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2008-11-05 SWAB MeetingNEW HANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 1 ASSEMBLY The New Hanover County Solid Waste Advisory Board met on Wednesday, November 5, 2008, at 4:07 p.m. in the Lucie F. Harrell Conference Room at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present were: Chairman Claud "Buck" O'Shields, Jr.; Vice-Chairman Robert W. Mitchell; Martin J. Michaelson; John Richard Newton; David Sims; Assistant County Attorney Sharon Huffinan and Deputy Clerk to the Board of Commissioners Kymberleigh G. Crowell. Others present: Assistant County Manager David F. Weaver and Environmental Management Director John Hubbard. MEETING CALLED TO ORDER Chairman O'Shields called the meeting to order and welcomed everyone to the meeting of the New Hanover County Solid Waste Advisory Board. APPROVAL OF MINUTES Chairman O'Shields asked the members to review the draft meeting minutes of October 29, 2008 for any needed corrections and/or changes. Hearing no comments, Chairman O'Shields called for a motion to approve the meeting minutes of October 29, 2008. Motion: Mr. Mitchell MOVED, SECONDED by Mr. Sims, to approve the meeting minutes as presented. Upon vote, the MOTION CARRIED UNANIMOUSLY. DISCUSSION/REVIEW OF OPEN ISSUES OF OCTOBER 29, 2008 PRESENTATIONS At the Board's request during the October 29, 2008 meeting, Director Hubbard presented comments concerning the October 29, 2008 presentations of Waste Industries and Waste Management. In connection with Republic's presentation, he stated that although the presentation was viewed as nonresponsive, there were some good ideas on landfill operations that staff planned to pursue. Mr. Mitchell also presented comments concerning Waste Industries. As representatives from both companies were in attendance, the Board asked that they join the discussion to provide answers to the comments. Waste Industries Presentation Review At the request of the Board, Phil Carter, Waste Industries Landfill Development, joined the meeting in order to respond to presentation comments presented by Director Hubbard and Mr. Mitchell. Discussion was held and responses were provided by Mr. Carter: • Transfer station: Waste Industries would perform all transfer station maintenance. A brief discussion was held as to what would occur if the contract was terminated prior to the 20 year end. If built by Waste Industries, the transfer station would be owned by them until the end of the contract unless the contract was terminated early by the County. If early contract termination occurred, the County would pay fair market value for the station as determined by an independent appraiser and would not be able to use the station until the end of the original contract term. • Cell closure: Discussion was held about the different aspects of opening and closing cells. An engineering plan for temporary closures needs to be in place and provided to NCDENR. The quote of $40.43/ton does not cover the plan and Waste Industries would be willing to assist with engineering. Waste Industries views mothballing as a way to save landfill for future use and there would be a need to determine the minimum requirements to maintain the landfill permits. Director Hubbard noted that NCDENR does not necessarily view mothballing as a permanent action and an exact definition needs to be provided by the agency. • Weigh station: County would maintain building and scales. • Citizen waste drop-off area: Thought is that County would operate this section so citizens could continue to utilize service and it is not included in the current contract. NF,W IIANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 2 • Mothballing costs: Director Hubbard reported that in discussion with Montenay Resource Recovery, it was stated this was the most expensive option. Mr. Carter clarified that Waste Industries may recommend converting the WASTEC facility into a material recovery or recycling facility. • C&D recycling center: The center would be operated by the County. Waste Industries is willing to provide up to $300,000 for construction of the center. If included, the price of $40.43/ton would stay the same with no rate impact. • Landfill gas: The landfill gas system is not part of the contract. Brief discussion was held that this should be considered a separate issue from the proposal. • Recycling: Waste Industries has spoken with a partner regarding handling recyclables. This service is not part of the contract, would be an addition to the $40.43/ton quote and is an option that can be explored. It can be considered a separate issue from the proposal. • Waste tonnage guarantee/flow control: Discussion held that tonnage would not be guaranteed if the County gave afranchise/agreement to another entity. These issues would need to be handled by the legal departments of each party. • Fuel