OFFICE OF OPERATIONAL SERVICES PUBLIC WORKS DEPARTMENT Commission Meeting November 29, 2010 @ 7:00 p.m. Temp. Resolution N...
<ul><li>Issue </li></ul><ul><li>Background </li></ul><ul><li>Request for Information (RFI) Process </li></ul><ul><li>ILA/S...
ISSUE <ul><li>The Interlocal Agreement (ILA) for solid waste disposal is set to expire in 2013 </li></ul><ul><li>City to r...
<ul><li>City, enters into an ILA with Broward County for solid waste disposal services becoming a “contract community” </l...
BACKGROUND  (Cont’d) <ul><li>Critical Dates </li></ul><ul><ul><li>Bonds retire in 2011 </li></ul></ul><ul><ul><li>South WT...
BACKGROUND  (Cont’d) <ul><li>Existing ILA intended to sunset and equitably distribute any assets owned by the District </l...
DISPOSAL FEE HISTORY 1992-2010 Since 1996 (past 15 years) the City of Miramar would have paid  $14.2 million  less if it w...
<ul><li>Request for Information (RFI) issued August 10, 2010 </li></ul><ul><li>Five proposals were submitted and all Browa...
RFI OUTCOMES <ul><li>RFI process shows outside disposal alternatives competitively compare to the BSWDD Service Agreement ...
RISK ASSESSMENT
<ul><li>Solid waste management consulting for almost 25 years. </li></ul><ul><li>Project Manager for the RRB and Broward C...
<ul><li>Components of disposal costs </li></ul><ul><li>Uncertainties associated with Proposed District </li></ul><ul><li>E...
CURRENT DISTRICT TIPPING FEE ILA Cities ILA Cities ILA Cities
WHEELABRATOR SERVICE FEE Fee Component Estimated Value Description Base Tipping Fee $47.75 Defined as $47.75 CPI One-Time ...
<ul><li>The proposed ILA documents contain many uncertainties. </li></ul><ul><li>Three of the most significant uncertainti...
CURRENT DISTRICT TIPPING FEE $30.17 $7.99 ILA Cities ILA Cities ILA Cities $77.02 $99.20
PROGRAM COSTS AND LIABILITIES
<ul><li>Current District Programs </li></ul><ul><li>Contract administration </li></ul><ul><li>Recycled material processing...
MIRAMAR DISPOSAL COSTS FY 2009 Waste Disposed 63,618.94 Recyclable Material 2,789.05 Disposal Cost $6,266,466  Excess Reve...
<ul><li>District assets and liabilities not determined. </li></ul><ul><li>New programs envisioned but costs not determined...
WHEELABRATOR SERVICE FEE Service Fee <ul><li>Adjustments: </li></ul><ul><li>Inflation </li></ul><ul><li>Change-in-Law </li...
ULTIMATE ASH MONOFILL BUILD OUT Full Cell 1A 1991 21 Acres Cell 1B  Until 2017 Cell 1B 1997 13.3 Acres Cell 1C Begin devel...
<ul><li>No limit. Charged as incurred. </li></ul><ul><li>Ash Monofill expansion </li></ul><ul><ul><li>New cell to be in pl...
CHANGE-IN-LAW COSTS
<ul><li>Can be adjusted maximum of 10% in any year, or up to 40% combining all prior adjustments over  the Service Fee on ...
<ul><li>If a capital modification is needed, the District covers about 2/3 of Wheelabrator’s cost. </li></ul><ul><li>Capit...
MAXIMUM CIL Increase to Service Fee (excluding inflation, pass through Costs) 140% over Service Fee on Contract Date Total...
TIPPING FEE RANGE – PROPOSED DISTRICT $12 - $30.17 ILA Cities ILA Cities ILA Cities $53.19-$110.02 $65.19-$140.19
Assumes $1/ton escalated for HHW, e-waste, etc. PROPOSED DISTRICT vs. ALTERNATIVE <ul><ul><li>Proposed District @$65.19 (P...
<ul><li>In its current form, the City would be exposed to many undefined risks and liabilities. </li></ul><ul><li>The City...
<ul><li>$725,000 one-time payment offered if execution of ILA prior to Dec. 31, 2010 </li></ul><ul><li>Equivalent to $72,5...
