MOVING TOWARD AN INTEGRATED SYSTEM FOR REDUCTION IN HAMILTON

Howard Mitchell Gavin Bush Environmental & Refuse Manager Central Region Manager Hamilton City Council NZ Ltd

SETTING THE SCENE

The management of waste in has evolved during the last twenty years into an extremely complex and interwoven mix of issues. Public concern about environmental pollution has been linked to waste disposal and the consumption of resources, however there is an ongoing desire for economic growth, which is at odds with the minimisation of waste.

The participants include service providers in the public (local authority) and private sectors (waste companies), waste generators (the entire community) and regulators (local, central and regional government). Their operations are not well co-ordinated.

In an attempt to co-ordinate a national approach to waste, the Ministry for the Environment presented the NZ Waste Strategy in March 2002, which set long term goals and expectations.

The Waste Management Institute of NZ has developed the LifeAfterWaste (LAW) principles, which aim to move the problem “up the pipe” and to harmonise the activities of resource use and waste management in a way that will ensure a better environment. LAW recognises that without a high quality environment and a truly integrated and sustainable approach to resource use, consumption and disposal, there can be no long term improvement in the quality of life.

On top of all that, service providers strive to be customer focused in delivering what customers want at a price that is acceptable, while governmental agencies strive to educate the consumer to take a considered approach to resource use.

There is a competitive market for waste, particularly as existing close down and the major new ones are increasingly being developed, owned and operated by privately owned waste companies. The Resource Management Act process of consenting new landfills has made landfilling a highly specialised activity, which requires particular skills.

The waste companies work in a full cost recovery mode, but competition for revenue forces them to reduce charges so that they can attract major customers. They operate in a highly regulated environment and the NIMBY syndrome makes landfills extremely risky financial ventures. The high investment cost of selecting, consenting, operating and closing a modern must be recovered from the users, while ensuring that an acceptable return is generated for shareholders.

New Zealand’s liberal approach to international trade makes and difficult in economic terms. Production costs of some of our major trading

Page 1 of 9 partners are lower and they do not necessarily share our approach to environmental or social issues.

Rapid development of attractive new technology, an increasing variety of products and packaging, cheaper imports and the persuasive power of advertising together encourage increased consumption. These factors militate against products that have a long service life or can be repaired cheaply, and so goods are replaced or disposed of in a shorter timeframe, thereby increasing the amount of waste generated.

Ultimately, waste management is a high risk activity, not just in environmental terms but also in economic and social terms.

This paper describes the approach taken by Hamilton City Council in addressing changing expectations regarding waste and managing risk by working together with private sector operators for the benefit of the community.

HAMILTON CITY’s APPROACH TO WASTE

Hamilton City Council has for many years taken an enlightened, practical and forward thinking approach to managing waste. As long ago as 1978, a comprehensive report on the city’s waste explored various options for and disposal. Published after the international “energy crisis”, the report reached some key conclusions, namely

• Waste generation was increasing at 6 to 7% per year. • The current method of individuals hauling waste to a tip was not economic in fuel consumption terms. • The traditional practice of dumping waste into an unlined gully, with no thought to subsequent environmental effects, should not continue. • Research into energy generation by burning refuse was continuing in , and Hamilton might participate in a future joint venture at one of the power stations. • A modern sanitary landfill was the most cost effective disposal method and a new landfill should be constructed, with appropriate controls on waste acceptance, site management, compaction, leachate management and post closure land use. The landfill should have an operating life of not less than thirty years. • Four refuse transfer stations were proposed, within easy reach of customers, thereby limiting the number of vehicles needing to be accommodated each day at the landfill. • Charges should be introduced at the transfer stations. • Council support for existing commercial recycling operations should continue.

While the emphasis was on improved environmental outcomes and economic efficiency, the report also drew attention to possibilities for “user pays” refuse collection, separate facilities for garden waste disposal, inorganic collections, pulverisation of refuse to increase its density, a regional landfill and the growing need for resource conservation.

The opportunities for implementation were limited only by the budgetary constraints of a council that was dealing with various other major projects at the time.

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New landfill and refuse transfer station

Following a process of site identification and tendering, the preferred site at Horotiu was selected in 1980. The site was owned and operated by Perry Aggregates, who extracted sand and gravel for sale to various industries. The site required reinstatement on completion of sandwinning, and a win-win situation would be achieved by establishing the new landfill at the site.

The new landfill was to be developed sequentially in a series of shallow stages each with a low permeability clay liner, leachate extraction and final reinstatement to grazing, re- establishing a landform that was consistent with the surrounding agricultural land. Operations commenced in 1985, concurrently with the opening of the new transfer station in the city.

