MEMORANDUM

TO: Timothy Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Borough Mayor

FROM: Jeffrey Sinz, Finance Director

Catherine Mayer, Solid Waste Director

DATE: June 24, 2002

SUBJECT: Ordinance 2002-26, Solid Waste General Obligation Bond Ballot Proposition

Capital funds are needed for planning, design, construction and equipping the regional solid waste facility near Soldotna. Ten-year landfill capital costs are estimated at $12,000,000 and include long-term planning, construction of two lined landfill cells, leachate collection and treatment system, gas collection and treatment, landfill equipment, and related improvements at the Central Peninsula Landfill to meet stringent federal and state requirements. Each landfill cell is expected to have a useable life of approximately five years.

The attached Ordinance requests approval to place a $12,000,000 Solid Waste General Obligation Bond proposition before borough voters as part of the October 1, 2002 election. If borough voters eventually approve this proposition, it is currently anticipated that the bonds funding would be generated through two separate sales. The first would occur in 2003 and would provide sufficient funding for construction of cell one. The second would occur in 2008 and would provide sufficient funding for construction of cell two. Both bond sales would provide funding for planning, design, leachate and gas related facilities, equipment and other related improvements.

Background

The landfill was established in 1969 and operated by the City of Soldotna until 1974 when the Borough assumed control. In 1990, the Borough Assembly adopted a Resolution recommending the utilization of the Soldotna Landfill as a regional landfill. Shortly thereafter, the Borough acquired properties adjacent to the existing landfill to assure that a development and operational area would be available for at least 30 years. Subsequently, the Kenai and Seward landfills closed, transfer facilities were upgraded, and waste from all areas along the road system (except the Homer area) was routed to the Soldotna regional landfill for disposal. The Homer Landfill will eventually be converted to a transfer facility and municipal solid waste will be transported north for disposal at the regional facility.

A baling facility and major site improvements were completed in 1992. The second phase of improvements, including a lined cell and leachate system, were successfully postponed for over ten years due to efficient waste management and continued vertical filling of waste over the existing landfill.

Planned Improvements

The development and operations of one main landfill equipped with extensive environmental controls is the most efficient and cost-effective method for waste management. The Central Peninsula Landfill (regional solid waste disposal facility) has been, and will continue to be, developed to manage waste generated on the Peninsula. Currently, about 75% of the Kenai Peninsula Borough population disposes of waste that is ultimately managed at this site. It is estimated that this will increase to 98% with the eventual transfer of waste from the South Peninsula (anticipated in five to twelve years depending on regulatory issues). The remaining 2% are served by rural/remote landfills located across Cook Inlet and Kachemak Bay.

Planned improvements at the Central Peninsula Landfill include long-term operation and development planning, construction of lined cell #1 and #2 (impermeable bottom liner), leachate collection and treatment system for the leachate (water passing through the waste), and related upgrades. Each landfill cell will have a useable capacity of approximately five years, so a new lined cell will need to be planned and constructed approximately once every five years for the next 30 to 50 years (estimated site life). Although the useable life of each cell is only about five years, the associated leachate collection and treatment facilities will be in use for a much longer period.

The necessary site improvements will be funded through general obligation bonds issued to coincide with and support the development of each new landfill cell, approximately once every five years. The bonds will be repaid over a ten-year period to better match the life of the liability with the average life of the capital improvements they will fund. Rather than going to the voters every five years for bonding authorization, it is proposed that voters instead be asked to authorize sufficient bonding authority to fund two landfill cells, or ten years worth of improvements. This anticipates going back to the voters approximately once every ten years for additional solid waste bonding authority. This funding approach provides sufficient authorization to proceed with facility planning and development in a cost-effective manner, but at the same time allows for periodic input from borough voters. It also allows for future adjustments in the approach to site development and/or financing as circumstances dictate.

The issuance of $12,000,000 of general obligation bonds will impact the annual tax levy by approximately $40 per $100,000 of assessed taxable property value (based on the estimated total 2002 assessed valuation, a 4.33% average rate of interest, and a 10-year payback period). Landfill operating and maintenance costs are not expected to be impacted by this project during the first few years of operation. However, it is expected that there will eventually be an operational and maintenance impact associated with the leachate collection and treatment aspect of the project. The extent of the impact will not be known until data is available regarding the quantity of leachate likely to be collected and a determination is made as to the appropriate treatment methodology. Regulatory requirements may also have a significant impact on future operating and maintenance costs.