<ul><li>Expiration of the Interlocal Agreement presents a rare opportunity for options </li></ul><ul><li>The promise of a ...
RECOMMENDATION The Director of Public Works recommends deferring the execution of an amended Interlocal Agreement with Bro...
QUESTIONS ?
Upcoming SlideShare
Loading in...5
×

Miramar risk assessment final

430

Published on

Miramar, Fl was faced with the strategic planning decision whether or not to join the Broward Solid Waste Disposal District. This presentation provides a detailed analysis of the proposed district and contractual arrangements conducted by Value Added Consulting.

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
430
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Miramar risk assessment final

  1. 1. OFFICE OF OPERATIONAL SERVICES PUBLIC WORKS DEPARTMENT Commission Meeting November 29, 2010 @ 7:00 p.m. Temp. Resolution No. R-4908 Deferring the Execution of an Amended Interlocal Agreement (ILA) with Broward County for Solid Waste Disposal Service
  2. 2. <ul><li>Issue </li></ul><ul><li>Background </li></ul><ul><li>Request for Information (RFI) Process </li></ul><ul><li>ILA/Service Agreement Risk Assessment </li></ul><ul><li>Signing Bonus </li></ul><ul><li>Staff Recommendation </li></ul>PRESENTATION OVERVIEW
  3. 3. ISSUE <ul><li>The Interlocal Agreement (ILA) for solid waste disposal is set to expire in 2013 </li></ul><ul><li>City to receive a “one-time” $725,000 signing bonus if signs onto a new 10-year ILA by December 31, 2010 </li></ul><ul><li>Deferring the execution of ILA may put the signing bonus at risk </li></ul><ul><li>City has a window of opportunity to engage in alternative options that could return greater benefits to the City </li></ul>
  4. 4. <ul><li>City, enters into an ILA with Broward County for solid waste disposal services becoming a “contract community” </li></ul><ul><li>Other Cities executed same ILA creating the Broward Solid Waste Disposal District (BSWDD) dependent to the county </li></ul><ul><li>Broward County issued bonds to support the BSWDD and requires all contract communities to deliver wastes to system to ensure revenue stream </li></ul>BACKGROUND
  5. 5. BACKGROUND (Cont’d) <ul><li>Critical Dates </li></ul><ul><ul><li>Bonds retire in 2011 </li></ul></ul><ul><ul><li>South WTE agreement expires 2011 </li></ul></ul><ul><ul><li>North WTE agreement expires 2012 </li></ul></ul><ul><ul><li>ILA expires in August 2013 </li></ul></ul><ul><li>Resource Recovery Board (RRB) has negotiated amended WTE Service Agreement </li></ul><ul><ul><li>10-year initial term </li></ul></ul><ul><ul><li>Some improvement, but still pass through risks </li></ul></ul><ul><ul><li>BSWDD to pay Wheelabrator for alignment of North and South facility contracts ($6 million+) </li></ul></ul>
  6. 6. BACKGROUND (Cont’d) <ul><li>Existing ILA intended to sunset and equitably distribute any assets owned by the District </li></ul><ul><li>RRB believes best course of action is to continue with the existing BSWDD and amend the ILA to coincide with the WTE Service Agreement </li></ul><ul><li>Wheelabrator will pay out a one-time $12 million signing bonus to contract communities that execute an amended ILA prior to December 31, 2010 </li></ul><ul><ul><li>City’s Share is approximately $725,000 </li></ul></ul><ul><li>City is obligated to ILA until 2013 and is final date to decide participation in amended ILA </li></ul>
  7. 7. DISPOSAL FEE HISTORY 1992-2010 Since 1996 (past 15 years) the City of Miramar would have paid $14.2 million less if it was paying Non-ILA tip fees The differential in 2010 is $1.5 million/year
  8. 8. <ul><li>Request for Information (RFI) issued August 10, 2010 </li></ul><ul><li>Five proposals were submitted and all Broward County Cities were invited to review </li></ul><ul><li>Seven ILA cities and two non-ILA cities participated in the presentations of the proposals on October 19, 20 and 25, 2010 </li></ul><ul><li>City consultant submitted a final report on the RFI process </li></ul>RFI PROCESS
