MEMORANDUM. Introduction. Enabling Legislation

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1 To: Jan McHargue, Winston-Salem/Forsyth County Utility Commission From: Abby M. Goldsmith, R. W. Beck, An SAIC Company Subject: Solid Waste Management Authorities Date: Introduction Currently, the Winston-Salem/Forsyth County Utility Commission (CCUC) oversees the operation of the City s landfills. In addition, the CCUC funds the majority of the cost of the City of Winston-Salem s curbside recycling program and, until recently, funded the school recycling program and drop-off centers throughout Forsyth County. The City of Winston-Salem and Forsyth County, as well as other municipalities in Forsyth County, also have solid waste management responsibilities, including collection of solid waste. As part of a comprehensive study for the CCUC on best practices in solid waste management, R. W. Beck, An SAIC Company. (R.W. Beck) considered several options for a governing structure to manage solid waste in Forsyth County. One of the solid waste management structures evaluated was to create a solid waste management authority responsible for oversight of all solid waste management activities for the City of Winston-Salem, Forsyth County, and any other local governments that chose to participate. The full report, entitled Study of Best Practices for Solid Waste Management Serving Forsyth County, North Carolina describes the option of creating a solid waste management authority, along with many other best practices. This memo extracts some of the relevant parts of that report and expands on the description of enabling legislation in North Carolina and provides more examples of how solid waste authorities operate across the southeast. Enabling Legislation North Carolina Statutes 153A-421 authorizes any two or more local governments to create a regional solid waste authority to provide environmentally sound, cost effective management of solid waste, including storage, collection, transporting, separation, processing, recycling, and disposal of solid waste by adopting substantially identical resolutions in accordance with State law. The State legislation allows local governments to grant an authority the following powers: To apply for, accept, receive, and disburse funds and grants made available to authority; To employ personnel; To contract with consultants;

2 Page 2 To contract for the acquisition, construction, improvement, enlargement, operation or maintenance of any solid waste facility; To contract for the provision of any solid waste management services; To acquire property, real or personal; To sell, lease, exchange, transfer, or otherwise dispose of property, real or personal; To issue revenue bonds of the authority and enter into other financial arrangements to finance solid waste management activities; To locate solid waste facilities as the authority may see fit; To assume any responsibility for disposal and management of solid waste imposed by law on any member unit of local government; To set and collect such fees and charges as is reasonable to offset operating costs, debt service, and capital reserve requirements of the authority; To apply for such permits, licenses, certificates, or approvals as may be necessary; To acquire property located within the territorial jurisdiction of any member unit of local government by eminent domain pursuant to authority granted to counties; To require that any and all (i) solid waste generated within the authority's service area and (ii) recyclable materials generated within the authority's service area and transferred to the authority be separated and delivered to specific locations and facilities provided that if a private landfill shall be substantially affected by such requirement then the regional solid waste management authority shall be required to give the operator of the affected landfill at least two years written notice prior to the effective date of the requirement; and To do all things necessary, convenient, or desirable to carry out the purposes and to exercise the powers granted to an authority under its charter. The local governments that choose to be part of a solid waste management authority may select which of the above powers it will grant to the authority. Each participating local government specifies the powers of the authority in similar resolutions passed by their governing body. Advantages and Disadvantages Some of the key advantages and disadvantages of the City of Winston-Salem and Forsyth County (and other local governments interested in participating) creating a solid waste management authority are described in Table 1.

3 Page 3 Table 1 Advantages and Disadvantages of Creation of a Solid Waste Authority Advantages Increase collaboration between member local governments Potential to further reduce costs due to economies of scale Increase financing options for jointly owned facilities Can be structured to distance solid waste decisions from the political process Potential for more consistent programming among communities Disadvantages Potential to remove direct decision-making from elected officials. Adds another layer of government Examples of Solid Waste Authorities in the Southeast There are two solid waste authorities in North Carolina, both of which are multi-county authorities whose primary function is to provide transfer, haul, and disposal for its member local governments. There are also several single-county authorities across the southeast that have broader responsibilities for managing solid waste. A description of four solid waste authorities in the southeast, including the two in North Carolina, are described below with a particular focus on how participants pay for the services provided by the Authority. Coastal Environmental Partnership (North Carolina) What is now the Coastal Environmental Partnership was formed as the Coastal Regional Solid Waste Management Authority in 1990 by Carteret, Craven and Pamlico counties in North Carolina. The Authority owns a Subtitle D landfill and two transfer stations, operates a composting and tire diversion program at the landfill, and holds annual HHW collection days in all three counties. The individual counties and municipalities are responsible for operating and raising revenue for solid waste collection and recycling programs. The Authority Board is comprised of three members from Craven County and two from each of the other counties. The County Commissioners from each County appoint the members of the Authority Board. The Authority is fully funded through the revenues it generates, primarily revenues from the tipping fee at the landfill ($38.00 per ton) and transfer stations ($50.50 per ton). All landfill customers pay the same tipping fees. Revenues pay all operating costs of the Authority as well as fully fund closure and post-closure costs and depreciation of existing cells. As a financial assurance mechanism, the participating counties have agreed to charge an availability fee to their citizens should the Authority enterprise fund not sufficiently cover these costs. However, to date, the counties have not had to implement the availability fund nor has the Authority had to borrow any additional funds since the initial bond issue when the Authority was first created and

