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Broward Resource Recovery
Board Interlocal AgreementNorth Lauderdale
City Commission Workshop December 14, 2010
Sandy Gutner, PE
Solid waste management consulting for almost 25
years.
Consulting across the US in all aspects of solid waste
management
Project Manager for the RRB and Broward County from
2003 to 2008.
Contract administration and negotiation as Owner’s
Representative for 15 large mass burn WTEs in the US
(combined capacity > 21,750 tons per day).
DISCUSSION TOPICS
Components of District disposal costs
Uncertainties associated with Proposed District
Possible alternatives
Wheelabrator Service Fee
District Program Expenses Liabilities
District Tipping Fee
ILA Cities
ILA Cities
ILA Cities
CURRENT DISTRICT TIPPING
FEE
WHEELABRATOR SERVICE FEE
Fee Component
Estimated
Value Description
Base Tipping Fee $47.75 Defined as $47.75
CPI One-Time Adjustment $1.91 Adj. from 2009 - 2011
Monthly Pass Through Costs $3.53 Excludes Ash Monofill,
leachate disposal
Change-in-Law Costs ?
Other Costs ? Late payments, etc.
Credits ? Miscellaneous adjustments
Total $53.19
OVERVIEW OF KEY RISKS The proposed ILA documents contain many
uncertainties.
Three of the most significant uncertainties include:
District Program expenses and liabilities
Service Fee Pass Through Costs
Change-in-Law risks
The potential exists for disproportionate costs to Contract Communities.
Risk allocation include many that are more typical of public ownership.
Wheelabrator Service Fee
District Program
Expenses/ Liabilities
Reserve Allocation
District Tipping Fee
CURRENT DISTRICT TIPPING
FEE
$77.02$30.17$99.20 $7.99
Current District Programs
• Contract administration
• Recycled material processing
• Closure and post-closure
reserves
• Environmental compliance
• Public information and
education
• Household Hazardous Waste
• E-waste recycling
• Scrap tire removal
• Unincorporated collection
services
• Research and development
Proposed Programs •Code enforcement
•Regional yard waste
•Construction and
demolition debris
•Emergency debris
processing and disposal
Approximate Cost $30/ton Approximate Cost $????
Total Program Costs
?????
PROGRAM COSTS
District assets and liabilities not determined.
New programs envisioned but costs not determined.
Code enforcement costs not estimated.
No business plan. Plan of operations to be modified after ILA.
As an Independent District, all costs borne by Contract
Communities.
All costs recovered through tipping fees and charges.
DISTRICT PROGRAM
UNCERTAINTIES
Net Tipping FeeMonthly Pass
Through Costs
Miscellaneous Revenues/Credits
Adjustments:
• Inflation
• Change-in-Law
• Capital
• O&M
• Lost revenue
• Pass through
costs
Service
Fee
Pass Throughs as
incurred:
• Ash monofill
expansion
• Leachate disposal
• Property tax
• Non ad valorem
WHEELABRATOR
SERVICE FEE
If a capital modification is needed, the District covers about 2/3 of Wheelabrator’s cost.
Capital may be financed by Wheelabrator with a 10% return on equity.
If Wheelabrator loses revenue due to C-I-L, District must make Wheelabrator whole. (if air emission changes result in lower energy recovery).
If operating and maintenance costs increase due to C-I-L improvements, the District must make Wheelabrator whole.
If ash can no longer to be used for daily cover at WM landfill, District must make Wheelabrator whole.
CHANGE-IN-LAW RISKS
Can be adjusted maximum of 10% in any year, or up to 40% combining all prior adjustments over the Service Fee on the Contract Date.
But….
Maximum adjustments exclude Pass Through Costs and inflation adjustments.
Service Fee was adjusted mid-year (May 2010) by 11.7% due to Energy Adjustment.
Another similar adjustment possible before Commencement Date.
MAXIMIMUM SERVICE FEE
ADJUSTMENT(Change-in-Law or Force Majeure)
140% over
Service Fee on
Contract Date
Total Increase
over
Proposed Fee
Proposed Service
Fee
Commencement
Date $53.19
FY 2010 SF on
Contract Date $77.02 $107.83 203%
MAXIMUM INCREASE(Excludes inflation, Pass Through Costs
Wheelabrator Service Fee
District Program
Expenses/ Liabilities
Reserve Allocation
District Tipping Fee
ILA Cities
ILA Cities
ILA Cities
$53.19-$110.02$12 - $30.17$65.19-$140.19
TIPPING FEE RANGE-PROPOSED DISTRICT
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
1 2 3 4 5 6 7 8 9 10
Cumulative Savings (Alternative vs.District @$12 Program)"""Cumulative Savings ($17.51 Program Costs)"""Haul and Disposal ($58/ton)
Assumes
$1/ton
escalated for
HHW, e-
waste, etc.
Cumulative Savings of
$58/ton vs. $77.70
Cumulative Savings of
$58/ton vs. $65.19
PROPOSED DISTRICT vs.
ALTERNATIVE *
* Based on Miramar tonnage
Wheelabrator North
Wheelabrator South
Central Disposal Sanitary Landfill
Reuters
New facilities to be developed
WHAT DISPOSAL OPTIONS
ARE THERE?
ALTERNATIVES
Wait for situation to evolve.
As ILA expiration approaches:
Negotiate with Wheelabrator directly
Issue RFP for disposal
Join with other city(ies)
Pros Cons
Anticipated lower costs Lower costs not guaranteed
Control over contracting and risks Contract separately for management
of other wastes (HHW, e-waste)
Commitment can be for less than 10
years
NEGOTIATE WITH
WHEELBRATORRisks Balancing Factors
Costs not guaranteed Market forces in City’s favor
May lose signing bonus $1/ton savings offsets loss
Contract terms Both parties have control in
negotiations
Alternate disposal if negotiations fail No worse off than before, but possibly
better
ISSUE RFP
Risks Balancing Factors
Development of new facilities may
take too long.
Financially sound, reputable
companies may provide guarantee to
perform while facilities being
developed.
May lose signing bonus $1/ton savings offsets loss
Contract terms Both parties have control in
negotiations
Alternate disposal if negotiations fail No worse off than before, but possibly
better
In its current form, the City would be exposed to many
undefined risks and liabilities.
The City will have limited control over the risks and
liabilities incurred by the District.
Deadline is creating artificial urgency.
The “signing bonus”, offset by the District’s one-time
payment is a fraction of known and unknown risks.
RECAP