City officials brainstorm ways to offset losses once WM host fees end

Currently, Waste Management pays approximately $4 million in annual host fees, which is a source of non-property tax revenue that the City of Rochester receives for hosting the company's landfill, now expected to close in 2034. (Courtesy photo)

ROCHESTER - At a finance committee meeting earlier this month Deputy City Manager and Finance Director Katie Ambrose delivered a presentation regarding the eventual closure of the Waste Management landfill and the impact it will have on the tax base following the expiration of community host fees.

Although no decisions were made during the meeting, the purpose of the presentation was to begin strategizing about what to do when the landfill closes and what it will mean for taxpayers.

Currently, Waste Management pays approximately $4 million in annual host fees, which is a source of non-property tax revenue that the City of Rochester receives for hosting the company's landfill, now expected to close in 2034. According to Ambrose, the fees are used to offset property taxes.

Deputy Mayor Peter Lachapelle, who works for Waste Management, stated that the possibility of Waste Management extending its time in the city is unlikely. Instead, he believes the property will be converted into a transfer station. Lachapelle cited previous lawsuits that were filed to block the extension of the property as an indication that there are unlikely to be any changes to future plans.

The landfill closure will increase costs for the city, which currently pays $662,832 for waste collection without disposal fees. Following the closure, the city will need to pay for both disposal and recycling fees, in addition to increased collection fees, with the total increase in cost expected to at least double. Although Waste Management will still own the land, the tax assessment is projected to decrease by $40 million, resulting in a lower contribution to the tax base.

According to Ambrose, the closure of the landfill will have a significant impact on the city's finances, leading to an increase in the cost of collecting and disposing of waste and the loss of host fees paid to Rochester by Waste Management per the Host Community Agreement.

Ambrose presented two potential methods to offset the financial losses from the departure of Waste Management. One method was financial planning using existing tax increment financing (TIF) districts, which would allow the city to retain property tax revenues generated from development within the TIFs. Additionally, the city could establish a dedicated savings account funded by increased host collection fees, to offset the costs of waste disposal once Waste Management departs. This account would receive interest and could potentially accumulate $25-$30 million over a 10-year period. The city would gradually reduce the amount of host fees used to offset property tax and other revenues while increasing the amount committed to the dedicated fund.

"This is still conceptual and subject to further development," said Ambrose. "Once implemented, it would be analyzed on a regular basis and adapted as necessary."