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2001-06-14 Special Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 637 JUNE 14, 2001 ASSEMBLY The New Hanover County Board of Commissioners held a Special Meeting with the Citizens Solid Waste Advisory Board on Thursday, June 14, 2001, at 5:00 P.M. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. Members present were: Chairman Ted Davis, Jr; Vice-Chairman Robert G. Greer; Commissioner Julia Boseman; Commissioner William A. Caster; Commissioner Nancy H. Pritchett; County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Davis called the meeting to order and advised that the purpose of the meeting was to hear a presentation from the Citizens Solid Waste Advisory Board on the User Fee System used in Prince William County, Virginia. PRESENTATION OF THE PRINCE WILLIAM COUNTY FEE BASED SYSTEM Mr. Buck O’Shields, Chairman of the Citizens Solid Waste Advisory Board, reported that the recommended budget for FY2001-2002 includes a tipping fee of $35 per ton to eliminate the general fund transfer to the Environmental Management Department; however, the Advisory Board feels that if the tipping fee is increased to $35 per ton, the haulers will carry their waste out of New Hanover County. In order to keep the waste in the County, the tipping fee should be reduced to $30 per ton, which will create a $1,250,000 shortfall for the Environmental Management Department. In order to secure funds to make up for the deficit, the following options can be considered: 1. Increase the Ad Valorem Tax Rate: The Advisory Board feels this is not a viable option because the goal of the current Board and former Boards of County Commissioners has been for the Environmental Management Fund to become a self-sustaining enterprise fund. 2. Seek Funding From Other Sources: The Director of Environmental Management has been approached by the N. C. Department of Transportation (NCDOT) to work out an agreement for the New Hanover County Landfill to receive waste materials from construction of the Smith Creek Parkway Extension. Receipt of waste from the NCDOT will generate additional revenue in the amount of $400,000. This waste can also be used as a daily cover for the Landfill saving approximately $400,000 by not having to dig up landfill cover or pay for cover materials. With revenue generated in the amount of $800,000, the existing shortfall has been reduced to $450,000 if the tipping fee is reduced to $30 per ton. This deficit can be made up by adding 1/4 cent on the tax rate or transferring funds from the Water and Sewer Fund Balance. In concluding the presentation, Mr. O’Shields turned the meeting over to the Director of Environmental Management Ray Church to discuss the Prince William County fee based system. Director Church spoke on the need to further explain the offer by the NCDOT and advised that a section of the Smith Creek Parkway Extension crosses an old landfill which is the site of a wetland mitigation project that will require moving 120,000 tons of materials. The major factor to determine is the amount of dirt and waste in the materials to be carried to the Landfill. An estimate has been received showing that 80,000 tons of the 120,000 tons is dirt that can be used as landfill cover. The remaining 20,000 to 40,000 tons will be comprised of waste such as concrete and brickbats, and all materials will be screened before going to the Landfill. Arrangements are underway with the NCDOT to proceed with the project. Director Church spoke on the information gained by members of the Citizens Solid Waste Advisory Board who visited Prince William County and stated that both counties have the following similarities: Population: Prince William County 220,000 New Hanover County 165,000 NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 638 JUNE 14, 2001 Commercial Accounts: Prince William County 2,000 New Hanover County 10,000 Debt: Prince William County $25 million Purchase of 1,000 acres of Landfill Property New Hanover County $19 million WASTEC and Landfill Construction & Equip. Out of County Waste Transfer: Both Prince William County and New Hanover County have experienced waste being carried out of their counties by Waste Management, Inc. Prince William County brought in waste from New York City to make up for the revenue shortfall, and New Hanover County accepted waste from outside county and state boundaries. General Fund Transfers: Both Prince William County and New Hanover County require general fund transfers to balance solid waste management budgets. Solution - Fee Based System: Implementing a fee based system eliminated the need for the general fund transfer in Prince William County. The total cost for the solid waste management program is $53.80 per ton which includes operation, construction, and maintenance of the landfill; debt service; yard waste composting; Clean Community (the same as Keep America Beautiful); educational programs; household hazardous waste collection; recycling processing; three crews for roadside litter collection; provision of roll-off containers for community clean-ups; funds for long-term landfill closures and care; and payment to the general fund for indirect costs and fund balance. In New Hanover County a fee based system would include the following programs: debt service; operation and maintenance of the WASTEC Facility; operation and maintenance and construction of the Landfill; recycling processing; administration and technical services; household hazardous waste collection; Keep America Beautiful; educational programs, long-term landfill closures and care; indirect costs to the general fund and fund balance. Benefits of the Fee Based System: Prince William County has recognized the following benefits from implementing the fee based system: (1) secured funding to allow