San Juan County Solid Waste Program

Rate Workshop 12/10/02

Goals Review the history of solid waste finances Understand the factors that control rates Discuss rate related policies Discuss rate structure alternatives Develop an action plan

Recent History of SW Finances10/ 9/ 02

Operating System Economic Performance Analysis

YTD

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002

Tons MSW 8678 8708 9107 10277 9167

Tons Recycle 2066 2291 2494 2542 1978

Total Revenue (with grants, excise tax and capital) $1,389,441 $1,479,516 $1,774,211 $1,983,441 $1,683,902

$ Increase $ 90,075 $ 294,695 $ 209,230

% Increase 6.48% 19.92% 11.79%

Total Expenses $1,392,392 $1,521,927 $1,868,475 $1,888,477 $1,330,985

Total Net Gain (Loss) $ (2,951) $ (42,411) $ (94,264) $ 94,964 $ 352,917

Rate Derived Revenue (no grants, ET or capital) $1,187,585 $1,312,064 $1,397,899 $1,651,801 $1,447,695

$ Increase $ 124,479 $ 85,835 $ 253,902

% Increase 10.48% 6.54% 18.16%

Operating Expenses

MSW Operations $841,862 $881,287 $1,075,936 $1,038,480 $900,360

Recycling Operations $178,806 $233,470 $244,398 $337,125 $178,661

HHW & Misc $76,127 $84,979 $100,638 $57,055 $28,688

Administration & Taxes $137,338 $158,786 $187,328 $199,351 $143,693

$1,234,133 $1,358,522 $1,608,300 $1,632,011 $1,251,402

$ Increase $124,389 $249,778 $23,711

% Increase 10.08% 18.39% 1.47%

Fee Net Gain (Loss) ($46,548) ($46,458) ($210,401) $19,790 $196,293

MSW Cost per Ton $ 97.01 $ 101.20 $ 118.14 $ 101.05 $ 98.22

Recycle Cost per Ton $ 86.55 $ 101.91 $ 97.99 $ 132.62 $ 90.32

Admin/ Taxes Cost per Ton $ 12.78 $ 14.44 $ 16.15 $ 15.55 $ 12.89

Combined Cost per Ton $ 114.87 $ 123.51 $ 138.63 $ 127.31 $ 112.28

Net Revenue per Ton $ (4.33) $ (4.22) $ (18.14) $ 1.54 $ 17.61

Page 17

Factors that Control Rates Cost of Infrastructure

Land, Buildings, Equipment Debt on Capital Maintenance of Infrastructure

Cost of Operations Collection Processing Disposal Overhead

Factors that Control Costs

Policy Level of Service Efficiency of Operation Geography Variable Costs

Labor Ferry Service Disposal, Transportation and Processing

Contracts

Policy Drives Costs The role of SW policy makers (BOCC) is to

evaluate the services that citizens want and structure the system in a way that provides those services in the most efficient way possible.

Don’t Operate the utility at a loss

SW System Financial Parameters:

System will continue to provide the same or better level of service

The fund will operate in the black The program will be financially independent

Why raise rates now?

SW Fund Cash BalanceSAN J UAN COUNTY SOLID WASTE FUND

($400,000)

($300,000)

($200,000)

($100,000)

$0

$100,000

$200,000

$300,0001/1/1996

4/1/1996

7/1/1996

10/1/1996

1/1/1997

4/1/1997

7/1/1997

10/1/1997

1/1/1998

4/1/1998

7/1/1998

10/1/1998

1/1/1999

4/1/1999

7/1/1999

10/1/1999

1/1/2000

4/1/2000

7/1/2000

10/1/2000

1/1/2001

4/1/2001

7/1/2001

10/1/2001

1/1/2002

4/1/2002

7/1/2002

10/1/2002

DATE

DO

LLA

RS

The SW Fund has always struggled financially because: 1)      The high capital costs associated with

duplication of infrastructure in order to serve citizens throughout a geographically diverse island community.

2)      A complicated and expensive transportation network involving trucks, trains and ferries and distances to markets and disposal facilities.

3)      Small volumes of SW and recycled materials (RM).

