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1994-01-13 Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 896 ASSEMBLY The New Hanover County Board of Commissioners held a Work Session on Thursday, January 13, 1994, at 10:00 A.M. in Room 501 of the New Hanover County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioners Sandra Barone; WilliamA. Caster; William E. Sisson, Jr.; vice-Chairman E. L. Mathews, Jr.; Chairman Robert G. Greer; County Manager, Allen 0' Neal; County Attorney, Wanda P. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Greer called the Work Session to order for the purpose of discussing residential and commercial collections. DISCUSSION ON OPTIONS FOR RESIDENTIAL COLLECTIONS IN UNINCORPORATED NEW HANOVER COUNTY Assistant County Manager, Dave Weaver, reported staff has prepared several scenarios with cost estimates for each option. The following scenarios were presented using 25,000 households in the unincorporated County with a trash flow in FY 1994/95 projected at 145,000 tons broken down as follows: 110,000 tons of municipal solid waste; 77,000 tons commercial; 33,000 tons residential; and 35,000 tons miscellaneous waste disposed at the Landfill: SCENARIO ONE: FUND BY FEES: 1) Residential Collection: Establish a County Collection System with Voluntary Subscription and County Billing: Exclusive contracts would be awarded by either negotiation or bidding for this service to haulers for sub-areas of the unincorporated County. The County would pay the hauler based on the number of households served. The hauler pays the tip fee, the cost of which is passed on to the County through the contract and then to the resident by the County through bi-monthly billing. The per household per month cost would be $17.55. The estimated cost to the County for this type of system would be $4.6 million annually plus $150,000 for administration for a grand total cost of $4.74 million, which averages out to $17.55 per household per month. At this point, this fee does not include the cost of disposal or tip fees. The disposal costs under this scenarlO are as follows: $11,300,000 - (1,300,000) (1,400,000) $ 8,600,000 Environmental Management Fund Expenditure Steam and Electric Sale Revenue Tip fee revenues for miscellaneous Landfill wastes - The remaining Environmental Fund expenditures to be covered by municipal solid waste tip fees. TiD Fee Revenues Generated Trash Generated $25/T $30/T $60/T $79/T Residential 33,000 T/YR $820,000 $990,000 $1,980,000 $2,580,000 $100/T $98/T $86/T $79/T Commercial 77,000 T/YR $7,770,000 $7,610,000 $6,620,000 $6,020,000 Total 110,000 T/YR $8,600,000 $8,600,000 $8,600,000 $8,600,000 NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 897 Additional tip fee cost added to residential monthly fees 25/T $1.88 $17.55 $19.43 $30/T $2.25 $17.55 $19.80 $60/T $4.50 $17.55 $22.05 $79/T $5.93 $17.55 $23.48 Monthly Collection Fee Total Monthly Fee SCENARIO TWO: FUND BY PROPERTY TAXES After discussion, staff was directed to eliminate this option since the Board is not in favor of increasing the property tax. SCENARIO THREE: FUNDED WITH BOTH FEES AND TAXES Residential Collection: Establish a County Collection System with Voluntary Subscription and County Billing: Exclusive contracts would be awarded by either negotiation or bidding for this service to haulers for sub-areas of the unincorporated County. The County would pay the hauler based on the number of households served. The hauler would pay the tip fee, the cost of which is passed on to the County through the contract and then to the resident by the County bi-monthly billing. The per household per month cost would be $17.55 by billing to individual residents. The disposal costs varies in this option because the $8.6 million will have to be paid to the Environmental Management Fund as presented in the following options: Tip Fee Options $25/T $30/T $42/T $60/T Revenue Generated $2,750,000 $3,300,000 $4,600,000 $6,600,000 Tax revenues needed $5,850,000 $5,300,000 $4,000,000 $2,000,000 TOTAL $8,600,000 $8,600,000 $8,600,000 $8,600,000 Tax rate lncrease 7.5 6.8 5.13 2.56 $25/T $30/T $42/T $79/T Add'l tip fee cost $ 1. 88 $ 2.25 $ 3.15 $ 5.93 added to residential monthly fees $17.55 $17.55 $17.55 $17.55 TOTAL MONTHLY FEE $19.43 $19.80 $20.70 $23.48 The tax increase would be a county-wide property tax because it represents disposal costs, which benefits every resident of the County. If a tip fee is included as a revenue source, the cost would have to be added to the $17.55 per household per month. Discussion was held on the funds needed to operate WASTEC. Deputy County Manager Atkinson reported at a $60 tip fee, there is still a shortfall of $2 million that must come in from other revenue sources. Does the Board wish to continue to use the 1/2 cent sales tax for the Environmental Management Fund, or allow this tax to return to the Water & Sewer District where revenue is badly needed; or does the Board want to continue the general fund contribution which is listed under Scenario 3? Commissioner Sisson commented on waste disposal being a tax that will have to be paid by the residents living in New Hanover County; however, trash should not be lost to surrounding counties and the cost for disposal should be spread equitably. A user fee should be equitably distributed with the people generating the most trash paying for that volume and people generating less trash paying for that volume. With the County contracting for services, this should reduce the volume of materials now going into WASTEC and the volume of materials going into the Landfill with the opening of the Construction & Debris Center along with the collection of more recyclables. Also, if WASTEC is in the position to receive garbage from surrounding counties, the County should have a mechanism in place to accept these materials. Discussion was held on controlling waste coming in from other