YORK COUNTY SOLID WASTE AUTHORITY. Annual Report.

Transcription

1 2013 YORK COUNTY SOLID WASTE AUTHORITY Annual Report

2 Dave Vollero gets a thumbs up from a hauler as he receives a packed lunch at the hauler appreciation day event. Authority Executive Director Dave Vollero (left), and County Commissioner Doug Hoke (far right), thank a waste hauler for their role in delivering waste to the Resource Recovery Center at the fall hauler appreciation event.

3 ABOUT THE YORK COUNTY SOLID WASTE AUTHORITY: The Authority is a municipal authority created in 1971 under the Municipal Authorities Act and charged with the responsibility to manage York County s municipal solid waste. The Authority s nine-member volunteer board sets the Authority s policies and goals. Members are appointed to five-year terms and serve on at least one Authority Committee. Authority Standing Committees include the Engineering/Operations Committee, the Recycling and Planning Committee, the Administrative Committee, and the Community Services Committee. The Authority is comprised of four divisions: Administrative, Community Services, Engineering and Operations, and Recycling and Planning. At the close of 2013, the Authority staff consisted of 20 full-time and five part-time positions. OUR MISSION: Facilitate responsible solid waste management. OUR GOALS: Using appropriate assessment tools, ensure that continuing solid waste management needs are met. Lead efforts to optimize environmental benefits from the management of solid waste. Provide or facilitate the availability of relevant long-term solid waste management programs and infrastructure that consider waste reduction, reuse, recycling, waste-to-energy and landfilling. Actively participate in the legislative and regulatory process at the federal, state and local levels. Attract, retain, motivate and continually improve the Authority in the pursuit of our Mission and Goals. Promote service and responsiveness to our customers, community and other interested parties. YORK COUNTY SOLID WASTE AUTHORITY The York County Resource Recovery Center, located in Manchester Township, processes York County s household waste and some types of residual (manufacturing) waste. 3

4 OUR BOARD OF DIRECTORS: Ed Heindel Chairman Joe Hoheneder Vice Chairman Clarence Nace Secretary William Brenneman Treasurer Noah Krout Asst. Secretary/Treasurer Wayne Paup Member Matt Sommer Member Fred Ritzmann Member Timothy Malinky Member David E. Vollero Executive Director Jerry C. Grim Assistant Executive Director 4

5 A MESSAGE FROM THE EXECUTIVE DIRECTOR: PLANNING FOR THE FUTURE David E. Vollero Executive Director Since 1971, the York County Solid Waste Authority has served the residents of York County through the development and operation of solid waste management facilities. The blueprints for our operations and programs is the York County Municipal Solid Waste Management Plan (Plan), that was updated by the Authority in 2013, in accordance with Act 101, Pennsylvania s Municipal Waste Planning, Recycling and Waste Reduction Act. That law requires Pennsylvania counties to ensure long-term capacity for managing their citizens municipal solid waste in an environmentally responsible manner. In 2013 the Authority submitted a revised and updated 25-year Plan to the Pennsylvania Department of Environmental Protection for review and approval. The Plan was developed in cooperation with a 14-member Municipal Waste Advisory Committee consisting of individuals from all classes of municipalities, citizen organizations, private industry, solid waste businesses, and the recycling industry. These appointed individuals represented the interests of our community by providing input to the Authority as it updated the Plan. In keeping with our obligations to provide for long term municipal waste management capacity for the County described in the Plan, in 2013 the Authority and its engineers were planning and designing improvements to the York County Resource Recovery Center (RRC) that will prepare the facility and site for future expansion necessary to provide long-term capacity for York County s municipal solid waste. In addition to meeting stringent regulatory requirements, these efforts will result in enhanced safety and customer service, and the extension of the RRC s useful life. The Authority s goal is to build on proven waste-to-energy technology, in order to maximize the long term value of the municipal waste resource to the citizens of York County. We expect to break ground on this exciting project in As we looked to the future of solid waste management throughout 2013, the Authority Board of Directors unanimously approved a resolution to amend the Authority s Articles of Incorporation to extend our term of existence to April 1, In March of 2014 the York County Board of Commissioners adopted a resolution approving extension of the Authority s term. This extension will enable us to move forward with certainty as we implement the York County Municipal Solid Waste Management Plan and provide the infrastructure required to meet the County s long term needs. The Authority, through the efforts of its Board of Director s and staff, is committed to providing York County citizens with one of the finest integrated systems of waste management in the United States. For the past 42 years, we have sought to use some of the most advanced technology to manage waste and protect our valuable natural resources. We look forward to creating new opportunities to reduce waste, protect our environment and serve the citizens of our community for the next 50 years. Best Regards, David E. Vollero Executive Director 5