See Page 11

SAN J UAN COUNTY SOLID WASTE STREAM

ENITRE WASTE STREAMMSW=Municipal Solid Waste

RM=Recyclable MaterialsOW=Organic Wastes

RI=Reusable or Repairable ItemsMRW=Moderate Risk Wastes

C&D=Construction & Demolition

0 Source Reduction 0Customers create less waste, buy

less, use less, use longer, buy reused, buy recycled, composting

Waste Generated

$$$ MRW $

$$$ Disposal $$$MSW, MRW, C&D

Trash to Treasure

$ Reuse 0RI,C&D

Exchange

Take It or Leave It

$$ Recycle 0RM,OW,RI,C&D

Recycling CentersSan J uan

OrcasLopez

Drop BoxesShaw

BlakelyFH Post Office

Eastsound Post Office

$$$ MSW $$$

$$$ C&D $$

0= No Cost$= Low Cost

$$= Moderate Cost$$$= High Cost

0= No Revenue$= Low Revenue

$$= Moderate Revenue$$$= High Revenue

Solid Waste Stream

Current Rates

RATES (no excise tax) 1998 1999 2000 2001 2002 Increase Town of Friday Harbor $126.00 $133.56 $133.56 $140.24 $140.24

% Increase 6.00% 0.00% 5.00% 1.69%

San J uan Sanitation $110.00 $116.60 $116.60 $122.43 $122.43

% Increase 6.00% 0.00% 5.00% 1.69%

General Self Haul $166.86 $176.87 $176.87 $202.73 $202.73

% Increase 6.00% 0.00% 14.62% 3.54%

Actual Effective Rate per Ton of MSW $136.85 $150.67 $153.50 $160.73 $157.92

% Increase 10.10% 1.87% 4.71% -1.74% 3.71% Actual Effective Rate per Ton

Combined $110.53 $119.29 $120.50 $128.86 $129.90

% Increase 7.92% 1.01% 6.94% 0.81% 3.55%

Through September 2002

Page 14

Rate Analysis ProcessIDENTIFY CAPITAL NEEDS $Capital Improvement Plan (CIP)

Debt on Capital

Cash on Hand

New Financing Sources

IDENTIFY OPERATING COSTS $Current Year Budget

RATE REVENUE REQUIREMENT

The total amount of money needed in a given fiscal year

Non-Rate Revenue

Allocate Revenue by Function

San Juan OrcasOther Lopez Administration

Garbage

Recycling

MRW

Reuse

Garbage

Recycling

MRW

Reuse

Garbage

Recycling

MRW

Reuse

Allocate Revenue by Customer Class

Franchise HaulerSelf-Haul Municipal Hauler Other

SET RATES

FY 2003 REVENUE REQUIREMENTS Operations:

Adopted operating budget FY 200312/7/2002 SOLID WASTE & RECYCLING BUDGET FY 2003

BARS REVENUE BUDGET 2003 BUDGET 2002 % CHANGE ACTUAL 2002TIPPING FEES

343.73.01.0000 Cash/Charge San Juan 437,750.00$ 425,000.00 3.00%343.73.02.0000 Cash/Charge Orcas 360,500.00$ 350,000.00 3.00%343.73.03.0000 Cash/Charge Lopez 125,000.00$ 125,000.00 0.00%343.72.00.0000 Franchise Hauler 540,750.00$ 525,000.00 3.00%343.73.04.0000 Town of Friday Harbor 275,000.00$ 270,000.00 1.85%

Total Tipping Fees 1,739,000.00$ 1,695,000.00$ 2.60%

OTHER REVENUES BUDGET 2003 BUDGET 2002 % CHANGE ACTUAL 2002Interest Bearing Warrants payable

237.92.00.0000 State Refuse Tax (3.6%) 33,237.00$ 32,400.00$ 2.58%334.03.11&.16 DOE Grant Operations 18,750.00$ 18,750.00$ 0.00%

DOE Grant Supplemental 50,000.00$ 343.71.00.0000 Recycling Revenue 5,000.00$ 10,000.00$ -50.00%343.73.91.0000 HAZ Waste San Juan 2,000.00$ 2,000.00$ 0.00%343.73.92.0000 HAZ Waste Orcas 1,000.00$ 1,000.00$ 0.00%343.73.93.0000 HAZ Waste Lopez 500.00$ 500.00$ 0.00%343.79.01.0000 Misc San Juan 200.00$ 200.00$ 0.00%343.79.02.0000 Misc Orcas 100.00$ 100.00$ 0.00%343.79.03.0000 Misc Lopez 50.00$ 50.00$ 0.00%369.90.00.0000 Miscellaneous 500.00$ 500.00$ 0.00%

