Workshop on

Sale of Wheelabrator

Broward County Commission

February 3, 2015Revised February 2, 2015

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Presentation Outline

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Background Total Waste Tonnage, 2011-2013

Broward County’s Method of Disposal

Municipal Contract Disposal Commitments

County Waste Disposal Contractual Rates – RRB and Post-RRB

Current Facilities Overview

Discussion: Impact of Wheelabrator Sale Timeline

Wheelabrator’s Requests

County Staff’s Requests

Key Conditions Precedent to a Deal

What Happens if Parties do not Agree on Deal

Background:

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F.S. 403.706- “The governing body of a county has the responsibility and power to provide for the operation of solid waste disposal facilities to meet the needs of all incorporated and unincorporated areas of the county”.

Obligation met through Wheelabrator and Sun-Bergeron Solid Waste Disposal Services Agreements

Contract Terms: July 3, 2013 – July 2, 2018

County Retains One Five-Year Term Renewal Right; thereafter renewal is by mutual consent

Contract designed to allow for cities to participate via an ILA

Broward County’s Statutory Responsibility

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Year Total Annual Tonnage

2011 2,336,767

2012 2,722,769

2013 3,285,645

Note: Over a two-year period, due in part to the improving economy, all waste tonnage including non-processableconstruction debris increased in excess of 40%, offsetting gains in recycling. The 2013 volume is approximately the same as the 2004 level. At the County’s peak (2006), total tonnage reached 3.6 Million.

Source: Florida Department of Environmental Protection Annual Solid Waste Management Report

Background: Broward County’s Total Waste Disposal (2011-13)

Broward County MSW

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Year Total MSW

(tons)

Lbs. per

capita

per day

Landfilled

(tons)

%

Combusted

(tons)

%

Recycled

(tons)

%

C&D

Debris

(tons)

% of

C&D

Debris

recycled

2004 3,356,633 10.67 1,751,300 53 854,787 25 750.546 22 931,416 0

2005 3,580,396 11.27 1,825,253 51 889,636 25 865,507 24 1,192,060 28

2006 3,583,264 11.20 2,018,959 56 847,720 24 716,585 20 1,260,118 11

2007 3,330,679 10.34 1,691,399 51 808,251 24 831,029 25 1,039,200 25

2008 2,644,472 8.24 1,227,415 46 787,607 30 629,450 24 710,053 14

2009 2,217,229 6.84 954,496 43 726,920 33 535,813 24 505,476 18

2010 2,149,065 6.74 839,666 39 709,699 33 599,700 28 523,070 33

2011 2,336,767 7.30 1,001,620 43 717,346 31 617,801 26 410,122 58

2012 2,722,769 8.42 965,109 35 750,278 28 1.007,382 37 675,247 75

2013 3,285,645 10.09 1,235,030 38 552,821 17 1,497,794 45 1,169,856 84

Source: Florida Department of Environmental Protection Annual Solid Waste Management Reports.

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RECYCLED COMBUSTED LANDFILLED

ADJUSTED

RECYCLING

RATE

2011 26% 31% 43% -

2012 37% 28% 35% 60%

2013 45% 17% 38% 60%

Predicted

for 201450% 10% 40% 58%

Background: Broward County Method of Waste Disposal

(Residential, Commercial and Industrial)

Source: (2011-2013) Florida Department of Environmental Protection Annual Solid Waste Management Report; 2014 County Projection

Note: The State’s recycling goal for counties is 75% by the year 2020. Despite Broward County’s progress in recycling, the adjusted recycling rate is decreasing due to diminished use of waste-to-energy.

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2012 2014

Background: Municipal Contract Disposal Commitments

(Waste Destined to Wheelabrator, 2012 vs. 2014)

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Background: Current Municipal Contract Disposal Commitments

Municipality Contract End Date

Dania Beach 2015

All Others 2018

Weston 2019

Pembroke Pines

Pompano Beach 2022

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Background: County Waste Disposal Contractual Rates RRB/Post-RRB

Note: Current rates, which are similar, cover municipal solid waste with no revenue sharing

and exclude yard waste, bulk waste, and construction and demolition debris.

ContractRates

2010

Rates

2012

Rates

2015

RRB w/ Debt Interim Current

Wheelabrator $71.64 $57.00 $42.11

Sun-Bergeron N/A N/A $43.25

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Current FacilitiesOverview:

South WTE Plant and Ash Monofill

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Current Facilities Overview: South Plant & Ash Monofill

Located @ SR 7, north of Griffin Road

Original Lease Agreement 1989

First Renewal Period Began 2011

There are five remaining renewal periods, five-year

increments, ending in 2041

All renewals are at Wheelabrator’s Sole Option

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Monarch HillLandfill Footprint

With PermittedExpansions – AerialJanuary 18, 2014

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Current Facilities Overview: North Resource Recovery Facility

The North Plant was certified under the Power Plant Siting Act on October 16, 1986

WMIF’s application for the proposed Monarch Hill Transfer Facility was received on January 2, 2015

State has determined that the Power Plant Siting Act Certification preempts the County’s authority to process the application

WMIF formally withdrew its application on January 29, 2015

Due to the complexity of the issue, regulation of the site may be split between the State and the County

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Current Facilities Overview: Monarch Hill Landfill

