Guelph Waste Management Coalition Inc

Archive for the ‘Documents’ Category

Subject: Waterloo Region Compost Contract
To: Gloria Kovach
Date: Saturday, April 24, 2010, 4:58 PM

Hi Gloria,

Below is a comment and some numbers that may be useful to you prior to the Monday night meeting on the subject. 

Waterloo Region Compost Contract

This contract from a purely business point of view would rank highly as among the worst in the history of commerce.

Selling a good or service well below cost in the “real world” [i.e. business] is financial suicide.  In the world of Municipal politics it is sheer robbery of the taxpayers.

Note that a $33 million plant will have a depreciation  and amortization rate of $1,320,000 per year based upon a 25 year period.  Considering that Waterloo Region is using two-thirds of the capacity, their share of depreciation would be two-thirds of the total or $871,000 per year.  Stupidly, the City of Guelph has already given out a 4 year contract that will generate $400,000 a year. This is a shortfall of $471,000 per year or $1,884,000. This represents a direct subsidy to the Region of Waterloo financed out of the pockets of Guelph taxpayers.

Now, the City of Guelph wants to enter a 20 year contract, which will provide long term benefits to the Waterloo Region. Different terms, same results.

The second contract suggests a price of $116.82 per tonne. Assuming a cost of $87.50 to process, it would net Guelph $29.32 a tonne on 200,000 tonnes or $586,400 per year or a $284,000 short-fall [i.e. subsidy] in the initial year of the contract.  Now the contract has an escalation clause tied to the Consumer Price Index.  Allowing for a 2% inflation rate from 2013 onwards, Guelph will continue to subsidize Waterloo for the entire life of the contract, granted, however, by diminishing annual amounts.

While the numbers are shocking, take note that the analysis does not even take into account any INTEREST PAYMENTS OR DEBT REPAYMENT.  It is based only on depreciation. 

Ask Janet Laird if she thought that if she bought a house for $330,000 and rented out two thirds for $333.33  a month for 4 years and then for 20 years starting at $488.66 per month, if she would consider it a good deal if her fixed costs were approximately  $2,100.00 per month. These are the same proportional numbers as the Waterloo contract.

It is hard to accept the fact that we are heavily subsidizing Waterloo ’s costs when according to the BMA 2009 Municipal Report, Guelph had total costs per capita for collection, disposal and recycling of $125 versus $36 for Waterloo .

Conclusion:  This deal is insane and the City of Guelph is merely compounding its errors in the on-going composting fiasco. Obviously a 30,000 tonne plant was a gross mistake if we believe that selling two-thirds of capacity for substantially below costs for the next 24 years is a good deal for taxpayers.

Milton Burns

Trying to get the real costs on the Organics plant to ensure that City Council understand.

