HomeMy WebLinkAbout10 - County Landfill Fee AgreementCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 10
May 11, 2004
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: General Services Department
David E. Niederhaus, Director, 949- 644 -3055
dniederhaus @city.newport- beach.ca.us
SUBJECT. County Landfill Fee Agreement
ISSUE:
The existing Waste Disposal Agreement between the City and the County, which includes
a stable landfill disposal fee, provides for an extension at the set rate if renewed by June
30, 2004. Does the City want to accept a County proposal to renew the Agreement for an
additional three years at the same landfill disposal rate?
RECOMMENDATIONS:
1. Accept the County offer to extend the Waste Disposal Agreement through June 30,
2010.
2. Authorize the City Manager to execute Amendment No. 1 to the Waste Disposal
Agreement.
DISCUSSION:
Background
In 1996, due to anticipation of rising County landfill disposal fees, a number of Orange
County cities explored options for opting out of the County's solid waste disposal system.
City staff were very active in this research to locate a less expensive landfill rate.
As a result of this threat, the County Integrated Waste Management Department staff
undertook an efficiency review of landfill operations and a landfill disposal rate study. The
result was a proposal that in return for all cities and waste haulers committing their
collected solid waste stream to the County landfills, the County would enter into a
County Landfill Agreement
May 11, 2004
Page 2
renewable 10 year agreement setting a reduced rate for landfill disposal. The agreement
also provided for an additional 10 year extension.
The City Manager's Association of Orange County Solid Waste Working Group (SWWG)
evaluated the County proposal in 1997 and after a further study of all financial
information, endorsed the County offer.
A Waste Disposal Agreement was forwarded to the City and approved by the Council.
On April 8, 1997, City staff executed the Waste Disposal Agreement with the County.
Eventually, the rest of the cities and solid waste haulers in the County executed similar
agreements.
The City non - exclusive solid waste franchisees were also individually notified by the City
in 1997 that all of their post recycled solid waste collection materials must be deposited in
a County landfill, as a condition of the franchise agreement.
The City Manager, as a current member of SWWG, was recently approached by County
staff regarding a modified extension of the 1997 agreement. The SWWG provided
tentative approval of the draft extension proposal, which was followed by a County letter
to all cities and solid waste haulers (Attachment A).
ANALYSIS:
The current Waste Disposal Agreement (WDA), which would expire June 30, 2007, has a
10 -year renewal provision. However, due to the uncertainty of the amount of solid waste
generated or the level of recycling in the County, it is difficult to project landfill tonnage
and revenue estimates for the three County landfills. In addition, two of the three landfills
are slated for expansion in the next five years, which entails expensive environmental
reviews and engineering reports. Until those studies are completed sometime prior to
2007, the County does not want to commit to extending the current landfill disposal fee of
$22 per ton for an additional 10 years. They are, however, willing to renew the
agreement with the current fee for three additional years (2007 to 2010).
A condition of County approval is that all cities and solid waste haulers must approve of
the three year extension. It is anticipated that this will occur.
As noted by a review of Attachment A, the County identifies six key provisions that are
included in the WDA. All of the provisions are acceptable.
The Assistant City Attorney has reviewed the County offer and the proposed amendments
to the Waste Disposal Agreement (Attachment B).
ENVIRONMENTAL REVIEW:
N /A.
County Landfill Agreement
May 11, 2004
Page 3
FUNDING AVAILABILITY:
Adequate funding is projected to continue to pay the same level of landfill disposal fees.
If the Council were to reject the County offer, it could mean that all cities, including
Newport Beach, would pay higher landfill disposal fees or locate a landfill disposal
alternative.
ALTERNATIVES:
The Council could choose to:
- Disregard the County offer to extend landfill disposal fee rates.
- Accept the County offer to extend landfill disposal fee rates.
and
- Direct staff to execute Amendment No. 1 to the Waste Disposal Agreement.