for long-term planning of services; (2) elimination of the general fund transfer which allowed Prince William County to reduce taxes by 6 cents; and (3) improvement of bond ratings for Prince William County due to elimination of the general fund transfer. Commercial Accounts: Prince William County has 200 different types of commercial accounts that are assigned a user code based on actual waste generation rates. The commercial accounts have a right to appeal the fee charged. In the first year, there were only 200 appeals out of 2,000 commercial accounts and that figure dropped to 25 last year. The fee based system has been successful in Prince William County with support from the elected officials and community. Before implementation of the User Fee System, the larger haulers monopolized the collection of solid waste by buying out the smaller haulers which reduced the number of haulers from 15 to 5 haulers. Under the fee based system, the smaller haulers have been able to compete for business and currently there are 12 haulers in Prince William County. The residents are paying less for trash collection due to increased competition for services. The Prince William County fee based system is in its third year of operation and is well received by the community. The plan of action to implement a similar User fee based system in New Hanover County is to provide sufficient funding to the Environmental Management Department for FY 2001-2002 and during this period develop a strong public education program for the residents, commercial accounts and industry. In order to implement the fee based system by July 1, 2002, the Board of County Commissioners will have to authorize Staff to move forward with the process. NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 639 JUNE 14, 2001 In concluding the presentation, Director Church offered to answer questions. Commissioner Pritchett spoke on serving as a member of the Citizens Solid Waste Advisory Board for a number of years and stated that the fee based system implemented by Prince William County is the most sensible, adaptable, and fair system that she had ever seen. If this plan is implemented in New Hanover County, the citizens will receive better services and the County will be able to reduce its waste stream. The revenue generated will be secure, thereby, enabling the County to continue to plan and build a strong solid waste management program. Discussion followed on how waste reduction is determined by the State of North Carolina. Director Church explained that New Hanover County generated 272,000 tons of trash last year with a population of 165,000. The figure of 272,000 is divided by 165,000 which equals 1.65 tons per person. Commissioner Caster requested an explanation of the difference in fees to commercial accounts if the fee based system is implemented. Director Church advised that in Prince William County, a survey was mailed to each commercial account requesting the amount of waste generated. The survey received a 50% response, and any commercial companies not responding were assigned a code. If the non- responding commercial company did not agree with the code assigned, the company had an opportunity to negotiate with Staff. If no satisfactory agreement could be reached, the company could appear before an Appeals Board. Since implementing the fee based system three years ago, the Appeals Board had not been contacted. Discussion was held on the difference between charging a fee and establishing a Solid Waste District where a tax can be levied to cover the cost of waste disposal. Director Church explained that the proposed system would be a fee, not a tax, with the same fee charged to residential accounts and different fees charged to various types of commercial accounts based upon the amount of waste generated. The fee will be placed on tax bills and mailed to residential and commercial accounts. In order for Prince William County to implement the fee, a non-taxing Solid Waste District had to be established. Mr. O’Shields advised that a number of years ago, the Advisory Board discussed the possibility of establishing a Solid Waste District to fund the environmental management program through implementing a tax rate. Numerous discussions have continued to occur about establishing a district, but after visiting Prince William County, the Advisory Board feels a similar system would be the best choice because the program can be implemented with existing personnel and equipment without creating a new bureaucracy to operate and oversee the Environmental Management Program. After a lengthy discussion on the complexity of the issue, Chairman Davis requested Staff to provide a written report showing how this type of fee based system will benefit New Hanover County. Director Church responded that he would be glad to prepare a detailed written report. After discussion of transferring funds from the Water and Sewer District to the Environmental Management Program for FY 2001-2002, Chairman Davis asked if this transfer of funds would postpone any planned water and sewer projects. Finance Director Bruce Shell explained that the current Water and Sewer fund balance is approximately $10 million. The half cent sales tax has been used by the Water and Sewer District to pay for debt service. The transfer of sales tax funds for the current fiscal year to the Environmental Management Account will delay future projects, but already approved projects should not be affected. Chairman Davis emphasized the importance of not delaying approved projects, particularly the Castle Hayne Project where people have been waiting to receive service for years. NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 640 JUNE 14, 2001 Vice-Chairman Greer spoke on being concerned about the County going in the wrong direction with