December 9, 2009-1:34pm To City Councilors from Patrick Quirk
I know each of you are extremely busy right now. However, I would appreciate a few minutes of your time on this
I have been struggling to get detailed financial information on the new compost facility. The City has stated that this
will cost us $114 per tonne on a net present value basis (NPV). Most people will assume this will cost us $1,140,000
a year (10,000 tonnes x $114) - an increase of roughly $300,000 from today’s cost.
The taxpayers will never pay $114 per tonne - it’s a theoretical number arrived at after discounting costs for 25
It’s the first time I have ever seen the City describe costs on a NPV basis. We will actually be paying somewhere
between $300-$400 per tonne. This is not a complex number to calculate.
The increase from where we are today will be between $2,000,000 and $3,000,000 - every year.
I am a believer in full disclosure of costs and that has clearly not happened here. In fact, this has the appearance of
This only gets worse by signing a deal with the City of Waterloo allowing them majority use of our facility at a cost
of $20 per tonne which interestingly our city staff chose not to disclose on a NPV basis.
I would greatly appreciate your response as to why the City is presenting this facility as having a cost of $114 per tonne
Pat Quirk
December 9, 2009-3:58pm To Patrick Quirk from Mayor Karen Farbridge
Dear Patrick,
The City did not sign a contract with the Region of Waterloo for $20/tonne.
Our operator signed a contract to process Waterloo Region’s organics at approximately $107/tonne through a
competitive bidding process. This contract brings several benefits to Guelph not least of which is $20/tonne in
revenue to the City (Please note: The City is not responsible for the cost of processing this organic waste. Our
operator is).
The figure of $114/tonne has been confirmed by our Chief Financial Officer.
We are very pleased to be partnering with the Region of Waterloo through a competitive process.
Karen Farbridge | Mayor
December 10, 2009-8:05am To Margaret Neubauer, Director of Finance/Treasurer from Patrick Quirk.
Hi Margaret,
Me again. I need to hear directly from people rather than third parties. As I carry on my crusade can I tell people that
the Chief Financial Officer of the City of Guelph has also stated the new facility will cost $114 per tonne?
December 10, 2009-8:52am To Patrick Quirk from Margaret Neubauer, Director of Finance/Treasurer.
Hi Patrick
We are in the midst of budget preparation, and many meetings. I will need to look into it further, to make sure that
the quotation regarding the $114 reflects the analysis and assumptions. The undiscounted cost per tonne for 10,000
tonnes and 30,000 tonnes was provided to Council, at the time the decision to proceed was made, and prior to the
Waterloo contract. I have several meetings today. I will try to get back to you by tomorrow morning.
Margaret Neubauer | Director of Finance/Treasurer
December 10, 2009-9:15am To Margaret Neubauer, Director of Finance/Treasurer from Patrick Quirk..
I know you are busy and I appreciate your response. I am not questioning the math behind the $114. It is completely
misleading number. I don’t ever recall anyone quoting a NPV cost to the public - nobody would understand it. The
fact that the real undiscounted cost was provided to council and they are marketing the NPV cost to the public is just
plain shocking. I don’t always agree with what the City does but I have never really questioned their integrity. It is
beyond me why we just don’t tell people what this facility will cost.
I hate to drag you into this mess but are you really prepared to put your name behind this facility as having a cost of
Thanks again for your time and look forward to your response.
December 10, 2009-8:41pm To Patrick Quirk from Margaret Neubauer, Director of Finance/Treasurer.
Hi Patrick,
I had a chance to review the various calculations and think the confusion relates to the purpose for which the Net
Present Value calculation was prepared which was to evaluate the impact of using the plant’s excess capacity to
process Waterloo’s organics and not the impact of the new Organics Plant on the 2011 tax levy.
I too am a strong proponent of full disclosure and would certainly not support presentation of information that would
be misleading. As you know, it is always a balancing act between providing information that is clear and concise
and sufficient for decision making, versus information overload.
Hopefully this additional detail will clarify what information has been provided, and for what purpose.
The net present value calculation was prepared by Ryan to evaluate the savings in cost/per tonne, of processing the
Waterloo organics at Guelph ’s facility, versus processing only City organics. The net present value analysis was
used, as the costs, revenues and processing volumes varied significantly over the life of the plant. The analysis had
to account for the 30,000 tonne capacity being utilized in varying proportions for Guelph/Waterloo organics, with
Guelph ’s tonnage growing from approximately 10,000 tonnes per year to over 16,000 tonnes annually, at the end of
25 years.
The Waterloo processing would result in reduced net costs for the City, through a reduction in the construction cost
of $650,000, a reduction in the processing fee per tonne from $87.50 to $79, and a revenue payment to the City of
$20 per tonne.
As I mentioned above, the analysis was to evaluate the benefit of processing Waterloo organics at the Guelph
facility, taking into account all of these variables, and to put a dollar value to the benefit. Net present value was the
