The Strategic Policies and Priorities Committee recommends the adoption of the report (April 6, 1998) from the Interim Functional Lead for Solid Waste Management:

Purpose:

The purpose of this report is to consider all the issues related to adjusting the current Solid Waste Management (SWM) fees at the transfer station and landfill facilities operated by the City of Toronto.

Funding Sources, Financial Implications and Impact Statement:

The City of Toronto currently charges a SWM fee for the disposal of Industrial Commercial Institutional (ICI) private sector waste of $70.00 per tonne at seven transfer stations and $50.00 per tonne at the Keele Valley landfill.

It is estimated that if the City of Toronto implements the recommended fees structure the net annual revenue for the City will increase by approximately $770,000.00.

Recommendations:

It is recommended that:

(1) the solid waste management fee at the Keele Valley landfill be increased to $53.59 per tonne effective November 1, 1998;

(2) the solid waste management fee at all seven City of Toronto transfer stations be reduced to $65.00 per tonne effective May 1, 1998;

(3) the Functional Lead for Solid Waste Management report back to the Works and Utilities Committee by May 1, 1999, on the implementation of the fees structure in recommendation numbers 1 and 2; and

(4) the Functional Lead for Solid Waste Management and the Chief Financial Officer and Treasurer report back to the Budget Committee and the Strategic Policies and Priorities Committee by August 1, 1998, on the funding of 3Rs initiatives through the use of solid waste management fees and the creation of a solid waste management reserve fund.

Council Reference/Background/History:

On March 8, 9, and 10, 1994, the Metropolitan Toronto Council adopted, as amended, Clause No. 1 of Joint Report No. 2 of the Management Committee and The Works Committee establishing SWM fees of $50.00 per tonne at the landfill, and $70.00 per tonne at transfer stations.

On December 18, 1996, Metro Council adopted Clause No. 1 of Report No. 30 of the Financial Priorities Committee authorizing execution of an agreement with Browning Ferris Industries (BFI) for the haulage and disposal of solid waste from the City of Toronto (formerly Metropolitan Toronto).

On February 11, 1998, the Works and Utilities (WU) Committee requested the Interim Functional Lead for SWM to report on increasing the current SWM fee at the Keele Valley Landfill to cover costs.

The WU Committee on March 25, 1998, referred the report entitled, "Solid Waste Management Fees," dated March 20, 1998, from the Interim Functional Lead for Solid Waste Management to the Strategic Policies and Priorities (SPP) Committee for consideration at its meeting on April 7, 1998, for submission to Council for consideration at its meeting on April 16, 1998.

The WU Committee requested the Commissioner of Works and Emergency Services to submit a further report to the Strategic Policies and Priorities Committee on:

(1) the following motions:

(i) that the solid waste management fee at the Keele Valley Landfill site be increased to $53.59 per tonne;

(ii) that the solid waste management fee at the Bermondsey and Scarborough Transfer Stations be reduced from $70.00 to $65.00 per tonne; and

(iii) that such fees become effective immediately, and be implemented initially for a six-month period, with an interim report to be submitted to the Works and Utilities Committee.

(2) the issue of transfer station fees and the means by which the City will enforce measures to prevent illegal dumping;

(3) the status of utilization of transfer station capacities; and

(4) the capacity of the Keele Valley Landfill site.

Discussion:

Extending the Life of the Keele Valley Landfill Site

The City of Toronto has entered into an agreement with BFI for the transport and disposal of a minimum of 250,000 tonnes of waste annually from the City of Toronto to a private landfill in Michigan. The City pays BFI $53.59 per tonne (GST exempt) for this service. The rationale for entering into the BFI contract was to extend the life of the landfill by one year, until the year 2002, in order to allow time for our Environmental Assessment (EA) process to provide long-term disposal solutions for the City.

Transfer Station Utilization:

In a previous report on the capacity and utilization of the transfer station network presented to the former Metro Toronto Environment and Public Space Committee on June 7, 1995, Works Department staff wrote that, "In the future, we project higher utilization of transfer stations for mixed waste..." and, "Increases in the diversion of waste from landfill will represent new challenges for transfer stations, but not a significant decline in utilization." The amount of mixed waste transferred through the transfer stations network in 1997 (941,871 tonnes) was up 10.5 percent over 1995 (842,853 tonnes). In addition, the amount of diversion materials transferred through the network in 1997 (202,723 tonnes) was up 11.5 percent over 1995 (179,505 tonnes). We are projecting that the tonnes of mixed waste and diversion materials managed through our transfer stations will continue to grow in the future. We estimate that we have capacity within our transfer stations to manage the small amount of tonnes projected to be received in any of the six pricing scenarios presented later in this report. The marginal cost for managing any additional mixed waste materials at our transfer stations is approximately $2.00 per tonne (excluding haulage costs) therefore further utilization of our transfer facilities makes good business sense at this time.

