San Juan County Solid San Juan County Solid Waste:Waste:

FundingFunding

Solid Waste FundingSolid Waste Funding

Current Solid Waste RevenueCurrent Solid Waste Revenue Rate Structure used to collect revenueRate Structure used to collect revenue

Cost of ServiceCost of Service Current Funding ProblemsCurrent Funding Problems Solutions Solutions

Current Revenue SourcesCurrent Revenue Sources Primary Source of Revenue is Garbage Primary Source of Revenue is Garbage

Tipping Fee Tipping Fee (86.6%)(86.6%) Excise Tax is used to Support Capital Excise Tax is used to Support Capital

Expenses (9.8%)Expenses (9.8%) Grants (HHW, Litter, Composting)Grants (HHW, Litter, Composting)

(1.7%)(1.7%) Recycling Revenue (2%)Recycling Revenue (2%) Miscellaneous Fee Revenue (HHW, Miscellaneous Fee Revenue (HHW,

unsecured loads)unsecured loads)

Service Rate Service Rate By Customer Class April 2008By Customer Class April 2008

Self HaulSelf 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 Tax3.4% to State Refuse Tax

Town of Friday HarborTown 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 SanitationSan 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

Service Rate Service Rate continuedcontinued

Recycling Customers Recycling Customers Drop off at transfer stations NO FEEDrop off at transfer stations NO FEE Post Office junk mail NO FEEPost Office junk mail NO FEE

Other Customers Other Customers HHW CollectionHHW Collection

Annual collection events MINIMUM FEEAnnual collection events MINIMUM FEE Facilities for Used Oil, Anti-freeze, vehicle batteries NO FEEFacilities for Used Oil, Anti-freeze, vehicle batteries NO FEE

Litter ControlLitter Control Roadside, beaches, volunteer coordination NO FEERoadside, beaches, volunteer coordination NO FEE

Other Subsidized ActivitiesOther Subsidized Activities Composting workshops, e-waste events, weed control, lions Composting workshops, e-waste events, weed control, lions

club reuse NO FEEclub reuse NO FEE

Rate HistoryRate History

SAN J UAN COUNTY SOLID WASTE FUND BALANCE

(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

500,000

Jan

-96

Ap

r-9

6

Ju

l-9

6

Oct

-96

Jan

-97

Ap

r-9

7

Ju

l-9

7

Oct

-97

Jan

-98

Ap

r-9

8

Ju

l-9

8

Oct

-98

Jan

-99

Ap

r-9

9

Ju

l-9

9

Oct

-99

Jan

-00

Ap

r-0

0

Ju

l-0

0

Oct

-00

Jan

-01

Ap

r-0

1

Ju

l-0

1

Oct

-01

Jan

-02

Ap

r-0

2

Ju

l-0

2

Oct

-02

Jan

-03

Ap

r-0

3

Ju

l-0

3

Oct

-03

Jan

-04

Ap

r-0

4

Ju

l-0

4

Oct

-04

Jan

-05

Ap

r-0

5

Ju

l-0

5

Oct

-05

Jan

-06

Ap

r-0

6

Ju

l-0

6

Oct

-06

Jan

-07

Ap

r-0

7

Ju

l-0

7

Oct

-07

DATE

DO

LLA

RS

Factors that Control RatesFactors that Control Rates Cost of InfrastructureCost of Infrastructure

Land, Buildings, EquipmentLand, Buildings, Equipment Debt on CapitalDebt on Capital Maintenance of InfrastructureMaintenance of Infrastructure

Cost of OperationsCost of Operations CollectionCollection ProcessingProcessing DisposalDisposal OverheadOverhead

Factors that Control CostsFactors that Control Costs

PolicyPolicy Level of ServiceLevel of Service Efficiency of OperationEfficiency of Operation GeographyGeography Variable CostsVariable Costs

LaborLabor Ferry ServiceFerry Service Disposal, Transportation and Processing Disposal, Transportation and Processing

ContractsContracts

Cost of ServiceCost of Service

Cost AllocationCost Allocation

How to calculate the appropriate How to calculate the appropriate share of costsshare of costs Based on Tonnage?Based on Tonnage? Based on Time?Based on Time? Based on number of Trips?Based on number of Trips?

Rate Development ConceptsRate Development Concepts Revenue Requirements – compares revenue Revenue Requirements – compares revenue

to expenses to determine overall rate.to expenses to determine overall rate. Cost of Service - determines revenue Cost of Service - determines revenue

requirements for customer classes based on requirements for customer classes based on level of service.level of service.

Rate Structure – method used to allocate the Rate Structure – method used to allocate the cost of service to various customer classes, cost of service to various customer classes, based on the governing bodies policies, that based on the governing bodies policies, that balances revenue and expenses. balances revenue and expenses.

Revenue ProblemsRevenue Problems

No Revenue for new capital facilities No Revenue for new capital facilities No Revenue for equipment No Revenue for equipment

replacementreplacement No Operating ReserveNo Operating Reserve Increases in recycling can drive up Increases in recycling can drive up

cost without providing increased cost without providing increased revenue.revenue.

