Canterbury Regional Landfill

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• Canterbury Regional Landfill
• Kate Valley
• A Case Study

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Kate Valley Landfill

• Situation in 1995
• Dumps
• 52 in Canterbury in 1995 MoE Landfill Census only
  a few dumps able to operate beyond 2002, and only
  2 beyond 2004
• high environmental standards for new landfills
• high costs - unaffordable for smaller Councils

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Regional Waste Initiative

• Regional Waste Concept
• one high quality landfill for Canterbury
• Burwood Landfill below acceptable standards
• Burwood Landfill extension unconsentable
• Burwood Landfill would become uncompetitive
• economies of scale available
• lower cost per tonne
• high environmental standards and security
  affordable only with one landfill

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Council Waste Plans

• In 1995 Councils beginning the process
• 300,000 t of waste p.a. after recycling
• 75 from Christchurch
• Christchurch had reduced waste by 16 by
  recycling, composting, and minimisation
• 100,000 t diverted by private sector
• Canterbury had 38 diversion overall
• Landfill still needed for many years

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Waste Diversion 1995

• Recycling RMF (now Meta NZ Ltd)
• Materials processing contract
• 5 years to become financially independent
• Market technological development
• From 9000 t to over 20,000 t.
• Composting 31500 tonnes/yr in Christchurch
• Some Rural Councils have made good progress on
  volunteer based systems

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Regional Waste Objectives

• Objectives for a regional solution
• environmental risk minimisation
• waste minimisation
• cost-effectiveness - competitive environment
• stable prices
• equity of access
• continuity of service
• high quality facilities and services

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Other Objectives

• Long term facility for all residual waste
• Share burden of capital and operating costs
• Share risks
• Aim high world best practice
• Best practicable environmental security
• Close old polluting dumps
• Better management of whole waste stream
• Compatible with waste minimisation
• Co-ordinate regional waste minimisation.

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Rural and City Balance

• Only one modern landfill would be economic
• Christchurch City with 75 of the waste to be
  balanced with interests of rural councils
• Objectives of waste diversion for recovery, and
  of waste minimisation to be protected and
  enhanced.
• Best tackled through a joint committee of all
  participating councils.
• Also necessary to bring in the private sector,
  whose expertise, willingness to share capital
  costs and risks, and whose secured potential
  landfill sites would be a desirable, if not
  necessary and leading part in the establishment
  and operation of a successful business and a high
  quality facility.

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Joint Committee

• The 10 Canterbury TLAs formed a joint standing
  committee in 1996
• Six of those Councils participate in the Landfill
  now under the Canterbury Landfill Committee
• Terms of reference to establish and implement
  solid waste strategy
• These are contractually bound to perpetuate the
  Committee through the election cycle
• Councils have irrevocably delegated their powers
  in relation to the landfill

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Rural and City Balance

• Committee Structure
• City has 3 reps, Rural Councils 1 each
• 50 votes by City (reps to vote together)
• 50 votes held by Rural Councils
• City has chair with limited casting vote (must be
  cast in interests of whole region)
• Supporting Staff Group (all Councils)

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Options for Ownership

• Possible arrangements
• Council ownership...consortium of Canterbury
  TLAs
• Private ownership...TLAs contract with owners
  of one or more private facilities
• Joint Venture...between TLAs and one or more
  private sector operators - Chosen option

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Share of waste stream

• Councils controlled about one quarter of the
  total waste stream during the collection phase

Total 300,000 tonnes per year
Collection Share
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Advantages of Public-Private Partnership

• The best of both worlds
• all of local authorities working together
• expertise of experienced waste companies
• draws on the strengths of both sectors
• Councils must implement Waste Plans esp waste
  minimisation
• Must be a successful business commercially
• Waste companies financial resources
• Waste companies secured landfill sites
• Only enough waste for one modern landfill
• Public consultation approval

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Regional Landfill

• Committee investigation programme
• investigation of regional concept began in May
  1996
• consultation on regional concept and private
  sector involvement (Nov 1996-Mar 1997)
• Request For Proposal documents
• Dec 97 to Aug 98 negotiation with industry
  partners
• Councils decision on participation Sept 1998