counties. Assistant County Manager Weaver reported a disreputable NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 898 hauler could come into the County from surrounding counties and it would be difficult to differentiate the trucks. Chairman Greer responded that, in his opinion, this will not occur frequently because the haulers will be contracting with the County and could lose their contracts. Mr. Eddie Dick, representing Waste Industries, reported the ultimate goal of New Hanover County is to maintain enough control over the waste stream to make its disposal operation financially viable. In his opinion, for the County to perform the billing is not practical. As a hauler his company performs the billing, and as a service provider, he does not like having anyone between the company and his customer. Most counties bill for disposal through taxes, a separate tax district, a fee system, or the general tax fund. His company is in favor of the County dividing the unincorporated county into zones and contracting with the haulers for residential collections which will require the haulers to carry the trash to WASTEC. Most residential homes are serviced through establishment of an average amount of tonnage produced per year used across the board. The services contracted should be for garbage collection and curbside recycling; however, since yard waste pick-up and bulky item pickup varies in volume, the County should consider eliminating these items from the contract and allowing the individual citizens to select their provider, or carry these items to the disposal center. On the commercial side, the volume should dictate the cost, which is done in other counties, and billed directly. The commercial billing, which is complicated because of daily changes, should be performed by the hauler. Mr. McKeithan totally disagreed with the haulers performing the billing. Waste Management, Inc. has experienced a problem wi th bad debt. The purpose of establishing a residential collections system was to provide all the services being received by City residents to County residents. Each hauler should be responsible for providing the garbage, curbside recycling, yard waste and bulky item collections in their zones. If a hauler elects not to perform curbside recycling, the County should divide that area among the other haulers. The County should perform the residential billing in order to eliminate the collection problems; however, a system should be worked out to eliminate the County collecting the money with a fee paid to the hauler inclusive of disposal costs with the hauler then having to turn around and pay the County for disposal costs. The County should bill for collection services and separately for disposal. After a lengthy discussion staff was requested to prepare a residential collection system as follows: 1) The providing of zones routes. County will contract with the haulers currently service to the unincorporated area with assignment to each hauler. This will eliminate overlapping 2) The haulers will collect refuse and contract or subcontract for the collection of recyclables, yard waste, and bulky items. 3) The County will negotiate the cost of the system with the haulers, and the County or its subcontractor will be responsible for billing customers for collection and disposal costs. 4) Residential subscription will be voluntary. DISCUSSION OF COMMERCIAL COLLECTION IN UNINCORPORATED NEW HANOVER COUNTY Assistant County Manager Weaver presented the following methods for commercial collection: NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 899 Option #1: The County would contract with the haulers on a non- exclusive basis to compete for commercial accounts for the cost and service required to collect the trash. The haulers would submit the bills to the County; the County would bill the commercial accounts based on the submitted charges; and the County would then pay the hauler. The tip fee is paid by the hauler and is included as part of the bill negotiated with the commercial account by the hauler. ADVANTAGES: (1) The existing competitive collection is maintained, except billing agent for the hauler. system for commercial trash the County would act as the (2) Commercial haulers would continue to deal directly with their accounts concerning levels of service and fees. (3) Flow control would be accomplished, and the hauler would continue to pay the tip fee. (4) The commercial accounts would receive only one bill for trash. The bill would come from the County. (5) The County would have no involvement in setting the amount billed to commercial accounts, except indirectly by the imposition of a tip fee charged to the haulers as is presently done. DISADVANTAGES: (1) The County would incur a cost of $150,000 to run this system. (2) The haulers have expressed concern about releasing billing information to the County. The County Attorney has made it clear that confidentially of records could be legally maintained. Assistant County Manager Weaver reported if the Board does not desire to charge a tip fee at WASTEC or the Landfill, this option should not be considered. After further discussion, it was agreed not to consider this option. Option #2: The haulers would continue to provide and bill commercial accounts for the cost of trash collection. The County would estimate the amount of trash produced by a commercial account and bill the customer to pay for the cost of disposal. There would be no tip fee. The County would require the hauler, through regulation, to provide adequate information to assist the county in estimating the amount of trash produced by a commercial account. ADVANTAGES: (1) The existing competitive system for commercial trash collection is maintained. (2) Commercial haulers continue to deal directly with their commercial accounts concerning levels of service and billing. (3) Flow control may be accomplished by the