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HomeMy WebLinkAbout25B - AGMT - WASTE DISPOSALREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE; MAY 19, 2016 TITLE; RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: 99 7-m W- A ❑ As Recommended ❑ As Amended ❑ Ordinance on 1°t Reading ❑ Ordinance on 2 n Reading ❑ implementing Resolution ❑ Set Public Hearing For! CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute an amendment to the Waste Disposal Agreement with the County of Orange, subject to nonsubstantive changes approved by the City Manager and City Attorney, to extend the terms of the Waste Disposal Agreement through June 30, 2025, to allow for the continued Importation of waste at the County's three landfills, and secure a portion of future net importation revenues to support solid waste and recycling program implementation. The disposal of solid waste at the Orange County landfills is governed by a 2009 Waste Disposal Agreement (WDA). in this agreement, Orange County cities agreed to deposit their solid waste at the three County landfill facilities in return for low, stable disposal rates. The agreement also set parameters for the importation of waste from outside the County into these landfills. The term of the current WDA began on July 1, 2010, and runs through June 30, 2020, with importation of waste from outside the County set to expire on June 30, 2016, The WDA is a fine example of the County and cities working in collaboration and strategically leveraging a countywide asset. Solid waste revenues are utilized by the County to maintain the landfill system, preserve funds for landfill closure costs, address post - closure maintenance, and mitigate long -term risk and environmental liabilities. The cities in the County benefit from additional services provided by the County, including permanent household hazardous waste collection facilities, green waste acceptance at no charge to cities to assist with compliance with state recycling mandates, and support of city programs to meet state diversion requirements. With the success of waste diversion and recycling in recent years combined with slow recovery from the Great Recession, in- County waste generation has dramatically decreased which, in turn, has created a reduction in revenues. A committee of City Managers representing Orange County cities participated with the County in preparing a framework to address the reduction In revenues and to ensure rate stabilization for local residents and businesses, The proposed Amendment to the WDA offsets revenue reductions by extending importation past the June 30, 2016, expiration date and establishing a fair -share allocation of net importation revenues to cities through June 30, 2025. A review of County resources concluded that the amount of Imported waste combined with in- County waste will remain below total disposal tonnage 2513-1 Amendment to the Waste Disposal Agreement With the County of Orange May 19, 2015 Page 2 projections contemplated in the current WDA. The proposed extension of the WDA will provide additional stability to the system, in light of more stringent legislative and regulatory requirements and recycling targets. It is recommended that the City Council approve the Amendment to the WDA to provide stable rates for residents and businesses, preserve continued service levels, ensure long -term capacity, maintain long- term partnerships between the City and County, and share net importation revenues with cities. Upon approvals by the Orange County cities, the proposed Amendment will be considered by the Orange County Board of Supervisors at their earliest available meeting. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #5 Community Health, Livability, Engagement & Sustainability, Objective #2 (expand opportunities for conservation and environmental sustainability). ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT The City's allocation of net importation revenues is scheduled to be received and budgeted in the Public Works Agency Refuse Collection Enterprise Budget (06917002 - 57010) as follows: Allocation (fiscal year) Received and Budgeted (fiscal year) Estimated Amount FY 2015 -16 September 30, 2016 (FY 2016 -17). $572,184 FY 2016 -17 September 30, 2017 (FY 2017 -18). $689,322 FY 2017 -18 September 30, 2018 (FY 2018 -19). $961,057 FY 2018 -19 September 30, 2019 (FY 2019 -20). $962,169 Executive Director Public Works Agency FM /CK Exhibits: 1. Amendment APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez 4 Executive Director Finance & Management Services Agency 25B -2 AMENDMENT TO WASTE DISPOSAL AGREEMENT Between THE COUNTY OF ORANGE, CALIFORNIA and the CITY OF CITY OF SANTA ANA County Amendment Authorization Date: _, 2015 County Notice Address; Director OC, Waste and Recycling 300 N. Flower, Suite 400 Santa Ana, CA 92703 With courtesy copies: City Attorney City of Santa Ana 20 Civic Center Plaza (M -29) P.O. Box 1988 Santa Ana, CA 92702 FAX 714 -647 -6515 20B Amendment to Wasto Disposal Agreemom ,2015 City Amendment Authorization Date: May 19, 2015 City Notice Address Cleric of the City Council City of Santa Ana 20 Civic Center Plaza (M -30) P.O. Box 1988 Santa Ana, CA 