surcharge: Of the $40.43/ton quote, the $17 transportation portion of this tipping fee would increase due to fuel surcharge increases. If the fuel increase is 4% then the $17 portion increases by 1 % and can be negotiated. • DEM staff: Waste Industries would not pay severance packages but DEM employees could apply for jobs; there would be openings at various levels within the company for this site. • Contract conditions: Terms and conditions would need to be established regarding contract termination. • Transfer station location: Discussion was held about construction and location of the transfer station and other facilities; does require state permitting. Mr. Carter will discuss location concerns with the appropriate people and provide Board with company's response. • Gate fees: Mr. Carter confirmed that gate fee charges would be set by the County; fee paid by Waste Industries would be the same as what other companies pay and is included in the proposal. Director Hubbard explained that these fees would still go before the County Commissioners for approval and contract issues may arise if gate fee increases are not approved. Discussion held regarding how fees are handled by other counties who are under contract with Waste Industries. • $.40 fuel surcharge: Discussion held about the accuracy of the $.40 per unit per month fuel surcharge. Clarification is needed on how this is calculated and charged to customers. Brief discussion was held regarding the price quote increase from the May 19, 2008 presentation. Mr. Carter stated that the new price quote is based on using the company's current sites and includes the $2 state surcharge plus other costs based on a company-wide review. He further clarified lawsuits such as the one filed by Waste Industries and Black Bear Disposal against the State of NC do not have an effect on costs calculated for contract proposals. In response to Mr. Mitchell's comments, Mr. Carter will provide an individual component breakdown for the $40.43/ton quote, clarification of charges based on contract length and waste tonnage levels per day, transfer station costs based on various waste tonnages, and a simple document laying out the responsibilities of each party. He will discuss with the company the options available to pay the County a fee to haul a certain waste amount, not disposed of at the County facility, to their own landfill in order to save County landfill space. Staff confirmed that yard waste is not taken to the landfill or incinerator; it is taken to the various mulch companies in New Hanover County. Mr. Carter also provided the Board with a record of Waste Industries' litigation based on the Board's October 29, 2008 request. Waste ManaEement Presentation Review At the request of the Board, Greg Peverall, Waste Management Director, Market Area Planning, joined the meeting in order to respond to presentation comments presented by Director Hubbard. Discussion was held and responses were provided by Mr. Peverall: NEW HANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 3 • Closing WASTEC: During the 90-day due diligence period and contract negotiation period, the issue of opening or closing WASTEC would be settled before the contract was executed. The $51/ton quote would be adjusted proportionally if the County decided to close WASTEC. The proposal currently includes operating WASTEC at 90% efficiency, maintenance, additional permitting and recycling; prices could be set for each component; all work would be done at current location. Discussion was held regarding landfill capacity estimates. Mr. Peverall clarified that engineering landfill life build-out estimates are based on approximately 50 years of life remaining without WASTEC and recycling components and receiving approximately 280,000 tons per year with a compaction rate of 1,450 pounds per yard. Landfill life is estimated to be higher with the inclusion of WASTEC and other components. Engineering estimates can be reviewed under tab 5 of the May 19, 2008 presentation. • Contract initiatives: Mr. Peverall confirmed that Waste Management would commit to funding the proposed initiatives under the contract. • Employee benefits: Information can be provided on employee benefits. • Facility Operations: Mr. Peverall confirmed that the County would own the facilities and Waste Management would operate, maintain and permit future capacity; does not see the arrangement having a negative effect on flow control. • Gate Fees: In connection with the prior comment, Director Hubbard expressed the same concerns with this proposal as with Waste Industries' proposal on the gate fees issue. Mr. Peverall stated that the $51/ton should cover everything and has not known this matter to be a contract issue. • Contract conditions: Terms and conditions would need to be established regarding contract termination. • Recycling revenues: If prices drop, it would