and their Impact on
Customers, Waste Haulers and the SWA

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◦ SWA
◦ Commercial Customers
◦ Haulers
◦ Economic-Tipping Fees
◦ Statutory –Enhanced Scrutiny and Enforcement
◦ Contractual-Franchise Contracts

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The SWA is a dependent special taxing district that was created by an act of the State Legislature in
1974.
Since 1991, the SWA has been classified as
“dependent” because its governing board, although a separate and distinct body, is comprised of all the members of the Palm Beach County Commission.
While dependent by definition the SWA is entirely independent financially. The SWA receives no financial support from any other source.

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The SWA has 2 primary functions:
◦ Disposal countywide; and
◦ Collection in the unincorporated areas.
Disposal was the SWA’s original function.
In 1988, the SWA and PBC entered into an interlocal agreement transferring the County’s responsibility for the collection of solid waste in the unincorporated areas to the SWA.
As two distinct enterprises, their sources and uses of funds cannot be commingled.
This presentation will focus on the Disposal function.

www.swa.org/site/collection_service/collection_service.htm
If the Board wishes we can arrange for a subsequent workshop to discuss the Collection function.

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Annually, the SWA prepares a budget to generate all the funds needed to carry out its responsibilities.
Funds are needed each year to pay for Operating
Expenses, Contractual Obligations, Debt Service and
Capital Expenses.
For the coming year that amount is projected at
$222,948,070.

2012/2013 Approved Disposal Budget
Expenditures
Operating
Fixed Cost and Contracts:
Contract Facilities
Debt Service
Capital and R&R
Total Fixed Cost
$ 65,212,880
52,584,760
91,496,100
13,654,330
157,735,190
Total Expenditure Budget $ 222,948,070

Determining Assessment and Commercial Tip Fee Rates
Total Budgeted Expenditures
◦ Less Revenues other than Assessments & Commercial Tip
Fees:
 Electric Revenue
 Recovered Material Revenue
 Non Assessable Tip Fees
 Other Non Assessable Revenue
 Carry-forward of Reserves
Equals
Assessments and Commercial Tip Fee Revenue

2012/2013 Approved Budget
Other Tip Fee Revenues
Building Debris
C/D Recycling Residue
Tires
Special Waste
Total Other Tip Fee Revenue
Electric Sales
Recovered Material Sales
Pelletizer Contract
Compost Contract
Sludge Contract
Other Current Revenues
Total Non-Fee Revenues
Reserve Carry-Forward
Total Non-Fee Sources
$ 1,800,000
1,008,000
234,000
195,000
$ 3,237,000
17,538,391
8,278,728
3,301,000
831,335
807,030
1,062,844
$ 35,056,328
7,999,323
$ 43,055,651

2012/2013 Approved Budget
Total Budgeted Expenditures $ 222,948,070
Non Fee Sources
Assessments and Commercial Tipping Fees
$ 43,055,651
$ 179,892,419
Assessments, approximately 75% of total revenue, are collected through the annual Tax Bill and levied against all improved property in the county.
Commercial Tipping Fees are collected by the hauler from the commercial customer and paid to the SWA at the disposal facility.

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The balance of revenues must be generated through the Residential and Commercial Assessment and
Tipping Fees on Commercial Garbage.
◦ The Residential and Commercial Assessments are non-ad valorem assessments levied against all improved property in the county and collected through the annual Tax Bill.
◦ The Tipping Fees cover the portion of the costs attributed to
Commercial property that are not raised through the Assessment, but which are based on actual tons delivered to SWA facilities.

48% Residential Tons
Residential
Single Family
Assessment
Multi-Family
Assessment
Mobile Home
Assessment
Total Budget
Less: Other
Revenues
52% Commercial Tons
Assessable
Tipping Fees
Commercial
Assessments
Low Generator
Medium
Generator
High Generator

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Special Assessments are not a tax; they are user fees determined by calculating the benefit of the service provided.
The SWA has conducted several waste generation studies to establish classes of users and to determine the benefit (levels of service) each receives.
The Assessments were originally adopted in 1990.
◦ Residential properties assessed for 100% of their cost.
◦ Commercial properties partially assessed and pay the balance in the form of Tipping Fees.

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Why the “split assessment” for commercial properties?
Waste generation for similar uses (for example Retail
Stores) can vary significantly;
Tipping fees allow businesses who generate less to pay less;
Tipping fees provide an incentive for businesses to recycle by avoiding disposal fees (the SWA accepts recyclables at no charge).
The higher the Tipping Fee, the greater the incentive.

