tip Fee Revenue
2012/2013 Approved Budget
Other Tip Fee Revenues
Building Debris
C/D Recycling Residue
Tires
Special Waste
Total Other Tip Fee Revenue
Electric Sales
Recovered Material Sales
Pelletizer Contract
Compost Contract
Sludge Contract
Other Current Revenues
Total Non-Fee Revenues
Reserve Carry-Forward
Total Non-Fee Sources
$
1,800,000
1,008,000
234,000
195,000
$
3,237,000
17,538,391
8,278,728
3,301,000
831,335
807,030
1,062,844
$ 35,056,328
7,999,323
$ 43,055,651
2012/2013 Approved Budget
Total Budgeted Expenditures
$
222,948,070
Non Fee Sources
$
43,055,651
Assessments and Commercial Tipping Fees
$
179,892,419
Assessments, approximately 75% of total revenue, are collected
through the annual Tax Bill and levied against all improved property
in the county.
Commercial Tipping Fees are collected by the hauler from the
commercial customer and paid to the SWA at the disposal facility.
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The balance of revenues must be generated through
the Residential and Commercial Assessment and
Tipping Fees on Commercial Garbage.
◦ The Residential and Commercial Assessments are non-ad valorem
assessments levied against all improved property in the county and
collected through the annual Tax Bill.
◦ The Tipping Fees cover the portion of the costs attributed to
Commercial property that are not raised through the Assessment,
but which are based on actual tons delivered to SWA facilities.
Total Budget
Less: Other
Revenues
48% Residential Tons
Residential
Single Family
Assessment
52% Commercial Tons
Assessable
Commercial
Tipping Fees
Assessments
Multi-Family
Assessment
Low Generator
Mobile Home
Assessment
Medium
Generator
High Generator
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Special Assessments are not a tax; they are user
fees determined by calculating the benefit of the
service provided.
The SWA has conducted several waste generation
studies to establish classes of users and to
determine the benefit (levels of service) each
receives.
The Assessments were originally adopted in 1990.
◦ Residential properties assessed for 100% of their cost.
◦ Commercial properties partially assessed and pay the
balance in the form of Tipping Fees.
Why the “split assessment” for commercial
properties?
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Waste generation for similar uses (for example Retail
Stores) can vary significantly;
Tipping fees allow businesses who generate less to pay
less;
Tipping fees provide an incentive for businesses to recycle
by avoiding disposal fees (the SWA accepts recyclables at
no charge).
The higher the Tipping Fee, the greater the incentive.
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Tipping fees are charges that are based on the actual
amount of waste disposed of or “tipped”.
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Waste disposal systems whose costs are largely
variable can successfully rely on Tipping Fees because
their costs fluctuate in relation to the amount of waste
received.
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More advanced systems, like the Authority’s fully
integrated system, have considerable fixed cost and
would never get financing based solely on Tipping
Fees.
$35 Tipping Fee
$42 Tipping Fee
Residential Assessment
$ 95,113,885
$ 95,113,885
Commercial Assessment
$ 66,124, 759
$ 62,394,004
Commercial Tip Fees
$ 18,653,775
$ 22,384,530
Total Commercial User Fees
$ 84,778,534
$ 84,778,534
Total Resi/Comm’l User Fees
$ 179,892,419
$ 179,892,419
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Total revenues from the commercial sector on a budgetary
basis are unchanged.
The required commercial assessment revenue is calculated
by subtracting projected commercial tipping fees from the
total required commercial revenue.
Since the commercial customer pays both an assessment
and tip fee, which combined generate the revenue needed
from those customers, if one increases the other must
decrease.
The relationship of these revenues to each other has no
impact on SWA’s overall budget or the cost of disposal to the
total commercial customer base.
That is true assuming all the waste is delivered to an SWA
facility.
Commercial Customer
Average medium category generator
Tipping Fee
Rate/ton
Tons disposed
Fee paid to hauler
Assessment
Med. Category Rate
Sq. Footage
Annual Assessment
Total Customer Fees
$
$
42 $
2.64
111 $
35 $
2.64
93 $
25
2.64
66
$0.213
1,500
$ 320
$0.226
1,500
$ 339
$0.244
1,500
$ 365
$
$
$
431
431
431
Assuming no change in waste generation, the total disposal charges
(assessment plus tipping fees) are unchanged.
The higher the tip fee rate the greater the financial incentive for a
customer to recycle.
$35 Tipping Fee
Yards Collected per Month
$42 Tipping Fee
100
100
$2.95
$2.95
Collection Revenue
$295.00
$295.00
Tipping Fee per Yard
$2.345
$2.814
Disposal Revenue
$234.50
$281.40
Total Hauler Revenue
$529.50
$576.40
Tipping Fees at SWA
$234.50
$281.40
Net Hauler Revenue
$295.00
$295.00
Collection Rate per Yard
Tipping Fee is a Pass-Through to the SWA
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The higher the Tip Fee Rate the greater the incentive to
divert waste to competing facilities by waste haulers.
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The SWA has the power to forbid competing disposal
facilities in the county but limited power beyond its
borders. (T.I. 718)
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There are privately owned disposal facilities within
reasonable driving distance both to our North and South.
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The SWA has the power to forbid the delivery of Palm
Beach County waste to any facility not designated by the
SWA through legal action.
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Waste haulers can collect the approved tip fee rate
from a Palm Beach County customer and illegally
deliver it to a competing site outside the county and
pay a lower fee.
The customer wouldn’t see a difference, but the
hauler would profit and the Authority would
experience a revenue shortfall.
If the loss is significant, the Authority would have to
increase rates to replenish reserves.
