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43 <br />Orange County, NC <br />Financial Plan and Rate Study for Solid Waste Enterprise Fund <br />4.0 POTENTIAL SOLID WASTE PROGRAM FINANCING <br />ALTERNATIVES <br />4.1 RENEWAL AND EXTENSION FUNDS <br />Many solid waste enterprise systems utilize the budgetary concept of a Renewal and Extension <br />(R &E) Fund. That is a fund which provides long -term financial backstop for unforeseen events <br />in solid waste operations that are difficult to predict at the current time. Such items could be <br />groundwater and landfill gas remediation at closed landfill sites, issues with landfill caps, decline <br />of recyclable commodity prices, dramatic fuel price escalation, weather events (tornado and <br />hurricane damage), and other Acts of God that cannot be foreseen. Typically, such funds are <br />capped at 25 percent of the annual operating costs of the enterprise system, which can also <br />provide three to four months of operating expenses. While typical of many large County or <br />municipal General Funds, it is less typical of individual enterprise funds in the past. Such R &E <br />Funds are becoming more and more prominent across solid waste departments in the US. <br />Orange County stands to benefit from an R &E fund in several ways. The fund could contribute <br />towards unexpected Post Closure Care (PCC) costs, enhance the current equipment replacement <br />schedules funded by the "Contribution to Equipment Reserves" budgetary line item, provide <br />funding for new C &D landfill cell construction and other future construction costs, enable the <br />County to weather recessed commodities markets for more stable budgeting of recyclable <br />material sales, and serve a rate stabilization function for the Program Fee. Note that the R &E <br />fund would require an increase in the Program Fee, which could not be funded at the current rate <br />of $107.00, nor at the increased rates calculated under Scenarios 2, 3, and 4. The use of the <br />"Appropriated Fund Balance" as a consistent revenue component highlights the need for an R &E <br />fund, as the Appropriated Fund Balance consists primarily of loans and other borrowed monies <br />previously sequestered for other purposes. The Balance as a portion of total revenue budgeted for <br />FY 2016 -17 is shown in red in Exhibit 21 below. <br />Exhibit 21.Budgeted Solid Waste Management Department Revenue <br />Components as Portions of Total Revenue (FY 2016 -17) <br />30 <br />■ County SW Programs Fee <br />■ Appropriated Fund <br />Balance <br />General Fund <br />Contribution <br />■ Other Funding Sources <br />