Total Other Revenues 111,337.00$ 65,500.00$ 69.98%

Total Revenue 1,850,337.00$ 1,760,500.00$ 5.10%

FY 2003 Revenue Requirements 10/ 9/ 02Capital Economic Analysis

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 Est FY 2003 Est FY 2004 Est FY 2005 EstCAPITAL REVENUE

Excise Tax (10%)Self Haul 58,839$ 65,210$ 55,900$ 86,678$ 94,000$

San J uan Sanitation 78,290$ 79,376$ 97,932$ 98,342$ 102,000$ Town of Friday Harbor -$ -$ -$ -$ -$

Total Excise Tax 137,129$ 144,586$ 153,832$ 185,020$ 196,000$ 200,000$ 210,000$ 220,000$

C & D Revenues -$ -$ -$ -$ -$ 7,400$ -$ -$ Grant Capital -$ -$ 28,288$ 49,198$ 75,000$ 436,725$

Transfers from County Funds -$ -$ 105,030$ 25,000$ 25,000$ -$ Sale of Assets -$ -$ -$ 7,175$ 2,000$ -$

Interest -$ -$ -$ -$ 2,000$ -$ Bond Revenues -$ -$ -$ -$ 985,000$ -$

Total Capital Revenue 137,129$ 144,586$ 287,150$ 266,393$ 1,285,000$ 644,125$ 210,000$ 220,000$

CAPITAL EXPENSESDebt Service

Long Term Debt Bulldozer 5,112$ 5,112$ 5,114$ 5,116$ -$ -$ Sutton Road GO Bond Principal -$ -$ -$ -$ -$ 50,000$ 55,000$ 55,000$

San J uan TS Principal 25,000$ 25,000$ 30,000$ 30,000$ 30,000$ 35,000$ 35,000$ 40,000$ Orcas Landfill Principal 20,000$ 25,000$ 25,000$ 25,000$ 30,000$ 30,000$ 30,000$ 35,000$

Orcas TS Principal 15,000$ 15,000$ 15,000$ 20,000$ 20,000$ 20,000$ 20,000$ 25,000$ Sutton Road GO Bond Interest -$ -$ -$ -$ 14,000$ 36,800$ 35,793$ 34,418$

San J uan TS Interest 26,830$ 25,468$ 24,055$ 22,316$ 13,333$ 4,340$ 2,188$ 2,188$ Orcas Landfill Interest 42,533$ 41,442$ 40,030$ 38,580$ 21,308$ 3,720$ 1,876$ 1,876$

Orcas TS Interest 16,235$ 15,418$ 14,570$ 13,700$ 8,096$ 2,480$ 1,250$ 1,250$ Total Debt Service 150,710$ 152,440$ 153,769$ 154,712$ 136,737$ 182,340$ 181,107$ 194,732$

Orcas Landfill -$ -$ -$ -$ -$ 68,568$ -$ -$ C & D Landfill -$ -$ -$ -$ -$ 15,000$ 100,000$ -$

Equipment 7,549$ 10,965$ 91,021$ 94,259$ 68,000$ 50,000$ 50,000$ 50,000$ Buildings and Grounds -$ -$ -$ -$ 110,000$ 596,313$ 30,000$ 30,000$

Depreciation -$ -$ -$ -$ -$ 60,000$ 60,000$ 60,000$ Land -$ -$ 15,385$ -$ 775,000$ -$ -$ -$

Total Capital Expenses 158,259$ 163,405$ 260,175$ 248,971$ 1,089,737$ 972,221$ 421,107$ 334,732$

NET CAPITAL (21,130)$ (18,819)$ 26,975$ 17,422$ 195,263$ (328,096)$ (211,107)$ (114,732)$

CAPITAL FUND BALANCE (132,833)$ (343,940)$ (458,672)$

Page 22

Rate Revenue Requirement FY 2003IDENTIFY CAPITAL NEEDS $Capital Improvement Plan (CIP)