Commercial Customer
Average medium category generator
Tipping Fee
Rate/ton
Tons disposed
Fee paid to hauler
Assessment
Med. Category Rate
Sq. Footage
Annual Assessment
Total Customer Fees
$
$
42 $
2.64
111 $
35 $
2.64
93 $
25
2.64
66
$0.213
1,500
$ 320
$0.226
1,500
$ 339
$0.244
1,500
$ 365
$
$
$
431
431
431
Waste Hauler
Tipping Fees Paid at Non SWA Site
Rate/ton
Tons disposed
Fee paid to dump
Windfall
SWA
Revenue Received by SWA
$
$
$
25 $
2.64
66 $
45 $
25 $
2.64
66 $
26 $
$
-
-
$
$
25
2.64
66
-
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The Waste Hauler potentially profits due to the difference
in competing rates, less any additional transportation
costs.
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The SWA loses revenue.
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The customer pays the same, this year.
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If sufficient diversion takes place the SWA will be
compelled to lower its expectation of revenues from tip
fees and increase the assessments accordingly and
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The SWA may be required to replenish reserves, if drawn
down, and increase the assessments, resulting in
significant rate increases.
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Reduce the Tip Fee to lower the potential to profit
from hauling the waste out of the county;
and/or
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Aggressively enforce Flow Control through increased
scrutiny, enforcement, fines and litigation.
Positives:
 The simplest solution.
 Avoids the cost of enhanced enforcement and litigation.
 Improves security of revenue collection which is seen as a
positive by bond rating agencies.
Negatives:
 It lowers the incentive to recycle.
 The rate would likely have to be set lower than currently
recommended to eliminate the problem.
From the Special Act (Ch. 2001-331):
As necessary to carry out its resource recovery and/or disposal plans or
programs or when necessary to carry out any other provision of this act,
require that all wastes collected by public or private agencies from any
municipality or unincorporated area of the county be transported to
Authority-designated processing and disposal facilities in a manner and
form as may be mandated in accordance with this act, particularly
paragraphs (2) and (8) of this section. This act shall not be construed to
preclude public or private agencies from operating permitted transfer
stations, provided that solid waste transferred or transported there from
shall be delivered to Authority-designated processing and disposal facilities
as set forth in this section.
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Protect the public health, safety and welfare.
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Ensure that waste is managed in accordance with the SWA’s
plan.
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Assure that sufficient funds are available to support the SWA’s
system.
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Enable the SWA to obtain necessary Bond financing at the
lowest rates.
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Comply with the Indenture of Trust;
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Ensure that the rate payers receive the highest value from their
investment in the system.
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Statutory Flow Control is valid and enforceable.
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Additional Flow Control Measures
◦ Contractual
 Franchise Collection Agreements in the Unincorporated Area.
 Interlocal Agreements with the cities.
◦ Economic
 100% Non-ad Valorem Residential Assessment
 75% Non-ad Valorem Commercial Assessment
 Competitive Tipping Fees
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Increased scrutiny to ensure that all solid waste is
delivered to an SWA facility.
◦ Inspection of Containers
◦ Inspection of Facilities
◦ Inspection of Records
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Imposing fines and penalties for violations.
◦ Violations of the Act are 2nd Degree Misdemeanors
◦ No specific civil penalties currently exist
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Providing for enforcement
◦ Violations of the Act related to sanitary disposal are enforced
through the Environmental Control Hearing Board
◦ SWA needs to determine the proper enforcement mechanism.
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Adopt Rule 5 governing the management of solid
waste
◦ SWA Rules carry the force of law.
◦ Requiring all solid waste to be delivered to SWA designated
facilities.
◦ Requiring all commercial solid waste to be disposed in a container
properly labeled Solid Waste only.
◦ Requiring all commercial solid waste containers to carry a label
provided by the SWA.
◦ Providing for inspections.
◦ Establishing fines and penalties for violations.
◦ Establishing a venue for enforcement action.
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Adopt Rule 6 governing the management of
recovered materials
◦ Requiring all recovered materials haulers and dealers to be
licensed.
◦ Requiring all recovered materials haulers and dealers to submit
reports in accordance with the Laws of Florida.
◦ Requiring the disposal of solid waste in a solid waste materials
container.
◦ Prohibiting recovered materials haulers from hauling recovered
materials commingled with solid waste in excess of the statutory
limits.
◦ Providing for inspections.
◦ Establishing fines and penalties for violations.
◦ Establishing a venue for enforcement action.
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Ability of SWA to enforce county-wide.
Ability to impose criminal and civil penalties.
Limitations if any on the SWA’s ability to perform
inspections.
Who is authorized to issue citations?
What is law enforcement’s involvement?
What is the appropriate venue for adjudication and
enforcement?
Positives:
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Allows tipping fees to remain high to encourage recycling and to allow
individual businesses to have more control over their cost.
Negatives:
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Will likely result in increased costs.
Places the SWA in an adversarial role.
Could result in legal challenges.
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Lowering the Tipping Fees reduces the incentive to recycle
and results in higher commercial assessments, but
equivalent revenues.
Lowering the Tipping Fees results in a more secure
revenue stream.
Lowering the Tipping Fees reduces the incentive to divert
waste.
Enhanced scrutiny and enforcement, if successful, will
allow for higher Tipping Fees and greater recycling
incentives while discouraging waste diversion through
penalties and sanctions.
A combination of these measures may be required.
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Lower the current Tipping Fee Rate to $38, thereby
raising the assessments 2% over the current year.
Pursue the development of rules to provide enhanced
scrutiny, enforcement, penalties and sanctions.
Upon successful implementation of the rules, Tipping
Fees may be increased.