8/7/2019 Budget Director's Analysis of Springfield Waste Disposal Options

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City of Springfield36 Court Street f Finance DepartmentSpringfield, MA 01103

To: City CouncilFrom: LeeAnn Pasquini, Budget DirectorDate: 4/7/2011Re: Re-Analysis of Solid Waste Disposal Options After Waste Zero ResponseCC : Al Chwalek, Lee Erdmann

Analysis:This updated analysisuses a revenue amount for the WasteZero proposal that isconsistent withthe Graduated Bin System (GBS) proposal. WasteZero has indicated that the price per bag couldbe adjusted to generate a desired amount of revenue. This analysis also classifies he paymentfrom WasteZero ($540,000 annually) to the City as a negative expense rather than classifying itas revenue as was done in our initial analysis. It was WasteZero's intent that this $540,000 in"guaranteed savings" be classified as a negative expense.How does this compare to the initial analysis?

Expenses - The otal expenses or the updated WasteZero proposal are$8,965,895which is $486,340 less than the GBS proposal.

Revenues - The nitial analysis used WasteZero's figures which included $3.6million incosts to the customers. WasteZero has ndicated that this was used because theyunderstood that this was the desired revenue. This second analysis reducesthe revenuegenerated by customers to be consistent with the GBS proposal.

Costs to Customers - The annual cost to customers is a range estimated by WasteZerobased on an average of 1.2 bags used per week. The size of the bags used issplit 50/50between the 15 and 30 gallon bags. Based on Waste Zero's bagassumption, this wouldbe an average annual cost of $52-$84 per year.

By changing how the credit from WasteZero to the City is classified, and adjusting therevenue originally proposed byWasteZero, I would summarize that the WasteZero programcould save $486K.Waste Zero has ndicated that they are on the State Contract for PAYT programs however theguarantee is not on the State contract. They have also indicated that the terms of contracts ofthis nature are typically 3 years however that would be dependent on some additional details.Based on the proposal, the City would payWasteZero an amount equal to the 2010 tipping fee($3,281,236) each year for the term of the contact with an offset of an annual guarantee fromWaste Zero of $540K. This amount is part of the OTPS expenses on the following page.

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8/7/2019 Budget Director's Analysis of Springfield Waste Disposal Options

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Projected Expense Compared to Projected Revenue:EXPENSES

PSOTPSWasteZero GuaranteeCapi tal (Bins)TOTAL

SUMMARYTOTAL REVENUETOTAL EXPENSES

Graduated Bin System$ 3,024,030$ 5,878,204

$ 550,000$ 9,452,235

$ (3,060,920)$ 9,452,235

Initial City Analysis ofWasteZero Proposal

$ 3,024,030$ 6,031,865

$ 450,000$ 9,505^95

$ (4,817,345)$ 9,505,895

Second City Analysis ofWasteZero Proposal

$ 3,024,030$ 6,031,865$ (540,000)

$ 450,000$ 8,965,895

$ (3,060,920)$ 8,965,895

Summary of Options:

Projected Net CostHousehold cost rangeAnnual Tonnage Est

Graduated Bin System$ 6,391,315

$40-$100 /year38,000

Initial City AnalysisofWasteZero Proposal

S 4,688,550$52 -$273 /year

26,000

Second City Analysis ofWasteZero Proposal

$ 5,904,975$52-$84/year

26,000

Other concerns / issues to beaware of; Ail procurement rules would need to be followed accordingto Chapter 30Brules. The change of implementation from anowner based fee to a resident based fee may be

a challenge to implement and enforce. No rebate to customers isproposed,otherwise that would impact the City's netcost. Waste Zero has authority to monitor allaspectsof the program; Is the City givingWaste

Zero authority to administer the program?

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