Composting

Another example of an enlightened approach was the development of greenwaste composting in Hamilton. During the early 1990’s HCC worked with a private developer to establish a commercially viable greenwaste composting centre, which contributed significantly to reducing the waste to the landfill, while at the same time producing a high quality range of mulches and suitable for use on the land. The initiative aligned with HCC’s Environmental Policy, which sought to “enable” the private sector and the wider community to participate and flourish in achieving desirable environmental outcomes.

The policy placed a higher value on “enabling” than the rather more traditional mechanisms of “regulating” and “service provision by council” in achieving the desired environmental outcomes.

Council had no expertise or experience in composting on a large scale and had not investigated the market for such products. Council was able to minimise the financial risk inherent in the venture by opting to invest in the land and infrastructure. The site was leased to the operator, who was required to produce a business plan, demonstrating the viability of the venture. The operator was entirely responsible for quality control, setting the fees and marketing the products. An added attraction was that the gate fees for greenwaste were lower than the refuse fees at the transfer station and no artificial subsidy was required from Council’s rates funds.

The composting centre has been very successful and has recently won an Environmental Business award.

Waste Management Plan

In 1998, HCC prepared a Waste Management Plan (WMP), as required by Local Government Amendment Act no. 4 (1996). The process commenced with invitations to all sectors of the community, who wished to be represented on a working party to develop a vision of the way forward.

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The WMP drew on the waste management hierarchy of the 5 R’s (reduce, , recycle, recover and residual disposal), placing a strong emphasis on treating waste as a potential resource and identifying public education as a key factor for successful implementation. The WMP supported much of the current practice, including the use of economic instruments (user pays) and recommended the introduction of kerbside recycling and the development of a Resource Park, which would provide a nucleus for new businesses to establish, using the resources discarded by others.

The high financial costs that were identified for the following twenty years were not attractive enough for all of the ideas to be implemented immediately, however the WMP provided the basis for a long term strategy.

Sustainable Environment Team

HCC has a Sustainable Environment Team, whose roles include community education, particularly at the school level, and the development and monitoring of sustainability indicators for the city. Waste issues have been incorporated into these activities.

Service delivery in Hamilton

All of Hamilton City Council’s refuse services have been carried out by medium to long term contracts, following a process of competitive tendering. The evaluation of the tenders includes consideration of the technical and management skills, track record, proposed methodology, as well as price.

Contracting provides a relatively high degree of certainty for long term financial planning and avoids HCC needing to invest in major capital equipment.

Waste companies

During the last five years, the markets serviced by the private companies in Hamilton have changed. In particular, Waste Management NZ Ltd (WAM) acquired WasteCare Ltd in July 1999. These companies were the two major operators in the Hamilton market and their amalgamation was followed by the introduction of new services and the entry of additional “haul and bury” and recycling companies (including Envirowaste), resulting in an enhanced level of competition.

After integrating the operations of WAM and WasteCare, WAM focused on developing new services and sought more efficient ways of hauling and disposing of waste. The company started compacting waste at its yard in the city, prior to hauling to Horotiu. The method enabled WAM to bypass the HCC transfer station, which resulted in reduced turnover through the station.

Horotiu landfill and the Resource Management Act

In common with many local authorities, waste planning has tended to work backwards from the disposal method, which is the ultimate destination for waste.

Page 4 of 9 A long-term financial model was developed for the Horotiu landfill, identifying costs and revenue required for operation and post closure monitoring and maintenance. The model is useful for calculating the gate price for refuse disposal, thereby reducing dependence on funding from rates. The gate price serves as a useful benchmark for evaluating alternative types of service.

In accordance with the Resource Management Act 1991, discharge consents were required for the existing landfill. An independent consultation committee was established in 1994 to determine public concerns and expectations regarding the management of the landfill. A considerable degree of public ignorance was evident amongst city residents, particularly because the landfill site was in the neighbouring Waikato District. The main cause of concern was the proximity of the landfill to the Waikato River, which has particular significance for Maori.

New guidelines for landfills, developed in the mid-1990’s, were not able to be satisfied without incurring considerable additional expenditure. The risk of contamination by failure of the liner was considered to be unacceptable, despite proposals to install composite liners and more sophisticated leachate management systems.

Discharge consents were issued in late 1997. Objections were referrred to the Environment Court and subsequently resolved in February 1999, by agreement between the parties. The consent conditions included the following:

• Closure not later than the end of December 2006. • Limitation on the total quantity of waste disposed. • Detailed monitoring of leachate, groundwater, river water, gas migration and stormwater, as well as a closure plan. • A triple layer composite liner was required for the final stage area, similar to the one installed in the current operating stage in 1997.

The effects of the consents for HCC were:

• Considerably increased cost of compliance. • Reduced ability to recover the high invested costs. • Insufficient time to plan, consent and prepare a new landfill with confidence.

