Financial and Environmental Issues of Public-Private Waste Management Strategy.

• Author: Duserick, Frank

INTRODUCTION

This paper addresses the rationale and processes for the outsourcing of the management and operations of a municipal landfill in Ontario County, New York. It describes the efforts of the County Administrator, the county's Chief Planner (Ontario County Planning Department 2010) and the county's Board of Supervisors to assess the need for and the viability of outsourcing a public-funding municipal operation to the private sector. In addition, the financial impact of the decision to outsource is evaluated.

In the fall of 2003, Ontario County accepted a proposal from Casella Waste Systems to take over operation and maintenance of the county landfill that was currently under performing with annual losses exceeding one million dollars ($1,000,000). The developed landfill encompasses over three hundred (300) acres in Seneca, NY and has been owned and run by Ontario County since 1970. However, many consecutive quarters operating at a loss prompted the county to seek an outside partner who specialized in waste disposal to streamline the landfill operation. The county's Planning Department released a Request for Proposals (RFP). A special landfill evaluation committee consisting of members from the Board of Supervisors and senior county managers reviewed the submissions from various waste management companies.

The contract was awarded to Casella Waste Systems, partially based on Casella's experience in managing Clinton County's landfill in Western New York. The Casella and Ontario County Partnership is a blend of contractual, legally binding agreements and strong collaboration between the two entities to meet common goals and objectives. Both of these entities have unique core competencies that can provide mutual benefits for all parties involved. This partnership was brought about for the purposes of optimizing the productivity of the landfill and shares the risk/reward that the newfound productivity could potentially bring both to Ontario County and to Casella. The public-private interface agreement has significantly exceeded the estimated increase of revenues to the County. However, the agreement is currently being questioned for its potentially negative impact on the area's environment and quality of life

PUBLIC-PRIVATE PARTNERSHIPS

The public-private partnership concept has been in use in the world for over forty years, and has been growing at a varying rate with mixed success. Its popularity is due to the fact that governments are more and more eager to increase the quality and efficiency of public services, while facing insufficient budgetary resources to cover investment needs. Confronted with public spending restrictions, municipalities began to turn to the private sector as a source of funds. These public-private partnerships are based on the cooperation of a public entity with private entities aimed at mutual benefits. For this project, Ontario County's feasibility study indicated that outsourcing the operation and maintenance of its landfill would turn annual operating losses into significant positive cash flows. Moreover, it would not require capital investment by the county except for attaining approval from New York State's Department of Environmental Conservation (NYS DEC).

Public-private partnerships (PPP) are "working arrangements based on a mutual commitment (over and above that implied in any contract) between a public sector organization with any other organization outside of the public sector" (Brinkerhoff & Brinkerhoff, 2011). These relationships are cross-sectoral but there is a shared effect between both parties to bring both commitment and competence to the table, thereby creating a classic synergy with the whole being more than the sum of the parts. These mutual agreements share the following features for both parties to enjoy the synergistic effect: Jointly determined goals, Collaborative and consensus-based decision making, Trust-based and formal/informal relationships and Shared accountability for outcome and results

Brinkerhoff and Brinkerhoff state that public-private partnerships typically evolve from one or more of the following reasons:

* To enhance efficiency and effectiveness through a reliance on comparative advantages and a rational division of labor and resources

* To keep the tax rate at a stable position for years to come

* To move from a no-win situation to a compromise and a potential win-win situation. It potentially would be possible to continue without a partnership, but stakeholders within the county would continue to be dissatisfied and incur losses.

* To provide integrated resources and solutions where the whole will be better than the sum of the parts.

* To improve and open decision-making processes to promote a more formidable operation which would benefit the citizens of the municipality.

* To...