2022-059 Solid Waste Closure Post Closure StudyDate: September 23, 2022 Report No. 2022-059
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Solid Waste Closure/Post Closure Study
BACKGROUND:
During the Spring of 2022, the Public Utilities Board (PUB) and City Council approved a contract
with Burns and McDonnell to update the City’s Closure/Post Closure Study for the Solid Waste
Fund. Burns and McDonnell has extensive knowledge in completing Closure/Post Studies and is
familiar with the costs (direct and indirect) of closing and maintaining a landfill facility. This study
is updated approximately every five-years and serves as a planning guide to ensure the City
continues to meet the financial assurance requirements set forth by the various federal and state
agencies. These requirements are met by making an annual transfer from the Solid Waste operating
fund to the closure/post closure reserve.
DISCUSSION:
In summary, the Study identifies the cost associated with closing and monitoring the landfill
facility after closure (i.e., post closure). Burns and McDonnell updated the Study based on current
operational practices and the assumptions identified in the recent major amendment to the City’s
landfill permit, Municipal Solid Waste (MSW) Permit 1590B. Closure costs are the costs incurred
once the Landfill reaches capacity to ensure the long-term protection of the surrounding
environment. Post-closure costs are the costs of monitoring and maintaining the expected useable
Landfill area during the 30-year post-closure period. Based on current waste acceptance and
operational factors the facility is currently forecasted to close in 2056, however, this date may
change as the Solid Waste department continues to implement the Comprehensive Solid Waste
Management Strategy.
Below is a summary of the results, major assumptions and differences between the old and new
Closure/Post Closure Study. The results and a complete list of the assumptions is available in the
attached final report.
• Current liability total $11 million, reserve balance totals $12 million.
• Acceptance rates are slightly lower than those project in the 2017 Study. For example, the
projected tonnage for FY 2025 was 544,466 tons in the 2017 Study and 483,411 in the
updated Study.
• Airspace utilization has increased from 1,100 pounds per cubic yard (lbs./Cubic Yard) to
1,276 pounds per cubic yard. In simplicity, this represents the amount of trash that can be
compacted into one cubic yard of space.
• The new Study decreases investment earnings from 2.15% to .33%.
Date: September 23, 2022 Report No. 2022-059
STAFF CONTACT:
Nick Vincent
Assistant Director of Finance
nicholas.vincent@cityofdenton.com
Brian Boerner
Solid Waste Director
brian.boerner@cityofdenton.com
REQUESTOR:
Staff
PARTICIPATING DEPARTMENTS:
Finance
Solid Waste
STAFF TIME TO COMPLETE REPORT:
Staff – 1 hours
ATTACHMENTS
Solid Waste Closure/Post Closure Study
8911 Capital of Texas Highway \ Building 3, Suite 3100 \ Austin, TX 78759
O 512-872-7130 \ 512-872-7127 \ burnsmcd.com
September 14, 2022
Nicholas Vincent
City of Denton
215 E McKinney St, Suite 600
Denton, Texas 76201
Re: Closure/Post-Closure Analysis
City of Denton Landfill, Permit 1590B
Dear Mr. Vincent:
Burns & McDonnell has completed the attached Closure/Post-Closure Analysis (Analysis) for
the City of Denton’s (City’s) current permitted Municipal Solid Waste Landfill, Permit 1590B
(Landfill). The closure and post-closure care costs for the City were determined by estimating
the total closure and post-closure care costs for the entire Landfill and the remaining life capacity
estimates for the site.
The 2022 Analysis was completed to ensure the City continues to meet financial assurance
requirements placed forth by the appropriate federal and state regulatory agencies, and also
serves as a planning guide for the City’s own reserve fund for closure and post-closure care. The
2022 Analysis was completed to reflect the recent Major Amendment to the MSW permit
(1590B) and without mining of the Permit 1590, Phase 0 area or enhanced leachate recirculation
(ELR) to be consistent with the City’s desired approach for future landfilling operations. The
1590B permit amendment included both a vertical expansion over the Unit 1 area and a lateral
expansion (Unit 2). The 2022 Analysis examined total closure costs for the Landfill (Phase 0 (no
mining), Unit 1, and Unit 2) and the City’s financial assurance liability and reserve fund health
for a partial closure (including Phase 0) when Unit 1 reaches capacity.
ASSUMPTIONS AND DIFFERENCES
The following presents the assumptions used for the 2022 Analysis as well as provides a
comparison to the 2017 Analysis. Please note that the results of the 2022 Analysis vary from the
2017 Analysis in part due to the approved expansion which increased time prior to closure.
Differences from the 2017 Analysis include the following:
• The 2022 Analysis focuses solely on the closure costs of the Landfill to understand the
changes in closure cost liability related to the approved Landfill expansion. The 2017
Analysis included closure costs for the Household Chemical Center (HCC) Facility,
Building Materials Recovery (BMR) Facility, and Source Separated Organics (SSO)
Compost Facility.