6 THE ROAD AHEAD: In early 2009 the Authority elected to postpone plans for expansion of the York County Resource Recovery Center (RRC) due to significant recent changes in county waste generation and recycling rates. Although facility expansion is not needed at this time, the Authority is making investments in the RRC so the facility can continue serving York County s waste management needs well into the future. In 2014, we expect to begin construction of the following site improvements: Scalehouse Relocation A new scalehouse will feature four scales instead of two to allow more automation for commercial haulers, more efficient communications with customers and quicker service. The new scalehouse will be located closer to the tipping hall thus alleviating traffic congestion at the site entrance. Customer Convenience Area A new customer convenience area of more than four acres will be constructed to the west of the tipping hall. This area will include a waste bunker to serve small haulers, boxes for the placement of certain special wastes and recyclable materials and space to accept dedicated loads of yard waste. Customers will no longer need to leave the site to deliver yard waste. Tipping Hall and Pit Expansion Expansion of the tipping hall and waste storage pit will be a major portion of the RRC site improvement project. The tipping hall will be expanded to the north and west, and will allow transfer trailers to off-load without interfering with the operations of local haulers. The waste storage pit will be expanded to the north to serve traffic on the expanded tipping floor, and to provide the Authority greater flexibility in managing fluctuations in waste generation among our customers. The crane system that delivers waste to the processing trains will be modified to accommodate the expanded tipping hall and pit. Work to install the natural gas pipeline to supply auxiliary fuel to the Resource Recovery Center began with drill test borings along the pipeline route. 6

7 BLACKGUM COURT Facility operator, Covanta York Renewable Energy, LLC, maintains a very strong safety record at the site. Currently, traffic congestion in the tipping hall presents one of the greatest challenges to providing a safe environment for our customers and employees. The expanded tipping hall and waste storage pit will reduce traffic congestion and allow for even safer operating conditions. SCALES YARD WASTE AREA TIPPING HALL EXPANSION AIR POLLUTION CONTROL AREA TIPPING HALL EXISTING BOILER HOUSE SMALL LOAD DROP-OFF AREA VISITOR CENTER BLACKTHORNE COURT COOLING TOWERS LEGEND New Structure Existing Structure Existing Pavemen Proposed Paving Gravel Paving BLACKBRIDGE ROAD Vegetation Wooded Area Stone 2561 MANCHESTER TWP. YORK COUNTY SOLID WASTE AND REFUSE AUTHORITY YORK COUNTY RESOURCE RECOVERY CENTER SITE IMPROVEMENTS PENNSYLVANIA 7

8 THE ROAD AHEAD: (CONT D) Warehouse and Maintenance Shop; Mechanical Upgrades Warehouse and maintenance facilities will be relocated to make room for tipping hall and pit expansion. The RRC s boiler water treatment system will be replaced with newer technology and new air compressors will be installed and relocated to better serve the facility. Education Center Thousands of people tour the RRC every year to learn how municipal waste is managed in the county and how that system impacts our environment and quality of life. A new education center will be constructed to better serve the large number of school students, civic groups, and individuals who tour the RRC. Environmental Improvements Systems will be installed to capture a portion of site storm water runoff for reuse in the process. Properly managed and maintained, the RRC will serve York County s municipal waste processing needs for many decades. The site improvements now being planned will not only provide the current benefits described above, but also prepare the facility for future expansion and the eventual replacement of existing waste processing capacity. Investments made in the facility now will benefit York County for years to come. Puppeteer Kathleen Jacobs created a Buster the Combustor Dragon puppet and incorporated the story of waste-to-energy into a puppet show assembly program presented to elementary schools in conjunction with America Recycles Day. Students actively participate in the America Recycles Day assembly that teaches the basics of recycling and using waste-to-energy to manage garbage that can t be recycled. 8