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Options considered

• Waste Disposal Options investigated
• Bio-digestion
• Incineration
• Landfill
• Landfill chosen for residual waste only
• Diversion to reuse, recycling, recovery to be
  optimised

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Incineration rejected

• Incineration
• cost several times more than landfill
• still need a landfill (hazardous waste)
• air discharges a huge environmental issue
• counter to regional waste management strategy
• need to feed the beast
• need government protection from competition from
  landfills
• not viable in NZ at present

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Contestable Process

• Committee evaluated best landfill proposals
• Waste Management Ltd and Envirowaste Services Ltd
  similar strength different approaches
• Committee wanted best of both
• Invitation to both to have joint venture
• Canterbury Waste Services Ltd formed

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JV Structure
Regional Waste Joint Venture Structure
TCL
Landfill Owner
CJSC 50
CWS 50
Contractor
Participating TLAs (6)
Waste Management
Envirowaste Services
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Details of Structure

• Memorandum of Understanding
• Negotiated over 8 month period
• Between CWS and Committee and 6 Councils
• Provides for Transwaste Canterbury Ltd
• CWS has 50 shares, Councils individually hold
  the other 50
• Councils hold shares according to population (75
  of Councils shareholding by Chch)

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Details contd

• All Councils irrevocably delegated shareholder
  responsibilities to Committee (single voice in
  JV)
• Councils and CWS appoint 4 directors each
• Chair was Council appointee for consenting and
  establishment period plus first 2 yrs operation
  then rotates
• Chair has no casting vote
• Hence all decisions require consensus
• This has worked very well in practice

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Fundamental provisions

• MOU is founded upon the balance between
  Council/community objectives and commercial
  imperatives
• Council waste plan and waste minimisation
  requirement are an important part
• TCL to also offer other waste facilities in the
  region as required
• TCL also to actively investigate alternatives to
  landfill (at least equally viable commercially,
  and environmentally sound)
• All shareholders to irrevocably commit
  controlled volumes
• All waste via transfer stations

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MOU issues

• The most difficult issues
• Control of the joint venture company
• fixing gate charges and establishing a fair rate
  of return,
• proper return for CWS Other
• Need for the councils to ensure that only
  residual waste would go to the landfill, and the
  need for co-operation with the councils waste
  minimisation plans.
• Resolved by a long and detailed process of
  negotiation by representatives of the Committee
  and supporting officers, as well as legal
  advisers.

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No Regional Waste Diversion

• A best practice landfill has reduced pressure for
  better waste diversion
• Council officers continue to plan to achieve
  better recycling / recovery
• Some politicians have resisted funding better
  waste diversion facilities.
• Christchurch leased its transfer stations to Meta
  NZ Limited to optimise diversion. Timaru has
  established a MRF.
• Recyclables collections and MRFs about 5 years
  behind the landfill
• No regional approach for such facilities beyond
  information sharing
• Scope for a regional approach exists a modern
  MRF in Christchurch within two years likely to
  generate interest from nearby districts to
  collect and commit their recyclables to it.

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Partners Roles in JV

• CWS
• Investigated and recommended landfill site
• Obtained all resource consents
• Built the landfill and established transport
  system from transfer stations (contestable
  processes)
• Operates the landfill and manages the transport
  system
• TCL to first consider CWS for other landfill
  activities (gas)
• Receives a proper return as defined in MOU
• Reports to consenting authorities on behalf of
  TCL
• Collects charges for TCL

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Partners Roles in JV

• TCL
• Owns landfill and improvements and waste
  containers
• Can acquire operational plant from CWS to
  continue operations
• Sets gate charge annually
• Earns a fair rate of return fixed per MOU
  process
• Commercial dividend to shareholders
• Reports to shareholders, including Statement of
  Intent
• Landfill Management and Operations Contract with
  CWS
• Guarantees Councils minimum 20 years landfill
  capacity
• Ensures efficient and economic transport system

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Partners Roles in JV

• COUNCILS
• Via Committee, exercises shareholder rights
• 75 of TCL board had to agree to site selected
• Right of pre-emption on sale of CWS shares
• Appoints Committee reps
• Operates or out-sources transfer stations
• TS operators to meet waste acceptance criteria
• Includes certificate to under consent conditions
  only to transfer residual waste
• TS operators set own gate charge (includes TCL
  charge)
• Free to divert waste at or before transfer to KV.