its solid waste management program for a number of years. He referenced a newspaper article published in the early 80s that quoted the former County Engineer as saying that the WASTEC Facility would become a self-supporting entity where County residents would not have to pay for garbage disposal and the tipping fee would eventually be eliminated by increased growth in steam sales. He stated that unfortunately, these projections have not come true. The cost of operating the incinerator continued to increase with the tipping fee escalating to $60 per ton which caused haulers to carry the trash out of New Hanover County. The County had to reduce the tipping fee to a reasonable rate to keep trash from leaving the county and this action resulted in a tremendous loss in revenue which started the process of transferring money from the general fund to subsidize the operation of the incinerator. During the last 13 years, landfill space has increased significantly around the country, and many local governments have more than 16 years of remaining landfill space. The life span of the New Hanover County Landfill is 30 years and the County does not owe money on the land. Vice-Chairman Greer presented the following figures showing the operational cost of the Landfill: FY1997-1998$6.55 per ton FY1998-1999$7.24 per ton FY 1999-2000$7.49 per ton FY 2000-2001 (projected)$7.50 per ton Vice-Chairman Greer referenced the current tipping fee of $32.00 per ton with a projected tonnage of 255,000 for the current fiscal year. If the total amount of expenditures projected is divided by the 255,000 tons, the cost is $54.90 per ton. Since other expenditures have been included in the recommended budget for FY 2001-2002, total expenditures are projected at more than $18,000,000. If this figure is divided by 255,000 tons, the cost per ton is $71.50. The Commissioners must determine what is the most cost effective and environmentally safe way to dispose of waste. Vice-Chairman Greer presented budget figures for the past three years showing the cost of operating the current environmental program and stated that New Hanover County is spending $14,000,000 to $18,000,000 to operate the incinerator. If the Board should decide to close the incinerator, $6,000,000 would be saved immediately. With new environmentally safe lined landfills in Sampson, Columbus County, and Greene County, there is sufficient landfill space in the vicinity. In order to generate more revenue, the incinerator should be closed, the County Landfill should be utilized, and contracts should be negotiated with haulers to carry a portion of trash to other landfills. This process would generate sufficient revenue to pay off the debt service and make a profit. Discussion followed on the sequence of events that would occur if the incinerator was closed. Vice-Chairman Greer responded that a sufficient amount of money has been spent to upgrade the incinerator; therefore, he would suggest operating the facility for six months and decreasing the budget by excluding capital expenditures that cost millions of dollars to keep the incinerator operational. Once the facility is closed, the County would sell any usable parts. A lengthy discussion followed on what would happen if landfills in Sampson County, Columbus County and Greene County decided not to accept trash from New Hanover County. Vice- Chairman Greer responded that if this should occur, all trash could be carried to the County Landfill which has a projected life span of 30 years. Commissioner Pritchett pointed out that if the incinerator is closed, the disposal volume will be doubled and the life span of the County Landfill will be cut in half. Vice-Chairman Greer responded that the volume would not be doubled because less than half of the waste is taken to the incinerator. Mr. O’Shields pointed out that the haulers were the only people complaining about the tipping fee. He presented the following figures based upon individual households generating 1.65 tons of NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 641 JUNE 14, 2001 trash per year to bury waste at the Landfill, not including the hauling cost: Tipping Fee Per TonDisposal Cost $60.00 $78 per year or $6.50 per month $30.00$37.00 per year or $3.08 per month Mr. O’Shields concluded his remarks by saying that it was difficult to understand why anyone could complain about the cost for waste disposal at the rates presented. He expressed concern for Waste Management, Inc. being the driving force behind closing the incinerator, particularly when the parent company owns and operate five incinerators throughout the country. The determination of whether to close the incinerator or implement a fee based system will be a political decision. Vice-Chairman Greer requested Mr. O’Shields to explain why Waste Management, Inc. was mentioned when other major haulers are not in favor of keeping the incinerator open. Mr. O’Shields responded that the haulers are opposed to allowing the incinerator to remain open because they have made large investments in landfills. He stressed the importance of the citizens understanding that when they hear haulers complain about a tipping fee at $30 or $35 per ton, this does not mean their monthly bills will be increased by that amount. He expressed concern for the citizens not being informed about the actual cost of waste disposal. Vice-Chairman Greer asked why residents should pay more for disposal of trash when it is not necessary. If an environmentally safe program can be implemented at a lesser price, it would be prudent for the County to move forward with the program. He spoke on this being his opinion, and stated as a County Commissioner he had to express his thoughts. Mr. O’Shields expressed appreciation to Vice-Chairman Greer for expressing his opinion and stated that he was