by Eric Richard

The following are notes I took at a workshop held by MassDEP.

Gerald Harry, Massachusetts Department of Revenue

Enterprise Funds are established under MGL Chapter 44.   This allows you to segregate revenues and expenses from the tax levy.

Cities and Towns can adopt an Enterprise Fund subject to Town Meeting or City Council.We see enterprise funds set up for water, sewer, ambulances, trash, hockey rinks, etc. Once it is adopted, it must be run for a minimum of 3 years.

They help measure financial performance by allowing you to readily measure the impacts of the decisions that you make on costs/revenue.

If there is money left over at the end of each fiscal year, this is called net assets unrestricted and can be carried forward.

We have been trying to encourage communities to build a reserve fund (no more than 5% of the overall user charges) into Enterprise Funds to protect against unforseen emergencies.

Revenues for an Enterprise Fund are primarily generated by the user fees.  You can get some revenue from investing the money.  You can potentially get state grants for funds.

You can use excess funds  to subsidize user fees.  But you need to recognize that this points to a deeper issue about your user fees that will eventually catch up with you.

You can use money from the Enterprise Funds for indirect costs.  For example, if you have a town employee (like a Billing Clerk) who is spending some portion of their time doing billing for an Enterprise Fund, you can pay for a reasonable amount of that from the Enterprise Fund.

by Eric Richard

This post contains notes from a session I attended today at a workshop hosted by MassDEP.

Dennis Lipka, Town of Holden

The Town of Holden has had municipal trash collection (using one hauler) since 2000.  All of our waste goes to Wheelabrator.

We cover single family homes and multifamily residences w/ fewer than 4 units. It is a fee based system (using an Enterprise fund).

In 2004, our recycling rate was at 14%.  In 2005, we implemented an overflow fee — anything outside of the 95 gallon tote would have to use a fee-based bag.

We actually use the bags as a promotional opportunity.  They say “Town of Holden” on them, but they also list out the things that are not allowed in the trash bags.

In 2007, we  decided to switch vendors.  We invited in other haulers, one of whom was Casella.  They wanted to provide an additional 95 gallon container for recyclables along with much more aggressive marketing and education (including education at the elementary schools).

We realized that the 95 gallon trash container sent the wrong message.  The optimized message is a much smaller trash container and a larger recycling bin.

We also realized there are some interesting dynamics in recycling:

• People will recycle to the capacity that you provide.  Therefore, if you give them a larger recycling container, they will recycle more
• Covered containers provide some magic.  People are more likely to recycle more if their recycling containers are covered.

So, when we talked w/ Casella, we decided that we wanted 65 gallon trash containers and 95 gallon recycling containers.

On July 1, we went live with single stream recycling.  With a 95 gallon container, we thought that semi-weekly recycling would work.

One of the nice things about the single stream is its simplicity; if it is in the toter, it goes — we don’t fight about the size of the cardboard. People are finding the system to be very easy to use.  Single stream is much less of a hassle.

On the first month, we doubled our recycling rate to 35%. We added an extra week of recycling on for Christmas and we broke 41% recycling for that week.

We offer two plans:

• 65-gal trash + 95 gal-recycling for $15 / month
• 35-gal trash + 35 gal-recycling for $11 / month

Both plans include the toters and recycling bins.

All Casella people go through a customer service training program that we specified.

The base contract is 5 years with 3 five-year optional extensions. The contract included purchase of all of the toters.

We had 400 people opt-out initially, but have gotten about 100 of those people back.

We have not had any problems w/ the semi-automated system.  If you were in Downtown Boston in Chinatown, you might have some problems.  But, in normal streets, we haven’t had any problems.

Casella has been very proactive about interacting with the community.  They work with people like the Boy Scouts.  They put together promotional literature.  They are putting together a video that we will air on cable TV.  They have a customer service operation that operates 16 hours a day 7 days a week.

Residents are very pleased with the program.

by Eric Richard

Today I attended a workshop hosted by the Massachussetts Department of Environmental Protection to help municipalities understand more about how to contract with waste haulers to provide curbside solid waste and recycling services.

What follows are my notes from this workshop.  The workshop consisted of three different speakers.    I will make each speaker a different post so people can comment on them separately if they would like.

John W. Giorgio

John is a principal in the municipal law firm of Kopelman and Paige, P.C.

The firm serves as town counsel to 120 towns.  John heads up the environmental and contracts practice group and has negotiated dozens of contracts for towns.

