Waste Management asks county to lower host fees

OKEECHOBEE — At the April 14 Okeechobee County Commission meeting, Jeff Sabin, Waste Management, asked for an amendment to Waste Management’s contract with the county in regard to the host fees paid on out-of-county solid waste.

He said the competition from other waste management facilities is making it harder for the Okeechobee landfill to compete, and they are losing business.

“Our competitors pay little or no host fees,” he explained.

“Over a period of time, we have lost tons to our competitors,” he said. “We need to stop the bleeding.”

Less out-of-county refuse going into the county landfill means less money in host fees, he said.

If the tons of waste don’t come to Okeechobee, there will be no host fees paid on that waste, he said. He said lowering the host fees could help keep Waste Management’s Okeechobee landfill more competitive.

To compete for contracts with other counties and municipalities, “we’re going to have to sharpen our pencil,” he said.

“We are asking you to consider the 13th amendment which modifies the host fees going forward.”

“Basically what this comes down to, is if we don’t approve it and the cost remains the same, it makes it cheaper for the coast to ship it elsewhere,” said Commissioner Bryant Culpepper.

“The more volume you are able to capture, you can reduce your cost per ton,” added Mr. Sabin.

“We are looking for long-term agreements as well,” he said. “That provides stability.”

“If you want to give up something, give up the trust fee, but don’t give up the host fee,” suggested Commissioner Terry Burroughs. He said the trust fee was put in place as a reserve in case something happened at the landfill, leaving the county responsible for the clean up. He said Waste Management has a $35 million insurance policy in place to cover any emergencies.

“I would be more inclined to give up the trust fund fee and keep 100 percent of the host fee,” said Commissioner Burroughs.

“The trust fund fee would help,” said Mr. Sabin, but it would not give them enough reduction to compete against other landfills.

“We would consider alternatives,” he said. “We ran the numbers. We have been looking at these for over a year.”

Mr. Burroughs said the county commission had only worked on the numbers for three days. “When you bring an opportunity to us, it has to be a win-win for everybody,” he said.

He said if they go with the Waste Management proposal for the lower host fees, WM would have to bring in an additional 138,000 tons to “make the county whole.”

Mr. Sabin said at the current rates, not only will they not be competitive enough to attract new business, but they could also lose some existing business.

“To me the bigger risk is to lose current business,” said Commission Chairman Frank Irby. He noted that the contracts with municipalities are usually multi-year contracts, so if they lose a customer it will be years before they have a chance to bid again with that customer.

“I don’t have a problem with the concept,” said Commissioner Burroughs.

“This is a business partnership.”

“I don’t mind giving up part of the fee to get more business,” said Chairman Irby. He said he understands there are other regional landfills now competing for the business.

“You are asking us to have on faith missing numbers in this equation,” said County Attorney John Cassels. “At some point, shouldn’t it be a sliding scale? The more you bring in, the less of a break the county should give you.”

He said Waste Management has other landfill facilities, and has some control of the waste stream.

“It’s difficult to make a decision when you control the flow,” he said. “You are asking for concessions based on what we are getting, but are you guaranteeing what we are getting?”

Mr. Sabin said the proposed amendment is a 15-year agreement.

Mr. Cassels suggested they offer a one-year renewable discount for contracts for waste tonnage that WM signs within the year.

You have a base cost of doing business at the landfill whether you have one ton or 100 tons, said Chairman Irby.

Mrs. Helton asked if there was some point that the landfill was not making money, would they shut down?

“The company views Okeechobee landfill as one of our primary long-term assets,” said Mr. Sabin.

Commissioner Burroughs asked if Waste Management would guarantee a minimum amount of host fees, if the county gives up the trust fund fee.

Mr. Sabin said he would take the county commission’s comments back to Waste Management for consideration.

Background

The following information was published in preparation for the April 14 commission meeting.

According to the staff report, in 2008 the county received a total of $5,095,659.25 in host fees. From 2009 to 2013, host fees continued to decline to an total yearly amount of $2,192,914.71 in 2013. In 2014 and 2015, there was a small increase in host fees in the amount of $2,447,303.55.

Waste Management is requesting the county consider a reduction to the full Host Fee and Landfill Trust Fee on municipal solid waste (MSW) of 42,170.98 tons and construction and construction and demolition (C&D) 21,168.20 tons up to an aggregate of 63,339.17 tons in volume on a calendar quarterly basis. The current host fees for MSW is $3.421 per ton and the Community Solid Waste Trust Fund fee is $1.734 per ton. The current host fees for C&D is $0.77 per ton and the Community Solid Waste Trust Fund Fee is $1.734 per ton. Once the calendar aggregate quarterly basis exceeds the 63,339,17 tons, the host fee will be reduced by 50 percent, which is $1.71 for MSW and $0.38 for C&D and no fee will be paid on the Community Solid Waste Trust Fund a reduction of $1.734 per ton. The calendar quarterly basis of 63,339.17 is derived from a three-year average yearly tonnage from 2011 to 2014.

Waste Management’s competition has put pressures on them to maintain current contracts and future competitive abilities in securing out-of-county contracts and contends Okeechobee County’s Host Agreement puts them at a competitive disadvantage in negotiating future out-of-county waste streams.

Publisher/Editor Katrina Elsken can be reached at kelsken@newszap.com

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