Alternative Pricing Structures for SWM Fees:

The City of Toronto currently charges Industrial, Commercial, Institutional (ICI) sources a SWM disposal fee of $50.00 per tonne for waste received at the Keele Valley Landfill and $70.00 per tonne at the seven transfer stations. The estimated allocation of waste tonnes for 1998 based on maintaining the status quo for SWM fees is shown on Table 1. The estimated revenue generated from all SWM fees for waste, wood chips and clean fill that has been included in the 1998 operating budget submission is $35,879,000.00.

The following pricing alternatives have been considered for the SWM fees:

(i) Alternative No. 1 - Increase only the landfill SWM fee for ICI sources to $53.59 per tonne. Rationale: Match the fee the City is paying to BFI.

(ii) Alternative No. 2 - Increase the landfill SWM fee for ICI sources to $53.59 per tonne, plus decrease the SWM fee for ICI sources to $65.00 per tonne at the Bermondsey and Scarborough transfer stations in order to export all additional tonnes of waste received at those transfer stations to Michigan through the use of the BFI agreement.

Rationale: The BFI agreement limits the shipment of City waste to Michigan through the use of only the Scarborough and Bermondsey transfer stations.

(iii) Alternative No. 3 - Increase the landfill SWM fee for ICI sources to $53.59 per tonne, plus decrease the SWM fee for ICI sources to $65.00 per tonne at all 7 transfer stations. All additional tonnes of waste received by the City's facilities would be disposed of at the Keele Valley landfill.

Rationale: Match the fee the City is paying to BFI by adjusting the landfill SWM fee and offset any lost revenue from the increased landfill fee by lowering the SWM fee charged at transfer stations.

(iv) Alternative No. 4 - Increase the landfill SWM fee for ICI sources to $53.59 per tonne plus decrease the SWM fee for ICI sources to $65.00 per tonne at all seven transfer stations. The equivalent of all additional tonnes of waste received by the City's facilities would be disposed of at the BFI landfill by redirecting collection vehicles carrying municipal waste away from the five transfer stations to the Bermondsey and Scarborough transfer stations without impacting collection costs.

Rationale: Do not impact the existing life expectancy of the Keele Valley landfill.

(v) Alternative No. 5 - Decrease the SWM fee for ICI sources to $65.00 per tonne at all 7 transfer stations. All additional tonnes of waste received at all seven of the City's transfer stations would be disposed of at the Keele Valley Landfill.

Rationale: Maximize the net revenue received by the City.

(vi) Alternative No. 6 - Decrease the SWM fee for ICI sources to $65.00 per tonne at all seven transfer stations. The equivalent of all additional tonnes of waste received by the City's facilities would be disposed of at the BFI landfill by redirecting, as required, collection vehicles carrying municipal waste away from the five transfer stations to the Bermondsey and Scarborough transfer stations without impacting collection costs.

Table 1 shows a summary of all the pricing alternatives considered including the financial and operational impacts that arise out of each alternative.

We are recommending the implementation of pricing alternative No. 3 for the SWM fees at landfill and transfer stations for the following reasons:

(1) The landfill SWM fee matches the price the City pays BFI to export its waste to Michigan.

(2) It has virtually no impact on the life expectancy of the Keele Valley landfill site.

(3) It creates minimal traffic impact on the streets surrounding our transfer stations as the additional 75,000 tonnes of waste materials entering our transfer station network will be spread out amongst the seven stations as opposed to going to two stations as is the case in alternative No. 2.

(4) With the exception of alternative No. 5 it results in the largest benefit to the net budget ($769,680.00).

(5) The relatively small (7 percent) increase of the landfill SWM fee will have no impact on illegal dumping within the City of Toronto. This clandestine practise might actually be lessened with the decrease of the SWM fee at our seven transfer stations which are all located within the boundaries of the City of Toronto.

In our opinion alternative No. 3 is the preferred option for generating revenue and maintaining the present level of disposal at the Keele Valley landfill site. However, if the SPP Committee would like to maximize the net annual revenue received by the City, alternative No. 5 could be considered. A negative consequence of choosing alternative No. 5 is that the life expectancy of the Keele Valley landfill is decreased by approximately 1.4 months. Should the SPP Committee wish to maximize the life of the Keele Valley landfill, alternative No. 2 could be considered. A negative consequence to choosing this alternative is that our net budget could be increased by approximately $1,760,000.00 annually since 70,000 tonnes of waste disposal is redirected from the Keele Valley site to the BFI landfill in Michigan.

