2. San Juan County Solid Waste Program Rate Workshop 12/10/02

3. Goals Review the history of solid waste finances Understand the factors that control rates Discuss rate related policies Discuss rate structure alternatives Develop an action plan

4. Recent History of SW Finances Page 17

5. Factors that Control Rates Cost of Infrastructure Land, Buildings, Equipment Debt on Capital Maintenance of Infrastructure Cost of Operations Collection Processing Disposal Overhead

6. Factors that Control Costs Policy Level of Service Efficiency of Operation Geography Variable Costs Labor Ferry Service Disposal, Transportation and Processing Contracts

7. Policy Drives Costs The role of SW policy makers (BOCC) is to evaluate the services that citizens want and structure the system in a way that provides those services in the most efficient way possible.

8. Don’t Operate the utility at a loss

9. SW System Financial Parameters: System will continue to provide the same or better level of service The fund will operate in the black The program will be financially independent

10. Why raise rates now?

11. SW Fund Cash Balance

12. The SW Fund has always struggled financially because: 1) The high capital costs associated with duplication of infrastructure in order to serve citizens throughout a geographically diverse island community. 2) A complicated and expensive transportation network involving trucks, trains and ferries and distances to markets and disposal facilities. 3) Small volumes of SW and recycled materials (RM). See Page 11

13. Solid Waste Stream

14. Current Rates Through September 2002 Page 14

15. Rate Analysis Process

16. FY 2003 REVENUE REQUIREMENTS Operations: Adopted operating budget FY 2003

17. FY 2003 Revenue Requirements Page 22

18. Rate Revenue Requirement FY 2003

19. SW Rate Structure Currently Five Classes of Customers MSW Self-Haulers Lots of them Commercial & Residential Loads average < 0.1 tons 50% bring less than 2 cans 45% bring recycling also FY 2001 Revenue= $864,075 (52%) Rate= $200.70/ton

20. SW Rate Structure Currently Five Classes of Customers Self-Haulers Municipal/Franchise Haulers Town & San Juan Sanitation Big, compacted loads average 5 – 6 tons FY 2001 Revenue= $756,546 (48%) Town Rate= $140.24/ton SJS Rate = $122.43/ton

21. SW Rate Structure Currently Five Classes of Customers Self-Haulers Municipal/Franchise Haulers Recycling Haulers Lots of them No Revenue FY 2001 Total Cost = $337,125

22. SW Rate Structure Currently Five Classes of Customers Self-Haulers Municipal/Franchise Haulers Recycling Haulers Special Rate Customers Free Take it or Leave it Litter Program Weeds, beach litter, road kills Lopez Lion’s Club Subsidized Blakely Island Shaw Island

23. SW Rate Structure Currently Five Classes of Customers Self-Haulers Municipal/Franchise Haulers Recycling Haulers Special Rate Customers Other Services Reuse Facilities Take it or Leave it Exchange MRW Used Oil & Antifreeze Batteries HHW

24. SW Rate Structure Currently Five Classes of Customers Self-Haulers $$$ High Rate Municipal/Franchise Haulers $$ Moderate Rate Recycling Haulers Special Rate Customers $ Low rate Other Services

25. Potential Revenue Sources Tipping Fees Users Pay by Weight or Volume Could apply to MSW, RM, MRW, C&D Taxes Property Tax Parcel Tax Excise Tax Other Tax Could apply to all residents of District or only to users of the system

26. WHO PAYS FOR SOLID WASTE & RECYCLING? In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other. Voltaire 1764. Examples of OPERATING revenues and costs under the current funding structure: Attorney’s Office in Friday Harbor generates 100 pounds of waste paper. Revenue = $0Cost=$6.00 Friday Harbor Bar and Restaurant served by Town generates 1000 pounds of glass, 300 pounds of other recyclables and 1000 pounds of MSW. Revenue=$70.12Cost=$138.00 Tourist eats one meal out, consumes 6 beers and leaves no food waste. Revenue=$0Cost=$.06 Orcas Island Construction Company self hauls 4,000 pounds of C&D. Revenue=$401.40Cost=$240.00 Schoolteacher on Lopez self-hauls one can of MSW and 5 pounds of recycling per week for one year. Revenue=$234.00Cost=$140.40 Port of Friday Harbor delivers 10 tons of glass. Revenue=$0Cost=$1,200.00 San Juan Sanitation customer generates 2 cans per week and self hauls 20 pounds of recycling per week for one year. Revenue=$254.65Cost=$312.00 Farmer on Waldron delivers 400 pounds of HHW to collection on San Juan. Revenue=$0Cost=$453.33 Assume average cost =.06/pound

27. Examples of CAPITAL revenues under the current funding structure: Attorney’s Office in Friday Harbor generates 100 pounds of waste paper. Revenue = $0 Friday Harbor Bar and Restaurant served by Town generates 1000 pounds of glass, 300 pounds of other recyclables and 1000 pounds of MSW. Revenue=$0 Tourist eats one meal out, consumes 6 beers and leaves no food waste. Revenue=$0 Orcas Island Construction Company self hauls 4,000 pounds of C&D. Revenue=$44.60 Schoolteacher on Lopez self-hauls one can of MSW and 5 pounds of recycling per week for one year. Revenue=$26.00 Port of Friday Harbor delivers 10 tons of glass. Revenue=$0 San Juan Sanitation customer generates 2 cans per week and self hauls 20 pounds of recycling per week for one year. Revenue=$46.18 Farmer on Waldron delivers 400 pounds of HHW to collection on San Juan. Revenue=$0 WHO PAYS FOR SOLID WASTE & RECYCLING?

28. The Base Rate Concept Many public utilities have a two tiered rate structure: Base Rate – All customers pay. Covers fixed costs and infrastructure. Volume Rate – Customers pay according to how much they use the system. Covers operating costs.

29. Example Town of Friday Harbor 13.28.150 Refuse service charge. A. Base Charge. There shall be a monthly refuse base charge for each separate refuse utility account: $2.27 per month per account. B. Use Charge. The monthly refuse use charge shall be as follows: 32 gallon can $4.74 1 yard dumpster $33.27 1 1/2 yard dumpster $49.96 2 yard dumpster $66.64 Clean cardboard (recycle) $7.06 per cubic yard

30. Applying a Base Rate to our System Apply to all potential customers Privilege Tax Apply only to current users Excise Tax Gate fee Apply only for specific services Fee for use of recycling services Fee for use MRW services Apply to all services Annual fee to use facilities

31. Privilege Tax Property Tax Assessment throughout district to pay all or a portion of infrastructure costs Parcel Assessment throughout district to pay all or a portion of infrastructure costs $1.67/month could pay all capital costs through FY 2005 Could be varied by land use type – e.g.: Business $5.00/month Residential $1.00/month Undeveloped $ 0 Page 29

32. Excise Tax Raising the current excise tax by 7% funds FY 2003 Adding the Town of Friday Harbor could generate an additional $75,000/year Adding the Town and raising the current excise tax by 3% funds FY 2003

33. Gate Fee Implementing a $3.00 gate fee could generate an additional $100,000 - $200,000 per year Would raise MSW minimum to $8.00 May deter reuse and recycling customers

34. Fees for use of infrastructure Annual facility permit Annual recycling permit Direct fees for MRW users

35. No changes to current rate structure Generate additional revenue using current rate structure Raise rates across the board by $12.43 per ton Raise rates across the board by 7.7% Raise rates preferentially by existing customer class Raise the minimum fee Raise the refrigerated appliance rate to $40.00 Page 25

36. Now What? Action Plan Who? What? When?

37. A Word about Traffic