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Home My WebLink About1995-03-27 95-150 ORDERCOUNCIL ACTION Item No. 95-150 Date March 27. 1995 Item/subject: Continuation of Existing Solid Waste Disposal Agreement with P.E.R.C. Responsible Department: Engineering The current Solid Waste Disposal Agreement between the City of Bangor and the Penobscot Energy Recovery Company contains options to modify the terms if the City of Bangor so elects. These options are outlined in detail in the attached Memorandum from Greg I.ounder of the M.R.C. With regard to option 1, the City is currently delivering approximately 10& more than the present minimum annual guaranteed tonnage on an annual basis. Tonnage reductions through recycling will be largely offset by growth. Future tonnage from Bangor will likely fall within the current window of "Guaranteed plus 25tw provided in the existing agreement. No change in the (cont'd) dJ 1�- epartment Head Manager's Comments: City Manager Associated Information: Order and Memorandum Finance Director Legal Approval: / roaeld eel? 7%a} %%< 15VO°pveren fead �/ s" epra✓i%lvn µs5 a,Jrad `yr Peas io 1993 In reivrn AriK MRL [o Wovailies' can vn} isa sedUrnr�j '4 N PC.'- "re{ounik la we mush 97✓a 3 ye9r$ arvonv o Jet ✓� any (lP(merreaj Janna ! _ city solicitor oauc a h'or - PDX 9K 'AtIlheam 71yr avr SHare or xlsyn>v" Passage eash Var 145W deliw.•d IS P5RC ie 1995 First Reading MA Referral ,y,. Referral S%a7 may on/r ;�/_q napg�e r of a reek p`1 I'm fiP011) I f5 are. his is 4A or l6Fora41e nxlz OIwnre Jj J� 199( PGRC res cfvein5 and QLs 1993 PERG-'.%fe('vunilc" 0(0M4- 95-150 Aeupmd to Csoneikw Blanchette March 27. 1995 CITY OF BANGOR (TITLE) WrUr, Tont nustion of._Exist mg Solid waste Dv sposal Ag11 reement with P.E.R.C. BY the cam Causal Nae OUN OfB!"Wor. ORDERED, THAT WHEREAS, the current Solid Waste Disposal Agreement between the City of Bangor and the Penobscot Energy Recovery Company (P.E.R.C.) contains provisions which would allow the City to reduce its annual guaranteed tonnage or to terminate the current agreement; and WHEREAS, The City of Bangor must notify P.E.R.C. by March 31, 1995 if it wishes to make such changes to the current agreement; and WHEREAS, it is not in the City of Bangor's best interest to reduce its guaranteed tonnage and limit available. capacity; -and WHEREAS, P.E.R.C. continues to be the most viable and economical facility for the disposal of Bangor's solid waste; NOW, THEREFORE, By the City Council of the City of Bangor be it ORDERED, THAT, the terms of the current Solid Waste Disposal Agreement between the City of Bangor and the Penobscot Energy Recovery Company not be modified, and be it further, ORDERED, THAT the City Manager provide written notification to the Municipal Review Committee, Inc. relative to this action. 95-150 IN CITY COUNCIL O R D E R Earth 27, 1995 Passed Title, Continuation of Existing Solid Waste Countlloxs Cohen 6 Tyler Disposal Agreement with P.E.R.C. Abstained ...................................... . CITY CLERK 95-150 -2- minimum guaranteed tonnage i ended. Option 2 would allow the City to terminate its agreement with P.e.R.C. and seek other disposal options. Since P.E.R.C. is the most viable and economical disposal alternative for the City of Bangor, this option is also not recommended. You will note that the City will also have the opportunity to terminate in the years 1998, 2000, or 2002. The attached Order directs that these options not be exercised, and that the present Agreement with P.E.R.C, remain unchanged. 95-150 Municipal Review Committee PO Sw25J •Bugm. Mane 096023579•(207)99].6)89• Fm:o0n903J548 Memorandum To: Member Communities From: Greg Launder Date: January 31, 1995 RE: Upcoming Waste Disposal Agreement Options ' As some of you may be aware, the restated waste disposal agreements had two options built in of which the deadline for exercising them is rapidly approaching. The Board of Directors felt it important to notify Municipal Review Committee members of these contract opdons so that respective communities can examine the potential benefits or detriments of exerdsing them. This notification is meant to outline these options for your information. The Municipal Review Committee has not taken a position on either option. Therefore, it is important to apprise you of the upcoming deadlines to allow your community to analyze your situation and make an informed decision. Articles V. and Vlll. of the solid waste agreements are enclosed for your RferenU. DIQI One A Municipality can reduce their amount of annual guaranteed tonnage to be delivered to the Penobscot Energy Recovery Facility (PERC) facility. (see Article V.) This would be a one-time irrevocable election to reduce tonnage. This option was built into the agreement to reflect the solid waste reduction and recycling goals of the stare. The deadline