We believe that our present SWM fees are competitive with the marketplace; consequently, it is difficult to predict with precision what impacts the restructuring of our SWM fees will have on the City's finances and operations, and the waste management marketplace as a whole. As a result, we have been conservative in determining the impact on our net budget. The former Municipality of Metropolitan Toronto made a commitment to the Solid Waste Management Industry Consultation Committee that six months notification of a pricing structure change would be given. Therefore, the increase in the landfill SWM fee should not be implemented until November 1, 1998, whereas the decrease in the transfer station fee could be made effective May 1, 1998 to allow the private sector to take advantage of our reduced fee immediately. During the next 12 months we will converse with the solid waste management industry on the impact the City's SWM fee changes have had on the private sector. We propose to forward a report to the WU Committee by May 1, 1999, providing all the relevant details to allow further consideration of this issue at that time.

We are also recommending that consideration be given to placing any net expenditure/revenue surplus that is generated in the disposal operations sub program in the Solid Waste Management budget for 1998, and in subsequent years, in a waste management reserve fund, with accruing interest, to finance waste diversion programs and lessen the impact of the increasingly higher cost of disposal in the future. Details for the establishment and contribution to the fund would be developed with the Chief Financial Officer and Treasurer and a subsequent report would be sent to the Budget Committee and the SPP Committee by August 1, 1998, for its consideration.

Conclusions:

Increasing the SWM fee from $50.00 per tonne to $53.59 per tonne at the Keele Valley landfill will match the price paid by the City of Toronto to BFI Ltd. to dispose of a minimum 250,000 tonnes of waste annually in Michigan. It is anticipated that this marginal price increase, while increasing the revenue received for each tonne of ICI waste disposed at Keele Valley, will result in a diversion of private ICI paid waste away from the landfill. Decreasing the SWM fee from $70.00 per tonne to $65.00 per tonne at the transfer stations is estimated to attract an additional 75,000 tonnes of ICI waste annually to the transfer stations. The additional tonnage received at the transfer stations will be offset by the reduced ICI tonnage at the Keele Valley landfill site, however, the net financial impact will be an increase in revenue of approximately $770,000.00 annually and virtually no impact on the life expectancy of the Keele Valley landfill.

There should be no impact on illegal dumping within the City of Toronto as a result of the SWM fees restructuring. A waste management waste reserve should be implemented to fund waste diversion programs to lessen the City's dependence on disposal.

Contact Name:

Angelos Bacopoulos, P. Eng., Director - Solid Waste Management Division, Metro Hall, Phone: (416)392-8831, Fax: (416) 392-4754, E-Mail: angelos_bacopoulos@metrodesk.metrotor.on.ca

*L/F = Landfill **T.S. = Transfer Station

(1) compared to status quo 20,000 tonnes come from Keele Valley landfill.

(2) compared to status quo 20,000 tonnes go to City transfer stations and 50,000 tonnes go to private sector facilities.

(3) compared to status quo 50,000 tonnes come from the Keele Valley landfill and 25,000 tonnes come from new ICI customers and go to the Scarborough and Bermondsey transfer stations.

(4) compared to status quo 20,000 tonnes go to private sector facilities and 50,000 tonnes go to the Scarborough and Bermondsey transfer stations.

(5) compared to status quo an additional 75,000 tonnes go from the Scarborough and Bermondsey transfer stations to the BFI landfill.

(6) compared to status quo 50,000 tonnes come from the Keele Valley landfill and 25,000 tonnes come from new ICI customers and are spread evenly throughout the seven City transfer stations.

(7) compared to status quo 20,000 tonnes go to private sector facilities and 50,000 tonnes go to the City's seven transfer stations.

(8) compared to status quo 25,000 tonnes come from Keele Valley and 50,000 tonnes come from new ICI customers.

(9) compared to status quo 25,000 tonnes go to the City's transfer stations.

The Strategic Policies and Priorities Committee also submits the following transmittal letter (March 25, 1998) from the Works and Utilities Committee:

Recommendation:

The Works and Utilities Committee on March 25, 1998, referred the report dated March 20, 1998, from the Interim Functional Lead for Solid Waste Management to the Strategic Policies and Priorities Committee for consideration at its meeting on April 7, 1998, for submission to Council for consideration at its meeting on April 16, 1998.

