Monroe County Solid Waste Management District

June 10th, 2010Brian O’Neill & Patrick O’Neill

Strategic Development Group Inc.

Materials Recovery Facility Cost Assessment

IntroductionOver the past five weeks, Strategic Development Group (SDG) and Garmong Construction have conducted an assessment to provide estimates for the establishment of a Materials Recovery Facility (MRF) for the Monroe County Solid Waste Management District.

Garmong Construction provided the analysis and preliminary cost estimates for retrofitting the Otis site.

SDG conducted the following research activities: • 20 hours of web-based research on MRF costs, revenues, and best practices • Interviews with 10 MRFs operating in the region • Site visits to 2 MRFs operating successful programs in the region • Interviews with 3 manufacturers of balers and 3 manufacturers of sorters

Facility ConcernsThe Otis Elevator property is well-suited for use as a MRF for the District. The amount of space available should allow for future expansions of operations and also provides significant storage areas should the District choose a marketing strategy for which storage space is needed.

The needed improvements to ventilation, weatherization, flooring, truck docks, etc. have been accounted for in the engineer’s report from Garmong Construction (appendix to SDG’s report) and those costs are included in the retrofitting item line of cost estimates.

Local Market2008 MONROE CO.

SWMDBLOOMINGTON

CURBSIDERANDOLPH CO. SWMD

MARTIN CO.SWMD

BARTHOLOMEW CO. SWMD VINCENNES SEYMOUR

Recycling Tonnage 2,700 3,100 850 3,150 2,300 490 1,960

Net Recycling Income

-$152,000 -$118,000 $0 $378,000 $210,000 $48,000 $231,000

Comingled? NO YES NO NO NO NO YES

Baled? NO NO NO YES YES YES YES

Net Income/Ton -$56 -$38 $0 $120 $92 $98 $119

Notes: As of 2010 Vincennes now has a deal with Hoosier Disposal mirroring Randolph Co. SWMD’s deal with a private vendor to take unprocessed recyclables for free (no baling), however Vincennes’ recyclables are comingled.

Recycling Revenue /TON

MCSWMD produces about 3,000t/yr in recyclables.Some others already expressed interest in collaboration: The Indiana Memorial Union (IMU): about 100t/yr IU Residential Programs and Services (IURPS): about 100t/yr City of Bloomington’s Fiber Stream: about 2,000t/yr City of Bloomington’s Comingle Stream: about 1,120t/yr

Other opportunities for collaboration exist: An unmeasured amount throughout IU (est. 2,000 t/yr). Neighboring counties – especially those with weak recycling

infrastructure, often partner with hub counties like Monroe.

Current Program Analysis

Current Program Analysis

= + [Processing of Recyclables] + [Transport of Recyclables] – [Sales of Recyclables]= + $121,000 + $123,000 - $29,000

= $215,000

There are two expenses in processing of recyclables: processing fees (per ton) and transportation (per pull). Some of the expense is recouped by the sale of recyclables. The total cost of processing of recyclables is $73/ton in 2009.

What will it cost us???Part 1 – Capital Expenses

Baler ExpensesExcel Balers (through Environment Link) $166,768.00

International Baler Corp. $260,000.00

American Baler $225,000.00-$240,000

CP Manufacturing $280,000.00

Use of Automation vs. Labor

Automation requires capital expenses to invest in equipment but can lower annual operational expenses by minimizing the need for labor.

Three types available:Ferrous Separation (Steel; ~$35,000)Non-Ferrous Separation (Aluminum; ~$75,000)Heavy-Light Separation (Glass/Plastic; ~$125,000)

Total Capital Costs (Purchasing)Retrofitting of Property (Appendix A) $251,272

Baling Equipment $166,768

Estimated Additional Installation Costs $16,000

Additional Equipment Estimated Costs $140,000

Total Estimated Cost: $574,500

Non-Ferrous Separator – Eddy Current Separator $75,000

Heavy Light Separator – Plastics/Glass Separation $125,000

Total Estimated Cost With Sorting Automation: $774,500

Leasing to Reduce Capital Costs

Industrial equipment such as sorters and balers can be leased instead of purchased.

Taking a 5 year lease on the balers would reduce the capital expenses by $166,600 (from $574,500 to $407,900), and operational costs would have a net increase of $39,292.32 annually for the first 5 years and a 5 year total operational increase of $196,461.60.

If a 5 year lease were taken on the balers and all additional equipment costs (roll-off truck, ferrous separator, conveyors) the capital expenses would be reduced by $306,600 (from $574,500 to $268,500) and operating expenses would have a net increase of $72,296.28 annually for the first 5 years and a 5 year total operational increase of $361,480.14.

What will it cost us???Part 2 – Operating Expenses

Increase In Operating Expenses

Operating a MRF would require an increase of

$330,000 in annual operating expenses.

Revenue Generated by MRF

The primary fiscal advantage of a MRF is the value of selling the processed commodities. Based on the range of values obtained by similar MRF operations MCSWMD can anticipate receiving between $90-$125/ton.The City will likely negotiate a deal with the District to manage covering the cost of sorting the city stream and profit sharing for recyclables value. The expense of managing city materials is already accounted for in all estimates throughout this report.

3,120 Tonsx $90-$125/ton

$288,800-$390,000

Mid-Value =

$340,000

2,930 Tonsx $90-$125/ton

$263,700-$366,250

Mid-Value = $315,000

Possible Revenue from City Material

Possible Revenue from District Material

Savings Generated by MRF

In addition to the possible revenue produced by the MRF, the City would experience a direct savings by avoiding the current cost (about $118,000 annually) of its contract to haul recyclables away. The District would avoid its current contracts costing about $215,000 annually.

Net Operating Cost/Income Summary

= $643,000

Net Operating Cost/Income Summary

= $571,000

National MarketAdjusted Market Values (scaled to overlay for comparison)Reported by Waste and Recycling News (November 2009)

Net Operating Cost/Income Summary: Market Downturn

= $366,000

Net Operating Cost/Income Summary: Market Downturn

= $294,000

Additional Considerations

More opportunities exist for collaboration

Reduced carbon footprint

Assurance of recycling

Path to sustainability

Creation of local jobs

Questions

Patrick O’NeillProject Associate812-331-1282peoneill@sdg.us

Brian O’NeillSenior Project Manager812-331-1282boneill@sdg.us