4 August 2011
BACKGROUND/FINDINGS
Counties are required by Washington State code to have a solid and hazardous waste management plan for the safe and environmentally responsible disposal of solid waste generated in the County.
Counties are not required to operate a solid waste system, just to see that some system for safe and responsible disposal exists.
San Juan County chose to establish a Solid Waste Disposal District, which is managed by the Disposal District Board (which is made up of the members of the County
Council). The Disposal District operates a transfer system, consisting of three stations.
Until a year ago, Orcas and San Juan had “tipping floors”, where both self haul and packer trucks could discharge their loads, which would be transferred to over the road trailers provided by Waste Management, which provided transport and disposal at a landfill. Lopez operated as a “drop box” into which self haul customers would deposit their waste, which would then be transferred over the tipping floor at Orcas. Since the
San Juan station was declared out of compliance by DOE (because of process water problems due to the tipping floor roof having been removed) it is operated as a drop box facility.
San Juan Solid Waste is managed as an “enterprise fund”, meaning that its expenses are supposed to be matched by its revenues, derived primarily from tipping fees
(supplemented to minor degree by grant funding).
Tipping fees have, for years, been far higher than those on the mainland. Ferry fees constitute a very small small proportion of the difference--about 7.5% (5% of total cost per ton). Even if a system were efficiently structured and run, with an appropriate level of overhead, if it does not have enough volume to amortize its fixed costs, it will be more expensive per ton handled than larger systems-it is “sub scale”.
The system has been “pay as you throw”--how much a user paid is directly related to the weight or volume of waste they present to the system. Pay-as-you-throw is the preferred method of charging for solid waste services because it is equitable, and because it provides a substantial incentive to “reduce”.
San Juan Solid Wasteʼs tipping fees probably were not equitable, however, because the differential between the tipping fees charged to commercial customers and self haul customers was not based on adequate analysis of the cost of providing the different services. Further, the self haul tipping fee is internally inequitable, in that there is no reflection of the “transaction cost” per weight/volume difference between larger and smaller deliveries. Finally, recycling until recently was “free”, which means it was paid

for by tipping fees on garbage. Different users and user classes produce different ratios of recycling to garbage, so some were paying for more than they produced, and some were paying less.
Counties which seek to have compensatory and fairly priced solid waste systems a) try to understand their costs and b) price according to those costs. Typically this is achieved by using a “gate fee” plus a tipping fee.
San Juan Solid Waste has been running a deficit for several years, as the amount of paid waste presented to the system has declined substantially. Construction debris has declined precipitously. Commercial solid waste is also down. Residential solid waste appears to be relatively level. The Town of Friday Harbor has left the system (except for recycling) because it is far more cost effective for it to deliver its route collected solid waste to Skagit.
Tipping fees, and minimum fee, have been increased substantially to help make up for the revenue shortfall, and system expenses have been reduced somewhat. With less garbage being delivered to Waste Management, the cost of disposal has dropped proportionately. Station hours have been cut, with modest reduction in labor cost.
However, the system as structured is heavily fixed cost in nature. When volume drops, and revenue drops, and price increases contribute to further volume declines as users haul their waste to Skagit, substantial deficits result.
County Council has prepared an alternative funding model, which it is taking to the voters as a ballot measure. It would impose a parcel fee on developed parcels which would fund some portion of the costs of operating San Juan Solid Waste--a very uncommon method of financing solid waste operations and facilities. In addition some combination of gate fee, tipping fees, recycling fees would be charged.
A base parcel fee would be imposed in all single family residences. Various multipliers would apply to several classes of multifamily residences and commercial establishments.
Only the parcel fees are specified in the ordinance to be referred to the voters. Other fees are not yet determined, and may be increased, decreased, or shifted by Council in succeeding years.
The proposed ordinance relies on a limited number of studies, done in localities quite different than ours, for its user classes and multipliers. Possibly more important, it imposes a single, flat, fee on all single family residences, despite considerable evidence that actual generation of garbage varies widely and substantially across different family sizes and consumer behavior. Proposed pricing, including the parcel fee, is not cost based.
RECOMMENDATION AND PROPOSAL
Because the ordinance does not promise to reduce cost of the system, and does not improve its fundamentally fixed cost nature (actually makes it worse), and because the

