LANDFILL CLOSURE AND POST-CLOSURE LIABILITY This liability represents the estimated total future cost to close and monitor after closing all of the existing landfill sites both closed and operating. This cost is discounted to a present value. The total estimated discounted future cash flows of these costs for your municipality at December 31, 2004 is $15,967,458. As this cost is recognized on a capacity used basis the liability reported in your December 31, 2004 financial statements based on the portion of the total capacity used to date is $9,771,386 of the total amount. If the assumptions used to calculate the discounted future cash flows, including estimated cost, inflation and interest levels, remain unchanged through 2005 and you use 10% of the total capacity that was available through all the existing sites, this liability at December 31, 2005 would increase by $1,596,746 (10% of $15,967,458) to $11,368,132 with an Environmental services expense of $1,596,746 recorded in the 2005 Statement of Financial Activities. In my simplistic example used in our meeting of September 6, if the total cost is $10,000,000 and we have used 50% of the capacity available the liability would be $5,000,000. In the following year, if we used a further 10% of the capacity available the liability would increase to $6,000,000 with a $1,000,000 expense. RECOMMENDATION Establish a specific waste management landfill closure and post-closure liability reserve to accumulate resources to finance these future costs. A portion of the current waste management reserve of $7,657,518 may be available for this purpose. Council would simply pass a resolution to transfer the amount available from the existing reserve to the newly created reserve. We would also recommend an annual budget line for a contribution to this reserve equal to the estimated increase in this liability for the current year.
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