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- Avoid risk of higher pricing that results from spot market purchasing <br />- Often can negotiate for market revenue sharing back to municipality <br />CON <br />- Private financing has higher interest rates with shorter payback required <br />- Long term commitment required to use a particular vendor <br />- No connection between actual costs and your fee <br />- Have to take type of service available in market (eg. source separated) <br />- Little control over quality of service, adding new materials, etc. <br />- Possible disruption of service w /no backup <br />- Other larger users may end up "buying" away your capacity <br />- Facility is often not in a good location resulting in high transportation costs <br />- No ability to get other value added services (educational center, etc.) <br />Approach C• Public Land Host for a Private MRF <br />PRO <br />- Small capital outlay by public sector (possibly none if land already owned) <br />- Commitment of tonnage over long term can get favorable pricing <br />- Commitment of land provides some leverage to control project <br />- Some control in case of vendor failure (ie: potential to kick vendor out) <br />- Avoid risk of higher pricing that results from spot market purchasing <br />- Often can negotiate for market revenue sharing back to municipality <br />- Ability to get MRF in good location resulting in lower transportation costs <br />- Some ability to get other value added services (educational center, etc.) <br />CON <br />- Private financing has higher interest rates with shorter payback required <br />- Long term commitment required to use a particular vendor <br />- No connection between actual costs and your fee <br />- Vendor risk of "building to suit needs to be covered with "put or pay' <br />- Have to take type of service available in market (eg. source separated) <br />- Hard to guarantee quality /consistency of service once up and running <br />- Possible failure of vendor with complicated process to replace <br />Approach D• Public Ownership and Financing with Private Sector Design. Build and Operate <br />PRO <br />- Public financing of capital provides lower rates and longer term (20 years) <br />- Public absorbing of financing risk results in lower bids from vendors <br />- Provides option for vendor to own/finance equipment <br />Commitment of tonnage over long term can get favorable pricing <br />- Significant leverage to control project - selecting best of private sector <br />- Closer match of actual costs to fees that are paid <br />- Ability to negotiate favorable terms on tip fees (graduated structure) <br />- Ability to negotiate favorable terms on other user tonnage (merchant fee) <br />- Ability to negotiate favorable terms on revenue sharing <br />- Ability to get value added capabilities (e.g. education center) <br />- Ability to get optimum site location and integrate with other functions <br />- Positioned to deal with changes over time through contract renegotiation <br />- Failure of vendor can be addressed relatively easily through default clause <br />2/5/99 Orange Regional MRF LOG Workshop Materials 18 <br />