Lincoln County Landfill Long Range Plan

Lincoln County Landfill Historical Perspective and Long Range Plan for 2010 and Beyond (Revised by Aga Razvi, August 24, 2010)

Background

The Lincoln County Landfill is a fee-for-service enterprise offering waste disposal services to county tax payers. The landfill was opened in 1989. The landfill was originally designed to last an estimated 15 years with a planned closure in the year 2004. Due to efficiencies of operation, recycling bans, and utilization of a separate construction/demolition landfill, only 67% of the permitted space has been utilized. At the current rate, the permitted space is expected to last an additional 6.6 years with an anticipated closing date of 2016.

The current landfill was designed and constructed in phases. The cost of the planning, construction of the initial phase and associated infrastructure was four million dollars. This money was borrowed from the County and has been paid back. Since the opening of the landfill, several additional phases have been constructed. All base construction activities have been completed for the life of the landfill. Once the landfill approaches its closing date, a final cap will be constructed in the year 2016. Since the beginning 8.11 million dollars have been spent on acquiring land, equipment, and construction expenditures. In addition, the landfill has also paid $ 641,000 on behalf of the county for the old landfill to the City of Merrill. At the present, the enterprise is entirely funded by the fees it collects and is not supported by tax levy dollars. At the present the landfill has no debts and the long range goals are to operate the landfill without any future debt.

Long term goals of this enterprise are to: 1. Offer continuous long-term quality service at a fair cost to Lincoln County residents. 2. Operate an environmentally safe landfill (-minimize environmental liability). 3. Continue to improve operating efficiencies. 4. Operate the landfill in a fiscally responsible manner so as to avoid a need for any tax dollars to support the enterprise (- stay off of the tax levy). 5. Extend the landfill useful life through 2016. 6. Decide the role of the County in providing solid waste services to its tax payers and future expansion of the landfill. in 2011 – approximately 4 years prior to closing, or in the year when the landfill reaches 80% of its total capacity.

Landfill Capacity and Planning for future services

Based on a January 2010 survey the current landfill has an estimated remaining volume for another 272,716 cubic yards of waste. Based on current waste tonnages, and assuming waste tonnages will remain at current levels, the landfill is projected to close in the year 2016. An increase or decrease in future tonnage could change the closing date. The landfill closure date should be updated each year based on tonnage received and the capacity available. A decision to chart the future of waste services (new landfill, no landfill, or transfer station) should be made at least 4 years prior to reaching capacity (or after approximately 80% of the total landfill capacity has been utilized). Based on projected tonnages, a decision for future landfill services should be made in the year 2011.

Prior to the estimated closure of the landfill in 2016 we must plan and budget for all anticipated and unanticipated equipment/construction and fiscal needs so as to provide uninterrupted quality service.

The estimated anticipated capital costs presented in the following sections are based on 2009 estimates adjusted by 3% per annum. The anticipated capital expenses include:

Essential Capital Improvements based on DNR code:

2016– Close approximately 11 acres of Phase II and Phase III ($ 1,445,000)

Anticipated and Unanticipated capital projects to improve efficiencies in operations: These projects should be approved based on cost/benefit analysis of each expense. Many of these projects are proposed for after 2010.

 Evaluate energy recovery from landfill gas  Install an on-site wetland leachate treatment system to save money on leachate transport and treatment  Replace compactor as needed  Update and replace scale as needed  Provide for any unanticipated environmental repair

Projected Revenues

The Lincoln County landfill offers waste disposal services but no waste collection services, therefore, it is dependent on various waste haulers to bring waste to the landfill. Of the several waste haulers that operate in the county, a few of the haulers own their own landfills and therefore prefer not to bring the waste they collect to the Lincoln County Landfill (unless mandated by the waste generator). Other haulers in the county also have the choice of taking their waste to landfills and transfer stations outside of Lincoln County. The quantity of waste delivered to the Lincoln County landfill and the resulting revenues generated are dependent on the tipping fee charged. The tipping fee charged must be competitive, and is to a large extent controlled by several external factors beyond the control of the landfill. These factors may include but are not limited to the charges imposed by landfills in the area (Oneida County, Marathon County, Vilas County) or by transfer stations operated by private waste hauling companies (Veolia, Waste Management, Oneida County, Northern Waste) some of whom may also offer landfill services. In the last eight years the Lincoln County Solid Waste Committee has carefully analyzed all the competitive pricing factors and have arrived at a fee structure so as to generate adequate revenues to meet its present and future obligations. Any financial impact on the balance between revenues generated and anticipated/unanticipated expenses could create a sudden need for subsidies from the tax payers and or increase in pricing. For some county-owned Wisconsin landfills, even small increases in tipping fee have resulted in waste tonnage shortages resulting in severe revenue short falls. Therefore, the impact on revenues from any increases in tipping fees should be carefully evaluated so as not to create a revenue shortfall or deplete existing reserves.