• Current waste acceptance rates are slightly lower than those projected in the 2017 Analysis.
For example, the projected tonnage for FY 2025 was 544,466 tons in the 2017 Analysis
and 483,411 tons for FY 2025 in the 2022 Analysis. Waste growth rates are projected to
continue in the future based on discussions with City staff, projected population growth in
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the City, and priorities from the City’s 2022 Comprehensive Solid Waste Management
Strategy (CSWMS). See graph below for historic waste tonnages:
• The 2017 Analysis estimated an airspace utilization factor (AUF) of approximately 1,100
pounds per cubic yard (lbs/CY) based on recent surveys completed at that time. The 2022
Analysis uses an AUF of 1,276 lb/CY based on the most recent survey. Historically, the
City had implemented strategic programs to increase the utilization of the City’s permitted
capacity (including ELR); however, recent discussions with City staff indicate that ELR is
not currently used and not planned as part of future Landfilling practices. While the
Landfill may still recognize long-term settlement due to ELR and therefore, an increased
AUF, the model was based on current achieved waste densities to be conservative.
• There has been further decrease in interest achieved on investments since 2017. The
interest achieved on investments in the 2017 Analysis was set to 2.15% (based on the 10-
year treasury yield); however, the 2022 Analysis used a 0.33% interest rate on investments,
reflecting recently achieved rates and anticipated future yields. The inflation rate was set to
2.30% based on to the 10-year CPI long-term forecast as published by the Federal Reserve
Bank of Philadelphia for 2021.
REGULATORY REQUIREMENTS
Financial assurance estimates are required to meet regulations related to the expenses recognized
for closure and post-closure care as well as for funding mechanisms available to meet these
requirements. The following are the regulatory requirements followed for the 2017 Analysis:
• Statement 18 of the Governmental Accounting Standards Board (GASB 18) defines
the standards for accounting and financial reporting for closure and post-closure financial
assurance at municipal solid waste landfills. The landfill owner/operator is required to
recognize an expense each period for closure and post-closure care costs, which is the
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Annual Tonnage
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current liability less the previous period liability. Per GASB 18, the following are utilized
to calculate the current liability:
o Estimated total closure costs and costs for performing 30-years of post-closure
care;
o Cumulative capacity used; and
o Total estimated capacity of the permitted facility.
• Title 30, Part 1, Chapter 37 of the Texas Administrative Code (TAC) defines the Texas
Commission on Environmental Quality (TCEQ) requirements for funding for financial
assurance and the mechanisms available to meet the requirements. The following
mechanisms are available for Landfills to meet financial assurance requirements:
o Surety bond guaranteeing payment;
o Surety bond guaranteeing performance;
o Irrevocable standby letter of credit;
o Insurance;
o Financial test; or
o Corporate guarantee.
Municipalities (including the City of Denton) often choose to meet financial assurance
requirements utilizing a local government financial test; however, it is recommended that a
restricted reserve account is also maintained to fund liability as it is accumulated so that
current Landfill customers are responsible for paying for the closure/post-closure costs of
the facility instead of delaying the costs so they are incurred by future generations. The
City current follows the practice of maintaining a restricted reserve account.
TOTAL CLOSURE COSTS
Closure costs are the costs incurred once the Landfill reaches capacity to ensure the long-term
protection of the surrounding environment. The total closure costs are the costs to close the
largest area of the Landfill that will accept waste, which is estimated to be the entire Landfill
(i.e., 258 acres) for the purposes of this analysis
The total closure costs were estimated for the Landfill (all Units; 258 acres) based on
engineering drawings and permit documents provided by the City, quotes from private
contractors, and Burns & McDonnell’s experience on similar projects. The closure profiles
varied slightly between Phase 0 (which is closed with a pre-Subtitle-D closure profile) and the
Unit 1 and Unit 2 Subtitle-D areas, as shown below.
The pre-Subtitle-D closure profile consists of (bottom to top):
• 18-inch infiltration layer;
• 6-inch topsoil; and
• Vegetative cover.
The Subtitle-D closure profile consists of (bottom to top):
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• 18-inch infiltration layer;
• 40 mil geomembrane liner (assumed linear low-density polyethylene LLDPE textured
liner);
• Geocomposite drainage layer;
• Erosion layer (18-inches on the crown; 30-inches on the side-slopes);
• 6-inches of topsoil; and
• Vegetative cover.
The total closure costs (2021 dollars) are estimated at $30,713,918 (all Units) or equivalent to an
estimated $18,106,926 for closure of the Phase 0 and Unit 1 area based on an average closure
cost of $119,046 per acre. See Attachment A for a summary of the closure cost analysis.
TOTAL POST-CLOSURE COSTS
Post-closure costs are the costs of monitoring and maintaining the expected useable Landfill area
during the post-closure period. Per GASB 18, the expected useable life is defined as the total
area expected to receive solid waste during the Landfill operating life. This is the area the City
has currently filled, is filling, or intends to develop per the current TCEQ permit (1590B).