Recommended Full Cost Recommended Full Cost Accounting Changes From 2005 Accounting Changes From 2005

AnalysisAnalysis Fund Capital and depreciation costs Fund Capital and depreciation costs

at approximately $167,000 per year at approximately $167,000 per year (further definition of need)(further definition of need)

Establish a Reserve equal to a Establish a Reserve equal to a minimum of two months operations minimum of two months operations plus one year of capital i.e. $620,000plus one year of capital i.e. $620,000

Potential Rate Structure Potential Rate Structure ChangesChanges

(2005 recommendations)(2005 recommendations) Increased Minimum Fee For Self Haul Increased Minimum Fee For Self Haul

($9.58 or $11.67)($9.58 or $11.67) Initiate an Administration Fee ($7.04)Initiate an Administration Fee ($7.04) Charge an excise tax per developed Charge an excise tax per developed

parcel to support Recycling, parcel to support Recycling, Reserves and CapitalReserves and Capital

Charge A Tipping Fee For RecyclingCharge A Tipping Fee For Recycling

Rate Structure IssuesRate Structure Issues

Recycling SubsidyRecycling Subsidy Garbage classes pay for most recycling Garbage classes pay for most recycling

costscosts Self Haul ServicesSelf Haul Services

Transfer cost are higher for self haul due Transfer cost are higher for self haul due to low volume per tripto low volume per trip

Discount Rates for Large Customers Discount Rates for Large Customers Which Class Will pay for Capital and Which Class Will pay for Capital and

ReserveReserve

Recycling SubsidyRecycling Subsidy

Reduces impedimentsReduces impediments Encourages separation from garbageEncourages separation from garbage People that choose not to recycle still People that choose not to recycle still

pay for the public benefit of the pay for the public benefit of the system.system.

Self Haul ServicesSelf Haul Services IssuesIssues

Small volume of waste Small volume of waste Relatively high service time on siteRelatively high service time on site Less manageable regarding timingLess 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 $11.67 per can if administration is based on

number of trips to the transfer stationnumber of trips to the transfer station

Discounted Rates For Large Discounted Rates For Large Volume CustomersVolume Customers

Town and Franchise pay lessTown and Franchise pay less Do not pay for the recycling portion of Do not pay for the recycling portion of

the programthe program Cost less to provide transfer service due Cost less to provide transfer service due

to large loadsto large loads Town does not contribute directly to the Town does not contribute directly to the

capital fund (operations does support capital fund (operations does support capital)capital)

Options for Rate Structure Options for Rate Structure ChangeChange

Tipping FeesTipping Fees Users Pay by Weight or VolumeUsers Pay by Weight or Volume Administrative FeeAdministrative Fee

TaxesTaxes General Property TaxGeneral Property Tax New Parcel TaxNew Parcel Tax Increase Existing Excise TaxIncrease Existing Excise Tax Could apply to all residents of Disposal District Could apply to all residents of Disposal District

or only to users of the systemor only to users of the system

Base Rate ConceptBase Rate Concept

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

fixed costs and infrastructure. May fixed costs and infrastructure. May cover cost of recycling system and other cover cost of recycling system and other “free” services. “free” services.

Volume Rate – Customers pay according Volume Rate – Customers pay according to how much they use the system. to how much they use the system. Covers operating costs.Covers operating costs.

Applying a Base RateApplying a Base Rate

Apply to all potential customersApply to all potential customers Parcel FeeParcel Fee

Apply only to current usersApply only to current users Excise TaxExcise Tax Administration feeAdministration fee

Apply only for specific servicesApply only for specific services Fee for use of recycling servicesFee for use of recycling services

Apply to all servicesApply to all services Annual fee to use facilitiesAnnual fee to use facilities

Costs included in a base Costs included in a base rate?rate?

Debt ServiceDebt Service Future Capital Facilities and Future Capital Facilities and

EquipmentEquipment Creating a Reserve Fund Creating a Reserve Fund Landfill MonitoringLandfill Monitoring Recycling ProgramRecycling Program Subsidized ServicesSubsidized Services

Per Parcel ExamplePer Parcel Example

Cost of Service Total Cost All Parcels Developed Parcels

Garbage Transport & Disposal $982,285Garbage Transfer $562,334Debt $260,057 $14.66 $26.10Administration $203,926 $11.49 $20.47Recycle Transport & Processing $153,036 $8.63 $15.36Recycle Transfer $123,905 $6.98 $12.44HHW and Litter $106,579 $6.01 $10.70Landfill Monitoring $90,277 $5.09 $9.06Engineering and Professional Service $83,368 $4.70 $8.37Taxes $70,890

$57.56 $102.50

Capital $167,000 $9.41 $16.76Reserve $83,000 $4.68 $8.33

Total Parcel Fee $71.65 $127.60

Administrative Fee ExampleAdministrative Fee Example

Questions to AnswerQuestions 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 RateIf Base Rate

Excise, Parcel, Administrative Fee etc.Excise, Parcel, Administrative Fee etc.

Which Services Should a Base Rate Which Services Should a Base Rate Cover?Cover? Capital, Reserve, Recycling etc.Capital, Reserve, Recycling etc.

Cost of ServicesCost of Services

Activity 2006

Expenditure % of Total

Cost Per Ton

Garbage Transport & Disposal $982,285 37% $81.38 Garbage Transfer $562,334 21% $46.59 Debt $260,057 10% $16.95 Administration $203,926 8% $13.29 Recycle Transport & Processing $153,036 6% $46.79 Recycle Transfer $123,905 5% $37.88 HHW and Litter $106,579 4% $6.95 Landfill Monitoring $90,277 3% $5.89 Engineering and Professional $83,368 3% $5.43 Taxes $70,890 3% $4.62 Total $2,636,657 Cost per Ton Garbage $181.11 Cost per Ton Recycle $137.80 Average Fee Required $218.43

Rate StructureRate Structure

What services require a feeWhat 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 haulSelf haul Town (partial rate)Town (partial rate) Franchise hauler (partial rate + percent of gross Franchise hauler (partial rate + percent of gross

income)income) What is “Free”What is “Free”

RecyclingRecycling Weed disposalWeed disposal Litter DisposalLitter Disposal