The Works and Utilities Committee reports, for the information of the Strategic Policies and Priorities Committee, having requested the Commissioner of Works and Emergency Services to submit a further report to the Strategic Policies and Priorities Committee on:

(1) the following motion by Councillor Shiner:

"(i) That the solid waste management fee at the Keele Valley Landfill Site be increased to $53.59 per tonne;

(ii) that the solid waste management fee at the Bermondsey and Scarborough Transfer Stations be reduced from $70.00 to $65.00 per tonne; and

(iii) that such fees become effective immediately, and be implemented initially for a six-month period, with an interim report to be submitted to the Works and Utilities Committee.";

(2) the issue of transfer station fees and the means by which the City will enforce measures to prevent illegal dumping;

(3) the status of utilization of transfer station capacities; and

(4) the capacity of the Keele Valley Landfill Site.

Background:

The Works and Utilities Committee on March 25, 1998, had before it a report (March 20, 1998) from the Interim Functional Lead for Solid Waste Management respecting the solid waste management fees charged at landfill sites and transfer stations; and recommending that:

(a) the solid waste management fee at the Keele Valley Landfill Site be increased to $53.59 per tonne; and

(b) the fee change become effective six months following approval of Council.

Mr. Lenny Campitelli, President, J and F Waste Systems Inc., appeared before the Works and Utilities Committee in connection with the foregoing matter.

Purpose:

The purpose of this report is to report on increasing the current Solid Waste Management (SWM) fee at the Keele Valley Landfill Site.

Funding Sources, Financial Implications and Impact Statement:

The City of Toronto currently charges a fee for solid waste disposal of $70.00 per tonne at transfer stations, and $50.00 per tonne at the Keele Valley Landfill Site. In 1998, the expected revenue from SAM fees is $31.3 million. If the City of Toronto marginally increases the fee at Keele Valley by $3.59 to match the Browning Ferris Industries Ltd. (BFI) fee of $53.59 per tonne, the increase in revenue resulting from the fee increase will probably be offset by a loss of revenue in the Industrial/Commercial/Institutional (ICI) customer base at Keele Valley.

It is estimated that this new fee structure will decrease net revenue for the City by $775,000.00.

Recommendations:

It is recommended that:

(a) the solid waste management fee at the Keele Valley Landfill Site be increased to $53.59 per tonne; and

(b) the fee change become effective six months following approval of Council.

Council Reference/Background/History:

On March 8, 9, and 10, 1994, the Metropolitan Council adopted, as amended, Clause No. 1 of Joint Report No. 2 of The Management Committee and The Works Committee establishing SAM fees of $50.00 per tonne at the landfill, and $70.00 per tonne at transfer stations.

On December 18, 1996, Metropolitan Council adopted Clause No. 1 of Report No. 30 of The Financial Priorities Committee authorizing execution of an agreement with BFI for the haulage and disposal of solid waste from the City of Toronto (formerly Metropolitan Toronto).

On February 11, 1998, the Works and Utilities Committee requested the Interim Functional Lead for Solid Waste Management to report on increasing the current SAM fee at the Keele Valley Landfill to cover costs.

Discussion:

The City of Toronto currently charges ICI sources a SAM disposal fee of $50.00 per tonne for waste received at the Keele Valley Landfill and $70.00 per tonne at the seven transfer stations. The estimated allocation of waste tonnes for 1998 based on maintaining the status quo for SAM fees is shown on Sketch No. 1.

Extending Life of Keele Valley Landfill Site:

The City of Toronto has entered into an agreement with BFI for transport and disposal of waste from the City of Toronto to a private landfill in Michigan. The City pays BFI $53.59 per tonne (GST exempt) for this service. The City has entered into this agreement with BFI to reduce the waste tonnage entering the Keele Valley Landfill. This is a short-term solution to increase waste disposal capacity and to extend the life of the Keele Valley Landfill until a long-term disposal arrangement is in place. In 1997, the estimated cost for disposal of waste at the Keele Valley Landfill was approximately $16.00 per tonne, which includes operating costs, capital costs and perpetual care costs.

The rationale for entering into the BFI contract was to extend the life of the landfill by one year to allow time for our Environmental Assessment (EA) process on alternative disposal mechanisms. Therefore any change in fees should not add to the amount of material going to the Keele Valley Landfill.

It is worth noting that two other Regional Municipalities in the Greater Toronto Area with landfill sites discourage the ICI sector from using their facilities by charging high SAM fees. Peel currently charges $80.00 per tonne and Halton charges $133.00 per tonne.