parcel fee structure both moves away from pay-as-you-throw and introduces substantial inequities within and between user classes, we propose an alternative system model, and recommend a “no” vote on the ballot measure.
The alternative proposed here is s calable, e fficient, n eutrally priced, s imple, i ntelligent, b usinesslike, l egally compliant, and e quitable--the SENSIBLE Solid Waste System, a set of market provided solid waste services (MPSWS). It differs fundamentally from the current system and the system proposed in the ballot measure. It is fundamentally much more variable cost in nature, it is priced fairly in that price reflects cost, and it does not rely on tax support. It will almost certainly be lower overall cost to users of the system, primarily because it has much lower overhead and would be more thinly staffed.
Route Collection of Garbage and Recycling
In both the Council proposed system and the SENSIBLE system, route collection of garbage would continue as current, under the regulation of the Washington Utilities and
Transportation Commission. The County has no direct control over route collection. It has indirect control through the requirements it may set in the Solid and Hazardous
Waste Management Plan, and the tipping fee it imposes on San Juan Sanitation--and therefore SJ Sʼ customers--at the sites it requires SJS to use.
If County sets a tipping fee for commercial higher than what it would cost SJS to deliver directly to Skagit, its customers have to pay more for the service they subscribe to than they would under the SENSIBLE system.
SJS has indicated it will implement route collection of co-mingled recycling under either system, although this is dependent on the price Council sets for recycling, for both SJS and self haul customers. SJS believes that if recycling is free, or too cheap, at the station(s) it will be difficult to attract enough customers for route collection to make it economically viable. Again, as with garbage collection, this service would be regulated by WUTC, not County.
Drop Off Service
The SENSIBLE solid waste system features drop off opportunity for all comers. Anyone not adequately served at their residence or place of business, anyone who does not want to use the route collection service for any reason, anyone with odd/large loads or occasional needs, could bring their garbage and co-mingled recyclables to the drop off site.
At each site two or more “packer” trucks would be parked along with six or more two yard “dumpsters”, plus a sani-can. Customers would present the attendant with a prepaid punch card or account identification for recording payment, and put their garbage and recycling into one of the appropriate dumpsters. Attendant would cycle the dumpsters into the packer trucks as necessary. At peak times an additional attendant might be needed.
Punch cards would be sold at several venues. No cash payments will be accepted at

the facilities. Acceptance of credit card payments will be explored.
Days and Hours
Analyses have been carried out assuming the facilities would be open at least three days a week, seven hours per day (with a midday closure for attendant lunch).
Cost/Price
Drop off service under the SENSIBLE system will price based as accurately as possible on cost, plus a reasonable margin. Because unlike route collection, drop off service will not be regulated by WUTC, the pressure to operate efficiently and price fairly will have to come from market forces. If the drop off operator sets prices too high, the customers will move to route collection (which is regulated), will haul themselves to the mainland, or will pay others who will likely offer the service to haul to the mainland for them. The drop off operator cannot afford to set up a large “price umbrella”.
Co-mingled recycling is priced somewhat lower than garbage, to the extent that it is somewhat less expensive to dispose of. (Example: garbage disposal fee at Skagit is about $90 a ton, and the cost to get rid of co-mingled recyclables is about $50 or $60 a ton, both delivered.) The cost of handling and transport is essentially the same. This is true for both route collected and drop off.
Because the SENSIBLE system is scalable, it can handle various levels of garbage and recycling deliveries. While it is substantially less fixed cost in nature than the current system, it is sensitive to utilization levels. How much it costs to handle a ton of garbage or recycling depends on how much of it shows up. It ʼs important to put in place the right level of equipment and personnel to match the demand that actually shows up. The cost of a mistake is lower in this system, though, because equipment can be shifted.
Models have been built to estimate the costs and prices to customers for various levels of business.
Table attached shows an example of cost per ton, and per can (using in this case 55# cans for illustration--lighter average can assumption would mean lower cost/price per can). If 100% of current self haul traffic showed up at the drop off facilities, cost per can for garbage and recycling, respectively, on Orcas and San Juan would be about $7.76 and $5.63. Presumably Lopez would be served by Port of Lopez initiative. If instead it were served by SENSIBLE/MPSWC cost per can would be around $13 and $10.
If roughly 50% of current self haul traffic showed up, Orcas and San Juan would be at about $9.20 and $6.90. With 40# cans (typical for route collection, possibly slightly light for self haul) this would be about $6.68 and $5.01.
This table illustrates both the scale effect--in general, the more volume a location handles, the lower the unit cost--and the utilization effect--if the operation is sized for more volume than shows up, the higher the unit cost. “Right sizing” is important.
Sites

Although a drop off facility only requires a fairly small footprint of accessible land to operated, using the existing sites would be the preferable locations. This depends on negotiating reasonable agreements for use and lease cost. Town of Friday Harbor has indicated willingness to negotiate accommodation of a drop off operation at its site on
Sutton Road. County would need to be willing to negotiate reasonable agreements for
Orcas and Lopez, and in general try to facilitate the provision of drop off services in the
SENSIBLE system.
If no agreement is reached with Town, perhaps County could host the San Juan drop off operation on part of the “Sundstrom” parcel.
Island Specific
The SENSIBLE system easily accommodates alternative island specific solutions. Port of Lopez has a plan to deliver solid waste services, including segregated materials recycling, on Lopez, and is in discussions with County to negotiate use of the Lopez facility. Drop off operations on Orcas and/or San Juan are largely independent of a
Lopez decision.
Transition
Given an interested party to operate the drop off service, it should take three to six months to implement.