Presentation on theme: "And their Impact on Customers, Waste Haulers and the SWA."— Presentation transcript:
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 ◦ SWA ◦ Commercial Customers ◦ Haulers Impact of Waste Diversion Alternatives for Securing Waste Flow ◦ Economic-Tipping Fees ◦ Statutory –Enhanced Scrutiny and Enforcement ◦ Contractual-Franchise Contracts
The SWA is a dependent special taxing district that was created by an act of the State Legislature in 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.
The SWA has 2 primary functions: ◦ Disposal countywide; and ◦ Collection in the unincorporated areas. 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 If the Board wishes we can arrange for a subsequent workshop to discuss the Collection function.
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.
Determining Assessment and Commercial Tip Fee Rates Total Budgeted Expenditures ◦ Less Revenues other than Assessments & Commercial Tip Fees: Electric Revenue Recovered Material Revenue Non Assessable Tip Fees Other Non Assessable Revenue Carry-forward of Reserves Equals Assessments and Commercial Tip Fee Revenue
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.
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 Assessable ResidentialCommercial Single Family Assessment Multi-Family Assessment Mobile Home Assessment Tipping FeesAssessments Low Generator Medium Generator High Generator 52% Commercial Tons 48% Residential Tons
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 ◦ 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? 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.
Tipping fees are charges that are based on the actual amount of waste disposed of or “tipped”. 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. 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 Commercial Assessment$ 66,124, 759$ 62,394,004 Commercial Tip Fees$ 18,653,775$ 22,384,530 Total Commercial User Fees$ 84,778,534 Total Resi/Comm’l User Fees$ 179,892,419
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.
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$42 Tipping Fee Yards Collected per Month100 Collection Rate per Yard$2.95 Collection Revenue$ Tipping Fee per Yard$2.345$2.814 Disposal Revenue$234.50$ Total Hauler Revenue$529.50$ Tipping Fees at SWA$234.50$ Net Hauler Revenue$ Tipping Fee is a Pass-Through to the SWA
The higher the Tip Fee Rate the greater the incentive to divert waste to competing facilities by waste haulers. The SWA has the power to forbid competing disposal facilities in the county but limited power beyond its borders. (T.I. 718) There are privately owned disposal facilities within reasonable driving distance both to our North and South. 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.
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.
The Waste Hauler potentially profits due to the difference in competing rates, less any additional transportation costs. The SWA loses revenue. The customer pays the same, this year. 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 The SWA may be required to replenish reserves, if drawn down, and increase the assessments, resulting in significant rate increases.
Reduce the Tip Fee to lower the potential to profit from hauling the waste out of the county; and/or 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 ): 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.
Protect the public health, safety and welfare. Ensure that waste is managed in accordance with the SWA’s plan. Assure that sufficient funds are available to support the SWA’s system. Enable the SWA to obtain necessary Bond financing at the lowest rates. Comply with the Indenture of Trust; Ensure that the rate payers receive the highest value from their investment in the system.
Statutory Flow Control is valid and enforceable. 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
Increased scrutiny to ensure that all solid waste is delivered to an SWA facility. ◦ Inspection of Containers ◦ Inspection of Facilities ◦ Inspection of Records Imposing fines and penalties for violations. ◦ Violations of the Act are 2 nd Degree Misdemeanors ◦ No specific civil penalties currently exist 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.
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.
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.
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: Allows tipping fees to remain high to encourage recycling and to allow individual businesses to have more control over their cost. Negatives: Will likely result in increased costs. Places the SWA in an adversarial role. Could result in legal challenges.
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.
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.