9 SUSTAINABILITY: Alternative energy production, materials recovery, community outreach and responsiveness and minimization of impacts to the environment are cornerstones of our integrated system of managing waste. We strive to continually improve our sustainability efforts within these core areas. In 2013, we signed an agreement with York County Solar Partners, LLC to construct a solar panel energy system at the now-closed York County Sanitary Landfill. The system is projected to produce 300,000 kilowatt hours (AC) of electricity annually, which is approximately the annual energy usage at the landfill. The panels will be constructed on 2 acres of land located on landfill property west of the facility s maintenance building and along Plank Road in Hopewell Township. The use of a solar panel system to supply our power needs at the landfill demonstrates not only our commitment to alternative energy, but also our efforts to minimize operational impacts to the environment. In addition to the electricity, the Authority will benefit from the sale of solar alternative energy credits generated by the array, while helping to diversify the Commonwealth s energy portfolio. Construction of the project will begin in the spring of Another effort to reduce environmental impacts and operational costs was initiated through a collaboration with Columbia Gas of Pennsylvania and Covanta. Auxiliary fuel is used at the Resource Recovery Center (RRC) for start-up and shut-down of our combustion units, and to stabilize operations as needed. Until recently, the RRC could use only fuel oil for that purpose. In late 2013, approximately 9,200 feet of natural gas distribution line was installed and connected to the RRC from a transmission pipeline located near Rudy Park. Auxiliary burners at the RRC will be modified in 2014 so that either natural gas or oil can serve as auxiliary fuel. We estimate the switch from oil to natural gas as auxiliary fuel at the RRC will substantially reduce air emissions of nitrogen oxides (6 tons/year), sulfur oxides (3.20 tons/year) and carbon dioxide (443.9 tons/year). The capital cost of the project to the Authority will total approximately $3M and will reduce annual operating costs by about $1M per year. The waste-to-energy process reduces raw garbage to ash. York County s 434,000 residents generate approximately 3.7 pounds of garbage per day, amounting to a county-wide total of nearly 1.7 million pounds each day. Raw garbage is reduced in volume by approximately 90 percent and metals mixed in with the ash residue are removed and recycled, further reducing the amount of the combustion residue and recovering those resources. In 2013, the Authority worked with York Reduction Systems, L.P. to establish contractual arrangements for construction and operation of an advanced ash processing and material recovery project that will be located at the Authority s current Yard Waste Transfer Facility. This project will further reduce the amount of combustion ash residue and recover significantly more valuable materials from the ash stream. The importance of the societal component of sustainability is undeniable. Giving residents recycle bins does not alone ensure recovery of materials or a reduction in the waste stream. Giving residents recycle bins and educating them about what and how to recycle is imperative in fostering changes that enhance sustainability. For this reason, the Authority aggressively fosters community involvement in the management of garbage through multiple mediums including radio, print and online branding. Education and outreach programs provided by the Authority, conducted both onsite at our Education Center and offsite, play an important role in teaching the community the role of municipal waste management in effective environmental stewardship. Raw garbage is reduced in volume by 90%. A worker welds connection pipe for the natural gas pipeline. 9

10 SUSTAINABILITY: (CONT D) The Authority s Medication Take-back Box Program is an example of proactive municipal waste management addressing an important societal issue by enhancing options for properly managing the residential pharmaceutical waste stream. Improper management of residential pharmaceuticals is a major problem in the US, and has led not only to the potential for increased abuse of prescription medications, but also to significant impacts to water and soil due to flushing medications or managing them in a landfill. Because we use waste-to-energy in York County to manage household waste, we encourage residents to place unused or expired medications out with their regular garbage after making the medications unpalatable by mixing them with coffee grounds or cat litter. In 2012, the Authority launched the Medication Take-Back Box program in cooperation with three local police departments. In 2013 that number grew to 11 participating police departments spanning much of York County, thus making it even more convenient for residents to safely manage their medications. In 2013, more than 2,600 pounds of medications were collected through this program and destroyed at the RRC. What s in a Number? Much is made of the statement Quality, not quantity, is what counts. Here at the Authority, we think both are important. RRC Operations: The Authority generates revenues through tipping fees and the sale of electricity from the RRC, making our operations self-sufficient. The RRC processed 415,961 tons of trash in 2013 and produced more than 165 million net kilowatt hours of power. An unexpected turbine failure reduced the net power generation for the year. Of the million revenue lost due to the turbine failure, 5.29 million was recovered from business interruption insurance coverage. In 2013 we held our tipping fee at $59 per ton. Carbon dioxide offset: According to the US Environmental Protection Agency, for every ton of waste processed at a waste-to-energy facility, the equivalent of one ton of carbon dioxide emissions is avoided. Household Hazardous Waste Programs: In an effort to help residents remove products containing hazardous components from the municipal waste stream, the Authority sponsors an annual collection program and a year round curbside program. The annual collection program (which is free to the public) netted 10.3 tons of household hazardous waste and the curbside program, which costs residents a $15 co-pay, saw 2.7 tons of household hazardous waste diverted for proper disposal. Public Recycling Drop-off facility: The Authority s public recycling drop-off facility collected 749 tons of materials from residents and businesses alike. Metal recycled out of municipal waste combustion ash: The ability to recover metals out of municipal waste combustion ash means the avoidance of greenhouse gas emissions associated with the production of new metals. In 2013, 15,467 tons of metals were recovered out of our ash stream and recycled into new products. Authority staff Rich Hazenstab (left) and Dave Vollero install a valve as part of a new active gas extraction system at the now-closed York County Sanitary Landfill. This is the first time an active gas venting system has been used at the site. 10

