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

Only discussing this part.

OVERVIEW

RRB

County WRS

North

Lauderdale

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

DISTRICT PROGRAM COSTS AND

LIABILITIES

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

CHANGE-IN-LAW COSTS

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

WHAT ARE THE

ALTERNATIVES?

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