$789,881

Debt on Capital$182,340

Cash on HandExcise Tax $200,000C&D Reserve $7,400

FY 2002 Carry over $195,263

New Financing SourcesDOE Grant $436,725

IDENTIFY OPERATING COSTS $Current Year Budget

$1,850,337

RATE REVENUE REQUIREMENTAdditional Capital = $132,883

Net Operating Revenue =$1,739,000Total Rate Revenue=$1,871,883

Non-Rate Revenue$111,337

Allocate Revenue by Function

Allocate Revenue by Customer Class

Franchise HaulerSelf-Haul Municipal Hauler Other

SET RATES$1,871,883/10,700

=$174.94 Net Effective Rate

Garbage Tipping Fees

SW Rate Structure Currently Five Classes of Customers

MSW Self-Haulers Lots of them Commercial & Residential Loads average < 0.1 tons 50% bring less than 2 cans 45% bring recycling also FY 2001

Revenue= $864,075 (52%)

Rate= $200.70/ton

SW Rate Structure Currently Five Classes of Customers

Self-HaulersMunicipal/Franchise Haulers

Town & San Juan SanitationBig, compacted loads average 5 – 6 tons

FY 2001

Revenue= $756,546 (48%)

Town Rate= $140.24/ton

SJS Rate = $122.43/ton

SW Rate Structure Currently Five Classes of Customers

Self-HaulersMunicipal/Franchise HaulersRecycling Haulers

Lots of themNo Revenue

FY 2001

Total Cost = $337,125

SW Rate Structure Currently Five Classes of Customers

Self-HaulersMunicipal/Franchise HaulersRecycling HaulersSpecial Rate Customers

Free Take it or Leave it Litter Program Weeds, beach litter, road kills Lopez Lion’s Club

Subsidized Blakely Island Shaw Island

SW Rate Structure Currently Five Classes of Customers

Self-HaulersMunicipal/Franchise HaulersRecycling HaulersSpecial Rate CustomersOther Services

Reuse Facilities Take it or Leave it Exchange

MRW Used Oil & Antifreeze Batteries HHW

SW Rate Structure Currently Five Classes of Customers

Self-Haulers $$$ High RateMunicipal/Franchise Haulers $$ Moderate RateRecycling HaulersSpecial Rate Customers $ Low rateOther Services

Potential Revenue Sources Tipping Fees

Users Pay by Weight or Volume Could apply to MSW, RM, MRW, C&D

Taxes Property Tax Parcel Tax Excise Tax Other Tax Could apply to all residents of District or only

to users of the system

WHO PAYS FOR SOLID WASTE & RECYCLING? In general, the art of government consists in taking as much money as possible from

one party of the citizens to give to the other. Voltaire 1764.

Examples of OPERATING revenues and costs under the current funding structure: Attorney’s Office in Friday Harbor generates 100 pounds of waste paper.

Revenue = $0 Cost=$6.00 Friday Harbor Bar and Restaurant served by Town generates 1000 pounds of glass, 300

pounds of other recyclables and 1000 pounds of MSW. Revenue=$70.12 Cost=$138.00

Tourist eats one meal out, consumes 6 beers and leaves no food waste. Revenue=$0 Cost=$.06

Orcas Island Construction Company self hauls 4,000 pounds of C&D. Revenue=$401.40 Cost=$240.00

Schoolteacher on Lopez self-hauls one can of MSW and 5 pounds of recycling per week for one year.

Revenue=$234.00 Cost=$140.40 Port of Friday Harbor delivers 10 tons of glass.

Revenue=$0 Cost=$1,200.00 San Juan Sanitation customer generates 2 cans per week and self hauls 20 pounds of

recycling per week for one year. Revenue=$254.65 Cost=$312.00

Farmer on Waldron delivers 400 pounds of HHW to collection on San Juan. Revenue=$0 Cost=$453.33

Assume average cost = .06/pound

Examples of CAPITAL revenues under the current funding structure: Attorney’s Office in Friday Harbor generates 100 pounds of waste paper.

Revenue = $0 Friday Harbor Bar and Restaurant served by Town generates 1000 pounds of glass, 300

pounds of other recyclables and 1000 pounds of MSW. Revenue=$0

Tourist eats one meal out, consumes 6 beers and leaves no food waste. Revenue=$0

Orcas Island Construction Company self hauls 4,000 pounds of C&D. Revenue=$44.60

Schoolteacher on Lopez self-hauls one can of MSW and 5 pounds of recycling per week for one year.

Revenue=$26.00 Port of Friday Harbor delivers 10 tons of glass.

