Audit: Ava Landfill Financial Estimates Reasonable, Projected Annual Cost Savings of $4.2 Million

The Oneida-Herkimer Solid Waste Management Authority (OHSWA) cost estimates for the proposed regional landfill in Ava are reasonable and objective, according to an audit released today by New York State Comptroller Alan G. Hevesi. The report notes that the potential cost savings from the $29.3 million project are $4.2 million per year compared to the cost for the current practice of exporting waste to another county.

The audit, conducted at the request of State and local officials, interest groups and residents, examined the financial aspects of the landfill project, but did not look at the social, environmental or quality of life issues related to the proposed landfill.

Currently, OHSWA exports waste to landfills near Rochester and pays fixed per-ton service fees for waste transportation and disposal. In September 1998, OHSWA selected a site in the Oneida County Town of Ava to establish a regional landfill. OHSWA and its consultants developed cost estimates for the construction and operation of the landfill, and later engaged another firm which verified that these cost estimates were reasonable and determined that a regional landfill was a more economically favorable option than exporting waste. After getting required approval from the State Department of Environmental Conservation, the board approved landfill development in May 2004 and construction began later that year.

Auditors from the Comptroller’s Office reviewed the cost estimates provided by OHSWA consultants, including the methodology and assumptions used to develop these cost estimates. Auditors determined that the cost estimates were well documented, objective and reasonable.

Auditors estimated disposal costs at $32.09 per ton compared to OHSWA’s projected range of costs from $30.60 to $34.62, projections that were made in April 2004. The auditors’ estimate is based on costs that had been originally omitted and other new information made available after April 2004. At $32.09 per ton, disposal costs are 35 percent less than the $49 per ton that OHSWA would otherwise pay in 2007 for waste exportation.

Auditors projected a $4.2 million potential cost savings annually from the landfill based on a volume of 250,000 tons. However, auditors noted that if the quantity of waste is greater, than cost savings would increase.

Although auditors determined that methods used to calculate capital costs were sound, auditors found that officials underestimated capital project costs by about $1 million, or four percent.

Auditors also identified other potential costs and revenue sources that were not included in OHSWA’s estimates but could impact the economic assessment of the landfill if they should occur. Those issues include a by-pass road, school district PILOT agreement, compensation agreement for hosting the landfill, a property value protection program and landfill gas power generation.

Auditors recommended that OHSWA revise its cost estimates based on the updated information in the audit, as well as routinely update these estimates as conditions change or more information becomes available. In a written response to the audit, OHSWA said it planned to implement the auditors’ recommendations, clarified some of the cost estimates and provided an update on potential costs and revenue sources. The complete response is included in the audit.

OHSWA has provided waste management services to the counties since 1988. Oneida and Herkimer County laws require that all waste generated in the counties go to OHSWA. OHSWA operates a recycling center, two major waste transfer stations, and five smaller waste processing facilities as well as manages trash collection for the City of Utica. In 2004, OHSWA reported $26 million in revenue and a net income of $2.4 million after paying $21.4 million in operating expenses and $2.1 million in debt service.