Prepared by:
Submitted by:
David E. Niederhaus David E. Niederhaus
General Services Director General Services Director
Attachments: (A) Orange County (IWMD) letter of April 21, 2004
(B) Amendment No. 1 of Waste Disposal Agreement
COUNTY OF ORANGE
v ®m
INTEGRATED WASTE MANAGEMENT DEPARTMENT
�IIFOR�
April 21, 2004
To: Waste Disposal Agreement Contracted Entities
• Orange County Cities
• County Sanitary Districts
• Joint Powers Authority
• Commercial Solid Waste Haulers
Subject: Renewal of Waste Disposal Agreements (WDA's)
Dear WDA Contracted Entity:
Janice V. Goss, Director
320 N. Flower Street, Suite 400
Santa Ana, CA 92703
www.oclandfills.com
Telephone: (714) 8344M
Fax: (714) 834 -4183
As you know, the County of Orange currently has WDA's with contract entities that include
Orange County cities, sanitary districts, a joint powers authority, and commercial solid waste
haulers. Under these Agreements, the contracted entities guarantee that all solid waste generated
in their jurisdictions will be delivered to the County's landfill system. These Agreements
currently guarantee a contract rate of $22.00 per ton for a ten -year period through June 30, 2007.
In accordance with Article VI, Section 6.1 (B), these Agreements are subject to a renewal option
that specifies they may be renewed by mutual agreement of the parties, on or before June 30,
2004, for an additional term of ten years on the same terms and conditions as are applicable
during the Initial Term of the Agreements. The contracted entities shall give the County written
notice of their irrevocable election to renew their Agreements on or before June 30, 2004. If the
parties do not renew the Agreements by June 30, 2004, the Agreements shall expire on June 30,
2007.
In accordance with Article VI, Section 6.1 (C), in connection with the parties right to renew the
Agreements pursuant to Section 6.1 (B), the parties shall, on or before June 30, 2004, negotiate
an applicable change in the contract rate for such renewal term. In determining a new contract
rate, the parties may take into consideration the following parameters, including but not limited
to:
• Actual cost of operations
• ,Population growth
• Increase or decrease in available, tonnage
• Economic and disposal market conditions in the Southern California region
• Changes in transportation and technology
• Closure and expansion of landfills
• Capacity of the Disposal System
• Available reserves
WDA Renewal Ltr
Page I of 3
Attachment A
Please sign and submit the attached four (4) original amendments to Brian A Uyeda Contract
Administrator, no later than Wednesday May 26 2004. If you have any questions concerning
the amendment please contact Brian at (714) 834 -4105 or brian.uveda(c)iwmd.ocgov.com.
Sincerely,
Janice V. Goss, Director
JVG:bu
Attachments
cc: Richard Acker, w/o attachments
Espi Garcia, w/o attachments
Ronald P. Pierre, w/o attachments
Brian Uyeda, w /attachments
City Recycling Coordinators, w /one copy of attachments
W DA Renewal Ltr
Page 3 of 3
AMENDMENT NO. 1
TO WASTE DISPOSAL AGREEMENT
WITH CITY OF
NEWPORT BEACH
This Amendment No. 1 is made and entered into on this _ day of _ 2004, by and
between the COUNTY OF ORANGE, a political subdivision of the State of California
(hereinafter "COUNTY ") and CITY designated above (hereinafter "CITY "). The CITY is a
general law or charter city and political subdivision of the State of California.
RECITALS
WHEREAS, COUNTY and CITY entered into a Waste Disposal Agreement (herein after
"Agreement ") on April 8, 1997, guaranteeing that CITY shall deliver or cause to be delivered to
the Orange County Landfill Disposal System, all of the municipal solid waste generated within
its jurisdiction for ten years; and
WHEREAS, COUNTY and CITY have agreed to a three -year extension of the
Agreement, amending the provisions for the Initial Term, Option to Renew, Calculation of
Average Annual Inflation, and Cumulative Tonnage Targets for County and Importation
Acceptable Waste.
NOW, THEREFORE, the parties hereto agree as follows:
I. Section 6.1. subparagraphs (A), (B), and (C) are deleted and replaced with the
following:
(A)Initial Term. This Agreement shall become effective, shall be in full force and
effect and shall be legally binding upon the CITY and the COUNTY from the
Contract Date and shall continue in full force and effect until June 30, 2010, unless
earlier terminated in accordance with its terms, in which event the Term shall be
deemed to have expired as of the date of such termination.
(B) Option to Renew. This Agreement shall be subject to renewal by mutual
agreement of the parties, on or before June 30, 2008, for an additional term of ten
years (the "Renewal Term ") on the same terms and conditions as are applicable
during the Initial Term hereof. The City shall give the County written notice of its
irrevocable election to renew this Agreement on or before June 30, 2008. If the
parties do not renew this Agreement by June 30, 2008, the Agreement shall expire on
June 30, 2010.
