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April 14, 2016

Despite the recent controversy associated with a few new mixed MRF facilities, the processing systems do an excellent job of what they are supposed to do: maximize the separation of like materials.

 

Taken as a whole, mixed MRFs have operated well since their reincarnation in the early 1990s and continued refinement through today. The sorting technology, which has been evolving for the last 25 years, has been proven to work and is reliable. Complete, pre-engineered integrated systems have been available now for years from a growing selection of established companies dedicated to the solid waste industry that can provide planning, engineering, manufacturing, controls, and startup, whether for new facilities, or retrofits of existing older facilities.

With that said, the following conclusions are offered for consideration:

  • MRFs have the potential to help communities significantly increase their waste diversion and recycling rates.
  • The integration of newer technologies offers a substantial increase in throughput of mixed waste-stream coupled with the ability to recover previously unrecoverable materials and/or materials previously unwanted (i.e., food scraps-organics).
  • High tech systems represent a significant investment over more manually intensive and older, less advanced facilities. This has to be balanced and their value thoroughly vetted in the planning stage with an economic proforma that is based on realistic, and in the authors opinion, conservative assumptions and estimates of the volume of recyclables that can be produced, demand for the recycled materials, changes in feedstock, the quality of recyclables that can be recognized, and the value that the market will put on those materials.
  • Operators should anticipate that plastic and fibers if commingled with dirty materials and/or mixed in with finished bales of those recycled materials may have a lower value placed on it by the end recycler than as compared to a bale of clean material. Thus, keeping different incoming waste-streams separate, at the front end of the system, if possible, is key in maximizing clean recovered materials and limiting the contamination risk posed by intermingling dirty materials.

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Contact the authors: Bruce Clark and Marc Rogoff 

Posted by Diane Samuels at 2:31 pm

November 30, 2015

An SCS pro forma model for waste management gives you the much-needed ability to analyze how different elements of a business plan will impact your cash flows and value. Subsequently, using individual forecasts and operations data, you can analyze when in the future you might need financing allowing you the time to plan to acquire sufficient resources, permits, and equipment. Read the Merced County case study here to learn more.

SCS Engineers assisted the Merced County, California, Regional Waste Management Authority (RWA) in developing a Pro Forma Model that encompasses projected operational costs and revenues to help decision-makers develop timely cash flow forecasts. The RWA now has a useful tool for annual budgeting and developing long-term capital policies.

Merced County, California, Highway 59 Landfill
Merced County, California, Highway 59 Landfill (pictured here) uses an SCS Pro Forma Model for managing the day to day business and long-term planning decisions.

After several years of revenue declines for numerous reasons, including the recession, a change in management in 2012 ordered a re-assessment of RWA’s operational and administrative functions. Throughout the year-long process, a new Regional Waste Director was selected to implement a progressive strategy that would realize operational efficiencies, cost savings, an expanded customer base, and lower long-term debt through bond refinancing. These measures provided considerable benefit, particularly in regards to the long-term financial health of the agency; however, it was not clear if cash could be generated quickly enough to meet the existing need. As a result, the agency hired a rate consultant in April 2015 to assess the anticipated shortfall and prepare a report to the RWA’s governing board.

The RWA owns and operates two disposal and recycling facilities, each located near the population centers of Merced County. Both landfills need expansions to increase disposal capacity in the coming years. SCS Engineers developed a Pro Forma Model to help the RWA prepare a long-term cash flow analysis and assess whether or not funds were available from operations to forestall a bond issue for the capital improvements as well as to fund adequate emergency reserves. At the beginning of SCS’s engagement, RWA staff provided background data and information concerning residential collection revenues and operating expenses.

The Pro Forma Model estimated annual net revenues during the 12-year planning horizon; determined that the current debt service is a major drain until the bonds mature in FY 2026/27; calculated that funds for projected capital improvements, fleet replacement, and a new “Rainy Day Fund” can be realized even if the RWA receives low waste deliveries to the landfill; and projected cash reserves. The model recommended that the RWA consider funding a landfill gas to energy project out of cash reserves rather than bond proceeds and projected annual revenues from methane sales.

The RWA adopted the findings of the proposed pro forma model in October 2015. Conducting the pro forma modeling effort enabled the RWA’s decision-makers to project costs of the various capital, fleet, and waste flow options. Key among the lessons learned was the implementation of a “Rainy Day Fund” to provide a long-term financial backstop for unforeseen events in landfill operations that cannot be predicted today. Such events could include groundwater and landfill gas remediation, issues with landfill liners, and weather events. The fund is capped at 25 percent of the RWA’s annual operating costs, which can also provide three to four months of operating expenses. While typical of many large County or municipal General Funds, it is less typical of individual enterprise funds in the past. Such Rainy Day Funds are becoming more and more prominent across solid waste agencies in the United States.

Lastly, the RWA now has a financial tool that can be updated annually and will continue to project future revenues and capital expenditures and ultimately forecast rate needs more accurately.

Marc Rogoff, Ph.D., is a Project Director for SCS Engineers’ and our National Expert on Solid Waste Rate Studies. Marc has over 30 years of experience in solid waste management as a public agency manager and consultant and has managed more than 200 consulting assignments across the United States on all facets of solid waste management. He has written and co-authored many articles, including the following:

Compatibility of Recycling Goals and the Continued Development and Operation of Integrated Waste Management Facilities, Including Landfills

Conducting Solid Waste Rate Studies and Business Plans

Trends in Solid Waste Collection

Click here for more information about SCS Engineers Solid Waste Services

Posted by Diane Samuels at 11:49 am