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Home My WebLink About10 O C WASTE DISP AG 06-07-04 AGENDA REPORT Agenda Item 10 Reviewed: . . ",L City Manager flIY Finance Director ~ MEETING DATE: JUNE 7, 2004 FROM: WilLIAM A HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT TO: SUBJECT: APPROVAL OF AMENDMENT NO.1 TO THE ORANGE COUNTY WASTE DISPOSAL AGREEMENT AND AUTHORIZE THE MAYOR AND CITY CLERK TO EXECUTE THE AMENDMENT SUMMARY The City is a party to the Orange County Waste Disposal Agreement. The Agreement guarantees a solid waste disposal rate of $22 per ton and will expire on June 30, 2007. The proposed amendment extends the expiration date by three years to June 30, 2010 while maintaining the current disposal rates. Staff is recommending approval of the amendment subject to City Attorney approval. RECOMMENDATION Staff recommends that the City Council approve amendment No.1 to the Orange County Waste Disposal Agreement and authorize the Mayor and City Clerk to execute the amendment, subject to City Attorney approval. FISCAL IMPACT There is no fiscal impact to the City. Disposal costs for residential and commercial solid waste services will remain stable for the term of the agreement. BACKGROUND In March of 1997, the City Council approved the City's participation in the Orange County Waste Disposal Agreement. Parties to this agreement were assured long term access to Orange County landfills at a discounted disposal rate of $22 per ton versus $27 per ton for other customers. The agreement provided a ten year term and required the parties to state their intent to renew their participation by June 30, 2004. The Orange County Integrated Waste Management Department (IWMD) has been investigating various landfill lifespan and expansion issues and will require additional time to complete these studies. The IWMD wishes to defer consideration of any revisions to the Waste Disposal Agreement until these issues are resolved and is proposing an amendment to extend the Agreement three years and adjust other related agreement provisions. Page 2 Specifically, the proposed amendment will accomplish the following: 1) Amend the initial term of the agreement by three years from June 30, 2007 to June 30, 2010. 2) Maintain the current contract rate of $22 per ton through June 30, 2010. 3) Amend the "Option to Renew" provision in Section 6.1 to state that the Agreement shall be subject to renewal by the mutual agreement of the parties on or before June 30, 2008 4) Amend the agreement to require the negotiation of any change in the contract disposal rate prior June 30, 2008. 5) Amend the annual inflation chart in Section 4.1 (F) by extending it three years. 6) Amend the In County and Importation Tonnage target figures in Appendix 2 by extending the charts by three years to maintain the $22 per ton disposal rate. The proposed amendment has been reviewed and approved by the Orange County City Managers Solid Waste Working Group. Staff recommends that the City Council approve of the amendment and authorize the Mayor and City Clerk to execute the amendment, subject to City Attorney approval. ~~ Tim Serlet Public Works Director Attachment: IWMD Letter and amendment COUNTY OF ORANGE ¡.aiel! V. Goss, Director 320 N. F'ow", Street. Suite 400 Santa Ana, CA 92703 INTEGRATED WASTE MANAGEMENT DEPARTMENT www.ocla"dfill'.com Tolephone, (714) 834-4000 Fa" (714)834-4183 April 21,2004 To: Waste Disposal Agreement Contracted Entities Orange County Cities County Sanitary Districts . Joint Powers Authority . Commercial Solid Waste Haulers 0 L'[(( ¡(,,'" .ìì.':~III~ì ,cAPR ;, CZO:. 