In order to secure future revenues and build financial reserves, the landfill operations must be entrepreneurial and be vigilant of external pricing structures in order to continue to attract adequate waste quantities/ dollars to meet our current and future obligations. To secure future revenues, the county has signed several long term agreements with waste haulers/generators so that they would commit a minimum tonnage or exclusively use the Lincoln County landfill.

One of the major factors for unanticipated revenue shortfall is the sale of one of the private hauling companies that currently brings the waste to our landfill. The buyer of the new hauling company may choose to take the waste elsewhere. Such a sale could decrease our revenue stream significantly (10-70%). We must be prepared for such an impact by building adequate reserves to offset the revenue shortfalls.

In 2009, the landfill generated total Operating Revenues of $ 1.652 million. For the last three years (2007 to 2009) the average revenue generated was $ 1.409 million per year. Projecting through 2016, a total of $ 9.3 million dollars (1.409 x 6.6 years), is expected to be generated during this time.

Projected Expenses:

All expenditures (including payroll, operational, maintenance, unforeseen, and capital expenses) are incurred from annual receipts and cash reserves. After payment of the initial debt obligations, there has been no borrowing, nor have there been any contributions from tax dollars since 2001. It is the Solid Waste Oversight Committee’s intent to continue to fulfill our capital and operational needs through cash receipts and reserves. In order to achieve this goal we must make sure that we have adequate waste volume delivered to generate gate receipts to cover our costs and build an adequate reserve for future capital expenses.

While our experience in operational costs extends over the past several years, we can project such expenses for the future relatively accurately. We can and continue to find more efficient ways of controlling our expenses to get the job done. It is however, difficult to accurately project capital expenditures and even more difficult to predict the unanticipated capital expenses. The following are possible unanticipated expenses a typical landfill may have to face:  Change in DNR fee structure to generate additional revenues for their operations. In the last eight years our obligations to DNR have increased several hundred percent and make up an estimated 25% of our annual revenues.

 A tipping fee adjustment by the competitors resulting in waste/revenue declines

 Environmental release at the landfill site due to natural forces that may require substantial expenses for environmental repair and mitigating the release.

 Increase in insurance, leachate treatment costs, or failure of leachate tank.

Remaining DNR required construction obligations are expected to cost an estimated 1.45 million dollars (for closure of the landfill). Operating expenses (including contributions to the County’s general fund) for 2009 were $869,096, at this rate $ 5.7 million (869,096 x 6.6 years) will be needed for operating expenses through the closure of the landfill in 2016.

Projected Cash Reserves:

Unrestricted Cash Reserves

At the end of 2009 the landfill fund had an unrestricted cash reserve balance of $ 2.442 million. With projected operating revenues of $ 9.3 million through 2016, and projected operating expenses of $ 5.7 million, and projected construction cost of $ 1.445 million. The total unrestricted cash reserves are expected to reach $ 4.19 million by 2016. In addition, the capital construction costs incurred in 2016 are reimbursable from the “restricted cash reserve”-- an estimated $ 1.445 million in closure cost are expected to be added to the unrestricted cash reserves in 2017, bringing the total in this category to $5.64 million. Based on current fiscal projections the landfill enterprise appears to have adequate dollars to cover all its anticipated obligations using existing and future revenues.

The County Board has passed a resolution to leave 75% of the annual operating expenses in the landfill’s operating account and transfer any excess dollars in the unrestricted cash reserves to the County’s General Fund. The transferred dollars should be maintained in a designated account so the funds are utilized for landfill related capital expenses. If at a future date the County Board chooses not to continue landfill services, the cash reserves transferred to the County’s General Fund should be first applied to meet the landfill’s code-required obligations followed by designating the remainding dollars to meet other county needs as determined by the County Board of Supervisors.

A financially secure landfill is likely to offer better service, better environmental protection, and minimize the need for unanticipated expenses in the future. Therefore, the landfill must continue to build additional reserves for unanticipated expenses so the landfill operations will not be a burden on Lincoln County tax payers when this need arises, or have to disrupt landfill operations in the future.

Restricted Cash Reserves Payments to the Restricted Cash Reserves were made from landfill funds in advance. The current (1/1/2010) balance in this fund was 3.56 million dollars. Assuming this fund will grow at 3% per year, the fund will grow to 4.38 million dollars by 2016. These restricted cash reserves are designated for closure and long term care.

Landfill closure is planned in one final event. A portion of Phase I is closed and was paid for with landfill funds. Closure of the remaining portion of Phase I, all of Phase II and Phase III will take place in 2016 and should be initially paid from unrestricted cash reserves as well. The current demolition landfill will also reach its design capacity in 2015 and will be closed. Following closure and DNR certification in 2017, the restricted funds designated for closure will be released by the DNR to the county. The closure funds are estimated to be $ 1.445 million and Lincoln County should receive these funds in 2017.

