Four members of the Del Norte Solid Waste Management Authority on Tuesday agreed to make a $163,456 payment to the California Public Employees Retirement System.
Authority Commissioner and Del Norte County Supervisor Lori Cowan was absent.
Authority Director Tedd Ward informed commissioners that the annual contributions from the authority to CalPERS of $11,125 is less than the annual increase to its other post-employment benefits obligation. If the authority board hadn’t agreed to pay the $163,456, it may have been required to pay $1.3 million next year in post employment retirement benefits, Ward said.
“I anticipate this is an issue that will be faced by all agencies, not just ours,” Ward told the Triplicate on Wednesday. “We’re just trying to get a little bit ahead of it.”
The decision appeared on the consent agenda prior to the results of an audit prepared for the authority by Patel & Associates of Oakland. According to Ward, the auditors had a clean opinion of the authority’s finances, however they found the agency had an extra $100,000 in additional liabilities associated with its other post-employment benefits.
Ward said the authority is “in the red” due to an existing $2 million liability associated with the closure of the Crescent City Landfill and a $2.4 million liability associated with the construction of the Del Norte County Transfer Station.
The agency increased rates last year slightly to address those liabilities as well as to bring the rates in line with the consumer-price index, Ward said. The rates in August 2016 increased from $144.04 per ton to $148.50 per ton, he said. The increase takes effect July 1 of each year, Ward said. He said he’s not sure what an increase could look like this year because the CPI numbers won’t be available until mid-April.
“The main driver for those adjustments is our contractual obligation to Hambro WSG and Recology Del Norte,” Ward said. Hambro WSG operates the Del Norte County Transfer Station while Recology Del Norte operates curbside garbage and recycling collection services.
“They each have annual CPI rate adjustments in their contract. The rationale is inflation impacts everybody and we don’t want our contractors to start losing money, but we don’t want to argue each year about the right number for the adjustment.”
The authority’s liability for the Crescent City Landfill has decreased by about half over the years, Ward said. In 2005 that liability was $4.63 million. The landfill closed in 2006. The liability will be acknowledged until at least through 2036, Ward said.
In 2005, the authority’s total liabilities were $5.697 million and its currently at $4.211 million in liabilities, Ward said.
“We are paying down those liabilities,” he said. “We are making progress, but the auditors are saying you’re still in the red.”
The authority has $1.163 million in the bank currently, Ward told commissioners. Large expenditures include a payment to Hambro for operating the transfer station and Hemmingsen Contracting for repairs to the landfill, he said.
Revenue from the transfer station is currently $37,786 ahead of budget, Ward said. Revenue from franchise collections fees is $8,000 ahead of budget, he said.
Although they wanted to discuss the CalPERS claims further, authority commissioners agreed to make the $163,456 payment immediately rather than the authority continuing to fall behind on its liability. Authority chair and Crescent City Mayor Blake Inscore said it’s fortunate that the DNSWMA is able to make this payment without negatively affecting its financial position.
“If we don’t address this there’s going to come a point in time where it’s going to affect our financial position in a negative way, even from the standpoint of the possibility of debt financing or anything we have to do in the long term if we get further behind with this,” Inscore said.
Inscore also acknowledged sentiment in the community the Del Norte Solid Waste Management Authority should be dissolved and noted if it was dissolved, liabilities for the landfill, transfer station and post employment retirement benefits would fall to the city and county to pay.
Authority vice chair and county Supervisor Chris Howard, added that taking on the authority’s liabilities would put the county into a financial position “we all don’t want to be in.”
“The city probably doesn’t want to be there, too,” he said. “This mechanism we set up, it does insulate and protect the county and the city from a great deal of liability we otherwise would have to carry.”
In other matters, Recology Del Norte General Manager Jeremy Herber told commissioners that it was too early to tell whether a ban on black and opaque bags in curbside recycling containers is succeeding in reducing the amount of garbage in the recycling stream.
In a Feb. 12 email to Ward, Herber said Recology is continuing to collect about 65 to 70 percent of the recyclable volume in Del Norte. The level of contamination in the recycling stream remains in the area of 18 to 25 percent, Herber said.
“Walmart, along with other stores, are having difficulty keeping (clear) bags in stock, but Ace seems to be keeping up with this demand,” Herber said in his email. “We are still in the roll-out phase of the program and will be performing recycle load inspections to verify the customer change in habits. Our expectations will be a decrease in contamination in the recycling stream in the first 30 days and improve thereafter.”
Jessica Cejnar can be reached at firstname.lastname@example.org .