Commenced Operations in 1965

Permitted Capacity: 1.5M Tons/Year; Yields a

Potential Remaining Life of 16 Years

2014 Actual Waste Flow Rate: 1.05M Tons/Year;

Yielding a Remaining Life of 24 Years if the Rate

Continues

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Sale of WheelabratorChange in Ownership of Assets

Pre -Wheelabrator Sale Post - Wheelabrator Sale

Waste Management

Owns

Waste Management

Owns

ECP/Granite

Owns

Monarch Hill Landfill Monarch Hill Landfill South WTE Plant

North WTE Plant North WTE Plant

South WTE Plant

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Discussion: Impact of Wheelabrator Sale

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Timeline August 2014 – Initial contact from Wheelabrator’s

attorney (after sale of Wheelabrator publicly announced).

December 19 – Initial deadline for concluding any contract amendment (date sale was closed).

Most issues raised by parties were easy to address. The difficult issue has been to develop a mechanism to address future responsibility for escrow deposits for closure and post-closure costs related to the south ash monofill. This issue has been the near exclusive focus of the discussions since mid-September.

New deadline – March 19, 2015 (90 days post-closing).

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Wheelabrator Requests1. Close North WTE plant: Provide reserve capacity for County

and municipalities of 725,000 tons/year at the South WTE plant and 575,000 tons/year at landfills (Monarch Hill and Okeechobee), which are already designated as alternative disposal sites under current contract. (Note: Wheelabratorcurrently provides 1,300,000 tons/year of reserved capacity at both plants, combined).

2. Consent to operate transfer stations at North and South solid waste recovery sites.

3. Substitution of Guarantor from Waste Management (former owner of Wheelabrator) to Wheelabrator Technologies.

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Impact of Closing North WTE Plant County and municipalities are currently using approx.

530,000 tons/year of WTE capacity. 725,000 tons/year reserved at South WTE plant appears sufficient for balance of current disposal contract term (3.5 years). Unclear whether demand for WTE disposal will exceed 725,000 tons/year (and if so, by how much) during five-year renewal term (if County renews).

575,000 additional tons/year reserved at landfill sites ensures that County can continue to meet its statutory obligation to ensure availability of adequate solid waste disposal facilities.

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Policy Consideration Terms of current contract obligate Wheelabrator to provide capacity

at North WTE site for up to 8.5 more years. This capacity does not appear to be needed during current contract term (3.5 years remaining).

Based on current and projected market conditions, internal and external experts believe that Waste Management will not agree to keep plant open beyond first renewal term (which would expire 8.5 years from now). It cannot be compelled to do so.

Policy question: North WTE capacity not needed for next 3.5 years; likely not available after 8.5 years. Is the possible need for that capacity during the five-year renewal term, and the possibility that demand for WTE will change in the next 8.5 years, sufficient justification to reject the financial benefits of the proposed deal?

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Transfer Stations at North and South Sites

Needed at north site to transfer waste for processing

at south WTE plant.

Needed at south site to transfer any County and

municipal waste that exceeds available capacity.

To extent Wheelabrator would seek to use south

transfer station to handle waste imported into

County, staff has asked for a per ton “host fee.” Item

remains on table.

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Substitution of Guarantor

Staff proposed that Waste Management remain

liable for obligations relating to capacity and transfer

station at north site (which it owns). It agreed.

Based upon analysis of the financial statements

provided, the County’s CFO believes that the County’s

interests will be adequately protected if both

Wheelabrator Technologies, Inc. and Granite (direct

purchaser of Wheelabrator) execute guarantees. They

have both agreed to do so.

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Primary County Staff Requests

Wheelabrator immediately exercises five-year lease

renewal option at south site, extending current lease

termination date from August 3, 2016 to August 3,

2021. Current annual rent is $1.16 million.

Accepted.

Wheelabrator expressly assumes obligation to, at

end of lease term, demolish south WTE plant (County

estimates demolition cost at $13.4 million in current

dollars). Accepted.

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Primary County Staff Requests, continued Currently, County funds all closure and long-term care

costs for south ash monofill, and Wheelabrator is obligated at end of lease term (up to 27 years from now) to reimburse its pro-rata share of certain costs incurred after August 3, 2011. Staff proposed that Wheelabratorannually pay all going-forward costs attributable to its use of the monofill after September 30, 2014, and that it reimburse the County for such costs from August 4, 2011 to September 30, 2014. Accepted conceptually, including up-front payment of $1 million to cover the period pre-September 30, 2014.

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Key Condition Precedent to a Deal Requires consent by current contracting municipalities

representing 2/3 of the delivered tonnage. Thus, the deal requires substantial buy-in by directly-affected municipalities.

Any non-consenting municipality would retain right to file suit to challenge the impact of the contract modification (as they are third-party beneficiaries).

Non-consenting municipalities would also retain ability to pursue any claimed breach of any direct contracts between themselves and Waste Management or Wheelabrator.

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What Happens if Parties Do Not Agree on a Deal

Unclear whether Wheelabrator would unilaterally

cease operation of North WTE plant.

If it does, litigation would be required to attempt to

force it to re-commence operation.

Outcome of such litigation is uncertain; however, it is

expected that immediate and long-term negotiated

benefits would be lost.