11 Electronics Recycling: In 2013, a new statewide electronics recycling law called The Covered Device Recycling Act took effect. The law imposes a number of responsibilities on manufacturers of covered devices that offer their covered devices for sale in Pennsylvania. Covered devices include desktop computers, laptop computers, computer monitors, computer peripherals and televisions. Individually, or as part of a group, a manufacturer must establish, conduct and manage a plan to collect, transport and recycle a quantity of covered devices equal to its obligated share. In addition, the law also prohibits waste haulers and waste disposal facilities from accepting covered devices. This new recycling requirement resulted in an all-time high total of 1,053 tons of electronics diverted for recycling through the Authority s electronics recycling program. Of that amount, 5 percent of the material diverted for recycling was ultimately managed at a waste-to-energy facility and 1 percent was managed in a landfill. Tours and Educational Programming: The Authority conducts tours and educational programming for York County residents, civic groups and businesses to promote an understanding of how their garbage is managed and to emphasize proper disposal. In 2013, the Authority provided outreach to more than 15,000 people. Tire Disposal Program: In support of Keep York County Beautiful, the Authority conducted its second annual free residential tire collection program. The program eliminated tons of tires from homes and illegal dump sites. Free Litter Disposal Program: The Authority s year round litter clean-up disposal program helped remove Tons of litter from York County. Free Programming : The Authority s education and outreach programs and the majority of its special programs such as electronics recycling, household hazardous waste collection, annual tire disposal and year round litter disposal programs are offered at no extra fee to residents, however, they are supported by the tipping fee and the revenue from the sale of electricity. For this reason, these programs are offered at no cost only to York County residents, since they are supported by in-county total waste management system fees. Commitment to the Environment and Environmental Stewardship: The Authority supports Keep York County Beautiful with staff resources and in-kind donations; the York County Envirothon with financial and staff support, contributes a donation to the York County Science fair, participates in Made in America Tours, and provides free educational programming in schools and civic groups throughout York County. In 2013, the Authority developed a script and mascot puppet to spread the word about waste-to energy through a special program presented in conjunction with America Recycles Day. The Authority s mascot, Buster the Combustor Dragon now communicates to elementary school students the importance of recycling. The Authority works with Keep York Beautiful to assist in eliminating illegal dump sites such as the one shown here. 11

12 A MESSAGE FROM THE ASSISTANT EXECUTIVE DIRECTOR: Jerry C. Grim Assistant Executive Director As the Authority s chief financial officer, I am pleased to share the Authority s financial position with you. This annual report contains a complete summary of the audited statements for 2012 and In 2013, the Authority maintained the cost for disposal at the RRC at $59 a ton. The Authority conservative fiscal practices have ensured that funds will be available to provide for future expenses such as the RRC expansion project, site improvements, future facility upgrades, and regulatory impacts, to name a few. The Authority is self-sufficient and relies on revenue generated by the operation of the RRC and the sale of electricity to support its operations. REPORT OF MANAGEMENT The management of York County Solid Waste and Refuse Authority ( Authority ) is responsible for the integrity and objectivity of the financial and operating information presented in this Annual Report covered by the Report of Independent Certified Public Accountants. The Authority maintains an effective internal control structure, which consists, in part, of organizational arrangements with clearly defined lines of responsibility and delegation of authority. We believe the internal control structure of the Authority provides reasonable assurance that transactions are recorded and executed in accordance with management authorization, that assets are properly safeguarded and accounted for, and that financial records are maintained so as to permit the preparation of financial statements in accordance with generally accepted accounting principles. The Authority, through its Administrative Committee, reviews the annual audit results. The Administrative Committee meets with management and the independent auditors to review the scope and results of their examinations. Reinsel Kuntz Lesher, LLP, an independent Certified Public Accounting firm, is retained to audit the Authority s financial statements. Their accompanying report is based on an audit conducted in accordance with generally accepted auditing standards, including an evaluation of the internal control structure and tests of accounting procedures and records. David E. Vollero Executive Director Jerry C. Grim Assistant Executive Director 12

13 York County Solid Waste and Refuse Authority Financial Statements and Supplementary Information December 31, 2013 and 2012 Table of Contents Page MANAGEMENT S DISCUSSION AND ANALYSIS 1 to 5 INDEPENDENT AUDITOR S REPORT 6 and 7 FINANCIAL STATEMENTS Balance Sheet 8 Statement of Revenue and Expenses 9 Statement of Changes in Net Position 10 Statement of Cash Flows 11 and 12 Notes to Financial Statements 13 to 28 SUPPPLEMENTARY INFORMATION Operating Expenses 29 Other Income 30 13