(C) Contract Rate During Renewal Term. In connection with the parties' right to
renew this Agreement for an additional ten -year term pursuant to Section 6.1(B), the
parties shall, on or before June 30, 2008, negotiate an applicable change to the
WDA Amend I Newport Beach
Page 1 of 6
Attachment B
Contract Rate for such renewal term. In determining any revisions to the Contract
Rate to be applicable during any renewal period, in addition to the circumstances
described in Section 4.2(A), the parties may take into consideration the following
parameters, including but not limited to:
(i) actual cost of operations;
(ii) population growth;
(iii) increase or decrease in available tonnage;
(iv) economic and disposal market conditions in the Southern
California region;
(v) changes in transportation and technology;
(vi) closure and expansion of nearby landfills;
(vii) capacity of the Disposal System; and
(viii) available reserves.
2. Section 4.1 (F) is deleted and replaced with the following:
(F) Calculation of Average Annual Inflation. For purposes of Section 4.2(A)(ii), the
inflation shall be calculated as the change in the Producer Price Index, Finished
Goods ( "PPI "), reported by the Bureau of Labor Statistics of the United States
Department of Labor between July of the year of calculation and July 1, 1997.
Average annual inflation shall be deemed to exceed 4% if the ratio between the PPI
Index for July for the year of calculation (calculated in accordance with the formula
below) and July 1997 exceeds the ratio corresponding to such year of calculation on
the table below. The ratio shall be calculated in accordance with the following
formula:
(July PPI Index of Calculation Year / PPI Index for July 1997)
Year of Calculation
Ratio
July 1, 1997
1.0000
July 1, 1998
1.0400
July 1, 1999
1.0816
July 1, 2000
1.1248
July 1, 2001
1.1698
July 1, 2002
1.2166
July 1, 2003
1.2653
July 1, 2004
1.3159
July 1, 2005
1.3685
July 1, 2006
1.4233
July 1, 2007
1.4802
July 1, 2008
1.5394
July 1, 2009
1.6010
July 1, 2010
1.6650
WDA Amend 1 Newport Beach
Page 2 of 6
In the event the PPI is no longer published during the term of this Agreement, such other
index identified by the Bureau of Labor Statistics or otherwise generally accepted as a
replacement for PPI shall be used for purposes of this Service Agreement.
APPENDIX 2 is deleted and replaced with the following:
This space intentionally left blank.
WDA Amend 1 Newport Beach
Page 3 of 6
APPENDIX 2
Cumulative In -County Tonnage Target to be Used
for Purposes of Section 4.2 (B)
Fiscal Year
Tonnage
Cumulative Tonnage
1997- 1998
2,277
2,277
1998- 1999
2,134
4,411
1999-2000
2,007
6,418
2000-2001
2,025
8,443
2001 -2002
2,042
10,485
2002-2003
2,060
12,545
2003-2004
2,079
14,624
2004-2005
2,096
16,720
2005-2006
2,111
18,831
2006-2007
2,128
20,959
2007-2008 *
4,033
24,992
2008 - 2009 *
4,437
29,429
2009 - 2010 *
4,556
33,985
Note: Tons are expressed in thousands.
* Fiscal years reflect the minimum tonnage necessary to support the Contract Rate.
Annual Importation Tonnage Target to be Used
for Purposes of Section 4.2 (C)
Year
Fiscal Year
Import Tonnage
1
1997- 1998
1,428
2
1998- 1999
1,428
3
1999-2000
1,428
4
2000-2001
1,428
5
2001 -2002
1,428
6
2002-2003
1,428
7
2003-2004
1,428
8
2004-2005
1,428
9
2005-2006
1,428
10
2006-2007
1,428
11
2007 - 2008 *
1,166
12
2008 - 2009 *
1,166
13
2009 - 2010 *
1,166
Note: Tons are expressed in thousands.
Fiscal years reflect the minimum tonnage necessary to support the Contract Rate.
WDA Amend 1 Newport Beach
Page 4 of 6
4. All other terms and conditions of the Agreement will remain unchanged and CITY
agrees to comply with all terms and conditions of the Agreement.
This space intentionally left blank.
wDA Amend 1 Newport Beach
Page 5 of 6
IN WITNESS WHEREOF, the parties have executed this First Amendment to Agreement the
day and year first above written.
"COUNTY"
COUNTY OF ORANGE
Date: By:
Janice V. Goss, Director
Integrated Waste Management Department
APPROVED AS TO FORM:
OFFICE OF THE COUNTY COUNSEL
ORANGE COUNTY, CALIFORNIA
Date: By:
Date: By:
Date: By:
Date: By:
WDA Amend 1 Newport Beach
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