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Changes in shareholding

• Waste Management sold to Transpacific Industries
  (TPI), Envirowaste Services sold to Ironbridge
  (entered into an agreement for CWS interest in
  TCL being sold to TPI)
• These changes do not directly affect the TCL
  joint venture
• But potential risk for Councils - nature of the
  JV can change (culture change) which may
• Change the dynamics of the joint venture board,
  given the degree of dominance which CWS has in
  the overall scheme, and
• Possibility of regional dominance through
  significant vertical integration (collection,
  transfer, transportation and disposal of waste)
  - monopoly behaviour.

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Changes in shareholding

• As a way of reducing these risks, attention might
  be given to the rights of pre-emption relating to
  the sale of the interest of any participant in
  the commercial partners shareholding entity in
  Transwaste
• Perhaps by seeking to limit the parties to whom
  the shares in that entity may be sold - consent
  of the council partner could be required -
  with-held if vertical integration might be likely
  to result.
• Commercial partner would strongly resist any such
  limitation, and it might be a deal breaking
  issue for them.

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CONCLUSIONS

• A successful joint approach by 6 Councils for a
  regional landfill, optimising Council/community
  objectives.
• A successful public private joint venture
  achieving fundamental commercial objectives
  without compromising Council and community
  objectives, including fair pricing.
• A robust process to establish the Landfill,
  preserving options for increased diversion, and
  for a viable alternative waste disposal.
• Establishment of a high quality landfill, meeting
  Council/community expectations, world best
  practice standards of service and environmental
  security.
• A robust MOU and structure. But risk of aspects
  of monopoly behaviour emerging.

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CONCLUSIONS

• Landfill is only in its second year of operation.
  
• In first year waste tonnages increased to nearly
  300,000 tonnes now slightly reduced or reached
  a plateau but higher than initially expected. The
  facility
• KV has coped easily with the increase -
  compaction rates and efficient landfill
  development will ensure capacity to continue well
  beyond its currently consented life.
• Financial performance is satisfactory - required
  rate of return and dividends within a reasonable
  period.
• Increases in gate charges absorbed by the
  community without significant protest -
  incentivises others to improve waste diversion to
  recycling / recovery.
• No significant consent compliance issues,
  environmental incidents or operational problems.

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Key features of Kate Valley Landfill

• Unique Public/Private Partnership
• Natural containment (site)
• World best practice design standards
• Integrated waste transport system
• High standard private sector operation
• Wide-ranging community outreach programmes
• Extensive land resources
• Major conservation, education, scientific and
  recreation use of site

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Kate Valley Landfill natural containment best
practice design
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Integrated Transport System
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Community outreach

• Community Liaison Group
• Community Trust distributes funds
• to local groups, projects, etc
• Charter of understanding with iwi
• Tiromoana Bush conservation area
• Mt Cass Walkway
• Public open days at landfill
• Site tours for schools and groups
• Education programmes

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Economics

• 10 years from conception to open
• 20 years JV
• 36M to open
• Gate Charge 64.77 per tonne (2006-07) 72.06 per
  tonne (2007-08) incl GST.
• Transport charge per trip from Chch range is
  503.42 to 542.56 (2006-07) 540.17 to 582.16
  (2007-08)
• 300,000 tonnes per year
• Operated on fully commercial basis with agreed
  return on investment
• Annual dividend to Transwaste shareholders

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Future Opportunities

• Development of landfill gas for generation of
  energy and for the evapouration of leachate
  (avoiding expensive transport to the Christchurch
  wastewater treatment plant).
• Implementation of real estate strategy offers a
  substantial financial upside, as surplus land is
  sold
• Preserving options for a Kate Valley II
  landfill if ever needed in the very long term
• Preserving ample buffer zones / screening areas
• Developing 450ha Tiromoana Bush conservation area
  / project high public recreation value and
  tourist potential.

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Tiromoana Bush
Tiromana Bush
Transwastes nationally significant native forest
restoration project
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Kate Valley Landfill