92702 -1988 FAX 714- 647 -6956 City of Santa Ana Public Works Agency 20 Civic Center Plaza (M -21) P.O. Box 1988 Santa Ana, CA 92702 FAX 714 - 647.5622 Exhibit 25B -3 AMENDMENT TO WASTE :DISPOSAL AGREEMENT THIS AMENDMENT TO WASTE DISPOSAL AGREEMENT (the "Amendment') is made and dated as of the date indicated on the cover page hereof between the County of Orange, a political subdivision of the State of California (the "County "), and the City designated on the cover page of this Amendment, a general law or charter city and political subdivision of the State of California (the i<Clty„). RECITALS The County owns, manages and operates a sanitary landfill system for the disposal of municipal solid waste generated by the cities and the unincorporated area within the County (the "Disposal System "). The Disposal System includes three active landfills and four regional household hazardous waste collection centers. The Disposal System is used for the disposal of municipal solid waste which is not reused, recycled or otherwise diverted from landfill disposal, pursuant to the California Integrated Waste Management Act of 1989 (Division 30 of the California Public Resources Code) (the "Act'). The County has entered into waste disposal agreements in 2009 (the "Original Waste Disposal Agreements ") with all of the cities in the County, including the City, as well as certain sanitary districts located in the County (the "Participating Cities "), pursuant to which the County agreed to provide disposal capacity for waste generated in or under the control of the Participating Cities, and the Participating Cities agreed to deliver or cause the delivery of waste generated in or under the control of the Participating Cities to the Disposal System, as more specifically set forth in, and subject to the terms and conditions of, the Original Waste Disposal Agreements. The City has determined that the execution of this Amendment by the City is in the best interest of the City and will serve the public health, safety and welfare by providing greater disposal rate stability, more predictable and reliable long -term disposal service, and sound environmental management. The County has determined that the execution by the County of this Amendment will serve the public health, safety and welfare by providing a more stable, predictable and reliable supply of municipal solid waste and the resulting service payment revenue to the Disposal System, thereby enabling the County to plan, manage, operate and finance improvements to the Disposal System oil a more prudent and sound long tern, businesslike basis consistent with its obligations to the State and the holders of obligations secured by its Disposal System. Official action approving this Amendment and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the County on the County authorization date indicated on the cover page hereof. Official action approving this Amendment and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the City on the City authorization date indicated on the cover page hereof. It is, therefore, agreed as follows: 2015 Amendment to Waste Disposal Agreement 25B -4 Section 1. Amendment to Original Waste Disposal Agreement (a) Sections 3.6(C) and 3,6(E) of the Original Waste Disposal Agreement are deleted and replaced in their entirety, as set forth below: "(C) Reeeint of Imported Acceptable Waste on a Contract Basis, Throughout the Term hereof, the County shall have the right to enter into a contract or other agreement with any municipal or private non - County entity for the delivery of Imported Acceptable Waste on terms and conditions that the County determines to be necessary to ensure and enhance the viability of the Disposal System for the benefit of the County and the Participating Cities and to generate Net Import Revenues. The County certifies that in its good faith judgment the contract or other agreement for the delivery of such waste will not materially and adversely affect the ability of the County to receive and dispose of Acceptable Waste from the Participating Cities in accordance with the applicable Disposal Agreements throughout the Term thereof, " "(E) Application anti Use of Revenues From Other Users. (1) Throughout the term hereof, all revenues received by the County from the disposal of County Acceptable Waste by the Disposal System, and all revenues received by the County from the disposal of Imported Acceptable Waste by the Disposal System (including amounts received by the County as a result of the failure of contract counterparties to deliver minimum required amounts of Imported Acceptable Waste) , shall be deposited by the County in the County OC Waste & Recycling Enterprise Fund and shall constitute revenues of the Disposal System. Pursuant to tine County's Plan of Adjustment, the County is entitled to receive net revenues (after payment Of all costs attributable to the acceptance of such Imported Acceptable Waste at the Disposal System) ( "Net Import Revenues ") from the disposal of Imported Acceptable Waste by the Disposal System. Costs attributable to the disposal of Imported Acceptable Waste include deposits to the Environmental Fund, deposits to closure