elimination of a tip fee. DISADVANTAGES: (1) The haulers have expressed concern for the release of commercial account information to the County. (2) All commercial accounts would receive two trash bills, one from the hauler for collection and one from the County for the cost of disposal. NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 900 (3) The County could be facing a bureaucratic problem if required to establish a program that would estimate trash volumes generated by individual commercial accounts for billing purposes. This system may be more susceptible to abuse. (4) The absence of any tip fee charged at WASTEC or the Landfill could lead to unwanted trash being brought in from outside the County. (5) The cost for administration of this option would be more expenSlve and burdensome. Assistant County Manager Weaver expressed concern for creating a bureaucratic nightmare in trying to estimate the charge per size container on a daily basis and stated after discussion with other counties staff feels this would be a very difficult billing process to administer. Also, the receipt of two separate bills could be a problem, particularly if a commercial customer is experiencing financial problems and pays the hauler to continue to remove the trash, but decides not to pay the disposal cost to the County. Chairman Greer stated the County may have some bad debt which would have to be incorporated into the cost of doing business; however, he does not feel this would occur frequently. Mr. McKeithan recommended considering the following system. The County would bill only for disposal. The hauler would bill for the service according to the size of the container and specialized equipment, which is the information that the haulers feel should be kept confidential. The tons per year or the $8.6 million figure for the Environmental Management Fund is the County's disposal costs. A portion of the County's disposal costs is residential, which can be derived by estimating how much each resident generates every month. The residential amount would then be removed from the waste stream. The haulers using roll-off containers to pickup construction debris would bill their customers for the service plus disposal. The figure used for billing is derived by weight at WASTEC. Both the County and the hauler have this information and know the exact disposal cost. The remaining disposal cost is for the commercial dumpster style container service. The haulers providing container service would provide the County a compatible disk with a list of every commercial customer, the size of the container and the frequency. The County would use the disk sorting the customers alphabetically with adding the container storage yards. The total container storage yards divided into the weight or dollars would provide a rate per container storage yard. This would provide a billing by volume. Once this system is placed on the County's computer system, the only change monthly would be the number of new businesses, number of businesses going out of business, and normal changes in commercial accounts. Each hauler would advise the County of the changes monthly. This method is not simple but would accomplish reducing the volume of the waste stream, place all the haulers on level ground, and eliminate the waste stream from going out of the County. Discussion was held on the commercial customer paying the hauler, but not paying the County. Mr. McKeithan reported the contract should require the commercial customer to pay for the serVlce; therefore, if he does not pay the County, the hauler will stop the serVlce. Assistant County Manager Weaver commented on Option #1 and inquired as to whether the haulers only concern lS the confidentiality matter? NEW HANOVER COUNTY BOARD OF COMMISSIONERS WORK SESSION, JANUARY 13, 1994 BOOK 23 PAGE 901 Mr. McKeithan expressed concern for County employees having access to this information, which in his opinion, cannot be kept confidential. Mr. Dick reported the customer should be served by the free enterprise system, and in his opinion, under Option #1 the County has more control than his firm is willing to give after being in business for 23 years. Also, there would be no way to control the confidentiality factor. Assistant County Manager Weaver reported the County would simply serve as the billing agent without becoming involved with negotiations between the hauler and commercial customer. A lengthy discussion was held on the billing procedure and the problems involved with sending out two separate bills. County Manager O'Neal reported the first responsibility of the Board of County Commissioners is to the citizens of New Hanover County. Trash must be disposed of in an environmentally sound and safe manner. This has been accomplished with the WASTEC Facility and Landfill. Also, the collection method must be kept as simple as possible for residential and commercial collections. The County has spent numerous hours in discussion with the haulers to work out an agreement that will be in the best interest of the citizens and acceptable to the haulers. At this point, there seems to be a conflict; therefore, he would recommend two options: (1) work out an agreement on one of the options presented, or (2) submit proposals for trash collections through one bid, which is the free enterprise system. Perhaps, the County should consider one bid for trash collections. Chairman Greer recommended scheduling another Work Session to discuss commercial waste collections. Consensus: It was the consensus of the Board to schedule a Work Session on January 20, 1994, at 8:45 A.M. until 12:00 noon in Room 501 of the New Hanover County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. ADJOURNMENT Chairman Greer expressed appreciation to the haulers for attending the meeting and adjourned the meeting at 12:50 P.M. Respectfully submitted, Lucie F. Harrell Clerk to the Board