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HomeMy WebLinkAbout25F - AGMT - WASTE DISPOSALREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE FEBRUARY 16, 2016 TITLE: AMEND THE WASTE DISPOSAL AGREEMENT WITH THE COUNTY OF ORANGE {STRATEGIC PLAN NO. 5, 2} CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: m•':• _c ❑ As Recommended ❑ As Amended ❑ Ordinance on 18` Reading ❑ Ordinance on 2nd 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 in the total amount of $3,184,732 for the Fiscal Years 2016 -2020, 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. DISCUSSION On May 19, 2015, the City Council approved this Waste Disposal Agreement (WDA) Amendment with the County to provide for continuation of waste importation at the County's three landfills and to extend the terms of the WDA through June 30, 2025. The WDA Amendment was negotiated by a committee of city managers representing Orange County cities and the County to address the reduction in revenues and to ensure rate stabilization for local residents and businesses. The County of Orange required approval by all 34 Orange County cities by no later than September 30, 2015. Unfortunately, not all cities were able to approve the WDA Amendment by that date. However, as the outstanding issues have now been resolved, the County is requesting all cities to approve an updated amendment. The disposal of solid waste at the Orange County landfills is governed by a 2009 Waste Disposal Agreement. 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 sets parameters for the importation of waste from outside the County into these landfills. The term of the 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 25F -1 Amendment to the Waste Disposal Agreement with the County of Orange February 16, 2016 Page 2 mitigate long -term risk and environmental liabilities. The cities 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. It is recommended that the City Council approve the revised WDA Amendment 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 its 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 Revenues for the remainder of the contract beginning in FY 2019 -2020 and ending in the FY2024 -2025 will be equal to 30% of the revenues received by the County from the disposal of Imported Acceptable Waste. Exhibits: 1. Amendment Agreement APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez Executive Director Finance & Management Services Agency 25F -2 AMENDMENT TO WASTE DISPOSAL AGREEMENT Between THE COUNTY OF ORANGE, CALIFORNIA and the CITY OF SANTA ANA County Amendment Authorization Date: 12016 County Notice Address: Director OC Waste and Recycling 300 M 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 2016 Amendment to Wsstc Disposal Agreement '2016 City Amendment Authorization Date: February 16, 2016 City Notice Address Clerk 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 WIT 1 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 (die "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 "City"), 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 on a more prudent and sound long term, 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 2016 Amendment to Waste Disposal Agreement 25F -4 Section 1. Amendment to Original Waste Dislposal 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) Receipt 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 and 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 Systern (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 the 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), operating 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 Cull, 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 Impart 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 2016 Amendment to Waste Disposal Agreement 25F -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 $18.46 per ton; and (iv) thereafter, Net Import Revenues shall be equal to 30% of the revenues received by the County from the disposal of Imparted 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 Import 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 put-pose 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 respect to 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, 201849, 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 (irmmediately 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(E)(3) and use the amount of such decrease to pay costs of the Disposal System." (c) Section 6.1(A) and Section 6.1(B) of the Original Waste Disposal Agreement are deleted and replaced in their entirety with the following: 2016 Amendment to Waste Disposal Agreement 25F -6 "SECTION 6.1 EFFECTIVE DATE AND TERM (A) Initial Tenn. This Agreement shall continue in full force and effect until .tune 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. (3) 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." (d) The first sentence of Section 6.1(C) of the Original Waste Disposal Agreement is deleted in its entirety and replaced with the following: "In connection with the parties' right to renew this Agreement for an additional ten -year tens pursuant to Section 6.1(3), the parties shalt, 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 new 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 the County and 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, 2016, this Amendment shall be automatically terminated and the County shall have no obligation to make the Amendment Payment. Section 4. REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each of the parties to this Amendment represent and warrant that it is a political subdivision of the State of California validly existing under the Constitution and laws of the State and (ii) it has duly authorized the execution and delivery ofthis Amendment, and has duly executed and delivered the Amendment. 2016 Amendment to Waste Disposal Agreement 25F -7 All other terms and conditions of the 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. CARVALHO City /Attorne By:( -\ �J Jose a doval Chiet ssistant City Attorney 2016 Amendment to Waste Disposal Agreement Date APPROVED AS TO FORM: COUNTY COUNSEL ORANGE COUNTY, CALIFORNIA By Steinmann, Deputy CITY OF SANTA ANA DAVID CAVAZOS City Manager RECOMMENDED FOR APPROVAL: FRED MOUSAVIPOUR Executive Director Public Works Agency 25F -8 APPENDIX County Acceptable Waste Tonnage Target to be Used for Purposes of Section 4.2(b) Fiscal Year Ton- nage Cumulative FY 2015 -16 2,724,250 2,724,250 FY 2016 -17 2,681,153 5,405,403 FY 2017 -18 2,638,746 8,044,149 FY 2018 -19 2,597,017 10,641,166 FY 2019 -20 2,558,522 13,199,688 FY 2020 -21 2,520,605 15,720,293 FY 2021 -22 2,483,256 18,203,549 FY 2022 -23 2,483,256 20,686,805 FY 2023 -24 2,483,256 23,170,061 FY 2024 -25 2,483,256 25,653,317 2016 Amendment to Waste Disposal Agreement 25F -9 APPENDIX 5 PARTICIPATING CrCY ALLOCATION PURSUANT_TO SECTION 3.6 2016 Amendment to Waste Disposal Agreement 25F -10 Allocation Percentage for Allocation of C Purposes of Section 3.6 Initial Payment Anaheim 13.18% $711,509 Aliso Viejo 0.67 36,416 Buena Park 2.34 126,275 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 Volley 1.76 95,217 Garden Grove/ GG Sanitary District 7.17 387,197 Huntington Beach 6.13 330,807 Irvine 822 444,036 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 0.58 31,362 Mission Viejo 2.42 130,902 Newport Beach 3.68 198,946 Orange 4.90 264,468 Placentia 1.58 85,116 Rancho Santa Margarita Lt 1 60,009 Santa Ana 10.60 572,184 San Clemente 1.40 75,728 San Juan Capistrano 1.23 66,420 Seto Beach 0.82 44,292 Stanton 1.62 87,287 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 Totals _ 100 %t $5,400,000 2016 Amendment to Waste Disposal Agreement 25F -10