Agenda - 02-18-1999 - Attachment 10

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This recommended "baseline' approach also takes advantage of the public sectors capabilities to bundle ` tonnage within their own community, to bundle tonnage regionally, to commit that tonnage over long term, to provide and prepare a site, provide and prepare long term low cost financing, and to make possible various "value added" projects like educational center capabilities and potentially to integrate this MRF with other related functions at a site like the Eubanks Road Landfill site. This "baseline" approach, leveraging the best strengths and capabilities of both public and private sector participants, brings lower capital and operating costs, lower risks to private partners, spreading of all this risk over longer term, the combined effect resulting in significant cost savings and lower fees. In the following two sections, background material is provided on examples of MRF public/private partnership models as well as a summary of the pros and cons of each of these approaches. EXAMPLES OF MRF PUBLIC/PRIVATE PARTNERSHIP MODELS There are many examples of each of the public /private partnership models described in this section. Following are selected examples to highlight what risks and financial burdens are being bome by the private sector and by the public sector. Approach A Paper Stock Dealers and Orange Recycling Services represent merchant MRF vendors Private Merchant MRF offering recycling services to its customer base but without any one key customer that "makes or breaks" their business success. Most traditional recycling paperstock dealers are merchant MRFs. There are not very many merchant MRF vendors that have invested extensively in commingled separation equipment. Communities using this approach tend to be pushed towards more expensive source separation programs which limits the total recovery levels of these recycling programs. Approach B Resource Management, Inc. in suburban Chicago, constructed and operates its own Merchant MRF w/Major advanced two stream commingled MRF with its success guaranteed by a large portfolio Public Contract of long term contracts it has with municipalities to process their recyclables. This facility is viewed as a successful service provider in its area by various municipalities since it offers very attractive tipping fee and revenue sharing arrangements and has traditionally pushed the communities to collect more materials. Tidewater Fiber, with its new arrangements with Durham City and County is taking on a similar role, but with much less core tonnage under contract than most other similar examples and no local base of operations to build on. Approach C The Athens - Clarke County, Georgia MRF was completely financed, designed, built and Public Land Hosting operated by a private MRF vendor (selected through an RFP process on publicly owned Private MRF land supplied by the County, with put or pay contracts for some base tonnage. The County is just now approaching their 'put" volumes which, once exceeded, start to provide for reductions in costs to the County for the processing services they secure from this private MRF. Athens also has the right to purchase the MRF on a straight -line depreciated basis and take over operation R it chooses. Approach D This approach was used in Ann Arbor, MI with the two stream commingled MRF built on Public Ownership and the Cit)(s landfill property, financed with a municipal bond, and then designed, Financing with Private constructed and operated by a private MRF vendor selected through an RFP process. Sector Design, Build and The City has guaranteed its own recyclables to the facility under long term contract. So Operate has the University of Michigan. There is no "put or pay' arrangement since the City owns and has financed the facility (in other words, the City has to pay the bond off no matter what so it has taken on its own "put" obligations). There are incentives to the MRF operator to find other merchant tonnage with a merchant fee paid back to the City to compensate it for the capital costs of the facility. The City also gets a reduction in its own tipping fees for every additional ton brought in, along with a percent of market revenues over a trigger market revenue floor price. These arrangements have been very successful for the City and for the MRF operator who is now processing nearly as much other tonnage in a typical year as is supplied by the City and the University. 16 2/5/99 Orange Regional MRF LOG Workshop Materials