be Waste Management's expense and would not have an effect on the contract. Mr. Peverall stated that the option of revenue sharing should be examined by the County but noted that price fluctuations would have an effect. • Automated recycling: It is more of a behaviour modification tool and appeals to a certain demographic (i.e.: parents and kids); proposal does not included curbside recycling. • C&D Recycling and MRF locations: Very little acreage is needed for these services; no more than 5 acres and hopefully will be able to be built on County property. Locations will not be located on the southern property as Waste Management considers that area valuable and wants to maximize the area for airspace. Proposed price would not change if the need arose to buy land, if County land was not available. • Landfill Gas: Mr. Peverall confirmed that Waste Management would receive the revenues and carbon credits from the fueUpower sales. • Cell construction and closure: It was confirmed that cell construction, closure, associated permit fees, post closure activity and environmental park initiatives are included in the $51/ton. • Landfill closure funds: This aspect would not be funded by Waste Management as the permit would still be in the County's name. Discussion was held on available options if the County does not pass government fmancial health test. If this occurred, Waste Management could take it over, if the County so desired. Mr. Peverall commented that there are about 15 different mechanisms that could be implemented for this issue. • Curbside recycling: This is not included in the proposal and if the County wanted to institute it, an additional cost would be incurred. Single stream drop-off sites would be included. Waste Management would take over the manned convenience centers and possibly convert them to single stream sites, if more friendly to the user. • County positions: Waste Management would have the weighmaster. The company would like to see the County establish an advisory committee to oversee the project. If the preference is to staff someone, it is negotiable whether it is the County's or the company's weighmaster. • $2 state surcharge: The surcharge is included as part of the $51/ton quote. In response to additional questions, Mr. Peverall confirmed that the cost of living index is included in $51/ton quote as the CPI; liability issues would be clarified by the attorneys as to what areas/issues each party would be held liable. Further discussion was held about the operation of WASTEC and Mr. Peverall will check to see what the price per ton would be to operate only WASTEC. Mr. Mitchell requested that it be noted Waste Management NEW HANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 4 declined to provide a sample contract to review indicating that they would proceed with providing contract documents if awarded the contract. Mr. Michaelson left the meeting at 5:30 p.m. Discussion was held regarding Republic's presentation and the Board felt the recommendation of hiring an engineering consultant is not a bad idea, if the County had the funds. As the Board feels that this may be helpful in some areas of the project, it will be kept as an option for possible inclusion in the final recommendation. The Board will continue discussions regarding the presentations during the November 12, 2008 meeting. Mr. Carter and Mr. Peverall will try to provide responses to the Board's questions by the November 12, 2008 meeting. Copies Director Hubbard's and Mr. Mitchell's documents are included herein as Attachment 1 and 2, respectively. ADJOURNMENT There being no further business, Chairman O'Shields adjourned the meeting at 5:45 p.m. Respectfu//lly submitted, /~J" rl i h G. rowell Kymbe e g Deputy Clerk to the Board NEW HANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 5 ATTACHMENT 1 Director Hubbard's Comments on Hauler Presentations Waste Industries (WI) WI proposes a 20-year agreement at $40.43 per ton to build and operate a transfer station at the landfill, plus transport the waste to the Sampson County landfill. They will increase that fee based on the CPI and will increase or decrease the fee based on fluctuation of fuel prices. They also propose mothballing the landfill and WASTEC. They base their fee on a 250,000 ton throughput and will contribute $300,000 towards construction of a C&D recycling area. • There was no mention of who performs transfer station maintenance. Assume that WI owns transfer station since they are building it. • As described in the presentation, "mothballing" the landfill would mean accepting a small amount of waste to maintain the operating permits, which would still need to be renewed every 5 years at the current price of $30,000. If this is the case, additional funding would be needed to close a large amount of area, equipment (e.g., compactor, bulldozer) to run the operation, and