Landfill Financial Overview & Options

1. Landfill Financial Overview & Options John A. Crawford Nassau County Clerk/Comptroller August 2005 Nassau County Clerk of Courts

2. Objectives • Chief Financial Officer obligation • Financial Highlights and Trends • Causal factors for current situation • Recommended Action • We are all in this together Nassau County Clerk of Courts

3. Budget Type Overview • Revenue Sources • Out-of-County (contract) • In-county commercial • Special Assessments • Expenditures • Operating • Non-Operating • Debt Service • Post Closure • Escrow Funding Nassau County Clerk of Courts

4. Key Escrow Accounts • Closure (for active landfill) • Funded annually to ensure revenues are available at time of closure • Funding required by law • Renewal & Replacement • Funded by “excess” revenues for land purchase and construction for additional landfill capacity. • Funding not required by law Nassau County Clerk of Courts

8. Causal Factors for Situation • Unclear FTE responsibility and accountability for financial performance of landfill. • Short-term “contract” cash-flow revenues appear to have priority over lifespan and cost control issues. (Annual vs. lifespan mindset) • Higher tonnage per day required higher operating costs, although large discounts were provided to out of county (contract) haulers. • Poor monitoring of true “cost” per ton compared to actual “revenue” per ton to manage lifespan liquidity. Nassau County Clerk of Courts

9. Causal Factors for Situation (cont.) • Necessary management actions to fully recognize and correct declining financial conditions have been ignored or differed. • Complex Accounting for Solid Waste Fund: 115 Revenue Accounts 478 Expenditure Accounts 82 Balance Sheet Accounts 675 Total Active Accounts for landfill • Bottom Line: Actual landfill costs have been subsidized from existing assets (instead of Special Assessment) to fund annual shortfalls. Nassau County Clerk of Courts

10. Special Assessment Issues At $45 per residence: (27,723 residences) • This has not been adequate given the actual landfill costs incurred. • Not raising Assessment (and not reducing costs) has only differed taxpayer costs, NOT prevented them. (Pay now OR pay later) • The Assessment will have to be increased to remain solvent in the future. • The more operating costs are cut, the less the required raise in Assessment. Nassau County Clerk of Courts

12. Immediate Outlook • Loss of Gateway/Advance business and reduced commercial volume • $1.9M Revenue loss (30% of $5.7m total Commercial Revenues budgeted) • Increased life expectancy of landfill Note: To cover loss by Special Assessment alone would require an additional $69.15 per residence Nassau County Clerk of Courts

14. Immediate Actions to Consider • Ensure operational and financial accountability for the landfill is designated to a qualified manager. • Aggressively cut costs. • Reduce unspent budgeted items including reserves and renewal & replacement to remain solvent this year. Nassau County Clerk of Courts

16. Near-Term Actions to Consider • Service only in-county customers due to area competition and lifespan issues. • Closely review all operating costs, including budgeted consulting fees. • Refinance $18M bond to separate current landfill portion from closed landfills. • Adjust Special Assessment and gate rate accordingly. Nassau County Clerk of Courts

18. Facts to Keep in Mind • Landfill solvency is best measured in terms of lifespan rather that annual budget. • Nassau county residents pay more per ton than out-of-county haulers. • Nearby landfills charge significantly lower gate rates. • Current $40/Ton gate rate revenues (and associated tonnage) are a very small percentage of the operation. • Levying a Special Assessment for businesses may have serious challenges due to the variety of volume and type of waste generated (without control of pick-up). Nassau County Clerk of Courts

19. Facts to Keep in Mind (Cont.) • Imposing an assessment on businesses will interfere with free-market economics and competition that benefits business owners. • Higher per ton costs appear to prevent our landfill from being competitive on the open market (for gate rate prices). • Equal effort should be made to control costs as to increase assessed revenues. • Using One-Cent funds to subside the landfill will NOT likely cause efficiency to improve. • Any One-Cent revenues used for the landfill reduces funds available for the 5-year capital plan. (Also not consistent with proposed Budget Policy as submitted to BOCC-Enterprise funds to stand alone). Nassau County Clerk of Courts

20. CFO’s Opinion The landfill is in seriously poor financial condition. This is primarily due to an ongoing lack of professionally qualified staff and unclear/or absent financial/business direction from the BOCC. Nassau County Clerk of Courts

21. Bottom Line • Individual (management) responsibility and accountability for landfill financial performance must be established. • Annual revenue shortfalls have been subsidized from other asset accounts. • Only $200K will remain in Renewal & Replacement and Reserves after covering revenue shortfall for this year. Nassau County Clerk of Courts

22. Bottom Line (Cont.) • The Special Assessment will need to be significantly increased. • A new landfill would require almost 100% financing, as Renewal & Replacement funds are largely insignificant at this time. Nassau County Clerk of Courts

23. Thank you Nassau County Clerk of Courts