Procurement Process and Public Bidding

Under state law (Chapter 30B), there is an exemption for public bidding of solid waste contracts.  Therefore, if you do not have any local bidding requirements, you can exercise sound business decisions without going out to bid.

This doesn’t necessarily mean that this is the best option.   You really should look around.  Generally towns are putting out an Invitation for Bid or an RFP.

If you go down that route, I recommend that you follow the public bidding process as defined in the law with up front caveats about how you intend to deviate for this.  I would stick with sealed bids, but you might want to reserve the right to award the contract to whoever you believe is in the best interests of the town (not going purely based off price).

As long as you know exactly what you want and can specify those criteria very explicitly, then you can award based on price (through an Invitation for Bid).  But an RFP allows you to base your decision on factors other then price.

With an RFP, you get two separate, sealed results.

• The technical proposal sets forth all of the technical qualifications that person has.  You then rank those proposals based on a set of evaluation criteria.
• The price proposal is delivered separately and you only open the price proposal after you have conducted your evaluation on the technical proposal.

You can then award the contract taking into consideration both the technical proposal and the price.  You don’t have to award to the lowest bidder if you have already determined that another bidder has a better technical proposal.

The key is making sure that your specification is designed to ensure that you are going to get all of the services that you need.

If you aren’t sure what services you want, you may want to talk with some potential bidders in advance.  You could invite the bidders in beforehand and have a conversation w/ them about the services they offer, their view on the state of the market, etc.  This can help influence your actual proposal that you go out to bid with.  You could alternatively do this in a formal process as a Request for Information.

As long as you reserve the right up front, you can negotiate the price down (because it is exempt under 30B), but you do need to make it clear that you are reserving this right up front.

If you know exactly what you want and price is going to be the deciding factor, go with a Invitation for Bid.

Once you go down either of these routes, follow all of the procurement laws.  This includes where, when, and how you publicize information.

If you move to a PAYT model and are purchasing bags or stickers, those are not exempted from the procurement rules.

Length of the Contract

The Uniform Procurement Act says that cities and towns can enter into contracts for up to 3 years.  For contracts longer than that, you need authorization from your Town Meeting or City Council prior to soliciting the bids.  This includes any extension or option in the contract.  For example, a 3-year contract with a 2-year extension is considered a 5-year contract for these purposes.

If you don’t get this authorization in advance, then it technically is not a legal document.

You need to check to see if your town has a local bylaw or ordinance that varies from this.  For example, maybe the Town Manager is able to enter into contracts that exceed this, or maybe there are other restrictions.

Because many of the services that waste contractors are looking to offer will have upfront capital expenditures, that makes shorter contracts less interesting.  If you go for a five year contract, you are likely to get more interest from providers and a lower price than a three year contract.

Who Has the Authority to Sign Contracts?

Boards of Health often think that they have more power than they do.  According to Massachusetts law, they have regulatory authority, but, unless there is a local bylaw that gives them that authority or Town Meeting has specifically authorized the BOH to enter into a particular contract, they do not have the power to contract,

Absent that, you have to look at who has the contracting authority.  In a city, that is generally the mayor.  In a Town, this might be the Town Manager, the Board of Selectmen, or the Town Administrator.

Getting out of contracts (if you have to)

If you enter into a 5-year curbside collection contract and the money is appropriated in the first year, and then you hit a fiscal wall downstream (e.g., if we get out of this contract, we can save the town money) and Town Meeting refuses to appropriate the money, what happens?

Under law, multi-year contracts are subject to annual renewal through appropriations.  If the town refuses to appropriate money, then the contract is canceled with no liability.  You do not have to reserve this right — it is implicit in the contract.

If your community is interested in entering into a long term waste (e.g., 20 years) to secure your solid waste disposal, the town can agree that the town will be liable, regardless of whether the appropriation is made or not.  This will likely give you a better contract with long term security, but it is much harder to get out of if need to.

If your town owns a solid waste system (e.g., a transfer station), and you want to bring in an outside contractor to run this, the law allows the town to enter into contracts for up to 40 years.

Moving Waste Off the Tax Levy

If a town wants to offer trash services to its residents, the traditional choice was to fund this on the tax levy.  It is well established under the law that the town can charge residents (through the property tax) for a service offered by the town.

But, everyone is facing limitations imposed by Prop 2 1/2.  Most cities and towns are up against their levy limits.

