1. San Juan County Solid Waste: Funding

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

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

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

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

6. Rate History

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

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

10. Cost of Service

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

12. Rate Development Concepts Revenue Requirements – compares revenue to expenses to determine overall rate. Revenue Requirements – compares revenue to expenses to determine overall rate. Cost of Service - determines revenue requirements for customer classes based on level of service. 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. 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 new capital facilities No Revenue for equipment replacement No Revenue for equipment replacement No Operating Reserve No Operating Reserve Increases in recycling can drive up cost without providing increased revenue. 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) 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 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) Increased Minimum Fee For Self Haul ($9.58 or $11.67) Initiate an Administration Fee ($7.04) Initiate an Administration Fee ($7.04) Charge an excise tax per developed parcel to support Recycling, Reserves and Capital Charge an excise tax per developed parcel to support Recycling, Reserves and Capital Charge A Tipping Fee For Recycling Charge A Tipping Fee For Recycling

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

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

18. Self Haul Services Issues Issues Small volume of waste Small volume of waste Relatively high service time on site Relatively high service time on site Less manageable regarding timing Less manageable regarding timing Cost of Service Analysis (2005) Cost of Service Analysis (2005) $6.16 per can based on weight $6.16 per can based on weight $9.58 per can based on service time @ facility $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 $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 Town and Franchise pay less Do not pay for the recycling portion of the program Do not pay for the recycling portion of the program Cost less to provide transfer service due to large loads Cost less to provide transfer service due to large loads Town does not contribute directly to the capital fund (operations does support capital) Town does not contribute directly to the capital fund (operations does support capital)

20. Options for Rate Structure Change Tipping Fees Tipping Fees Users Pay by Weight or Volume Users Pay by Weight or Volume Administrative Fee Administrative Fee Taxes Taxes General Property Tax General Property Tax New Parcel Tax New Parcel Tax Increase Existing Excise Tax Increase Existing Excise Tax Could apply to all residents of Disposal District or only to users of the system 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: 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. 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. 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 Apply to all potential customers Parcel Fee Parcel Fee Apply only to current users Apply only to current users Excise Tax Excise Tax Administration fee Administration fee Apply only for specific services Apply only for specific services Fee for use of recycling services Fee for use of recycling services Apply to all services Apply to all services Annual fee to use facilities Annual fee to use facilities

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

24. Per Parcel Example

25. Administrative Fee Example

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

27. Cost of Services

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