14 Management s Discussion and Analysis This section of the Authority s annual financial report presents our analysis of the Authority s financial performance during the fiscal year ended on December 31, Please read it in conjunction with the financial statements, which follow this section. FINANCIAL HIGHLIGHTS The Authority s net position increased by $2.3 million or a 1.5 percent change. During the year, the Authority s revenue from waste disposal fees decreased by $1.0 million, or 4.5 percent, while electric sales decreased by $1.8 million, or 9.8 percent. This decrease in revenue was due in large part to the turbine failure experienced at the Resource Recovery Center on February 23, Business Interruption insurance covered $3.8 million of lost revenue from the turbine failure. The decrease in the revenue reflected above was the result of the 30-day deductible period. During the year, the Authority s operating expenses increased by $0.3 million, or 0.9 percent, primarily as the result of an increase in operation and maintenance costs. REQUIRED FINANCIAL STATEMENTS The financial statements of the Authority report information about the Authority using accounting methods similar to those used by private sector companies. These statements offer short-term and long-term financial information about its activities. The balance sheet includes all of the Authority s assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to Authority creditors (liabilities). It also provides the basis for assessing the liquidity and financial flexibility of the Authority. All of the current year s revenue and expenses are accounted for in the statement of revenue and expenses. This statement measures the success of the Authority s operations over the past years and can be used to determine whether the Authority has successfully recovered all its costs through its user fees and other charges. It also establishes the Authority s credit worthiness. The final required financial statement is the statement of cash flows. The primary purpose of this statement is to provide information about the Authority s cash receipts and cash payments during the reporting period. This statement reports cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities. It also provides answers to such questions as where did cash come from, what was cash used for, and what was the change in cash balance during the reporting period. FINANCIAL ANALYSIS OF THE AUTHORITY Our analysis of the Authority begins on the second page of the financial statements. The balance sheet and the statement of revenue and expenses report the net position of the Authority and changes in them. You can think of the Authority s net position, the difference between assets and liabilities, as one way to measure financial health or financial position. Over time, increases or decreases in the Authority s net position are one indicator of whether its financial health is improving or deteriorating. However, you will need to consider other non-financial factors such as changes in economic conditions, population growth, and new or changed government legislation. 14 1

15 NET POSITION To begin our analysis, a summary of the Authority s balance sheet is presented in Table A-1: TABLE A-1 Condensed Statements of Net Position (Balance Sheet) (In millions of dollars) Dollar Change Annual Percent Change Current Assets $ $ $ (4.0) (2.9) % Property, Plant and Equipment, Net (2.2) (11.3) Other Assets (2.8) (12.6) Total Assets (9.0) (5.0) Current Liabilities Long-Term Debt (9.4) (100.0) Future Contract Income (2.8) (100.0) Landfill Closure and Post Closure Care (0.1) (20.0) Total Liabilities (11.3) (44.1) Total Net Position $ $ $ % As can be seen from the table above, net position increased $2.3 million to $157.6 million in 2013 up from $155.3 million in This was due to favorable results of operations and was earmarked for anticipated future projects of the Authority. 2 15

16 TABLE A-2 Condensed Statement of Revenue and Expenses (In millions of dollars) Dollar Change Annual Percent Change Waste Disposal Fees $ 21.4 $ 22.4 $ (1.0) (4.5) % Electric Sales (1.8) (9.8) Other Income (0.4) (8.2) Total Revenue (3.2) (7.0) Operating Expenses Depreciation and Amortization Interest Expense (0.7) (35.0) Loss on Impairment of Property, Plant, and Equipment (4.5) (100.0) Total Expenses (4.9) (10.9) Changes in Net Position $ 2.3 $ 0.6 $ % While the balance sheet shows changes in financial position, the statement of revenue and expenses provides answers as to the nature and source of these changes. As seen in Table A-2, waste disposal fees decreased by $1.0 million to $21.4 million in 2013, down from $22.4 million in Tonnage processed decreased from 441,344 tons in 2012 to 415,961 tons in 2013, mostly as a result of the turbine failure at the Resource Recovery Center. Decreased energy production at the Resource Recovery Center caused electric sales to decrease $1.8 million to $16.5 million in 2013 from $18.3 million in As referenced in the Financial Highlights, the majority of the decrease in revenues is the result of the turbine failure at the Resource Recovery Center. Operating expenses increased in 2013 primarily due to an increase in operation and maintenance costs. CAPITAL ASSETS At the end of 2013, the Authority had invested $143.4 million in a broad range of infrastructure including the Resource Recovery Center, Management Center, Yardwaste transfer site, Recyclable materials drop-off center, landfill liners and system improvements, truck storage building, vehicles and equipment. During the year 2013, the Authority made capital improvements totaling $3.3 million. More information on the Authority s capital assets is presented in Note 6 of the financial statements. 16 3

