San Juan County Solid Waste: Funding

1. San Juan County Solid Waste:Funding

2. Solid Waste Funding • Current Solid Waste Revenue • Rate Structure used to collect revenue • Cost of Service • Current Funding Problems • Solutions

3. Current Revenue Sources • Primary Source of Revenue is Garbage Tipping Fee (86.6%) • Excise Tax is used to Support Capital Expenses (9.8%) • Grants (HHW, Litter, Composting)(1.7%) • Recycling Revenue (2%) • Miscellaneous Fee Revenue (HHW, unsecured loads)

4. Service Rate By Customer Class April 2008 • Self Haul • $7.50 per can • $278 per ton • 10% to Capital Fund (Disposal District) • 3.4% to State Refuse Tax • Town of Friday Harbor • $187 per ton (largest SJI customer) • None to Capital (except portion of fund shift) • San Juan Sanitation • $187 per ton (effective rate) • $157.40 Tipping fee • + 10% of Gross Revenue to Capital Fund

5. Service Rate continued • Recycling Customers • Drop off at transfer stations NO FEE • Post Office junk mail NO FEE • Other Customers • HHW Collection • Annual collection events MINIMUM FEE • Facilities for Used Oil, Anti-freeze, vehicle batteries NO FEE • Litter Control • Roadside, beaches, volunteer coordination NO FEE • Other Subsidized Activities • Composting workshops, e-waste events, weed control, lions club reuse NO FEE

6. Rate History

8. Factors that Control Rates • Cost of Infrastructure • Land, Buildings, Equipment • Debt on Capital • Maintenance of Infrastructure • Cost of Operations • Collection • Processing • Disposal • Overhead

9. Factors that Control Costs • Policy • Level of Service • Efficiency of Operation • Geography • Variable Costs • Labor • Ferry Service • Disposal, Transportation and Processing Contracts

10. Cost of Service

11. Cost Allocation • How to calculate the appropriate share of costs • Based on Tonnage? • Based on Time? • Based on number of Trips?

12. Rate Development Concepts • Revenue Requirements – compares revenue to expenses to determine overall rate. • Cost of Service - determines revenue requirements for customer classes based on level of service. • Rate Structure – method used to allocate the cost of service to various customer classes, based on the governing bodies policies, that balances revenue and expenses.

13. Revenue Problems • No Revenue for new capital facilities • No Revenue for equipment replacement • No Operating Reserve • Increases in recycling can drive up cost without providing increased revenue.

14. Recommended Full Cost Accounting Changes From 2005 Analysis • Fund Capital and depreciation costs at approximately $167,000 per year (further definition of need) • Establish a Reserve equal to a minimum of two months operations plus one year of capital i.e. $620,000

15. Potential Rate Structure Changes(2005 recommendations) • Increased Minimum Fee For Self Haul ($9.58 or $11.67) • Initiate an Administration Fee ($7.04) • Charge an excise tax per developed parcel to support Recycling, Reserves and Capital • Charge A Tipping Fee For Recycling

16. Rate Structure Issues • Recycling Subsidy • Garbage classes pay for most recycling costs • Self Haul Services • Transfer cost are higher for self haul due to low volume per trip • Discount Rates for Large Customers • Which Class Will pay for Capital and Reserve

17. Recycling Subsidy • Reduces impediments • Encourages separation from garbage • People that choose not to recycle still pay for the public benefit of the system.

18. Self Haul Services • Issues • Small volume of waste • Relatively high service time on site • Less manageable regarding timing • Cost of Service Analysis (2005) • $6.16 per can based on weight • $9.58 per can based on service time @ facility • $11.67 per can if administration is based on number of trips to the transfer station

19. Discounted Rates For Large Volume Customers • Town and Franchise pay less • Do not pay for the recycling portion of the program • Cost less to provide transfer service due to large loads • Town does not contribute directly to the capital fund (operations does support capital)

20. Options for Rate Structure Change • Tipping Fees • Users Pay by Weight or Volume • Administrative Fee • Taxes • General Property Tax • New Parcel Tax • Increase Existing Excise Tax • Could apply to all residents of Disposal District or only to users of the system

21. Base Rate Concept • Many public utilities have a two tiered rate structure: • Base Rate – All customers pay. Covers fixed costs and infrastructure. May cover cost of recycling system and other “free” services. • Volume Rate – Customers pay according to how much they use the system. Covers operating costs.

22. Applying a Base Rate • Apply to all potential customers • Parcel Fee • Apply only to current users • Excise Tax • Administration fee • Apply only for specific services • Fee for use of recycling services • Apply to all services • Annual fee to use facilities

23. Costs included in a base rate? • Debt Service • Future Capital Facilities and Equipment • Creating a Reserve Fund • Landfill Monitoring • Recycling Program • Subsidized Services

24. Per Parcel Example

25. Administrative Fee Example

26. Questions to Answer • Method for funding Capital and Reserve? • Through Tipping Fee or Base Rate? • If Base Rate • Excise, Parcel, Administrative Fee etc. • Which Services Should a Base Rate Cover? • Capital, Reserve, Recycling etc.

27. Cost of Services

28. Rate Structure • What services require a fee • Garbage Tipping (95% of Revenue) • Appliances, Household Hazardous Waste • Who pays the tipping fee (Customer Class) • Self haul • Town (partial rate) • Franchise hauler (partial rate + percent of gross income) • What is “Free” • Recycling • Weed disposal • Litter Disposal