Therefore, when you are looking at a solid waste budget that can be not an insignificant portion of your budget, there is a strong temptation to get this out of the tax levy.

What are your options to move this off the tax levy?

One option is going to a pay as you throw system where users are now paying a fee to use the trash and recycling system. This can help a town put a bandaid on their fiscal problems.  It basically acts like an override since you have this additional new fee system that is outside the levy that persists.

However, if you go to a pay as you throw system, you have to institute a fee.  Towns certainly can have fees for service, but you cannot use the guise of a fee in place of a tax.

So, what is the difference between a permissible fee and an impermissible tax?

• The fee has to be exchanged for a particular beneficial service that is not available to users who do not pay the fee.
• Fees are paid by choice.  The party paying the fee has the choice of not utilizing the service and, thus, not paying the fee.
• User fees cannot generate new revenue for the town that can be used for other purposes; they can only reimburse the town for the cost of providing that service.

The trickiest of these items, and the one that towns tend to get caught on, is ensuring that the fee is a “choice”.  In order to survive a legal challenge, you have to prove that you have some sort of an opt out provision. You also can’t have the burden being unnecessarily high. So, how do you make sure you include the element of choice?

• One option is good old competition.  If you can provide the service at a better price than the alternatives, then you will be able to compete by price.
• Alternatively, if you have a use fee, like a sticker or bag fee, then the users have the option of not buying the bag and thus, not participating in the system; users who do not want to participate do not buy bags or stickers and do not benefit from the system.
• You can provide an explicit opt out mechanism where residents have to show that they have a contract with another hauler and, thus, are not subject to the service.

If you are going to implement a user fee, you should seriously consider an Enterprise Fund.  This allows you to show very clearly what your costs are and allows you to prove that the fees are fair.

Mandatory Recycling Provisions

If your town wants to implement a mandatory recycling provision, they can pass a bylaw at Town Meeting based on  MGL Chapter 40 Section 8h.

This allows a town to impose a mandatory recycling provision that sets the requirements for any hauler in town.  This allows you to “level the playing field” to ensure that all providers must meet a minimum set of guidelines.

If the town is contracting with one hauler, you can use this mechanism to ensure that alternative vendors cannot undercut your price by offering lower service.

You can achieve similar results through the Board of Health permitting process. While the BOH can implement permitting processes, a bylaw codifies this much more.  It protects you from the whims of the Board of Health and ensures that any change has to come before Town Meeting again.  This also strengthens your legal strength.

Flow Control Bylaw

If a Town does not control management of all solid waste in the town, but wants to be able to direct where the materials (trash or recycling) go, there are mechanisms called Flow Control Bylaws.

For example, you could pass a bylaw that says “If you do business in this town, then you have to send all trash to facility X.”

In the 1994 case of C&A Carbone, Inc. v. Town of Clarkstown, New York, the Supreme Court struck this down saying that this violated the Commerce Clause because it gave one facility an unfair advantage over another.  People then assumed that Flow Control bylaws where null and void.

But last year in the case of United Haulers Association Inc. v. Oneida-Herkimer Solid Waste Management Authority, the Supreme Court decided that Flow Control Bylaws are acceptable if the recipient of the trash is a public entity (compared to a private/commercial entity).  You have to have some evidence that the public program is promoting a public interest (including increasing or mandating recycling).

If you want to dictate where your trash or recycling goes, this could be a means to do this.

by Vicki Tardif

Everyone else seems to be blogging about this, so I will too. Whole Foods has announce that it will no longer offer plastic bags to consumers. The store will still offer paper bags made of 100% recycled paper. Shoppers can also get a 10 cent discount for every reusable bag they bring in to cart their groceries away.

San Francisco banned plastic bags last year and many cities are looking to follow suit. I suspect in both the case of San Franciscans and Whole Foods shoppers, that they are more likely to support these sorts of bans than the population at large. For example, I know that Rush Limbaugh rails against stores oppressing him by stealing his plastic bags.

It will be interesting to see if the movement continues to gather momentum or if it will remain an anomaly found in left-thinking enclaves.

by Vicki Tardif

A few months ago, the Oxford University Press named “locavore” the 2007 word of the year. I first heard the word “locavore” last spring as I started reading more about the local-food movement. I have mixed feelings about the locavore movement. All of the locavore advocates I found supported eating food grown within the somewhat arbitrary limit of 100 miles. Conveniently, these people all seemed to live in the San Francisco area, which just happens to be within 100 miles of Salinas Valley, otherwise known as the “Salad Bowl of the World”. Last month, one of these California-based locavores blogged about the spinach growing at a local farm. I am a life-long New Englander; the only things I expect to grow in December are the snow banks.