'J; TUSTlt, PUBl'C WC)RKS D~PT. Subject: Renewal of Waste Disposal Agreements (WDA's) Dear WDA Contracted Entity: 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 of3 The Integrated Waste Management Department (IWMD) is in the process of considering extending the lifespan of the Frank R. Bowerman (FRB) and the Olinda Alpha (Olinda) Landfills. The evaluation process will require substantial effort that must be completed before IWMD can begin negotiations with the contracted entities regarding a new contract rate and a long-term commitment extension for the Agreements. The evaluation process will include, but may not be limited to, the following: . Addressing Environmental Impact Report and California Environmental Quality Act (CEQA), remediation, and mitigation issues. . Negotiating Memorandums of Understanding with the affected cities. . Reviewing the IWMD's Regional Landfill Options for Orange County (RELOOC) plan to determine what the landfill system will be after 2013 (the targeted closure date for Olinda). . Conducting a cash flow analysis to determine an appropriate contract rate and contract extension timeline. In recognition of the requirements necessary to complete the process for evaluating the possible expansions ofFRB and Olinda, and address the renewal of the WDA's, the IWMD proposes that the WDA's be amended to include the following provisions: 1. Amend the "Initial Term" of the Agreement by increasing it three (3) years from June 30, 2007 to June 30, 2010. 2. Maintain the current contract rate of$22.00 per ton through June 30, 2010. 3. Amend the "Option to Renew" provision (Section 6.1., subparagraph B) to state that the Agreement shall be subject to renewal (the "Renewal Term") by mutual agreement of the parties on or before June 30, 2008, for an additional term of two years. The City shall give the County written notice of its irrevocable election to renew the Agreement on or before June 30, 2008. If the parties do not renew the Agreement by June 30, 2008, the Agreement shall expire on June 30, 2010. 4. Amend the "Contract Rate During the Renewal Term" to include that the parties shall, on or before June 30, 2008, negotiate an applicable change to the Contract Rate for such renewal term. 5. Amend the "Calculation of Average Annual Inflation" chart in Section 4.1 (F) of the Agreement by extending the chart three years. 6. Amend the In-County and Importation Tonnage Targets in Appendix 2 by extending the charts three years. The figures shown for the three additional years reflect the minimum tonnage amounts necessary to maintain the $22.00 per ton Contract Rate. The proposed amendment to the WDA has been reviewed and approved by the City Managers' Solid Waste Working Group (SWWG) and is enclosed for your review and consideration. We believe the amendment provides the contracted entities with the best possible strategy aimed at addressing the solid waste needs of Orange County and still continuing to maintain one of the lowest tipping fees in Southern California through at least 2010. WDA Renewal Ltr Page20f3 Please sign and submit the attached four (4) original amendments to Brian A. Uveda. Contract Administrator. no later than Wednesdav. Mav 26. 2004. If you have any questions concerning the amendment please contact Brian at (714) 834-4105 or brian.uveda(@jwmd.ocgov.com. Sincerely, ~)V~ 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 WDA Renewal Ltr Page 3 of3 AMENDMENT NO.1 TO WASTE DISPOSAL AGREEMENT WITH CITY OF TUSTIN 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: 1. 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 1 Tustin Page 1 of6 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) (ii) (iii) (iv) actual cost of operations; population growth; increase or decrease in available tonnage; economic and disposal market conditions in 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. the Southern 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 July 1,1997 July 1, 1998 July 1,1999 July 1, 2000 July 1, 2001 July 1, 2002 July 1, 2003 July 1, 2004 July 1, 2005 July 1, 2006 July 1, 2007 July 1, 2008 July 1, 2009 July 1, 2010 Ratio 1.0000 1.0400 1.0816 1.1248 1.1698 1.2166 1.2653 1.3159 1.3685 1.4233 1.4802 1.5394 1.6010 1.6650 WDA Amend 1 Tu8tin 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. 3. APPENDIX 2 is deleted and replaced with the following: This space intentionally left blank. WDA Amend I Tustin Page 3 of 6 APPENDIX 2 Cumulative In-County Tonnage Target to be Used for Purposes of Section 4.2 (B) 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) ....". >¥iear . '.."..'.' > ... .>.... H..... H>". 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 Tustin 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 Tustin 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 Tustin Page 6 of 6