17 LONG-TERM DEBT At year-end, the Authority had $9.4 million in long- and short-term debt down from $18.1 million in 2012 for a decrease of $8.7 million or 48.1 percent, which was the amount of the 2013 principal payments on outstanding debt. More detailed information about the Authority s long-term liabilities is presented in Note 7 of the financial statements. No new long-term debt was incurred in the current year. In December 2009, Moody s Investor Service affirmed the A2 rating on the Authority s outstanding bonds. In December 2013, Standard & Poor s Rating Service affirmed the Authority s stand-alone rating of AA. One area that demonstrates the Authority s financial strength and future borrowing capacity is seen in its debt service coverage ratio, which is currently 0.9 and a rolling debt service coverage of TABLE A-3 Debt Coverage Ratio (In millions of dollars) Annual Percent Change Waste Disposal Fees $ 21.4 $ 22.4 (4.5) % Electric Sales (9.8) Total Operating Revenue (6.9) Total Operating Expenses Operating Surplus (40.3) Depreciation (5.5) (5.5) 0.0 Interest Expense (1.3) (2.0) (35.0) Loss on Impairment of Property, Plant, and Equipment 0.0 (4.5) (100.0) Other Income (Net) (8.2) Net Surplus $ 2.3 $ Cash Flow Available for Debt Service (1) $ 9.1 $ Annual Debt Service $ 9.7 $ Debt Service Coverage Ratio (2) (30.8) Rolling Coverage (3) (1.4) (1) Cash Flow Available for Debt Service = Current period surplus + Interest + Depreciation + Impairment Loss (2) Debt Service Coverage Ratio = Cash Flow Available for Debt Service / Annual Debt Service (3) Rolling Coverage = (Cash Flow Available for Debt Service + Cash on hand from prior year end) / Annual Debt Service 4 17

18 ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES The Authority and management considered many factors when setting the fiscal year 2014 budget and tip fees. The 2014 budget was prepared with sensitivity to the economy, and comparison with other resource recovery centers in the region. It recognizes the Authority s basic premise of developing the York County Resource Recovery Center to provide a solid waste management program that is safe, efficient and economical which is affirmed by the Solid Waste Management Plan. The budget is based on processing 410,000 tons as set forth in the Service Agreement with Covanta York Renewable Energy, LLC (Covanta). The 2014 budget established the 2014 York County tipping fee at $59 per ton. CONTACTING THE AUTHORITY S ASSISTANT EXECUTIVE DIRECTOR This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the Authority s finances and to demonstrate the Authority s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Authority s Assistant Executive Director, 2700 Blackbridge Road, York, PA 17406, (717) Edward N. Heindel Chairman David E. Vollero Executive Director Jerry C. Grim Assistant Executive Director 18 5

19 Independent Auditor s Report To the Board of Directors York County Solid Waste and Refuse Authority York, Pennsylvania Report on the Financial Statements We have audited the accompanying financial statements of York County Solid Waste and Refuse Authority (Authority) as of and for the years ended December 31, 2013 and 2012, and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. 6 19

20 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of York County Solid Waste and Refuse Authority as of December 31, 2013 and 2012, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 1 through 5 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements that collectively comprise York County Solid Waste and Refuse Authority s basic financial statements. The accompanying supplementary information shown on pages 29 and 30 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. March 24, 2014 York, Pennsylvania 7 20

21 York County Solid Waste and Refuse Authority Balance Sheet December 31, Assets Current Assets Cash $ 2,192,002 $ 2,181,727 Short-term investments 2,384,949 2,500,690 Indentured trust funds 118,803, ,640,552 Accounts receivable 8,050,997 4,372,637 Contract receivable 2,752,294 2,525,040 Accrued interest receivable 643, ,094 Prepaid expenses 317, ,967 Total Current Assets 135,144, ,101,707 Property, Plant, and Equipment, Net 17,272,165 19,489,944 Other Assets Contract receivable - 2,752,294 Indentured trust funds 8,935,792 9,034,625 Closure funds 7,005,408 7,017,559 Self-insurance trust fund 2,719,305 2,761,093 Landfill trust fund 792, ,621 Total Other Assets 19,453,156 22,377,192 Total Assets $ 171,869,684 $ 180,968,843 See accompanying notes. 21

22 December 31, Liabilities and Net Position Current Liabilities Current maturities of long-term debt $ 9,390,179 $ 8,750,000 Accounts payable 1,434,292 1,225,255 Accrued payroll and vacation 181, ,878 Payroll taxes withheld and accrued 5,400 9,498 Future contract income 2,752,294 2,525,040 Accrued interest payable 105, ,663 Total Current Liabilities 13,868,446 12,935,334 Long-Term Debt - 9,448,570 Future Contract Income - 2,752,294 Landfill Closure and Post Closure Care 393, ,029 Total Liabilities 14,261,947 25,666,227 Net Position Invested in capital assets, net of related debt 7,881,986 1,291,374 Restricted for landfill trust fund 792, ,621 Restricted for closure funds 7,005,408 7,017,559 Restricted for self-insurance trust fund 2,719,305 2,761,093 Restricted for capital activity and debt service 125,547, ,573,989 Restricted for operations and maintenance 2,191,860 2,101,188 Unrestricted 11,469,517 7,745,792 Total Net Position 157,607, ,302,616 Total Liabilities and Net Position $ 171,869,684 $ 180,968,