Revenue=$0 San Juan Sanitation customer generates 2 cans per week and self hauls 20 pounds of

recycling per week for one year. Revenue=$46.18

Farmer on Waldron delivers 400 pounds of HHW to collection on San Juan. Revenue=$0

WHO PAYS FOR SOLID WASTE & RECYCLING?

The Base Rate Concept

Many public utilities have a two tiered rate structure: Base Rate – All customers pay. Covers fixed costs

and infrastructure. Volume Rate – Customers pay according to how

much they use the system. Covers operating costs.

Example Town of Friday Harbor

13.28.150 Refuse service charge.

A. Base Charge. There shall be a monthly refuse base charge for each separate refuse utility account: $2.27 per month per account.

B. Use Charge. The monthly refuse use charge shall be as follows:

32 gallon can $4.74

1 yard dumpster $33.27

1 1/2 yard dumpster $49.96

2 yard dumpster $66.64

Clean cardboard (recycle) $7.06 per

cubic yard

Applying a Base Rate to our System Apply to all potential customers

Privilege Tax

Apply only to current users Excise Tax Gate fee

Apply only for specific services Fee for use of recycling services Fee for use MRW services

Apply to all services Annual fee to use facilities

Privilege Tax Property Tax Assessment throughout

district to pay all or a portion of infrastructure costs

Parcel Assessment throughout district to pay all or a portion of infrastructure costs $1.67/month could pay all capital costs through FY 2005 Could be varied by land use type – e.g.:

Business $5.00/month Residential $1.00/month Undeveloped $ 0

Page 29

Excise Tax Raising the current excise tax by 7% funds

FY 2003 Adding the Town of Friday Harbor could

generate an additional $75,000/year Adding the Town and raising the current

excise tax by 3% funds FY 2003

Gate Fee Implementing a $3.00 gate fee could generate

an additional $100,000 - $200,000 per year Would raise MSW minimum to $8.00 May deter reuse and recycling customers

Fees for use of infrastructure Annual facility permit Annual recycling permit Direct fees for MRW users

No changes to current rate structure Generate additional revenue using current

rate structure Raise rates across the board by $12.43 per ton Raise rates across the board by 7.7% Raise rates preferentially by existing customer class Raise the minimum fee Raise the refrigerated appliance rate to $40.00

Page 25

Now What? Action Plan

Who? What? When?

A Word about TrafficORCAS TRANSFER STATION Average Average Average

Peak Total Peak MSW Peak REC Total MSW REC

Total MSW REC Vehicles Vehicles Vehicles # of Vehicles Vehicles Vehicles

Month Vehicles Vehicles Vehicles Per Day Per Day Per Day Days Per Day Per Day Per Day

OCT 02 3102 2068 1034 14 222 148 74SEP 02 3573 2382 1191 13 275 183 92AUG 02 4095 2730 1365 290 13 315 210 105J UL 02 3362 2241 1121 542 345 273 11 306 204 102J UN 02 3065 2043 1022 264 12 255 170 85MAY 02 2600 1793 807 233 12 217 149 67APR 02 2700 2000 700 231 13 208 154 54MAR 02 1916 1419 497 204 12 160 118 41FEB 02 2284 1692 592 230 12 190 141 49J AN 02 2333 1728 605 227 13 179 133 47

Totals 29029 20096 8933 125 232 161 71

A Word about TrafficSAN J UAN TRANSFER STATION Average Average Average

Peak Total Peak MSW Peak REC Total MSW REC

Total MSW REC Vehicles Vehicles Vehicles # of Vehicles Vehicles Vehicles

Month Vehicles Vehicles Vehicles Per Day Per Day Per Day Days Per Day Per Day Per Day

OCT 02 3154 2253 901 21 150 107 43SEP 02 3416 2440 976 257 168 402 20 171 122 49AUG 02 4018 2870 1148 605 168 402 22 183 130 52J UL 02 3878 2770 1108 570 175 409 22 176 126 50J UN 02 3520 2514 1006 175 21 168 120 48MAY 02 3216 2297 919 161 21 153 109 44APR 02 2961 2193 768 162 19 156 115 40MAR 02 2857 2116 741 179 22 130 96 34FEB 02 2387 1768 619 135 19 126 93 33J AN 02 2506 1856 650 165 20 125 93 32

Totals 31911 23077 8834 207 154 111 43