concerned about the residents hearing only one side of the solid waste management program. The majority of information is about the haulers and the cost, not about the program that the citizens say they want. The Citizens Solid Waste Advisory Board has strived to prepare a program that will encompass all components of solid waste disposal, eliminate the burden on the taxpayers, and generate enough revenue to pay for the entire program. Commissioner Pritchett spoke on requesting Director Church to prepare figures on the operational cost of the current solid waste program versus using the Landfill for disposal of all waste, including constructing and closing cells, burying the waste, maintaining and operating the Landfill as well as paying the debt service. She stated that the figures presented on the two programs were so close in cost, it was difficult for her to understand why the incinerator should be closed when this action will reduce the life span of the Landfill. She also expressed concern for the County becoming hostage to fees charged by out of county landfills as well as New Hanover County being liable for any damages caused by trash carried to other counties. She commented on the benefits derived from use of the incinerator and landfill as an integrated system and emphasized the importance of New Hanover County being in control of its solid waste disposal program without being dependent upon any other county or company. Commissioner Caster expressed concern for the cost of operating the incinerator and stated if there is a way to dispose of waste at half the cost of the present system, the Board should consider this option. Discussion has already been held, and all parties have generally agreed that in time the incinerator will have to be closed because of the cost to maintain and operate the facility. No one knows when costly emission control regulations will be required or whether environmental regulations will halt the use of ash as a landfill cover. When the incinerator was opened in the 80s, it was the right decision; however, things have changed and there are now environmentally safe landfills being used throughout the country. Mr. O’Shields stated that things have changed, but in his opinion, the construction of landfills by major corporations in other counties is no guarantee for the future. These companies have a state NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 642 JUNE 14, 2001 permit to operate a landfill in a county, and these landfills can be closed overnight if a decision is made by the governing body. New Hanover County cannot afford to be caught with the same situation that occurred in the 80s when the County was denied use of an out of county landfill. The County needs to be in control of its solid waste disposal program. Commissioner Boseman noted that she could not support just another creative way to tax people, which is the basis of a user fee system. Mr. O’Shields responded that the Advisory Board was requested to eliminate using the ad valorem tax to pay for waste disposal. Regardless of which system is used, the County has to pay for disposal whether through a tax or charging a fee. Vice-Chairman Greer stated that a fee should not be charged when a system can be implemented to pay for itself. The main issue is to provide our citizens with the most cost effective system to dispose of solid waste. He expressed concern for the following misconceptions about incineration: (1) the percentage of weight reduction from incineration; (2) the sale of electricity was projected to be $1.6 million for the current year with revenue received during the past 11 months in the amount of $1 million resulting in a budget shortfall; (3) the ash being used as a cover for the Landfill could easily be determined a hazardous waste; (4) many citizens are proud of the fact that the WASTEC Facility generates its own electricity when in fact, the County pays $9,000 per month to have electricity available for use if needed; and (5) many people think that all trash is burned to ash in the pit, which is not the case, and results in spending $7,000 per month to purchase natural gas to burn all items. Vice-Chairman Greer noted that these are a few hidden costs that are never mentioned. Director Church commented on weight reduction and informed the Board that when trash is burned, it goes into a trough and absorbs water. After having the waste tested in a laboratory, it was found that 15 percent of the waste is water that evaporates at the Landfill. This means that you have an 80 percent weight reduction after evaporation of the water and an 80 percent volume reduction. The Landfill is dependent upon volume. The ash is used beneficially and is tested on a weekly basis. The ash in the Landfill has never tested hazardous and if quality sand had to be purchased for landfill cover, it would be expensive. The ash contains lime from the scrubbers which raises the ph that becomes beneficial to the Landfill which has a low ph. Mixing these two ingredients (vinegar and baking soda) creates a neutral leachate. There are no heavy metals in the leachate because it is not acidic. With the exception of iron, the leachate meets drinking water quality standards. The only problem with leachate is ammonia, which is why Staff is studying constructed wetlands to see if the ammonia can be reduced. Director Church referenced the $7.50 per ton figure mentioned by Vice-Chairman Greer and assumed that he pulled out this figure from the 1999 McGladrey & Pullen Independent Auditor’s Report. He explained that this figure was an erroneous number because capital costs were not considered when publishing the number. After questioning the accountant about the figure, another report was published in May 1999 showing the Landfill cost at $16.39 per ton, which changes