The total post-closure costs of the Landfill were estimated based on engineering drawings and
permit documents provided by the City, quotes from private contractors, and Burns &
McDonnell’s experience on similar projects. The total annual post-closure costs (2021 dollars)
are estimated at $297,300 (all Units). The present value worth of the 30-year post-closure (2021
dollars) is $23,684,758. This accounts for inflation from 2021 through closure and then 30 years
of post-closure, with the cost discounted to present value at the City’s current investment earning
rate of 0.30 percent. See Attachment B for a summary of the post-closure cost analysis.
DISPOSAL CAPACITY PROJECTIONS
As discussed previously, the City has had significant tonnage growth at the Landfill in the past
several years and is projecting a similar tonnage growth moving forward. Since the 2017
Analysis, Landfill Permit 1590B approval provided both lateral and horizonal expansions. This
had a significant impact on the remaining capacity of the Landfill Permit 1590A area. The
estimated closure year for the 2017 Analysis was 2028; whereas the 2022 Analysis estimated the
closure year for Unit 1 of the Landfill as 2041, an increase of 13 years from the vertical
expansion. The Landfill Permit 1590B Unit 2 provides additional capacity, resulting in the
Landfill reaching capacity in 2056 based on the current tonnage acceptance and projected growth
rates. See Attachment C for the disposal capacity projections and waste tonnage growth rates.
FINANCIAL ASSURANCE LIABILITY
The currently closure and post-closure liability for the Landfill is provided in Table 1 below.
The current liability is the present value (2021 dollars) the City would pay to close the portions
of the Landfill that have accepted waste.
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Table 1: Current Liability (2021 Dollars)
Description Amount
Closure Costs $30,713,918
Post-Closure Costs $23,684,758
Total Liability $54,398,676
Percent of Airspace Consumed 20.32%
Total Current Liability $11,051,945
ANNUAL FINANCIAL ASSURANCE EXPENSE (GASB 18)
The accounting expense to recognize per GASB 18 is based on the current liability less the
liability recognized in the previous period. At the end of FY 2021, the City recognized a liability
of $12,076,086 for the closure and post-closure care of the Landfill. Based on the current
liability calculated in Table 1, the City would have lower liability in FY 2022 and therefore need
to recognize an expense of ($1,024,141) for FY 2022. See Attachment D (column labeled
“Accounting Expense to Recognize”) for the annual accounting expenses the City is expected to
recognize per GASB in FY 2022 and in future years. However, the accounting expenses
associated with financial assurance and have no bearing on how the City decides to accumulate
funds in its closure and post-closure reserve (after meeting financial assurance through the local
government test). The reserve fund contributions are discussed in the section below.
CLOSURE AND POST-CLOSURE RESERVE FUND
As discussed previously, although the City relies on local government financial test to meet
financial assurance requirements for closure and post-closure care, the City has a separate
reserve fund intended for funding future closure and post-closure costs. At the end of FY 2021,
the City had $11,992,859 accumulated in its reserve fund.
Attachment D outlines two approaches, or options, to making annual contributions to the reserve
fund:
• Option 1 – Increase annual contribution (a combination of cash contribution and interest
income) by an inflationary amount each year, starting in FY 2022.
• Option 2 – Make the annual contribution (a combination of cash contribution and interest
income) equal the GASB 18 accounting expense and therefore the reserve balance equal to
the current liability. This results in a deduction in FY2022 but requires increasing
contributions in all subsequent years.
Using Option 1, the City would need to make a fund contribution of $1,879,657 for FY 2022.
Using Option 2, the City would reduce its fund balance by ($980,491) for FY 2022. These
contributions are inclusive of both interest income and cash contribution. If interest rates
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received are less than estimated in Attachment D, the City will need to recognize a greater cash
contribution.
Burns & McDonnell also evaluated the projected fund balance allocated to closure costs for the
interim closure of Unit 1 and believes, based on the assumptions discussed and projections in
Attachment D, that either option would provide adequate funding to perform closure of Unit 1
when that portion of the Landfill reaches capacity.
CLOSING
The permitting of the Landfill expansion (1590B) and slight decreases in waste disposal rates
have resulted in reduced current liability due to an increased time period until closure. However,
multiple factors have increased the present value of total closure and post-closure costs,
including increased total closure costs due to the expansion area, inflation rates and low savings
yield. If you have any questions or comments regarding the 2022 Analysis, please contact Seth at
737-787-6686.
Sincerely,
Seth Cunningham, PE
Project Manager
STC/dlk
Attachments:
Attachment A: Closure Cost Analysis
Attachment B: Post-Closure Cost Analysis
Attachment C: Disposal Capacity Projections
Attachment D: Annual Expense Recognition and Funding Options
cc: Brian Boerner, City of Denton
Cassandra Ogden, City of Denton
Danielle Stanford, City of Denton