Impacts of Flow Control on South Hampton Roads Businesses

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Impacts of Flow Control on South Hampton Roads
Businesses
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Flow Control

• Flow control refers to the legal right of
  localities to control where waste generated
  within their jurisdictions is taken for disposal

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Flow Control Implementation

• If adopted by all localities, flow control will
  equalize the disposal rate paid by members and
  private trash haulers

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Why Consider Flow Control?

• May bring about additional competition for waste
  collection
• More transparent process for businesses
• Businesses will better understand the rates and
  their charges from haulers
• Will reduce pressure for localities to raise the
  real estate tax
• Enhances regional method to handle trash
• Enhances attractiveness and competitiveness of
  the region as a business location
• Flow control eliminates the need for the receipt
  of out-of-state waste
• Being considered the dumping ground of the
  state brings a negative image to the region
• Reduces truck traffic
• Preserves landfill space for the future

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Estimated SPSA Member Locality Financial Impact
Notes 1These figures are estimates only they
are based on a combination of previous tonnages
and a 52/ton tipping fee 2The total estimated
savings are in constant dollars, through January
2018 3If SPSA ceases using the Regional
Landfill, Suffolk will pay the prevailing
municipal tipping fee 4Savings for Virginia
Beach are compared to the Citys capped rate of
53.88 in FY2009 the cap expires July 2015.
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Your Waste Disposal Bill

• Three components
• Unit rental (size, type, etc.)
• Collection (frequency of schedule)
• Disposal (amount disposed)
• Under flow control, only the disposal component
  would be affected
• Generally waste disposal is only a small business
  expense as compared to other expenditures
• Example
• Typical bill for 5500 sq. ft. office building
  57/month

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Initial Estimates of Financial Impacts of Flow
Control

• Homeowners and businesses served by the public
  for trash collection will see no (0.00) increase
  in their trash disposal bills
• Residents of apartments and condos served by
  private waste haulers should see relatively small
  changes in waste disposal charges
• Impact of less than 2 per month per unit
• Varying cost impacts on other businesses

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Private Hauler Survey

• To assess the financial impact of flow control on
  area businesses, a third-party survey is being
  conducted
• Haulers--who are best able to provide data on
  impacts to businesses--have been asked to provide
  impact on varied businesses
• Independent consultant R.W. Beck, Inc., based in
  Framingham, Massachusetts, will develop a report
  based on responses

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Business Recycling

• Recycling can reduce the cost of waste disposal
  for businesses
• Reduces volume of trash disposed
• Recycling is positive for business image
• Information is available from SPSA on Virginia
  restaurants, hotels and other businesses that
  have cost effectively used recycling services to
  reduce their waste disposal costs
• SPSA will be exploring opportunities for
  increasing business recycling through private
  and/or public programs
• SPSA already provides consultation services on
  recycling options for waste minimization/recycling

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Changes at SPSAReforms and Efficiencies

• Committed to continuing evaluations of new
  technologies and enhancement of
  services/operations for the benefit of all served
• Committed to continued operation of activities in
  a transparent, accessible, and open manner

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Operational Innovation Privatization
Considerations

• Streamlined operations decentralization and some
  outsourcing of transportation services
• RFP issued for potential outsourcing of landfill
  disposal capacity
• RFP issued June 29, 2007
• Proposals were received September 5, 2007
• Continued exploration of divestiture of
  Waste-to-Energy system
• Yard waste program to be downsized to mulch-only
  operation by January 1, 2008
• SPSA has issued an RFP for a private contractor
  to manage composting services

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FY 07-08 Cost Reductions

• Operating budget 5.3
• Administration 14.2
• Some divisions had cuts as high as 50
• 39 deleted positions
• Annual salary savings of 1,748,690
• Reduction in Force program
• 31 higher salaried employees took early
  retirement
• Cost of this program can be paid back in one year
  as a result of savings from the program

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Debt Reductions

• Current financial policies assure SPSA will be
  debt free by 2017
• 38 of SPSAs current budget is dedicated to debt
  service

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SPSA Debt Repayment Schedule
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Financial Reforms

• 100/ton municipal tipping implemented to fund
  SPSA financial management policies required by
  Board
• Full compliance with policies within three years
• Policies include
• Cash funding closure of all SPSA facilities
• Funding a Reserve and Contingency account
• Provision of significant annual cash
  contributions which reduce reliance on debt
  financing of capital assets
• Moodys has re-affirmed SPSAs A3 bond rating

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Independent Financial and Technical Review
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R.W. Beck, Inc.

• Serves as representative to the bond holders
• Performs independent annual review of facilities
• Reviews adequacy of system revenues to meet debt
  service requirements
• This includes reviews of financial policies
  implemented to assure SPSA will be debt free by
  2017

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Conclusions on Debt Repayment Model

• Four key conclusions
• Assumptions used in SPSAs debt repayment model
  are reasonable
• Proposed programs will allow SPSA to continue to
  provide waste management services
• SPSA is projected to be viable to 2018
• SPSA is projected to be able to pay off debt by
  2018

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Review of Financial Reforms

• Through implementation of financial reforms, SPSA
  will
• Improve its overall financial strength
• Establish funds typical of other authorities
• Have greater flexibility in the event of an
  unforeseen occurrence
• Enhance the ability to pay off bonds

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Conclusions on Flow Control and Business Community

• Equalizing disposal rates for localities and
  private trash haulers may reduce need to raise
  real estate taxes which are a significant
  recurring operating costs for all businesses.
• Owners and employees of those businesses also pay
  significant real estate taxes on their homes
• Allows South Hampton Roads member communities to
  meet their contractual obligations to SPSA to
  deliver all waste generated in their communities
  to SPSA
• Guarantees adequate waste streams to pay off the
  debit issued to provide waste disposal services
  meeting new environmental standards adopted when
  SPSA was created
• Leaves business community, residents, and all
  member localities in 2018 with properly closed
  landfills and a debt free and operational
  regional solid waste management system.
• All sectors will have more options available post
  2018

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Questions