4 Page 4 its facilities developed. At that time, the Authority issued a $27 million revenue bond, $4 million of which was used to reimburse participating counties for costs they had expended between the time the Authority was formed and the time the Authority financing was complete. Up-front costs that were covered by the counties prior to the time the Authority was formed were paid based on population with Craven County paying 56 percent of the costs, Carteret County paying 36 percent of the costs, and Pamlico County paying 8 percent of the costs. The Authority and the participating counties assure tonnage, and thus revenue, at facilities using several approaches. First, the Authority keeps tipping fees competitive at its facilities, in part as a result of the economies of scale resulting from multiple counties sharing facilities. A competitive tipping fee provides an incentive for haulers to deliver waste to Authority facilities regardless of other requirements. In addition, the Authority has inter-local agreements with all counties and municipalities to deliver solid waste to Authority facilities and all private haulers must deliver to Authority facilities as a term of their required licensing agreement. For more information: Albemarle Regional Solid Waste Management Authority (North Carolina) The Albemarle Regional Solid Waste Management Authority, created in 1992, has seven member counties: Perquimans, Chowan, Gates, Dare, Currituck, Hyde, and Tyrrell. The primary reason for the formation of the Authority was to provide cost-effective solid waste disposal for the region. In 1993, the Authority signed a 20-year contract for waste disposal, which was revised and signed by member towns and counties in May 2009, resulting in a disposal agreement that will last until The Authority provides the following services for its members: Licensing waste haulers; Contract negotiations with disposal facility; Centralized data collection on tonnage, materials, and handling; Reporting to state and local governments; Billing and accounts receivable for towns, counties, and private haulers; Recycling and waste reduction education; Technical assistance, research, and grant writing; and Special waste management program development. The seven counties are divided into three regions. Each region is served by one transfer station, which is owned by a county or group of counties, and operated by a private contractor. The counties own the scales, scale houses, and transfer station buildings while the Authority owns the computer equipment used to produce tickets and run the software and the server that holds the data. County employees operate the scales at two of the transfer stations while Authority employees operate the scales at the third (this county reimburses the Authority for the cost of the

5 Page 5 scale operators at their facility). Each county or group of counties that owns a transfer station establishes the rules for use of that transfer station and sets the tipping fees for waste delivered there. The Authority s Board of Directors (Delegates) consists of one voting board member from each county, which is typically a County Commissioner or County Manager. The Authority has an Executive Director, two full-time administrative employees, and two part-time scale operators. These employees are employees of Albemarle Regional Health Services (ARHS), a seven-county health department based in Elizabeth City. The Authority contracts with ARHS to provide administrative and technical services including data management, technical services for the communications and computer systems, employee and benefits management, and financial oversight. Each of the seven counties pays the Authority an administrative fee that covers the operating expenses of the Authority. The fee paid per County is based on the tonnage disposed from that County. For more information: Horry County Solid Waste Authority (South Carolina) The Horry County Solid Waste Authority was created in 1990 by Horry County Council to develop and implement in all respects an adequate solid waste disposal and resource recovery/recycling system for all residents, commercial and industrial operators within the County, and such other entities as the Authority deems appropriate." In keeping with this mandate the Authority s Board of Directors adopted the following mission statement: To be an independent, innovative and responsive organization that aggressively provides comprehensive cost-effective solid waste management in an environmentally sound manner, incorporating state-of-the-art methods and technology, and educating the public on responsible waste management. In fulfilling its mission, the Authority has established a variety of comprehensive recycling, resource recovery, waste management services, and educational programs to meet the diverse waste management needs and interests in the County. The Authority owns and operates two landfills, a yard waste composting facility, a materials recovery facility, and a network of 24 convenience and recycling centers. Together, these facilities handle approximately 300,000 tons per year. The Authority is funded through two primary sources: disposal fees at its facilities and a millage (equal to 6.0 mills for FY 2011) on the property tax bill in the unincorporated areas only. The disposal facility tipping fees are deposited into a Solid Waste Authority Fund (totaling over $20 million in FY2011) that pays for the operation of the disposal and recycling facilities, including funding depreciation and a closure and post closure account for the landfill. The property tax revenues collected by the County from property owners in the unincorporated areas of the County are deposited into a Waste Management Fund (totaling over $6 million in FY2011), which pays for solid waste and recycling collection centers.

