Monday, August 9, 2010

A conflict of interest

On Tuesday, August 10, 2010 our BoCC will be deciding on who will fill one of the vacancies on the County's Solid Waste Advisory Committee.  Last month the committee conducted interviews and has recommended Mr. Dan Locke (Chief of Mont. Co's Division of Solid Waste Services) to join the committee.  (Daniel Locke recommendation -please scroll down to page 7)

As a member of the NMWDA, Mr. Locke has a clear conflict of interest since the NMWDA will be significantly benefiting by the placement of its Regional Incinerator in Frederick County. 

I would also like to provide some additional information to the LTE Mr. Locke wrote over 2 years ago.

1.) The electricity revenue made by Mont. Co. trash incinerator in fiscal 2007 was $17 Million, but Mr. Locke fails to share that AFTER all revenues are calculated, the subsidy to operate and pay the debt service was $38 Million.

2.) The electricity revenue for fiscal 2008 was $26M, however, Mont. Co. still had costs of nearly $33 Million in order to operate the facility.

3.) How the Mont. Co. incinerator "breaks even" is that there is a System Benefit Charge (as does Fred. Co.) in order to make-up any shortfalls in electricity and ferrous revenues.  This "fee" found on the property tax bill is part of what they define as Revenue - please don't assume Revenue is just the electricity revenue.  Mr. Locke describes this "fee" as solely a fee to subsidize recycling, but if you were to read the bond prospectus for Mont. Co.'s incinerator the subsidy for its incinerator is also assured by this fee

4.) The statement that Mont. Co's waste services are "mid-range" may be due in part to the fact that their trash incinerator cost half of what Frederick and Carroll Counties are planning to spend.

5.)  Also, please note that the Mont. Co. System Benefit Charge is spread among 4 times the population of Frederick, and an unknown (at least by me) amount of business retail space as compared to Frederick.

Thank you,
Caroline Eader

MontCo solid waste services chief disputes column on WTE
Originally published March 09, 2008

The Feb. 4 column of Katherine Heerbrandt, ("Tra$$$h") contained several errors regarding solid waste management in Montgomery County. To help clarify the issue we wanted to share the following information relating to our service. Regarding the statement that "The promised recovery of projected costs at break even levels was bogus," our Solid Waste System operates on a break even (full-cost-recovery) basis, as do most enterprise funds, such as water and sewer funds operated by most jurisdictions. Fees are set to cover the county's actual solid waste management expenses, and, thus, are not subsidized by taxes through the county's general fund. The fee paid by Montgomery County residents -- for very comprehensive waste and recycling services -- is in the middle range of other jurisdictions in the region, particularly when considering full cost accounting.
Next, revenue from selling the energy generated from our WTE facility was not $2 million as stated in the commentary, but $17 million. That was in FY 2007. In FY 2008, due to the recently increased market value of electricity, it is projected to be $27 million.
The statement that "Once the plant was operational, homeowners started to see something new on their tax bills every year, a $200 solid waste fee" is not correct. The System Benefit Charges did not increase by $200/year when the WTE opened; rather another set of fees just replaced the earlier system of refuse collection and tipping fees which included general fund support.
The new system, introduced in FY96, covered all solid waste costs, as it continues to do to this time. In that first year, the new Base System Benefit charge was $56.26/household.
In addition, homeowners paid a $66.64/household Disposal Fee that was charged in lieu of residential haulers paying a tipping fee to the county. Because the residents' haulers no longer paid a tipping fee, they could not pass that along to their customers. Thus, the County's Disposal Fee did not represent an increase, merely a different way to recover costs.
At the same time, in order to pay for county recycling program costs, which otherwise had to be subsidized by the county general fund, the county introduced an Incremental System Benefit Charge of $65.54/home. Again, that was for recycling -- not disposal -- services and simply represented a new means of paying for recycling costs that avoided any subsidy from county general funds and assured a full-cost recovery without taxes. The county continued to provide refuse collection for homes receiving that service from the county, but again its refuse collection fee provided full-cost recovery for that service, as well.
Finally, we would like to address the assertion that "Fees for waste disposal will rise sharply at least twice to meet the debt service obligation before it's paid off or refinanced in 2016."
Actually, because of roughly constant scheduled debt service, increasing capacity utilization, and the increasing market value of electricity, the solid waste fees in Montgomery County have either generally declined or stayed about the same over the years. And, when compared to inflation, they have substantially declined.

Daniel E. Locke is chief of
Montgomery County's Division
of Solid Waste Services. He writes
from Rockville.

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