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Reserve funds an option for landfill

To pull the regional landfill out of a financial hole, possible solutions range from charging Fredericksburg and Stafford residents to dump trash, to having the county pitch in funding.

The Rappahannock Regional Solid Waste Management Board that oversees the landfill also has the ability to tap more than $6 million in restricted funds as long as they have a way to replenish the money. The action would require the blessing of Fredericksburg and Stafford County, staff said.

When landfill director Keith Dayton briefed the Stafford Board of Supervisors recently on the facility, he did not mention the possibility of tapping the restricted funds. He believes that it would be poor financial management.

Staff later said that dipping into the restricted money is not a solution and should not be considered a viable option.

Staff had at first expected the issue of tapping the restricted funds to come up at an upcoming Stafford infrastructure committee meeting, but later said that it wasn’t an option and wouldn’t come before the committee. The committee will make a recommendation to Stafford supervisors regarding the landfill.

The landfill is currently facing an operational deficit and an unfunded $4 million capital project of adding a new cell that must be completed by the end of next year. The cells are the spaces that hold the trash at the landfill and they are closed off after they are filled.

In addition, the landfill needs $650,000 annually to fund the construction of future landfill space after the initial cell addition.

There is slightly more than $13,000 in unrestricted net assets, or funds that are not obligated for other things.

When Dayton briefed Stafford supervisors on June 17, he said the approximately $6.5 million the R–Board has is restricted.

Most of that money is fenced off because the state requires that funds be set aside for the closure of cells that are filled with trash, and they must be monitored after they are closed. If the funds were used for any other purpose, they would have to be restored.

“Those funds could be tapped, but there is no backstop,” R–Board member and Stafford County Administrator Anthony Romanello explained.

HARD DECISIONS

Because the landfill doesn’t have sufficient revenue, replenishing the funds would fall to Fredericksburg and Stafford, the two localities served by the landfill, according to staff.

But Stafford doesn’t have a source for the funds or the capacity to borrow them, said Maria Perrotte, Stafford’s chief financial officer.

Stafford and Fredericksburg have already been asked to come up with money to help with the operational deficit.

Stafford rejected a $114,000 request for a subsidy from the landfill.

The Fredericksburg City Council has budgeted money in the upcoming budget that would cover costs for a $20 per-ton tipping fee charge for city waste dropped off at the landfill. That is expected to generate $165,000 in revenue this year. Currently, city waste can be dropped off for free.

Stafford Supervisor Paul Milde also asked the board on June 17 to help with financing the $4 million cell addition.

“I want to hear that [tapping the restricted funds] as an option. I don’t see why we wouldn’t discuss it …. We need to get the landfill in the black …. I don’t think anything should be off the table,” said Milde, who is the R–Board chairman and infrastructure committee member.

Milde added that he was going to ask staff at the committee meeting to look into cases where landfills have been taken over by private contractors.

“The truth is, the private entity does a more efficient job than government. So I’d like to have that discussion,” Milde said.

R–Board member and infrastructure committee member Gary Snellings said that tapping into the restricted funds should only come up after all other options are exhausted.

“In my mind, it is not an option right now. It may come to a point where it may have to come to the table,” Snellings said.

He said he hasn’t thought of ways that the R–Board could replenish those restricted funds itself, or repay the county. That should only be explored if the option had to be put on the table, Snellings said.

Supervisor Cord Sterling, who is also on the infrastructure committee, said that he wouldn’t support tapping into the restricted funds.

“I’m speaking as a financial person. I don’t think that the R–Board should behave in such a manner,” Sterling said.

The financial problems of the landfill shouldn’t have come to Stafford supervisors in the first place, he said.

“They [the R–Board] are basically saying, we don’t want to raise tipping fees, we don’t want to reduce any services …. That’s their job … to make the hard decisions. They don’t want to make any of those decisions,” Sterling said.

REVENUE OPTIONS

Staff has proposed several ways that the landfill could generate more revenue.

One option is to charge residents, who currently dump for free, a $3 per-visit charge to dump their household waste. The per-visit $3 fee is expected to generate $1.1 million in revenue annually, which would fully fund operational costs and replenish the reserve fund to allow for the expansion of a cell, a staff memo states.

Currently, 25 percent of the waste received by the landfill is unbilled. The majority of that material comes from the free residential drop-offs.

Snellings said he does not support the charge to residents. He believes that would lead to the kind of illegal dumping that occurred previously when Stafford charged for a county tag that was policed through the landfill.

A potential recycling contract could also be part of the fix. The contract, which is still under review, would bring in an additional $20,000 to $25,000 each month, or about $240,000 a year. A handler of recyclable materials that finds end buyers for the items pays the landfill for recyclables it brings in.

“We are expecting this unexpected recycling revenue to make up that [operational] shortfall this year,” Dayton said to the board on June 17.

The contract has not yet been approved. If it was, the R-Board will still be left with finding the money for adding the new cell and annual funds for future expansion.

GOVERNMENT SUBSIDIES

Another proposal was the $114,000 requested from Stafford, which Milde has described as a short-term fix.

“Personally, I think the county needs to go back and subsidize the landfill until it gets back on its feet. To me, that is the No. 1 option,” Snellings said.

The city and county used to contribute subsidies. In 1999, for example, the landfill received $1.2 million in funding. But in 2002 the landfill was deemed financially sustainable and subsidies stopped.

Sterling doesn’t support a government subsidy. He has previously proposed shutting down the landfill and sending Stafford’s trash elsewhere.

“If they are telling me that we are running out of capacity, that it would cost millions more to build more capacity, and that we can’t touch the commercial hauler fee … then why aren’t we in favor of that?” Sterling asked.

Fees that commercial haulers pay to dump trash at the landfill account for the bulk of the landfill’s revenue. Dayton has said that raising fees could divert those commercial haulers to other landfills.

Dayton has described the landfill’s tipping fees as “very competitive.” Currently, the landfill’s base fee for commercial haulers of $41 per ton is the second lowest in the region, higher only than Spotsylvania’s $29-per-ton base fee. Spotsylvania has budgeted $2.7 million in general fund support for that landfill in fiscal year 2014.

Loudoun County’s landfill charges $62 per ton to commercial haulers while Fauquier County charges $55 per ton and Hanover County charges $50 per ton to commercial haulers.

Since 2005, the landfill has seen a 31 percent decline in total tonnage. Dayton attributed the bulk of that to competing landfills. The loss of government funding, the recession, greater recycling and better handling of household waste were other factors, Dayton said.

Vanessa Remmers: 540/735-1975

vremmers@freelancestar.com

 

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