23 York County Solid Waste and Refuse Authority Statement of Revenue and Expenses Years Ended December 31, Operating Revenue Waste disposal fees $ 21,420, % $ 22,354, % Electric sales 16,516, ,332, Total Operating Revenue 37,936, ,687, Operating Expenses 33,306, ,070, Operating Income before Depreciation 4,629, ,616, Depreciation 5,503, ,506, Operating Income (Loss) (873,817) (2.31) 2,109, Other Income (Expenses) Other income 4,494, ,864, Interest expense (1,315,857) (3.47) (1,958,696) (4.82) Total Other Income, Net 3,178, ,906, Changes in Net Position before Special Item 2,305, ,015, Special Item Loss on impairment of property, plant, and equipment - - (4,464,293) (10.97) Changes in Net Position $ 2,305, % $ 551, % See accompanying notes. 9 23

24 York County Solid Waste and Refuse Authority Statement of Changes in Net Position Years Ended December 31, 2013 and 2012 Net Position at December 31, 2011 (as Previously Stated) $ 155,569,512 Restatement for adoption of GASB Statement No. 65 (refer to Note 11) (818,598) Net Position at December 31, 2011 (as Restated) 154,750,914 Changes in net position 551,702 Net Position at December 31, ,302,616 Changes in net position 2,305,121 Net Position at December 31, 2013 $ 157,607,737 See accompanying notes

25 York County Solid Waste and Refuse Authority Statement of Cash Flows Years Ended December 31, Cash Flows from Operating Activities Cash received from grants and customers $ 37,705,237 $ 44,686,081 Cash paid to suppliers, employees, and trust funds (33,646,211) (32,984,561) Net Cash Provided by Operating Activities 4,059,026 11,701,520 Cash Flows from Investing Activities Purchase of investments (40,347,816) (36,947,007) Proceeds from sale of investments 46,670,628 36,369,573 Investment income received 2,855,059 2,206,220 Net Cash Provided by Investing Activities 9,177,871 1,628,786 Cash Flows from Capital and Related Financing Activities Capital expenditures (3,018,904) (1,138,441) Proceeds from disposal of property, plant, and equipment 13,072 45,000 Principal repayments of long-term debt (8,750,000) (8,245,000) Interest paid (1,470,790) (2,132,796) Net Cash Used in Capital and Related Financing Activities (13,226,622) (11,471,237) Net Increase in Cash 10,275 1,859,069 Cash at Beginning of Year 2,181, ,658 Cash at End of Year $ 2,192,002 $ 2,181,727 See accompanying notes

26 York County Solid Waste and Refuse Authority Statement of Cash Flows (continued) Years Ended December 31, Cash Flows from Operating Activities Operating income (loss) $ (873,817) $ 2,109,968 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation 5,503,356 5,506,887 (Increase) decrease in assets Accounts receivable (3,678,360) 906,294 Contract receivable 2,525,040 2,316,550 Prepaid expenses (98,253) 11,940 Increase (decrease) in liabilities Accounts payable (57,636) 191,606 Accrued payroll and vacation (42,718) 25,330 Payroll taxes withheld and accrued (4,098) 853 Future contract income (2,525,040) (2,316,550) Landfill closure and post closure care (136,528) (143,882) Other receipts 3,447,080 3,092,524 Net Cash Provided by Operating Activities $ 4,059,026 $ 11,701,520 Supplementary Schedule of Noncash Investing and Financing Activities In 2013 The Authority amortized bond premium in the amount of $58,391 as a decrease in long-term debt and a decrease in interest expense. Accounts payable include $284,334 for capital expenditures. In 2012 The Authority amortized bond premium in the amount of $84,974 as a decrease in long-term debt and a decrease in interest expense. Accounts payable include $17,661 for capital expenditures. See accompanying notes