  9. 9. RFI OUTCOMES <ul><li>RFI process shows outside disposal alternatives competitively compare to the BSWDD Service Agreement </li></ul><ul><li>Liabilities are generally confined to an “arm length transaction” limiting cost increases </li></ul><ul><li>RFI process did not allow for proposers to disclose their “best competitive” details </li></ul><ul><li>A formal RFP will allow for direct comparison of financial and service benefits </li></ul>
  10. 10. RISK ASSESSMENT
  11. 11. <ul><li>Solid waste management consulting for almost 25 years. </li></ul><ul><li>Project Manager for the RRB and Broward County from 2003 to 2008. </li></ul><ul><li>Contract administration and negotiation as Owner’s Representative for 15 large mass burn WTEs in the US (combined capacity > 21,750 tons per day). </li></ul><ul><li>Lead negotiator for SWA Palm Beach County 20 year O&M Agreement in 2008. </li></ul>SANDY GUTNER BACKGROUND
  12. 12. <ul><li>Components of disposal costs </li></ul><ul><li>Uncertainties associated with Proposed District </li></ul><ul><li>Estimated costs of proposed District compared to alternative </li></ul>DISCUSSION TOPICS
  13. 13. CURRENT DISTRICT TIPPING FEE ILA Cities ILA Cities ILA Cities
  14. 14. 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
  15. 15. <ul><li>The proposed ILA documents contain many uncertainties. </li></ul><ul><li>Three of the most significant uncertainties include: </li></ul><ul><ul><li>District Program expenses and liabilities </li></ul></ul><ul><ul><li>Service Fee Pass Through Costs </li></ul></ul><ul><ul><li>Change-in-Law risks </li></ul></ul><ul><li>The potential exists for disproportionate costs to Contract Communities. </li></ul><ul><li>Risk allocation include many that are more typical of public ownership. </li></ul>OVERVIEW OF KEY RISKS
  16. 16. CURRENT DISTRICT TIPPING FEE $30.17 $7.99 ILA Cities ILA Cities ILA Cities $77.02 $99.20
  17. 17. PROGRAM COSTS AND LIABILITIES
  18. 18. <ul><li>Current District Programs </li></ul><ul><li>Contract administration </li></ul><ul><li>Recycled material processing </li></ul><ul><li>Closure and post-closure reserves </li></ul><ul><li>Environmental compliance </li></ul><ul><li>Public information and education </li></ul><ul><li>Household Hazardous Waste </li></ul><ul><li>E-waste recycling </li></ul><ul><li>Scrap tire removal </li></ul><ul><li>Unincorporated collection services </li></ul><ul><li>Research and development </li></ul><ul><li>Proposed Programs </li></ul><ul><li>Code enforcement </li></ul><ul><li>Regional yard waste </li></ul><ul><li>Construction and demolition debris </li></ul><ul><li>Emergency debris processing and disposal </li></ul>PROGRAM EXPENSES/LIABILITIES Approximate Cost $30/ton Approximate Cost $???? Total Program Costs ?????
  19. 19. MIRAMAR DISPOSAL COSTS FY 2009 Waste Disposed 63,618.94 Recyclable Material 2,789.05 Disposal Cost $6,266,466 Excess Revenue Distribution $0 Recycling Revenue ($134,919) Net Disposal Cost $6,131,547 Net Disposal Cost per Ton $96.38 Wheelabrator Service Fee $66.26 Difference (Program Costs) $30.12
  20. 20. <ul><li>District assets and liabilities not determined. </li></ul><ul><li>New programs envisioned but costs not determined. </li></ul><ul><li>Code enforcement costs not estimated. </li></ul><ul><li>No business plan. Plan of operations to be modified after ILA. </li></ul><ul><li>As an Independent District, all costs borne by Contract Communities. </li></ul><ul><li>All costs recovered through tipping fees and charges. </li></ul>DISTRICT PROGRAM UNCERTAINTIES
  21. 21. WHEELABRATOR SERVICE FEE Service Fee <ul><li>Adjustments: </li></ul><ul><li>Inflation </li></ul><ul><li>Change-in-Law </li></ul><ul><ul><li>Capital </li></ul></ul><ul><ul><li>O&M </li></ul></ul><ul><ul><li>Lost revenue </li></ul></ul><ul><ul><li>Pass through costs </li></ul></ul><ul><li>Pass Throughs </li></ul><ul><li>Ash monofill expansion </li></ul><ul><li>Leachate disposal </li></ul><ul><li>Property tax </li></ul><ul><li>Non ad valorem </li></ul>