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Tipping fees are charges that are based on the actual amount of waste disposed of or “tipped”.
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Waste disposal systems whose costs are largely variable can successfully rely on Tipping Fees because their costs fluctuate in relation to the amount of waste received.
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More advanced systems, like the Authority’s fully integrated system, have considerable fixed cost and would never get financing based solely on Tipping
Fees.

Residential Assessment
Commercial Assessment
Commercial Tip Fees
Total Commercial User Fees
$35 Tipping Fee
$ 95,113,885
$ 66,124, 759
$ 18,653,775
$ 84,778,534
Total Resi/Comm’l User Fees $ 179,892,419
$42 Tipping Fee
$ 95,113,885
$ 62,394,004
$ 22,384,530
$ 84,778,534
$ 179,892,419

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Total revenues from the commercial sector on a budgetary basis are unchanged.
The required commercial assessment revenue is calculated by subtracting projected commercial tipping fees from the total required commercial revenue.
Since the commercial customer pays both an assessment and tip fee, which combined generate the revenue needed from those customers, if one increases the other must decrease.
The relationship of these revenues to each other has no impact on SWA’s overall budget or the cost of disposal to the total commercial customer base.
That is true assuming all the waste is delivered to an SWA facility.

Commercial Customer
Average medium category generator
Tipping Fee
Rate/ton
Tons disposed
Fee paid to hauler
Assessment
Med. Category Rate
Sq. Footage
Annual Assessment
$ 42
2.64
$ 111
$ 35
2.64
$ 93
$ 25
2.64
$ 66
$0.213
$0.226
$0.244
1,500
$ 320
1,500
$ 339
1,500
$ 365
Total Customer Fees $ 431 $ 431 $ 431
 Assuming no change in waste generation, the total disposal charges
(assessment plus tipping fees) are unchanged.
 The higher the tip fee rate the greater the financial incentive for a customer to recycle.

Yards Collected per Month
Collection Rate per Yard
Collection Revenue
Tipping Fee per Yard
Disposal Revenue
Total Hauler Revenue
Tipping Fees at SWA
Net Hauler Revenue
$35 Tipping Fee
100
$2.95
$295.00
$2.345
$234.50
$529.50
$234.50
$295.00
Tipping Fee is a Pass-Through to the SWA
$42 Tipping Fee
100
$2.95
$295.00
$2.814
$281.40
$576.40
$281.40
$295.00

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The higher the Tip Fee Rate the greater the incentive to divert waste to competing facilities by waste haulers.
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The SWA has the power to forbid competing disposal facilities in the county but limited power beyond its borders.
(T.I. 718)
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There are privately owned disposal facilities within reasonable driving distance both to our North and South.
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The SWA has the power to forbid the delivery of Palm
Beach County waste to any facility not designated by the
SWA through legal action.

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Waste haulers can collect the approved tip fee rate from a Palm Beach County customer and illegally deliver it to a competing site outside the county and pay a lower fee.
The customer wouldn’t see a difference, but the hauler would profit and the Authority would experience a revenue shortfall.
If the loss is significant, the Authority would have to increase rates to replenish reserves.

Commercial Customer
Average medium category generator
Tipping Fee
Rate/ton
Tons disposed
Fee paid to hauler
Assessment
Med. Category Rate
Sq. Footage
Annual Assessment
$ 42
2.64
$ 111
$ 35
2.64
$ 93
$ 25
2.64
$ 66
$0.213
$0.226
$0.244
1,500 1,500 1,500
$ 320 $ 339 $ 365
Total Customer Fees $ 431
Waste Hauler
Tipping Fees Paid at Non SWA Site
Rate/ton
Tons disposed
Fee paid to dump
Windfall
SWA
Revenue Received by SWA
$ 25
2.64
$ 66
$ 45
$ -
$ 431
$ -
$ 431
$ 25
2.64
$ 66
$ 26
$ 25
2.64
$ 66
$ -
$ -

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The Waste Hauler potentially profits due to the difference in competing rates, less any additional transportation costs.
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The SWA loses revenue.
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The customer pays the same, this year.
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If sufficient diversion takes place the SWA will be compelled to lower its expectation of revenues from tip fees and increase the assessments accordingly and
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The SWA may be required to replenish reserves, if drawn down, and increase the assessments, resulting in significant rate increases.