27 York County Solid Waste and Refuse Authority Notes to Financial Statements December 31, 2013 and 2012 Note 1 - Nature of Operations The York County Solid Waste and Refuse Authority (Authority) was created in 1971 under the Municipal Authorities Act and is responsible for facilitating the responsible management of York County s municipal solid waste. This mission is achieved through the use of an integrated system of waste management that incorporates waste reduction, reuse, recycling, educational outreach and waste-to-energy technology. This integrated system is implemented through the use of a county-wide 25-year waste management plan. The Authority facilities include the York County Resource Recovery Center (RRC), the Yard Waste Transfer Facility, a Public Recycling Drop-off Center, a Public Education Center, and the now closed York County Sanitary Landfill which hosts a community recreation complex and wildlife habitat on 200-plus acres of its 308 acre site. County-wide programs include efforts such as education and outreach programs conducted on and off-site, electronics recycling, household hazardous waste collection, and Christmas tree recycling. The Authority operates separately from the County of York as an independent, self-funded entity. The Authority s operations and programs are supported by its two revenue streams which include the tip fee (cost for disposal of waste) at the RRC and the sale of electricity (considered a source of tier two alternative energy in PA ) derived from processing the waste at the RRC. Electricity is sold to the local utility company. Note 2 - Summary of Significant Accounting Policies A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of Presentation The accounting policies of the Authority conform to accounting principles generally accepted in the United States of America as applicable to local governments. In addition to complying with all applicable Governmental Accounting Standards Board (GASB) pronouncements, the Authority s financial statements comply with the guidance provided by the Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions, Emerging Issue Task Force Opinions (EITF) and the Committee on Accounting Procedure issued on or before November 30, GASB pronouncements take precedence when there is a conflict or contradiction between pronouncements. The Authority has elected not to apply FASB pronouncements issued after November 30,

28 York County Solid Waste and Refuse Authority Notes to Financial Statements December 31, 2013 and 2012 Note 2 - Summary of Significant Accounting Policies (continued) Governmental Accounting Standards Board (GASB) Pronouncements In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. The objective of this statement is to reclassify certain items currently being reported as assets and liabilities as deferred outflows of resources and deferred inflows of resources. In addition, this statement recognizes certain items currently being reported as assets and liabilities as outflows of resources and inflows of resources. The Authority adopted this statement in its December 31, 2013 financial statement. Accounts Receivable Accounts receivable are stated at outstanding balances. The Authority considers accounts receivable to be fully collectible. If collection becomes doubtful, an allowance for doubtful accounts will be established, or the accounts will be charged to income when that determination is made by management. Unpaid balances remaining after the stated payment terms are considered past due. Recoveries of previously charged off accounts are recorded when received. Investments Investments are stated at fair value. Property, Plant, and Equipment Property, plant, and equipment are stated at cost and are depreciated on the straight-line method over the estimated average useful lives of the assets as follows: buildings and improvements, five to twenty-five years; heavy equipment, five years; miscellaneous equipment, five years; office furniture and equipment, five years; and landfill liners and system improvements, five to twenty-five years. Maintenance, repairs, and minor renewals which do not significantly improve or extend the lives of the respective assets are charged against operations when incurred. Additions, improvements, and major renewals are capitalized. Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. An asset is considered to be impaired when the undiscounted estimated net cash flows to be generated by the asset are less than the carrying amount. The impairment recognized is the amount by which the carrying amount exceeds the fair value of the impaired asset. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows and discount rates reflecting varying degrees of perceived risk. For the years ended December 31, 2013 and 2012, the Authority recognized an impairment loss of $-0- and $4,464,293, respectively (refer to Note 6)

29 York County Solid Waste and Refuse Authority Notes to Financial Statements December 31, 2013 and 2012 Note 2 - Summary of Significant Accounting Policies (continued) Premium on Bonds Payable Bonds issued during the year ended December 31, 1997, were sold at a premium. The premium is amortized as a reduction of interest expense over the life of the bonds. Note 3 - Tax-Exempt Status The Authority was created under the Municipal Authorities Act of 1935 and Under this Act, the Authority is excluded from taxes on exempt function income. Therefore, no provision is made for taxes on income. Note 4 - Deposits and Investments All deposits and investments are carried at fair value, which are separated and detailed in this note by financial statement line classification. The Authority currently has no formal investment policy; however, each fund holds specific requirements as detailed in each fund s respective section. Cash and Short-Term Investments As of December 31, 2013 and 2012, the carrying values of the Authority s cash deposits amounted to $2,192,002 and $2,181,727, respectively, and the bank balances amounted to $2,159,400 and $2,191,824, respectively. Of the bank balances, up to $250,000 of deposit accounts are covered by the Federal Deposit Insurance Corporation (FDIC) in the Authority s name as of December 31, 2013 and An unlimited number of noninterest-bearing transaction accounts were covered by the FDIC as of December 31, Bank balances are categorized as follows as of December 31: Collateralized with securities held by the pledging financial institution s trust department held in the Authority s name $ 1,909,400 $ 35,307 Amount insured by federal depository insurance, including fully insured, non-interest bearing accounts 250,000 2,156,517 $ 2,159,400 $ 2,191,824 Bank balances are collateralized under Pennsylvania Act 72. Pennsylvania Act 72 allows for bank-owned securities to be pledged on a pooled basis to collateralize public funds