6 Page 6 The Authority Board is comprised of six voting members plus two ex-officio members (one County and one City of Myrtle Beach staff person) appointed by the County Commission. A total of 127 positions are included in the FY 2011 budget, half of them are dedicated to the County collection system. For more information: Palm Beach County Solid Waste Authority (Florida) Palm Beach County, Florida has a solid waste management authority that provides solid waste disposal and recycling services to the 1.4 million people in the County and collection of solid waste and recyclables to the residents and businesses in the unincorporated area. The Solid Waste Authority is a Dependent Special District, as defined in Florida law, and is governed by the seven elected County Commissioners of Palm Beach County, Florida. The Solid Waste Authority s facilities include a waste-to-energy plant, a landfill, a vegetation processing facility, a compost facility, two material recycling facilities, a household hazardous waste collection facilities, and a network of five transfer stations. These facilities were financed, in large part, through $420 million of revenue bonds, issued in 1984 and 1986 and subsequently reissued. As a condition of the bond issuance, the Authority was required to implement a funding mechanism in 1990 to ensure a stable and predictable revenue stream to meet debt service obligations. Currently, more than three-quarters of the revenue for the Authority s $200 million per year budget comes from a non-ad valorem special assessment included on the County s annual property tax bill. All Palm Beach County property owners pay the disposal component of the assessment. Residential property owners are assigned to one of three categories (single-family, multi-family, mobile home) that pay an annual rate intended to cover 100 percent of the cost of disposal of waste they generate. In 2011, the annual rate for the residential disposal component ranged from $94 to $166. Commercial properties are assigned to one of five categories based on estimated waste generation and pay an annual fee per square foot of space. These fees are intended to pay for the fixed costs of disposal, estimated to be 60 percent of the total disposal costs. The remaining 40 percent of the disposal cost for commercial waste is covered by a tipping fee on commercial waste at disposal facilities. In addition to the disposal component of the assessment, the Authority charges an additional assessment to residents in the unincorporated portion of the County to cover the cost of curbside collection of solid waste. The Authority provides these services through a contractor. Municipalities that collect solid waste may charge an additional fee for collection. The State legislation that created the Authority (Chapter , as amended) provides the Authority with the ability to assess all residential units, commercial property, and governmental property in Palm Beach County. Prior to that time, the waste haulers collected the disposal fees. The assessment rates are adopted by the Governing Board each fiscal year at a Public Hearing, and are calculated based upon the adopted budget and estimated waste generation studies.

7 Page 7 For more information: Conclusion Creating a solid waste management authority is one way for the City of Winston-Salem and Forsyth County to form a joint organization that could fulfill responsibilities that the CCUC may not have the clear mandate to perform. Membership in a joint organization does not have to be limited to the City and the County, other interested municipalities and even surrounding counties can be members either as the authority is formed or by joining down the road. North Carolina Statutes 153A-421 specifically allows a regional solid waste authority, that is, an authority that has more than one member local government, to enter into long-term contracts and to generate revenue through issuance of revenue bonds. Assigning these responsibilities to an independent agency may make it easier to finance and/or contract for transfer, disposal, or recyclable processing capacity. In addition, should local governments decide to implement a county-wide collection system for residents or businesses, an authority may be able to arrange for consistent services and offer them in a way that reduces the cost per customer better than individual local governments. On the other hand, assigning these responsibilities to an independent authority means that the elected officials of the local governments may no longer be making all the decisions about how solid waste will be managed. Ultimately, the City of Winston-Salem and Forsyth County must determine whether the overall benefits of assigning a defined set of solid waste management responsibilities to a solid waste management authority offset any concerns regarding designation of a separate agency to manage some parts of solid waste. Local governments can address concerns about delegating solid waste responsibilities, in part, by addressing the following questions in the resolutions that create an authority. Which solid waste management responsibilities will be assigned to an authority and which will be retained by individual local governments? What will be the source of capital and operating funds for the authority, its programs and facilities? How will the authority board members be appointed? How will decisions by the authority be made final? This report describes how member local governments of four different authorities, two of them multi-county authorities in North Carolina and two single-county authorities in other southeastern states, addressed these questions. \ag