Finally, an attempt to secure a commercial market for the had not been successful and the private proposer had withdrawn from further involvement at the site when the original consents were issued in 1997.

Competing landfills and transfer stations

During 1998, WAM had negotiated to dispose waste at the proposed private Tirohia landfill, near Paeroa, to service their contracts in Hamilton and the greater Waikato. In order to transfer their Hamilton waste, WAM planned to build their own small, private transfer station on their premises in the city.

Following the takeover of WasteCare in 1999, it became obvious to WAM that it would not make commercial sense to build their own facility when they could instead pay HCC a “tolling fee” for using the underutilised HCC transfer station to compact their waste.

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WAM subsequently negotiated with HCC to process a certain minimum monthly tonnage through the transfer station and to dispose all their waste to Horotiu until Tirohia became operational.

HCC benefited by increased turnover through the transfer station and WAM benefited by not having to build their own transfer facility.

During this period, HCC received proposals from other companies, exploring ways in which they could be involved in Council’s integrated waste management planning. While Council considered these proposals, none was accepted, as a comprehensive overall solution was then being contemplated.

At the same time, Perry Waste Services announced their investigations into constructing a new landfill at Huntly, and subsequently an alternative site at Hangawera, near Morrinsville. Envirowaste had entered the Hamilton market as a private refuse and recycling collector, built a transfer station at Cambridge and announced plans to build a large landfill at Hampton Downs in the North Waikato, to serve the Auckland and Waikato markets.

These developments demonstrated the competitive market for collection and disposal in the region and the pressure that private companies were exerting to secure business for themselves.

THE PROBLEM

Planning Horotiu closure and the introduction of new services

In 2000, when the final stage of Horotiu was being designed, the required capacity was difficult to determine, because there was considerable uncertainty in the waste market.

The following factors needed to be taken into account:

• Council controlled only about 25% of the waste collected in Hamilton (the weekly kerbside residential refuse collection). • The remainder ( and taken to the transfer station) was at risk of being diverted to one or more competing landfills, which were privately owned and were already operating in the Auckland region (Redvale, Rosedale, Greenmount, Whitford) or were proposed to commence operating in the Waikato region before Horotiu closed (Tirohia, Hampton Downs and Hangawera). • Horotiu also provided disposal for waste from the Waikato and Waipa districts, where HCC had no control over decisions regarding their waste disposal. • There was considerable uncertainty regarding how soon the proposed new landfills would be available to receive waste, because they had not yet been granted consents to operate. It was not known how many sites would be available before Horotiu closed.

The high cost of preparing the final stage at Horotiu, together with the uncertainty regarding the volume of waste to be disposed within the fixed timeframe to closure, led Council to consider methods of increasing the level of certainty necessary to complete the

Page 6 of 9 design. In economic terms, it was desirable to continue operating until the closure date, in order to maximise the return on the invested cost of construction.

Council had no plans for developing a new landfill, particularly because the major private landfills were considered to have sufficient capacity for many years and they would provide a competitive market for disposal of Hamilton’s waste after Horotiu closed.

Pressure for the introduction of kerbside recycling was increasing and Council wished to balance the need to finance the landfill against calls for waste reduction and implementation of its own Waste Management Plan.

FRESH THINKING

Staff presented the situation to a Council workshop in August 2000, pointing out the drivers and the conflicting objectives, outlining an opportunity to bring the waste industry service providers “into the kitchen” to produce the best solution.

Council subsequently resolved to advertise a Request for Proposals (RFP) for the Long Term Management of Solid Waste Disposal for Hamilton in February 2001.

The RFP indicated Council’s willingness to take an open-minded approach to encouraging opportunities and innovation for the medium to long term, without prescribing solutions.

Council recognised that the waste industry had developed related objectives and useful skills, business relationships and resources, which could best be utilised by working together with Council. In turn, Council owned valuable infrastructure, was committed to delivering essential services and was able to commit itself to long term relationships on behalf of the community.

Response to the RFP

Private companies reacted favourably to the RFP, bidding strongly for the overall scope of work. Of particular interest was the possibility of a 15 year term, which would allow the companies to have certainty for utilisation of assets, staff and systems, which would ultimately result in being able to offer very low prices.

WAM’s response addressed the key deliverables requested by Council, by building on the previous agreement regarding use of the transfer station. A key component was that WAM committed commercial waste from Hamilton and neighbouring districts to Horotiu until closure in 2006, allowing Council to gain a return on invested costs by continuing to operate for as long as the consents allowed. Again, building on earlier agreements, WAM was able to offer disposal at Tirohia after Horotiu closed, retaining their Redvale landfill as a backup.