  22. 22. ULTIMATE ASH MONOFILL BUILD OUT Full Cell 1A 1991 21 Acres Cell 1B Until 2017 Cell 1B 1997 13.3 Acres Cell 1C Begin development by 2014 (1)
  23. 23. <ul><li>No limit. Charged as incurred. </li></ul><ul><li>Ash Monofill expansion </li></ul><ul><ul><li>New cell to be in place by 2017. </li></ul></ul><ul><ul><li>Expansion is 6 years earlier due to non-ILA waste. </li></ul></ul><ul><ul><li>Not a Capital Cost Adjustment. </li></ul></ul><ul><ul><li>Estimated $18M to $20M. </li></ul></ul><ul><li>Leachate treatment and disposal. </li></ul><ul><li>Capping and closure costs. </li></ul><ul><li>Taxes, including non ad valorem, sales taxes. </li></ul>PASS THROUGH COST UNCERTAINTIES (excluded from Service Fee Caps)
  24. 24. CHANGE-IN-LAW COSTS
  25. 25. <ul><li>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. </li></ul><ul><li>But…. </li></ul><ul><li>Maximum adjustments exclude Pass Through Costs and inflation adjustments. </li></ul><ul><li>Service Fee was adjusted mid-year (May 2010) by 11.7% due to Energy Adjustment. </li></ul><ul><li>Another similar adjustment possible before Commencement Date. </li></ul>CHANGE-IN-LAW SERVICE FEE ADJUSTMENTS
  26. 26. <ul><li>If a capital modification is needed, the District covers about 2/3 of Wheelabrator’s cost. </li></ul><ul><li>Capital may be financed by Wheelabrator with a 10% return on equity. </li></ul><ul><li>If Wheelabrator loses revenue due to C-I-L, District must make Wheelabrator whole. (if air emission changes result in lower energy recovery). </li></ul><ul><li>If operating and maintenance costs increase due to C-I-L improvements, the District must make Wheelabrator whole. </li></ul><ul><li>If ash can no longer to be used for daily cover at WM landfill, District must make Wheelabrator whole. </li></ul>CHANGE-IN-LAW RISKS
  27. 27. MAXIMUM CIL Increase to Service Fee (excluding inflation, pass through Costs) 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%
  28. 28. TIPPING FEE RANGE – PROPOSED DISTRICT $12 - $30.17 ILA Cities ILA Cities ILA Cities $53.19-$110.02 $65.19-$140.19
  29. 29. Assumes $1/ton escalated for HHW, e-waste, etc. PROPOSED DISTRICT vs. ALTERNATIVE <ul><ul><li>Proposed District @$65.19 (Program costs - $ 12) </li></ul></ul>Cumulative Savings of $58/ton vs. $77.70 Cumulative Savings of $58/ton vs. $65.19
  30. 30. <ul><li>In its current form, the City would be exposed to many undefined risks and liabilities. </li></ul><ul><li>The City will have limited control over the risks and liabilities incurred by the District. </li></ul><ul><li>The “signing bonus”, offset by the District’s one-time payment is a fraction of known and unknown risks. </li></ul>RECAP
  31. 31. <ul><li>$725,000 one-time payment offered if execution of ILA prior to Dec. 31, 2010 </li></ul><ul><li>Equivalent to $72,500 per year over 10 years </li></ul><ul><li>Miramar produces approximately 70,000 tons of solid waste per year </li></ul><ul><li>A single $1 per ton change in disposal cost = $70,000 per year (or $700,000 over a 10 year period) </li></ul>ILA SIGNING BONUS ASSESSMENT
  32. 32. <ul><li>Expiration of the Interlocal Agreement presents a rare opportunity for options </li></ul><ul><li>The promise of a financial incentive is creating a sense of urgency </li></ul><ul><li>Long-term financial impacts are of great concerns </li></ul><ul><li>A competitive process for options will benefit Miramar residents and businesses </li></ul>SUMMARY
  33. 33. RECOMMENDATION The Director of Public Works recommends deferring the execution of an amended Interlocal Agreement with Broward County for Solid Waste Disposal Services until the City can complete its own Request for Proposal Process.
  34. 34. QUESTIONS ?
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×