and postclosure reserves, City host fees (if applicable), oporating costs (such as manpower expenditures, equipment, services and supplies expenditures), state surcharges, and a pro rata share of capital project costs. Net Import Revenues shall be used for the payment of bankruptcy related obligations until payment in full of such bankruptcy related obligations required to be paid from such Net Import Revenues pursuant to the Plan of Adjustment, It is estimated that payment in full of such bankruptcy related obligations required to be paid from such Net Import Revenues pursuant to the Plan of Adjustment will occur by the end of Fiscal Year 2017 -18, (2) Until the County's obligation to apply Net Import Revenues for the payment of bankruptcy related obligations in accordance with the Plan of Adjustment has been satisfied in fill, Net Import Revenues shall be calculated as provided in Section (3.6)(E)(1). For any period after the County's obligation to apply Net Import Revenues for the payment of bankruptcy related obligations in accordance with the Plan of Adjustment has been satisfied in full, Net Import Revenues shall be calculated as follows: (I) in Fiscal Year 2017 -18, Net Import Revenues for each ton of Imported Acceptable Waste received shall be equal to the revenues received for the disposal of such ton of Imported Acceptable Waste (excluding any newly established per -ton fees or increases to existing per -ton fees with respect to Imported Acceptable Waste payable to the State, other regulatory agencies or cities in which facilities in the Disposal System are located) in excess of $17.57 per ton: (ii) in Fiscal Year 2018 -19, Net Import Revenues for each ton of Imported. Acceptable Waste received shall be equal to the revenues received for the disposal of such ton of Imported 2015 Amendinent to wastm Disposal Agrees❑ a 25B -5 Acceptable Waste (excluding any newly established per -ton fees or increases to existing per -ton fees with respect to Imported Acceptable Waste payable to the State, other regulatory agencies or cities in which facilities in the Disposal System are located) in excess of $ 18.01 per ton; (iii) in Fiscal Year 2019 -20, Net Import Revenues for each ton of Imported Acceptable Waste received shall be equal to the revenues received for the disposal of such ton of Imported Acceptable Waste (excluding any newly established per -ton fees or increases to existing per -ton fees with respect to Imported Acceptable Waste payable to the State, other regulatory agencies or cities in which facilities in the Disposal System are located) in excess in excess of $18,4 6 per ton; and (iv) thereafter, Net Import Revenues shall be equal to 30% of the revenues received by the County from the disposal of Imported Acceptable Waste (excluding any newly established per -ton fees or increases to existing per -ton fees with respect to Imported Acceptable Waste payable to the State, other regulatory agencies or cities in which facilities in the Disposal System are located). (3) After the County's obligation to apply Net Import Revenues for the payment of bankruptcy related obligations in accordance with the Plan of Adjustment has been satisfied in full (i) 50% of any Net Import Revenues (as calculated pursuant to Section 3.6(E)(2)) shall be paid to the County General Fund; and (ii) 50% of such Net hnport Revenues shall be paid to the Participating Cities (and to the County, with respect to the unincorporated area) listed in Appendix 5 for use for any purpose by the Participating City, including but not limited to state mandated solid waste programs. Payments of such amounts to the County General Fund and the Participating Cities shall be made by the County within 90 days after the end of each fiscal year. The portion of Net Import Revenues specified above payable to the Participating Cities shall be apportioned in the percentages set forth in Appendix 5. (4) The percentages set forth in Appendix 5 with respeetto each Participating City will be adjusted at the end of Fiscal Year 2019 -20 to reflect the percentage of actual deliveries of Acceptable Waste from each Participating City as compared to the total amount of actual deliveries from all of the Participating Cities during Fiscal Years 2017 -18, 2018 -19, and 2019 -20. The County shall notify each Participating City of the revised percentages in Appendix 5 within 120 days after the end of Fiscal Year 2019 -20. The revised percentages will be used for the allocation of Net Import Revenues generated during Fiscal Year 2020 -21 and thereafter. (b) Section 4,2(A)(z) is added to the Original Waste Disposal Agreement (immediately following Section 4.2(A)(y)) as follows: "(z) decrease the amount of Net Import Revenues otherwise payable to the County General Fund and the Participating Cities pursuant to Section 3.6(E)(2) and Section 3.6(L)(3) and use the amount of such decrease to pay costs of the Disposal System." (c) Section 6.1(A) and Section 6.1(13) of the Original Waste Disposal Agreement are deleted and replaced in their entirety with the following: 2015 Amendment to Waste Disposal Agxoment r "SECTION 6.1 EFFECTIVE DATE AND TERM (.A) Initial Term. `Phis Agreement shall