In line with Council’s waste minimisation and resource recovery strategies, WAM offered to introduce kerbside recycling services to Hamilton households, and to enhance the existing recycling operation at the transfer station. Processed recyclables were offered to upper recycling markets under long term agreements, with WAM offering to

Page 7 of 9 take full responsibility for the ongoing success of waste minimisation systems and to promote resource recovery.

Significance and implementation of the successful proposal

Following a detailed evaluation of the proposals received, Council resolved in July 2001 to accept the proposal from Waste Management NZ Ltd (WAM), which included the following, covering a period of 15 years from 1 July 2002:

• Enabled Horotiu to continue operating until the closure date, ensuring maximum recovery of invested costs. • Achieved a high degree of certainty regarding the quantity of waste to be disposed at Horotiu, thereby reducing the risk inherent in determining the required design capacity. • Following closure of Horotiu, WAM would dispose of all kerbside and transfer station refuse to a consented landfill for an agreed price per tonne, for the remainder of the 15 year term. • WAM would introduce a weekly kerbside residential recyclables collection. WAM would manufacture and distribute a 45 litre plastic crate to every household, as well as collect a specified range of materials, while being responsible for the commercial viability of the sale of the recyclables and retaining the revenue earned. The recyclables would include paper and cardboard, glass bottles, steel and aluminium cans and plastics (grade 1 and 2 initially). • WAM would provide the weekly kerbside residential refuse collection, when the current contract expired on 1 July 2002. • WAM would operate the Refuse Transfer Station and Recycling Area under contract until Horotiu closed, thereafter under a commercial lease until the end of the 15 year term. • WAM would establish a Customer Service Centre, which would provide a toll free number for managing all enquiries, requests and complaints regarding refuse and recycling. • Key Performance Indicators, relating mainly to customer satisfaction and service quality, were incorporated with the new contracts. • A Memorandum of Understanding was agreed between Council and WAM and a Partnership Agreement was signed, setting out the agreed method of working together.

The partnership between HCC and WAM recognised the benefits of working together to resolve potential conflicts; provided a mechanism for a joint response to changes imposed by legislation, and provided a basis for the parties to explore opportunities for further waste minimisation after the Horotiu landfill closed. The agreement also provided a high degree of long term financial certainty, based on agreed rates, which were indexed to inflation.

HCC and WAM developed a comprehensive Communication Plan to inform residents of the changes, under the logo of “Sort It Out”. The campaign included media advertising and news releases, as well as advertising on buses and bus shelters. The key item was the recycling crate, which was embossed with the logo, details of the types of recyclables accepted and the toll free 0800 101010 number, which WAM had reserved for the Customer Service Centre. Simple recycling information brochures were included with each crate, during the distribution phase.

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Prior to implementation, Council adopted a new Refuse Bylaw, and resolved that kerbside refuse collection would be limited to a maximum of two approved 60 litre bags, each weighing not more than 20 kg. The option of using bins instead of bags was deleted, because the industry was moving toward either bag or MGB methods of collection and surveys had indicated that more than 80% of Hamilton households were no longer using bins anyway. A range of suitable bags was available at retail outlets, so residents could make their own choice between plastic and paper bags and it was not considered necessary for HCC to introduce its own bag.

Following the implementation of the new services, the NZ Waste Strategy and the LifeAfterWaste programme, it is likely that Council’s Waste Management Plan will be reviewed within the next two years.

WAM has constructed six new refuse collection vehicles, five new recycling collection vehicles and has assumed responsibility for the two existing Carter Holt Harvey “PaperChain” vehicles to service the more than 41,000 households in Hamilton.

After the first two months of operation, the public reaction to the kerbside recycling has been excellent, with participation of households and quantities of materials exceeding expectations. Several improvements have been introduced to the recycling area at the transfer station.

Communication between the parties has been effective at all levels, through regular planning and operations meetings, and the partnering principles are being used to successfully guide the implementation phase of the new contracts.

SUMMARY

Hamilton City Council has recognised the risks and opportunities inherent in managing waste (and its constituent resource content) in a changing environment. These include existing commitments at the landfill, the perceptions and expectations of customers, as well as new and more stringent statutory requirements to minimise waste, conserve resources and protect the environment. These expectations are not yet well aligned on a national scale, therefore HCC has adopted an approach that is strategic, yet practical.

The solution includes a partnership with a major recycling and waste service company, to provide a range of services in an integrated manner, while continuing to encourage other private operators (including greenwaste composting) to continue providing waste minimisation services in a sustainable manner.

The long-term arrangements have ensured that the financial risk to ratepayers will be minimised.

The arrangements to date have created a sound platform for developing further initiatives for implementing the long term goals of the NZ Waste Strategy and LifeAfterWaste in ways that recognise the participation of all members of the community in making New Zealand a better place to live.

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