Financial model assists in identifying preferred transition date

Post Date: June 5, 2020

Despite COVID-19, June 30 remains the deadline to submit council resolutions to AMO that self-identify a preferred recycling program transition time. To inform this decision, the CIF has been working with the Region of Peel, the City of Ottawa, and RSM Canada Consulting LP on a model that will assist municipalities, taking into consideration operational and financial impacts.

The purpose of this model is to aid municipalities in pinpointing and qualifying the most economical timeline to transition blue box systems to Individual Producer Responsibility (IPR). Although municipalities may request a specific transition date, there is no guarantee that the date identified will be selected or supported through the Provincial decision process. Even if your municipality has already submitted a preferred date to AMO, the model can help identify the implications of transitioning, when dates are assigned. 

Download the Model

Once the initial inputs to the model are complete, staff can continue to finesse and update with new information thereby providing ongoing financial insights into the overall impact of transitioning at different times for planning and scheming purposes.

Version 2.0

Updated from a previous version (see City of Barrie CIF Project #1041), the updated model incorporates unique collection and services inputs that improve its utility for other Ontario municipalities. Upgrades have included Material Recycling Facility ownership, multiple depots, multi-collection contract scenarios (including municipal forces), and the option to transition either/or single family and multi-residential collection services.

Gathering the data for input

Good news! Much of the data required is currently at hand! Before putting away all the binders, stacked papers and spreadsheets used for the 2019 Datacall, take this opportunity to pull together the data essential to run this model. The model allows you to:

  • review waste programs, projecting and comparing financial calculations moving toward transition
  • assist in planning and understanding the full cost associated with IPR (pre and post transition)
  • identify risks and rewards to IPR timing as well as leverage support to consider the eligibility of sources of materials and operations

Understand backwards, looking forwards

The model generates total costs for a window from 2020 to 2030, encompassing pre- and post-transition timing, assuming 50% funding (percentage can change if needed) from 2023 until conversion. The model compares the baseline (current operations) with two scenarios for each possible year of transition (2023, 2024, or 2025):

Scenario 1: Opt-Out transitioned community

Municipality does not provide blue box services on behalf of producers and considers early termination of contracts if/as applicable.

Scenario 2: Opt-In transitioned community

Municipality opts to provide collection services, while meeting performance standards and contamination thresholds.

Hybrid options exist in the model to consider collection from either single-family households and/or multi-residential units. Below is a screenshot showing the present value of 10 year forecast. It shows, for this particular municipality, that opting in, in year 2023, will have the lowest forecasted cost over 10 years.

Checklist of data required

In order to fill in the model, the following information needs to be gathered:

  • Collection and processing contracts (e.g., costs and payment structure, details regarding contract termination, costs to opt out early, extensions, and future price assumptions)
  • Historical and current RPRA datacall information, including allocation methodology
  • Waste audit data for single-family and multi-residential households
  • Internal blue box program costs and waste collection data (e.g., administration, P&E, acceptable materials, public space, etc.)
  • Current and historical demographic data (e.g., population, growth rate, dwelling counts, number of multi-residential units)
  • Municipal landfill costs

  • Capital inventory and costs (primarily carts and bins for collection)

Our team was really pleased with the comprehensive modelling tool. We are eager to share information about it with others in our department for further tweaking.

Andrea DinnerProject Manager - City of Ottawa

This model will help Peel develop and assess the outcomes of various blue box program transition scenarios. The analysis is important for Peel in order to identify and work towards the best transition scenario which will inform the decision-making process.

Erwin PascualManager of Waste Planning - Region of Peel

Model, training session, and more information

If you have any questions about using the model, contact CIF staff. Also, let us know if you are interested in attending a training session on the model (date to be determined). For more information contact CIF staff or Rhett Nussey at RSM Canada.