the figures presented by Vice-Chairman Greer. Vice-Chairman Greer advised that the figures came from documents on record at the Environmental Management Department and asked if the documents had been changed. Director Church responded that no figures had been changed; however, the figures mentioned by Vice-Chairman Greer could have been seen in some documents where capital construction costs were not included. He offered to sit down with Vice-Chairman Greer to discuss how the numbers are generated. Director Church also pointed out that Staff has an excellent record on one particular cell in the Landfill from the day it was opened and closed including the number of tons buried in the cell and the exact size. This record has provided a snapshot of the number of tons that can be buried in one acre at the Landfill. This figure can be applied to the150 acres in the Landfill to determine the life NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 643 JUNE 14, 2001 span of the County Landfill. With the WASTEC Facility remaining open, the life span is 50 years and with the WASTEC Facility closed, the life span will be 25 years based on today’s waste stream which does not include growth. In concluding his comments, Director Church expressed concern about focusing on the three major haulers and forgetting about other customers that use the Landfill. The towns of Kure Beach, Wrightsville Beach, the City of Wilmington, small contractors, and hundreds of homeowners visit the Landfill on a daily and weekly basis. When deciding on what direction to follow, these users should be considered in the plan. Chairman Davis spoke on the need for the Board and everyone to understand that if the WASTEC Facility is closed, it will not be reopened. The County will have nothing in place to reduce the amount of trash being carried to the Landfill. If waste is carried to other county landfills and for some reason these landfills refuse to take the waste, the County will become dependent upon the New Hanover County Landfill as its one source for waste disposal. The other issue is the possibility of more stringent federal regulations regarding air emissions and the ash that could make it cost prohibitive to operate the WASTEC Facility. He emphasized the importance of taking all of these items into consideration before the Board makes a decision. Director Church explained that due to current concern regarding methane gas escaping from landfills, the federal government will probably enact more stringent regulations for use of landfills. He also spoke on the current $30.00 tipping fee and stated at this time, the figures indicate that the Landfill is operating at $15.11 per ton including construction of new cells, closing cells, and day to day operations. Other landfills, such as Sampson County, operate at approximately the same amount per ton. The difference between the $30.00 and $15.11 allows approximately $15.00 per ton to be applied to recycling, waste reduction programs, debt service, technical staff, etc. If waste is transferred to Sampson County at $30.00 per ton, the County will be buying fuel with the $15.00 per ton and no money will be available to apply to other programs or maintenance of the existing Landfill. These are expenses that will have to be paid. The proposed fee based system does provide a mechanism to fund programs and allow the County to move toward waste reduction. After discussion of trying to place a value on benefits of the WASTEC Facility to the Landfill, Director Church explained that 130,000 tons of waste are being received in the Landfill per year and reported that $1.7 million is saved per year by not having to build landfill space and pay operational costs to bury materials in the Landfill. This is the amount of savings that the WASTEC Facility provides for the Landfill and residents of New Hanover County. Vice-Chairman Greer requested the members of the Board to think about how much money would be saved if 75 percent of the waste was carried out of the County. Chairman Davis requested Assistant County Manager Weaver to prepare a detailed statement that simply explains the figures and costs for operating the current program as well as the Prince William County fee based system before the meeting on Monday, June 18, 2001. Commissioner Caster stated that regardless of what decision is made by the Board, the effort and work given by Director Church, Plant Manager Hubbard, and Staff to operate a good facility cannot be questioned, but the responsibility of the Board is to find the most effective ways possible to reduce the cost of government during an extremely difficult budget year. Vice-Chairman Greer requested the Board to make a decision on Monday regarding whether the WASTEC Facility should remain open because it is not fair to Director Church and Staff to be questioned each year when they are performing in an exceptional manner. Mr. O’Shields urged the Board to make a decision regarding the incinerator on Monday so the Advisory Board and Staff can have a response. Chairman Davis advised that he would allow 15 minutes to hear public comments. NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 28 SPECIAL MEETING WITH SOLID WASTE ADVISORY BOARDPAGE 644 JUNE 14, 2001 After commenting on this being a Work Session and not a public hearing, Commissioner Pritchett expressed concern for opening the floor to hear comments. Commissioner Caster referenced the number of calls from persons who are now opposed to allowing the WASTEC Facility to remain open and advised that only one side had been heard this evening. He stated regardless of when public comments are received, both sides should be given an opportunity to speak. After discussion, Chairman Davis adjourned the meeting at 6:40 P.M. Respectfully submitted, Lucie F. Harrell Clerk to the Board