appropriate tool for the analysis. However, I think perhaps confusion has occurred around the present value figure of
$114 per tonne, when the more relevant figure is the approximate $6.8 million in savings over 25 years, which is the
difference between the net present value of the contract costs, with and without the Waterloo volumes, based on the
information available today, and assuming Waterloo’s organics using up all excess capacity through the life of the
With respect to the use of net present value analysis, the method was also used to evaluate the comparative cost over
the life of the facility, of the two vendor proposals for construction and operation, and this was also appropriate.
As you have noted, a different analysis is required, with respect to impact on the tax levy. This was provided to
Council, at the time they were making their decision to proceed or not. There were many factors impacting
Council’s decision, and cost was only one of them.
At the time the Council considered whether to proceed with the Organics Plant in April 2009, Council was advised
that the cost of the contract would be $87.50 per tonne, plus the capital cost of the new facility. As per the report,
depending on the financing source, the final negotiated price, and the financing term, the incremental increase in the
levy for the new capital facility would range from approximately $1.83 million in lost investment income to 2.5
million in financing costs for a debt of 20 years. The decision on financing source was deferred to July 2009, at
which time debenture funding was approved.
In the April report, the alternative costs of the current trucking/incineration process at approximately $85 per tonne,
and the options of organics processing in Ontario or Quebec facilities at $110 - $190 per tonne were also disclosed.
At that time, inquiries were made on the cost per tonne to process in the new Organics facility. This was prior to the
Waterloo proposal. Analysis was prepared on a non-discounted basis of $258.55 per tonne if only 10,000 tonnes
capacity was used, indexed for City growth over the 25 years, and using debt. These calculations were approximate,
and based on assumptions at the time, but they are the non-discounted values.
Based on the information available today, the 2011 levy requirement for the Maple Reinders contract, including the
Waterloo component will be approximately $2.456 million. This is approximately $528,000 less than the cost
without the Waterloo component. This assumes completion of the project and issuance of debt in 2010, a full year of
operation in 2011 and a City organics volume of 10,400 tonnes. The per tonne cost in 2011 based on these
assumptions is approximately $236. The cost per tonne will vary in each year of the contract.
Excluding environmental considerations, the incremental financial cost of using the new organics processing facility
over the current interim processing method of trucking and incineration will depend on fuel prices, trucking costs
and incineration prices in 2011, but in 2009, that cost was approximately $85 per tonne, as disclosed in the Council
Hope this provides the clarification you have been looking for.
Margaret Neubauer | Director of Finance/Treasurer
December 11, 2009-7:12am To Margaret Neubauer, Director of Finance/Treasurer from Patrick Quirk..
Thanks for an honest response.
I would respectfully suggest that our councillors should correct their statements to match the facts.
Current cost (2009) = $85
Organics Processing in other facilities = $110 - $190
Projected cost when our facility is fully operational = $236
Incremental Cost of our solution over current = $151 per tonne or $1,570,000 per year (10,400 tonnes x $151).
If I was a councillor I might have asked you what this cost was if we spread it out over 15 years just for perspective,
perhaps many of them did but I don’t know.
Thanks for taking time during budget season to respond.
December 11, 2009-7:14 am GWMC Att: Ken Spira from Patrick Quirk..
You can include my emails with your MOE submission and distribute them to anyone you wish, including posting
them on your website. I have been telling people that I am not a member of any organization nor do I live anywhere
near this facility. I think it’s been easier for me to get information if it’s just for me.



John Sloot, 0591 Watson Road South Re: Guelph Wet/Dry Facility


Newmarket Compost Ruling Reasons for Judgement

Compost - Health and Safety Issues

Effects of bioaerosol polluted outdoor air on airways of residents - a cross sectional study

Health complaints and immunological markers of exposure to bioaerosols among biowaste collectors and compost workers

Increased Levels of Markers of Microbial Exposure in Homes with Indoor Storage of Organic Household Waste

Literature Review - Human and Animal Pathogens in Compost

Long-Term Survival of Pathogenic and Sanitation Indicator Bacteria in Experimental Biowaste Composts

Microbial disinfection capacity of municipal solid waste (MSW) composting

Microbiological aspects of biowaste during composting in a monitored compost bin

Municipal Solid Waste Composting Issues in Risk Assessment and Management-Worker Health and Safety

Safety in Compost Production - Safety - Odors - Fires

Strategies for evaluating the sanitary quality of composting

Survival of Ascaris Suum Ova, Indicator Bacteria and Salmonella Typhimurium Phage 28B in Mesophilic Composting of Household Waste

Survival, Growth and Regrowth of Enteric Indicator and Pathogenic Bacteria in Biosolids, Compost….

Temperature, Pathogen Control And Product Quality

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