Recently, NPR’s Here and Now did an an interview with James McWilliams on this topic. (It is the first 15 minutes of the audio clip on that page.) James McWilliams is a visiting scholar at Yale and author of an upcoming book on the history of pesticides. In this interview, he talks about how there is more to determining how “green” your food is than simply adding up the miles your food traveled to get to your plate. For example, is it better to eat food grown locally with the use of pesticides or to eat organic food that was grown farther away? If I live in a drought area, should I eat locally-grown tomatoes or tomatoes grown in an area where water is more plentiful?

There is no one-size-fits-all answer to these questions. The “greenest” way for my uncle in Texas to eat is different than it is for me here in Massachusetts. My friends in California may find a different solution than either of us. We may also have different priorities. I may care about preserving the land by keeping local farms alive. My uncle may care about how to live responsibly in drought conditions. My California friends may be focused on curbing the use of pesticides. These are all environmentally-friendly goals.

So what is a consumer to do? If we are willing to take a step back, it turns out that there is a common solution — education. Go to local farmers’ markets and talk to the farmers. They can tell you which crops are in season, which ones are doing well, and which ones are struggling that growing season. If your grocery store lists the origin of its produce, take note. If it doesn’t, ask the manager why they do not provide this information to consumers. If your grocer provides organic produce, look at that option. Regardless of our goals, education is the first step to working toward greening our diets, even if the solutions we settle upon are not the same.

by Vicki Tardif

By day, I am a software engineer. In a former job, I designed and implemented customized software for large-scale web sites. After a while, I learned that one of the best ways for a project to start off on the wrong foot was for the customer to specify that they wanted their web site to use Hot-New-Technology-Mentioned-In-Business-Week™. Often times Hot-New-Technology-Mentioned-In-Business-Week™ was completely inappropriate for the engineering problem at hand and using it created unneeded complexity. But for some reason, the customers decided that they were more competent than the professional engineers they hired. Inevitably, the more the customer insisted on a particular implementation, the more the project floundered.

The California Energy Commission fell into the trap of requesting the Hot-New-Technology-Mentioned-In-Business-Week™, when it proposed mandating thermostats that can be controlled by state regulators. In spite of the details of their proposal, the California Energy Commission’s goal is not to control people’s thermostats; their goal is to cut California’s energy consumption, particularly during peak usage times. Instead of meeting their goal, the Energy Commission attracted opposition and derision from around the country and ultimately scrapped their proposal.

Ideally, lawmakers write legislation that either promotes a desired behavior or deters unwanted behavior. Lawmakers are not and cannot be experts in every field under the sun. When they write legislation that is overly specific, they run the risk of either inadvertently promoting undesired behavior or squashing innovation that may lead to a better solution. In the case of the state regulated thermostat settings, nothing stops particularly obstinate homeowners from finding a different, less efficient way to cool their homes and ultimately using more power in the process. A better way to achieve the same goal would be to mandate programmable thermostats and educate consumers on how best to use them. The Energy Commission could then position itself as trying to help consumers save money instead of trying to force people to conserve.

Similarly, the federal government gives a tax credit for hybrid and alternative fuel vehicles. The goal of the law is to help people buy more fuel efficient cars. However, as it is written, if I buy a hybrid SUV that gets 18 miles per gallon, I get a tax credit; if I buy a traditional compact car that gets 30 miles per gallon, I do not. Is it really more environmentally-friendly for me to drive the hybrid SUV instead of the compact car? Because the law is overly specific, it can promote the very behavior it is trying to deter.

Ideally, legislation should be written to describe the end goal and allow the market to find a solution that meets that goal. Instead of promoting hybrid vehicles, the government should promote a minimum fuel efficiency. This would not only close the hybrid SUV loophole mentioned above, but it would also allow the law to adapt along with new solutions. If I somehow find a way to power my car with a fleet of gerbils running on wheels, I should also get the credit, so long as I meet the fuel-efficiency goal. Who knows, maybe my gerbil-powered car could blow away a Prius in a drag race, but we will never find out so long as lawmakers are mandating the Hot-New-Technology-Mentioned-In- Business-Week™.