The county is obligated to perform long term care for 40 years after the landfill closes. Lincoln County’s long term care obligations will end in the year 2055 (based on a 2016 closure date). Expenses incurred for long term care are reimbursed to the County (from a separate escrow account previously established by Lincoln County) by the DNR in the following year after the expenses have been incurred. The fund balance in the long term care – restricted reserve account was $ 2.11 million on January 1, 2010. Based on DNR’s projected requirements for expenses it is expected that the unrestricted cash reserves for long term care are adequate.

Long Range Plan Updates: The county must continue to revise its remaining landfill capacity and fiscal projections every year based on the current goals, space available, market conditions, DNR regulations and requirements, and the future level of service the County wishes to offer. As the landfill approaches its capacity, the County must make a decision on future waste disposal services the county wishes to offer. Several options will be presented to the Landfill Oversight Committee within the next year to determine the future status of solid waste. The committee’s recommendations on the options would then be brought forward to the County Board of Supervisors. Options that will likely be considered include the following:

Option 1: Expand current landfill operations

This option will allow expansion of the current landfill to continue offering service for another 15 years or more past 2016. Sufficient land is available for an expansion at the current landfill property. Expansion could occur to the North and/ West of the current landfill. In order for this option to be adopted, County Board approval should be sought by 2011 to authorize a feasibility study the following year, and construction to be completed in 2014. An estimated cost of $ 2.9 million is projected for the initial phase of construction of the landfill expansion and includes the cost of the regulatory permitting process. Equipment for the expansion is expected to cost an estimated $ 956,000.

Advantages:  Fully utilize current infrastructure  Maintain uninterrupted low cost of disposal service for users  Continue to build unrestricted cash reserves  Potential for increased revenues from energy sales.  Continued financial contributions: $ 200,000/year to County’s General Fund (conditional upon approval by the Solid Waste Committee),  Offer continued employment to County Staff  Expansion could add four additional years of site life with no additional construction cost.  Eliminate the need to create a new Closure and Long Term Care Fund.  Current Closure and Long Term Care fund continues to grow over time

Disadvantages:  Draw down unrestricted reserves to build the expansion, estimated capital costs of $ 2.9 to 4.0 million dollars.  Financial and environmental risks continue at current levels, however, the landfill has a 21 year track record of successfully managing finances and environmental risks.

Option 2: No landfill services will be offered by the county.

If this option were chosen the landfill will continue its current operations until it reaches full capacity in 2016. After 2016, each community, individual users, collection and hauling company served by the landfill will have to determine its own option for solid waste disposal.

Advantages:  Financial and Environmental risk and liability of a future landfill is eliminated. The environmental risks of current landfill however will remain for 40 years after closure  Un-restricted cash reserves approaching 5.6 million dollars would be transferred to the County’s General Fund.

Disadvantages:  Cost of hauling waste generated in the county will increase because of increased travel distance. Users therefore will likely have to pay more.  Cost of disposal could also increase for users because of a lack of competition in the region.  Cost increase could result in inappropriate disposal and littering of waste, resulting in added litter cleanup costs to local municipalities and town governments.  Landfill operations currently contribute to the County’s General Fund. This will be eliminated since there will be no operational revenues in the future.  Interest earned on unrestricted cash reserves is presently retained in the County’s General Fund. If the unrestricted cash reserves generated by the landfill are utilized for other expenditures, this source of interest income would be eliminated for the County.  Environmental risks are minimized but not eliminated.  Need for continued staffing for Long Term Care and monitoring.

Option 3: Offer limited solid waste services

In this option it is anticipated that the County will enter into a contract on behalf of its residents with another landfill. In addition, the County/Private Sector may construct a Transfer Station and to facilitate efficient transfer of waste to another landfill.

Advantages:  Environmental risk and liability of a future landfill is eliminated. The environmental risks of current landfill however will remain (for 40 years from closure).  A portion of the unrestricted cash reserves approaching 5.6 million dollars could be used for constructing one or more transfer station(s). The remainder of the cash reserves may be transferred to the County’s General Fund.  Continued service to existing communities  County may be able to negotiate a competitive price for disposal due to volume leverage.

Disadvantages:  Cost of hauling waste generated in the county will likely increase because of increased transfer costs. Users therefore will likely have to pay more. Estimated cost to transfer and transport waste from within the county is estimated at $ 300,000 annually.  Cost of disposal could also increase for users because of a lack of competition in the region, and  Lincoln County currently offers subsidies to its large in-county users, these subsidies would no longer be offered. However, the county can negotiate a favorable rate if enough communities commit their waste to the County.  High volume industrial waste and contaminated soil would not be processed through the transfer station, eliminating potential revenues/profits.  Cost increase could result in inappropriate disposal and littering of waste, resulting in added litter cleanup costs to local municipalities and town governments.  It is unlikely that there will be significant profits from the transfer station to contribute annually to the County’s General Fund.  Interest earned on unrestricted cash reserves is presently retained in the County’s General Fund. If the unrestricted cash reserves generated by the landfill are utilized for other expenditures, this source of interest income would be eliminated for the County.

 Environmental liability would be increased to its users, because of use of another landfill

Updated August, 2010