A marginal fee increase at the Keele Valley Landfill to match the BFI fee of $53.59 may cause ICI waste generators to seek out lower priced private sector SAM facilities for the disposal of their waste. This may effectively offset revenues resulting from the fee increase of $3.59 per tonne. However, a diversion of any amount of waste from the Keele Valley Landfill increases the site life and hence allows additional time to select alternative disposal options. Based on this scenario, the estimated allocation of waste tonnes on an annual basis is shown on Sketch No. 2.

Increasing Revenue to the City:

The City receives revenue from the SAM fees it charges the ICI sector at its facilities. Since there are private sector alternatives, raising our rates may decrease the volume of ICI tonnage received and hence our revenue will decrease.

We estimate that reducing the SAM fees at the transfer stations will attract additional tonnage, and will compensate for the reduced revenue as a result of increasing the landfill SAM fee, thereby allowing for an overall increase in SAM fee revenue. This would result in an increase in tonnage going to the Keele Valley Landfill via the transfer stations.

The additional tonnage could be diverted from Keele Valley to Michigan through the use of the BFI contract, however, this will require considerable system adjustment since BFI only hauls from two of the seven transfer stations.

The best option for generating revenue and maintaining the present level of disposal at the Keele Valley Landfill is to combine an increase in the fee at the Keele Valley Landfill with a reduction in the fee at the transfer stations.

It is estimated that lowering the SAM fee at the transfer stations to $65.00 per tonne will attract 50,000 tonnes of ICI waste originally destined for Keele Valley and an additional 25,000 tonnes of new ICI waste. The increased ICI waste at the transfer stations will approximately offset the reduced tonnage expected at Keele Valley due to the SAM fee increase at the landfill. Under this scenario the additional 5,000 tonnes received at our facilities will be shipped to Michigan through the BFI contract. It is estimated that net revenue will increase by approximately $1.2 million on an annual basis. Based on this scenario the estimated allocation of waste tonnes on an annual basis is shown on Sketch No. 3.

In order to change our pricing structure, the former Municipality of Metropolitan Toronto made a commitment to the Solid Waste Management Industry Consultation Committee (SWMICC) that six months notification of a pricing structure change would be given. In view of this commitment, it is recommended that the fee increase to $53.59 be made effective six months following authorization by Council.

Conclusions:

Increasing the SAM fee from $50.00 per tonne to $53.59 per tonne at the Keele Valley Landfill will match the price paid by the City of Toronto to BFI to dispose of 250,000 tonnes of waste annually to Michigan. It is anticipated that this marginal price increase, while increasing the revenue received for each tonne of ICI waste disposed at Keele Valley, will result in a diversion of private ICI paid waste and will reduce net revenue to the City by an estimated $775,000.00.

Decreasing the SAM fee from $70.00 per tonne to $65.00 per tonne at the transfer stations is estimated to attract an additional 75,000 tonnes of ICI waste to the transfer stations. The additional tonnage received at the transfer stations will be offset by the reduced ICI tonnage at the Keele Valley Landfill Site and an additional shipment of 5,000 tonnes to Michigan through the BFI contract. Therefore there will be no effect on the remaining life of the landfill.

It is estimated that by increasing the SAM fee at Keele Valley to $53.59 per tonne and lowering the SAM fees at the transfer stations to $65.00 per tonne will increase net revenue by approximately $1.2 million for the City.

Given that the rationale for entering into the BFI contract was to extend the life of the Keele Valley Landfill Site by one more year, we are reluctant to recommend any option that increases the annual tonnage to the landfill.

Contact Name:

Angelos Bacopoulos, Director - Solid Waste Management, Metro Hall, Phone: (416) 392-8831, Fax: (416)392-4754, E-Mail: angelos_bacopoulos@metrodesk.metrotor.on.ca .

I am advised, not for the first time, that fees at private transfer stations have risen. However, the fees at City of Toronto transfer stations and the Keele Valley Landfill Site have not risen in recent memory.

This should be of concern for two reasons: The City's landfill will grow full faster than preferable; the City is missing out on revenues.

I would ask that staff responsible for landfill report on the rates currently charged elsewhere and make recommendations for adjustments of the City's fees. I acknowledge that, at Metro, there was an agreement with the waste hauling industry that Metro would not hike its deposit fees at short notice.

The Strategic Policies and Priorities Committee also had before it a communication dated April 6, 1998, from Mr. Arthur Potts, Municipal Affairs Consulting, which has been circulated to all Members of Council under separate cover on April 8, 1998, and a copy thereof is also on file in the office of the City Clerk.