Waste Management Contract

Pursuant to RSA 149:M-17 Barrington is under contract with Waste Management for the transportation and disposal of municipal solid waste (MSW) and recycling.  At Town meeting in 2018, voters ratified a multi-year contract with Waste Management through December 31, 2026 (2018 Barrington Executed TS Agreement).  This is a great contract for the Town and is saving the Town a significant amount of money compared to other municipalities.  In 2022, the Select Board worked on an extension to the contract and learned that Waste Management would be looking for a 100% increase in rates by 2031.  The Select Board opted to remain in the existing contract and explore alternative options to prepare for a spike in costs starting in 2027.  Ultimately, the Select Board decided to propose establishing a revolving fund to residents at the 2024 Town Meeting along with a gradual increase in user fees (~20% per year through 2027).  Details of the process and decision-making to get to this point can be found below.

November 27, 2023 (Select Board Meeting)

The Select Board supported the recommendation from the joint Advisory Budget Committee and Transfer Station and Recycling Center Review Committee:

1. The groups recommended proceeding with a warrant article to establish a Revolving Fund for the Transfer Station which would allow the Town to prepare for a dramatic increase in waste disposal costs at the end of the contract with Waste Management (12/31/2026).  The proposal would be to retain $225,000 annually as revenue in the general fund to offset taxes (and fund approximately 72% of the Transfer Station).  Further, the proposal would target an approximately 20% annual increase in Transfer Station user fees and that additional revenue would be deposited in the revolving fund.  A 20% increase in 2024 is expected to generate $45,000 in additional revenue.  An additional 20% increase in 2025 would add $100,000 and an additional 20% in 2026 would add $165,000.  The result would be approximately $310,000 in time for a new waste disposal contract (where we anticipate a doubling of disposal costs).  The group was in favor of an approach which incrementally increased user fees to avoid a doubling of fees in one year.  Additionally, the group felt that the balance in the revolving fund could be used to extend the incremental user fee increases and/or pursue other options such as performing transportation using Town equipment/personnel.

November 20, 2023 (Joint Advisory Budget Committee and Transfer Station and Recycling Center Review Committee)

The Advisory Budget Committee and Transfer Station and Recycling Center Review Committee came together in a joint meeting to discuss how the Town should proceed with the anticipated increase in waste disposal costs.  The group discussed a variety of options and ultimately decided that establishing a revolving fund along with gradually increasing the user fees was the best approach.  The groups unanimously recommended that the Select Board proceed in that way.  This outcome is especially important because the two groups have very different goals and objectives and agree completely with the proposed path forward.

August 14, 2023 (Select Board Meeting)

1. In 2022 and early 2023, the Select Board evaluated the current Waste Management contract which is set to expire at the end of 2026.  In recognition of the State’s municipal solid waste crisis, the Select Board sought an extension of the existing Waste Management contract.  Although the Town anticipated cost increases with an extension, the proposal was much higher than expected.  In order to secure a contract through 2031, Waste Management proposed a 12% increase in 2023, a 30% increase in 2024, a 33% increase in 2025 and a 39% increase in 2026 over the Town’s existing contract.  The contract price continued to escalate through 2031.  The Select Board respectfully declined Waste Management’s non-negotiable offer at the January 10, 2023 meeting.
2. One thing, we talk about regularly as a tenant of good government is avoiding large peaks or valleys in appropriations (or revenue).  It is fair to assume that Barrington’s solid waste rates could double in 2027 after our existing (and well negotiated) contract expires.  This would have a strong negative impact on the Town’s budget, revenue, and residents as a significant spike in cost. 
3. In order to mitigate the anticipated cost increase and maintain a stable tax rate, I would propose asking voters to establish a revolving fund per RSA 31:95-c.  Trash bag prices were increased by 25% in 2022 which has resulted in increased revenue collection.  A revolving fund would allow the Town to set aside a portion of the additional revenue as a savings account to ‘buy-down’ the anticipated cost increase in 2027.
4. As an example, if the current contract cost is $250,000 per year and we expect the cost in 2027 to be $500,000 per year, we could save $75,00 per year in 2024, 2025, and 2026 using a revolving fund.  We could then strategically use those savings so the cost in 2027 could be $325,000, the cost in 2028 could be $425,000, and the cost in 2029 could be $500,000.  Additionally, the Town could continue to gradually increase Transfer Station user fees to avoid a one-time doubling of fees in 2027.
5. If the Select Board supports this idea in concept, a full proposal will be developed with a target funding schedule and utilization plan.  Once the Select Board reviews that level of detail, a determination can be made whether or not to present the Transfer Station Revolving Fund to voters in March of 2024. 

