By Paul Gable
The HCSWA board gave solid waste authority staff approval yesterday afternoon to negotiate a recycling contract with Charleston County.
HCSWA board members heard a short presentation on the proposed contract from authority staff, then, asked questions about the proposal for over an hour before voting 7-0 to move forward.
Contract negotiations between HCSWA staff and Charleston County staff will go forward based on the projections presented during the presentation with key items requested by HCSWA board members included.
The contract will only be for recyclable materials generated in Charleston County, basically from its curbside pickup operations.
Key elements that board members requested to be included in the contract were a 90 day notice termination clause by either party for any reason, arrangements with Charleston County for removal of any residual waste from recycling operations so residual waste will not be buried in the HCSWA landfill and do everything possible to make sure the HCSWA will not lose money on the deal.
According to the staff presentation, a base market value per ton will be negotiated for the sale of the recycled material. If the revenue falls more than 10% below the BMV, Charleston County will make up the difference to get back to the 10% margin. If the revenue exceeds the BMV by more than 10%, revenue above that threshold will be shared according to a negotiated percentage between Horry and Charleston counties.
The BMV will establish the price that the recyclable materials will be sold for. Costs for hauling and processing the waste at the HCSWA material recycling facility will be charged from the gross revenue of the sales before monthly profit/loss calculations are finalized.
The HCSWA will pay $425 per truckload (approximately $106,250 per month) toward the transportation costs for the recyclables from Charleston County to the Hwy 90 landfill. That cost will be added to monthly expenses charged to Charleston County before monthly profit/loss is calculated.
Charleston County will only experience revenue from the operations after all HCSWA costs are covered and the 10% threshold above BMV is realized.
Even at the 10% below BMV level, the HCSWA will break even on the processing and sale of Charleston County recyclables. Below that, Charleston County will make up the difference.
If recyclables are sold at the BMV level and the cost of running the HCSWA MRF is at or near projections, the HCSWA stands to realize approximately $1 million per year in net profit from the Charleston County contract, if it is finalized. If the revenue exceeds the BMV assumptions and costs are held to projections excess profit will be realized.
The contract will call for funding three new permanent and 19 new temporary positions to handle the increased operations at the MRF. These cost for these positions will be charged to the Charleston County account.
it appears the HCSWA will require a three reading budget ordinance amendment to be passed by Horry County Council, if contract negotiations are finalized, because of the increased revenue and expenses generated by the contract
The HCSWA budget is included in the overall Horry County budget and is approved by Horry County Council each budget year.
I personally met with Executive Director Danny Knight, Assistant Director Mike Bessant and Finance Director Jan Bitting after the board meeting to ask additional questions about the basis for the projections as well as other areas of the proposal.
After that meeting, I am satisfied that this proposal, if finalized as presented with board requested additions, contains enough safeguards to protect the citizens of Horry County from loss.
Anyone who follows this publication knows I have long been a critic of HCSWA decisions. I have often felt the board acted as a rubber stamp to nearly anything the staff presented. This was especially true of the flow control decisions.
On this occasion, I found the board pleasingly eager to ask questions and provide its own input as to what should be included in the contract. The staff was more than willing to share the base calculations that went into each revenue and expense projection I questioned.
I don’t know if this signals the dawn of a new era at the HCSWA, but it certainly was a breath of fresh air from years of previous experience.