continue in full force and effect until June 30, 2025, 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, 2023, 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, 2022. If the parties do not renew this Agreement by June 30, 2023, the Agreement shall expire on June 30, 2025." ((t) The first sentence of Section 6,1 (C,) of the Original Waste Disposal Agreement is deleted in its entirety and replaced with the following: "hr connection with the parties' right to renew this Agreement for an additional ten -year term pursuant to Section 6.I(E), the parties shall, on or before June 30, 2023, negotiate an applicable change in the Contract Rate for such renewal term." (e) Appendix 2 of the Original Waste Disposal Agreement is deleted in its entirety and replaced with the form attached hereto. (f) Appendix 5 shall be added to the Original Waste Disposal Agreement as a now appendix, in the form attached hereto. (g) All other terms and conditions of the Original Waste Disposal Agreement shall remain in full force and effect. Section 2. Initial Payment. As consideration for the execution of this Amendment by all of the Participating Cities, and subject to the occurrence of the Amendment Effective Date pursuant to Section 3, the County agrees to pay, from the County OC Waste & Recycling Enterprise Fund, the Amendment Payment to the Participating Cities listed in Appendix 5. The aggregate Amendment Payment shall be $5,400,000, and shall be distributed to the individual Participating Cities (including the City) in the percentages set forth in Appendix 5 by September 30, 2016. Section 3. Effectiveness of Amendment. The provisions of this Amendment shall not become effective unless and until the Amendment has been executed by the County and all of the Participating Cities. The date on which all of the Participating Cities have executed the Amendment shall be the "Amendment Effective Date." The County shall give written notice of the Amendment Effective Date to the City. In the event that the Amendment Effective Date does not occur by June 30, 2015. this Amendment shall be automatically terminated and the County shall have no obligation to make the Amendment Payment; provided, however that the County Board of Sttpervisois may extend such automatic termination date to a date no later than September 30, 2015. 2015 Antendincra to `Uaste Disposal A�ieemcnt 25B -7 Section 4. REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each of the panties to this Amendment represent and warrant that it is apolitical subdivision of the State of California validly existing tinder the Constitution and laws of the State and (ii) it has duly authorized the execution and delivery of this Amendment. and has duly executed and delivered the Amendment. All other terms and conditions ofthe 2009 Original Waste Disposal Agreement not specifically changed by this Amendment, shall remain in full force and effect. IN WITNESS WHEREOF, COUNTY and CITY have caused this Amendment to be executed by their duly authorized officers or representatives as of the day and year first above written. COUNTY OF ORANGE Director, OC Waste & Recycling ATTEST: MARIA D. HUIZAR Clerk of the Council APPROVED AS TO FORM: SONIA R. CARV City Attopaey\ / 2015 Amendment to Waste Disposal Agreement r - Date APPROVED AS TO FORM: COUNTY COUNSEL ORANGE COUNTY. CALIFORNIA By Date CITY OF SANTA ANA DAVID CAVAZOS City Manager RECOMMENDED FOR APPROVAL: FRED MOUSAVIPOUR Executive Director Public Works Agency APPENDIX 2 Coonty Acceptable Waste Tonnage Target to be Used for Purposes of Section 4.2(b) Fiscal Year Tonnage FY 2015 -16 2,724,250 FY 2016-17 2,681,153 FY 2017 -18 2,638,746 FY 2018 -19 2,597,017 FY 2019 -20 2,558,522 FY 2020 -21 2,520,605 FY 2021 -22 2,483,256 FY 2022 -23 2,483,256 FY 2023 -24 2,483,256 FY 2024 -25 2,483,256 2015 Atnendrnent st Wnste Uisposnl Agreement 25B -9 Cumulative 2,724,250 5,405,403 8,044,149 10,641,166 13,199,688 15,720,293 18,203,549 20,686,805 23,170,061 25,653,317 APPENIaIX PARTICIPATING CITY_ ALLOCATION PURSUANT TO SECTION 3.6 2015 Amendment to W90 Disposal Agreement 25B -10 Allocation Percentage for Allocation of C Purposes of Section 3.6 Initial Payment Anaheim 13.18% $71.1,509 Aliso Viejo 0.67 36,416 Buena Park 234 126,275 Brea 2.28 123,085 Costa Mesa 2.18 117,936 Costa Mesa Sanitary District 1.48 79,976 Cypress 2.56 138,115 Dana Point 0.99 53,278 Fullerton 4.10 221,271 Fountain Valley 1.76 95,217 Garden Grove/ GG Sanitary District 7.17 387,197 Huntington Beach 6.13 330,807 Irvine 8.22 444,036 Laguna Beach 1.14 61,796 Laguna Hills 0.74 40,098 Laguna Niguel 1.36 73,341 Laguna Woods 0.41 22,274 La Habra 1.69 91,431 Lake Forest 2.45 132,214 La Palma 0.32 17,325 Los Alamitos U8 31,362 Mission Viejo 2.42 130,902 Newport Beach 3.68 198,946 Grange 4.90 264,468 Placentia 1.58 85,116 Rancho Santa Margarita 1..11 60,009 Santa Ana 10.60 572,184 San Clemente 1.40 75,728 San Juan Capistrano 1.23 66,420 Seal Beach 0.82 44,292 Stanton 1.62 87,28'? Tustin 1.42 76,648 Villa Park 0.21 11,081 Midway City Sanitary District (Westminster) 2.13 114,893 Yorba Linda 1.78 96,344 County Unincorporated 3.35 180,723 - Tntala 100 % $5.400.000 2015 Amendment to W90 Disposal Agreement 25B -10