April 13, 2023 (Select Board Meeting)

1. The Town maintains a membership with the Lamprey Regional Cooperative.  One service provided by the organization is competitively negotiated waste disposal rate with Waste Management.  Although the Town was able to secure more competitive rates, the Lamprey Regional Cooperative rates would be available to the Town in the future.  Recently, the cooperative negotiated an extension through 2033.
2. See attached, Amendment Two Lamprey Cov Ltr 2023-03-22
3. See attached, 2023 WM proposed fee change Amend 2
4. See attached, Amendment Two Lamprey Regional Fully Executed 2023

January 10, 2023 (Select Board Meeting)

At the January 10, 2023 meeting, the Select Board reviewed the contract extension proposal.

A quick analysis was performed based on 2022 data for hauls and tonnage.  Each value represents the estimated annual cost.  This analysis assumes no change in utilization and ignores commodity pricing and the fuel surcharge.

If Barrington adopted the proposed contract terms, it is estimated that it would cost a total of $272,732 more in years 2023-2026 than the current contract terms.  Further, the proposed 2031 pricing is estimated to be $203,892 more than the 2026 rates of the existing contract. 

One thing, we talk about regularly as a tenant of good government is avoiding large peaks or valleys in appropriations (or revenue).  This proposed contract extension could allow the anticipated cost increase to be gradually phased in versus experiencing a doubling of the rates in 2026.  That said, the Town could also explore other tools to help normalize a price hike.  One such option would be a revolving fund or special revenue fund.  This would allow user fees to accumulate year over year and funds could be saved in anticipation of a large increase. 

An additional factor to consider is the current solid waste industry and capacity in New Hampshire.  Due to the proximity of Waste Management in Rochester, Barrington is unlikely to have a less expensive option based on hauling fees alone.  The ability to secure a contract through the end of 2031 is appealing in order to manage the uncertainty of the solid waste industry.

The Transfer Station and Recycling Center Review Committee will meet on Monday, January 9, 2023 to review the Waste Management proposal.  Their comments will be available for review at the January 10, 2023 meeting.

Ultimately, the Select Board voted to reject the proposal from Waste Management.  

January 5, 2023

After multiple meetings with staff, on January 5, 2022, Waste Management has offered terms of a contract extension through the end of 2031.  Their proposal includes a price jump in 2023 and in years 2024-2031 there would be an average increase of 4.9% per year per ton and 6.9% per year per haul.  The current contract (through 2026) maintains 2% increases per year in tonnage and hauling.  The proposed contract also includes a fuel surcharge/rebate program with a $4/gallon baseline.  The proposed 2023 start date would be June 1, 2023.  It is apparent that if we remain in the existing contract, we should expect a dramatic increase in a new contract. 

Waste Management Proposed Contract Extension Through 2031 20230105

Waste Management Proposed Contract Extension Fuel Surcharge 20230105

May 23, 2022

At the May 23, 2022 meeting, the Select Board voted to not accept the cost increase until an updated draft proposal is created between Waste Management and Barrington to include a contract extension.

May 9, 2022

At the May 9, 2022 meeting, the Select Board met with Peter Lachapelle, Waste Management’s Public Sector Representative to further discuss the Waste Management request and the impacts to the solid waste industry.

April 13, 2022

On April 13, 2022, the Town received the following letter and request for a 3% increase in hauling and disposal (above and beyond the contract) from Waste Management.

Inflationary Cost Letter

Additionally, Waste Management provided the following review of industry impacts.

Waste Management Industry Impacts - April 2022