for providing PERC notice of this one-time reduction is March 31, 1995. The one time reduction mould be effective twelve (12) months after notice is provided to PERC. Option Two The second option is that municipalities can opt to terminate their waste agreements with PERC by March 31, 1996 provided a one year notice is given. (see An. VIII.) This translates into a notification deadline toPER €-tdadr3d— 9sAi This mn option is not a one time only circustance. uicipalities could alssoo�pt to terminate the grant agreements by Marc 1 of 1998, 2000, or 2002. f 95-150 Page 2 Jvi S, 1995 Outlined below are a few comments to consider in weighing the two options: Reduction in Annual Guaranteed Tonnage 1. A reduction in guaranteed tonnage would reduce the towns guaranteed plant capacity share. Yom community is allocated 25% capacity over your guaranteed tonnage to amount for the possibility of community growth until the year 2003. This 25% growth buffer may represent excess or unneeded municipal solid waste (MSW) capacity share. This may especially be the case in larger communities where volume of retail sales has remained steady and residential growth and development may have actually declined over the past several years. In other communities generating just a few hundred ton of MSW, a 25% increase may just be a large residential subdivision, mobile home park, or commercial outlet center away. The first and best source to check for growth and development trends in your community is your local Comprehensive Plan. It is important not to reduce guaranteed tonnage capacity only to later have that decision frustrate a growth and development strategy contained hi your town Comprehensive Plan or for an economic development opportunity to be lost. 2. The success of local recycling programs should be assessed. The measurement of waste reduction and recycling hue needs to rely on real numbers based on compiled weight slips. A good source may be your annual waste reports to the Maine Waste Management Agency. It would be a risk to rely on your town's overall recycling rate as calculated by the reporting forms formula. 3. A reduction in your guaranteed tonnage an be picked up by another Charter Municipality if they need the plant capacity. If reduced annual guaranteed tonnage is not picked up by other charter municipalities the aggregate plant capacity share for the Chatter Municipalities is permanently reduced. This tonnage could be marketed by PERC to other municipal customers. This may be a positive development if the aggregate charter municipality tonnage capacity truly is not needed. The marketed tonnage could help as the agreement moves to the "profit sharing ° stage between PERC and its Chatter Towns. The net distributable cash is split 50/50 between PERC and the towns for the remainder of the contract. Any plant capacity share held but not truly needed may not be to the Chatter Towns best financial interest. 4. Probablv the worst result of reduced guaranteed tonnage would be the case where the town that executed the reduction needed more capacity in a few years. Towns may be held to their maximum capackv share in the future. Remember that any decrease is permanent. - 95-150 Page 3 jmurva. 1995 ContractTerminatiom.. Option Two 1. The pERC plant is a low cost, environmentally safe, and long term place to dispose of MSW. The reason that the plant has become such an attractive choice is due mostly to the user municipalities sticking together. 2. Chatter municipalities are about to begin receiving a share of the PERC profits for the first Ume. A 50/50 split of the "distributable profits" will be returned to the toms starting April 1, 1995 for hose towns that remain with the PERC contracts. There will definitely be profits to distribute. The latest estimates range in the - neighborhood of 5% payback on calendar year 1994's tipping fees. The agreements have matured to the point what potential profit sharing will now be an annual occurrence. 3. Any spot market tipping fees lower then those at PERC, if they exist, would likely be interim situations with no security or stability as is enjoyed by those towns contracting with the PERC plant- 4. lant4. Should a cheaper long term disposal option become available in future, towns could opt out of their contracts at that time. I hope that the above information has clarified the upcoming options which are available to your community under the current PERC waste disposal agreements. Should your community contemplate exercising either option, please contact me as I will be tracking decisions to see if changes in the aggregate will effect the Charter Municipalities' standing with the waste agreements. If the Municipal Review Committee can be of further assistance, do not hesitate to contact Greg Lounder at the Eastern Maine Development Corporation, 942-6389 or 1-800339-6389.