staff to operate and maintain the equipment, to monitor and operate leachate control system, to perform ground water monitoring, and to maintain the landfill grounds. • County would operate the weigh station - no mention of who maintains building and scales. • The landfill currently has an area where citizens can drop off waste - no mention of staffmg and operating this area. • County funds will pay for mothballing WASTEC. Proper mothballing can be expensive and there was no mention of who would pay for this. • Additional cost above $300,000 of building a C&D recycling center would be borne by the County. If it is built, additional cost would be needed for equipment operation and maintenance, plus more staff. WI stated that the $40.43 was based on 250,000 of non recycling waste. By operating the C&D recycling center, the reduction in waste going to the transfer station could raise the price per ton. • No mention of a landfill gas system. With the landfill "mothballed" it is unknown whether or not production of methane within the existing landfill will eventually trigger being under New Source Performance Standards, thus requiring installation of a gas collection and control system. • Proposal does not include recycling. If the County wants such a program, the cost will escalate according to the sophistication of a system desired (i.e., drop-off sites, curbside recycling, Materials Recovery Facility). This will add staff and equipment. Assume County would receive revenue from commodity sales. • Since waste will now be going to a private facility (transfer station), County may not have the ability to enact flow control. Therefore, the tonnage cannot be guaranteed. Also, if the system is operated like WI's contracts in Brunswick and Pender Counties, WI will not pay a gate fee at the transfer station, thus giving them a huge advantage over all other haulers. • Not clear on how the fuel surcharge is administered. • If this proposal is adopted, the majority of DEM staff would be laid off. No mention of who would pay the severance package for these employees. • Need to establish conditions under which the contract will be terminated. • The location of the transfer station and any other facilities that maybe built is important. If they are built on the southern property, at some point they would need to be removed to provide space for landfilling. • Gate fee increases would still go before the Board of Commissioners. CPI increases would be annual but fuel surcharges could be anytime. Problems could occur if commissioners do not allow increases. May affect contract. NEW HANOVER COUNTY SOLID WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 6 • WI stated during the presentation that customers in New Hanover County were charged an additional $0.40 for fuel increases. A DEM staff member stated that his quarterly bill increased as much as $3.81 for "oiUenergy price adjustment." Waste Management (WMI) WM will take over the operation of DEM with all programs that exist now. They would invest $lOM (?) for a landfill gas (LFG) project, C&D recycling system, Materials Recovery Facility, and upgrades at WASTEC. They would employ current County employees at current rates of pay. The agreement would be for 20 - 30 years. The program would cost NHC $51 per ton with adjustments for CPI and fuel. Weighmasters will be County employees and County will establish the gate rate. • No guarantee that WASTEC would remain open. Worst case would be WMI take over operation, shut down WASTEC, and run the landfill to capacity to maximize net revenues. • Need contract commitment for contract initiatives (i.e., LFG, C&D recycling, MRF, WASTEC upgrades). • We would like to see details on benefits provided to employees. Assume they would enter into a new retirement system and investment would end in the County system once they become WM employees. • Assume County would still own facilities and that WMI would contract to operate. County may not have the ability to enact flow control. Other haulers and municipalities may elect other sites; especially WI who has transfer stations in both Brunswick and Pender Counties where they have no gate fee. Assume WMI would not pay gate fee at NHC facilities. Tonnage cannot be guaranteed. • Gate fee increases would still go before the Board of Commissioners. CPI increases would be annual but fuel surcharges could be anytime. Problems could occur if commissioners do not allow increases. May affect contract. • Need to establish conditions under which the contract will be terminated. • Recycling revenues have been high recently but the market fluctuates. Not sure if the program would change or citizens be charges should commodity prices drop significantly. • Automated recycling proposed by WMI are time-consuming because material is fed one at a time. This may have an impact on volume. No mention of who receives commodity