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Reduce the Tip Fee to lower the potential to profit from hauling the waste out of the county; and/or
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Aggressively enforce Flow Control through increased scrutiny, enforcement, fines and litigation.

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Positives:
The simplest solution.
Avoids the cost of enhanced enforcement and litigation.
Improves security of revenue collection which is seen as a positive by bond rating agencies.
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Negatives:
It lowers the incentive to recycle.
The rate would likely have to be set lower than currently recommended to eliminate the problem.

From the Special Act (Ch. 2001-331):
As necessary to carry out its resource recovery and/or disposal plans or programs or when necessary to carry out any other provision of this act, require that all wastes collected by public or private agencies from any municipality or unincorporated area of the county be transported to
Authority-designated processing and disposal facilities in a manner and form as may be mandated in accordance with this act, particularly paragraphs (2) and (8) of this section. This act shall not be construed to preclude public or private agencies from operating permitted transfer stations, provided that solid waste transferred or transported there from shall be delivered to Authority-designated processing and disposal facilities as set forth in this section.

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Protect the public health, safety and welfare.
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Ensure that waste is managed in accordance with the SWA’s plan.
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Assure that sufficient funds are available to support the SWA’s system.
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Enable the SWA to obtain necessary Bond financing at the lowest rates.
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Comply with the Indenture of Trust;
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Ensure that the rate payers receive the highest value from their investment in the system.

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Statutory Flow Control is valid and enforceable.
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Additional Flow Control Measures
◦ Contractual
 Franchise Collection Agreements in the Unincorporated Area.
 Interlocal Agreements with the cities.
◦ Economic
 100% Non-ad Valorem Residential Assessment
 75% Non-ad Valorem Commercial Assessment
 Competitive Tipping Fees

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Increased scrutiny to ensure that all solid waste is delivered to an SWA facility.
◦ Inspection of Containers
◦ Inspection of Facilities
◦ Inspection of Records
Imposing fines and penalties for violations.
◦ Violations of the Act are 2 nd Degree Misdemeanors
◦ No specific civil penalties currently exist
Providing for enforcement
◦ Violations of the Act related to sanitary disposal are enforced through the Environmental Control Hearing Board
◦ SWA needs to determine the proper enforcement mechanism.

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Adopt Rule 5 governing the management of solid waste
◦ SWA Rules carry the force of law.
◦ Requiring all solid waste to be delivered to SWA designated facilities.
◦ Requiring all commercial solid waste to be disposed in a container properly labeled Solid Waste only.
◦ Requiring all commercial solid waste containers to carry a label provided by the SWA.
◦ Providing for inspections.
◦ Establishing fines and penalties for violations.
◦ Establishing a venue for enforcement action.

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Adopt Rule 6 governing the management of recovered materials
◦ Requiring all recovered materials haulers and dealers to be licensed.
◦ Requiring all recovered materials haulers and dealers to submit reports in accordance with the Laws of Florida.
◦ Requiring the disposal of solid waste in a solid waste materials container.
◦ Prohibiting recovered materials haulers from hauling recovered materials commingled with solid waste in excess of the statutory limits.
◦ Providing for inspections.
◦ Establishing fines and penalties for violations.
◦ Establishing a venue for enforcement action.

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Ability of SWA to enforce county-wide.
Ability to impose criminal and civil penalties.
Limitations if any on the SWA’s ability to perform inspections.
Who is authorized to issue citations?
What is law enforcement’s involvement?
What is the appropriate venue for adjudication and enforcement?

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Positives:
Allows tipping fees to remain high to encourage recycling and to allow individual businesses to have more control over their cost.
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Negatives:
Will likely result in increased costs.
Places the SWA in an adversarial role.
Could result in legal challenges.

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Lowering the Tipping Fees reduces the incentive to recycle and results in higher commercial assessments, but equivalent revenues.
Lowering the Tipping Fees results in a more secure revenue stream.
Lowering the Tipping Fees reduces the incentive to divert waste.
Enhanced scrutiny and enforcement, if successful, will allow for higher Tipping Fees and greater recycling incentives while discouraging waste diversion through penalties and sanctions.
A combination of these measures may be required.

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Lower the current Tipping Fee Rate to $38, thereby raising the assessments 2% over the current year.
Pursue the development of rules to provide enhanced scrutiny, enforcement, penalties and sanctions.
Upon successful implementation of the rules, Tipping
Fees may be increased.