revenues. • No mention of C&D recycling and MRF location. No mention whether or not $51 per ton includes purchase of land and operation of these facilities. No mention of ownership and maintenance. • Assume since WMI provides LFG project, they receive revenues from fueUpower sales (depending upon system) and carbon credits. • No mention of landfill cell construction and closure and whether or not $51 per ton includes this, including permit fees. No mention of who pays for post closure activity such as monitoring. Assume $51 per ton pays for Environmental Park initiatives. • Owners of landfills must have funds on hand for landfill closure. Governments are not required to have these funds on hand if they pass a test based on the health of the government's finances. NHC continuously passes this test. Not sure if this will change with WMI operating the department. • Curbside recycling is not included. Not sure if volume at drop-off sites would necessitate MRF construction. Should curbside recycling be introduced, extra cost would be added to $51 per ton. • Need to establish County positions needed for oversight of solid waste program in NHC. Since they are County employees, weighmaster pay would be funded by the County. Could be paid by raising the gate fee or out of the General Fund. • No mention of who pays $2.00 surcharge for waste landfilled. Republic No further consideration because they were not responsive. They had some good ideas regarding landfill operation which staff will pursue. NEW HANOVER COUNTY SOLH) WASTE ADVISORY BOARD NOVEMBER 5, 2008 MEETING PAGE 7 ATTACHMENT 2 Waste Industries Comments Bob Mitchell Contract: 1. Term proposed is 20 years -too long. Consider their offer for a shorter term - 5, 10 years; 2. They pay for the construction of the Transfer Station, and all maintenance. If NHC cancels early, NHC pays them fair market value but cannot use the Transfer Station until the original term of the contract expires. Likewise, NHC MUST open the landfill. These two points are unacceptable. Likewise, the language says the appraiser to set value must be familiar with landfill operations -but the question is what is the value when it cannot be used for the balance of the contract and how does the general value of a landfill come into play?; 3. Lawyers need to assure NHC that we would not be roped into any liability with how WI runs their Sampson County landfill.... this is VERY important; 4. Requires ALL county waste to be transported... this limits our options for maintaining the landfill and its permits; 5. No discussion as to where yard waste would be taken. If it were to our landfill, this would be an inappropriate use of precious land and would not contribute to methane production; 6. Note that WI gets all the methane rights at their landfill -this cuts costs to them substantially; 7. Escalation clause CPI includes fuel costs and they have a separate fuel escalation clause. They contend that the 75% of CPI is an adjustment to reflect that, but that % is probably not the weighting in the index; 8. How would a recycling program affect the contract which refers to nonrecycled refuse stream? Concept: 1. Break down the $40.43 into individual price components; 2. If we want to dump only, what are the charges for various tonnages per day -set the tonnages we want?; 3. Under their proposal, simple T-account of what WI would do and what NHC would still do - so we clearly understand responsibilities of each. We can add things such as NHC responsible for existing landfill, etc.; 4. What would a transfer station cost for different tonnages of daily MSW?; 5. Given that two variables determine their pricing, construct a pricing matrix with 3, 5, 10, 15, and 20 year contracts and daily tonnages on the side (we should set the same as above point 2); 6. Under the proposed contract, what if NHC built the transfer station -how would that affect pricing and our flexibility for future alternatives? 7. Could the Transfer Station, if we built it, be easily used for other purposes when not used for its primary purpose? 8. What are prices for other "services" we might want? Why can't these all be unbundled for simple analysis? 9. Note: our per capita waste costs are not comparable to other counties due to tourism and the fact that we "import" workers on a daily basis from surrounding counties. 10. Cost savings mentioned of $78 million are admitted by them to be inaccurate as they did not give credit to the county numbers of WASTEC, escalation of costs, methane generation (if we cease operations, this by product will cease and the likelihood of a partner to develop it may vanish), nor the unknown (but potentially costly) "mothballing" of both WASTEC and the landfill. Their words were to the effect that we could discuss mothballing with the state and they probably be understanding - no guarantee that our permits would remain valid;