Title
Conduct a hearing to:
a. Approve Amendment No. 5 to the Unified Franchise Agreement A-11631 (UFA) between the County of Monterey and USA Waste of California, Inc., dba Carmel Marina Corporation, for the Exclusive Collection of Solid Waste and Recyclables in Unincorporated Monterey County, effective January 1, 2016, in order to amend Exhibit 1 - “Approved Rates and Charges” of said UFA to adjust existing collection rates pursuant to the terms of said UFA and to add new rates for new food waste collection services to be provided, and to add and amend Sections to said UFA to incorporate the new food waste collection services to be provided; and
b. Approve and authorize the Director of Health to execute Amendment No. 5 to the UFA between the County of Monterey and USA Waste of California, Inc., dba Carmel Marina Corporation, for the Exclusive Collection of Solid Waste and Recyclables in Unincorporated Monterey County.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Approve Amendment No. 5 to the Unified Franchise Agreement A-11631 (UFA) between the County of Monterey and USA Waste of California, Inc., dba Carmel Marina Corporation, for the Exclusive Collection of Solid Waste and Recyclables in Unincorporated Monterey County, effective January 1, 2016, in order to amend Exhibit 1 - “Approved Rates and Charges” of said UFA to adjust existing collection rates pursuant to the terms of said UFA and to add new rates for new food waste collection services to be provided, and to add and amend Sections to said UFA to incorporate the new food waste collection services to be provided; and
b. Approve and authorize the Director of Health to execute Amendment No. 5 to the UFA between the County of Monterey and USA Waste of California, Inc., dba Carmel Marina Corporation, for the Exclusive Collection of Solid Waste and Recyclables in Unincorporated Monterey County.
SUMMARY:
The Director of Health seeks authorization to execute Amendment No. 5 to the Unified Franchise Agreement A-11631 (UFA) between the County of Monterey and USA Waste of California, Inc., dba Carmel Marina Corporation (Waste Management) (Attachment A). Proposed Amendment No. 5 encompasses rate adjustments to existing collection services; a new rate for new food waste collection services to be provided by Waste Management, and adds and amends Sections of said UFA as specified below to incorporate the new food waste collection services to be provided in 2016.
DISCUSSION:
On February 2, 2010, the Board of Supervisors awarded said UFA to USA Waste of California, Inc., dba Carmel Marina Corporation (Contractor). Article 13.13ff, Adjustments to Service Rates, Surcharges and Fees (as amended December 13, 2011), states that “beginning on January 1, 2012 and annually thereafter, subject to CONTRACTOR’S compliance with all provisions of this Article, each Collection Service rate, fee or surcharge as set forth in Exhibit 1 to this Agreement shall be adjusted by the Refuse Rate Index (RRI) as set forth in Section 13.13.1.” The basic components of the rate adjustment include changes in the Contractor’s operational costs, changes in the tipping fees charged by the Monterey Regional Waste Management District (MRWMD) and the Salinas Valley Solid Waste Authority (SVSWA), as well as changes in other fees charged by these agencies (e.g., SVSWA’s AB939 Fee, which is a fee that was implemented by SVSWA during Fiscal Year 13-14 to replace revenue SVSWA previously generated from the importation of waste and which is now used to support SVSWA’s diversion activities such as outreach and education ). Tipping fees and any other fees charged by the landfills (e.g., SVSWA’s AB939 Fee) are both direct “pass-throughs” to the rate payers. Pursuant to Article 13.13ff, Contractor has submitted a request for a rate adjustment.
The RRI methodology included as Exhibit 2 of the UFA, as amended December 10, 2013, was used to calculate the proposed rate adjustment as listed below (Attachment B) and has been used to amend Exhibit 1 “Approved Rates and Charges” of the UFA to adjust collection rates, fees and other charges (Attachment C) based on where the rate payer is located (Attachment D):
|
|
Rate Payers within MRWMD Boundaries |
Rate Payers within SVSWA Boundaries |
|
Residential, multi-family, and commercial cart |
1.89% |
3.39% |
|
Multi-family bin, commercial bin, roll-off, and large venue events |
1.89% |
3.39% |
For rate payers within the MRWMD’s jurisdictional boundary, the 1.89% proposed rate increase reflects the change in the Contractor’s operational costs only as the MRWMD did not change its basic tipping fee of $51.75 per ton for CY 2016. Also the MRWMD does not charge any other fees to its member agencies.
For rate payers within the SVSWA’s jurisdictional boundary, the proposed 3.39% rate increase reflects the change in Contractor’s operational costs and change in the County’s share of the SVSWA’s AB939 Fee. The AB939 fee is charged to the waste haulers as a flat fee based on the percentage of waste delivered to the SVSWA facility (Attachment E). The proposed rate adjustment reflects an $89,863 increase in the County’s share of the SVSWA’s AB939 Fee from $348,407 in FY 14-15 to $438,270 (a 25.79 % increase), which became effective July 1, 2015. Like the MRWMD, the SVSWA did not change its basic solid waste tipping fee of $67.00 per ton for FY15-16.
Because the effective date of UFA rate adjustments and the SVSWA fee adjustments are not in sync, each year, the UFA rate adjustment for customers within the SVSWA’s jurisdictional boundary also includes a retroactive adjustment to account for the initial six (6) months (July through December) of AB939 fee payments that the Contractor made on behalf of the County. The Contractor recoups this amount over the twelve months of the following calendar year. The retroactive element is adjusted accordingly depending on SVSWA’s AB939 adjustment.
Amendment No. 5 includes the addition of food waste collection services. In 2014, the State enacted AB1826, which will require businesses that produce eight (8) cubic yards of volume of organic material to implement an organics program by 2016. AB1826 also requires local jurisdictions to implement an organic waste recycling program to divert organic material (food waste, green waste, landscape and pruning waste, nonhazardous wood waste, and food-soiled paper waste that is mixed in with food waste). AB1826 is the State’s effort to set the stage for the achievement of the State’s goal to increase diversion requirements from the current 50% to 75% by 2020. Monterey County is currently in compliance with the State’s 50% diversion rate and already offers green waste collection services which are a part of the organic waste recycling programs that should be offered to comply with AB1826. Increasing diversion through the implementation of a food waste collection program is imperative to ensure that Monterey County will keep pace with the State’s goal to increase diversion requirements. It is also a critical component for the County to ensure AB1826 is fully implemented by 2016.
OTHER AGENCY INVOLVEMENT:
The Office of the County Counsel has reviewed proposed Amendment No. 5 as to form and legality.
FINANCING:
There is no General Fund Contribution resulting from this Board action. Waste Management will continue to remit franchise fees, calculated at 10% of collected revenue, to the General Fund. Due to late submission the Budget & Analysis Division was unable to review.
Prepared by: Teresa Rios, Management Analyst III, 8979
Approved by: Ray Bullick, Director of Health, 4526
Attachments:
Attachment A - Proposed Amendment No. 5; on file with the Clerk of the Board
Attachment B - Exhibit 1 Approved Rates and Charges Effective January 1, 2016; on file with the Clerk of the Board
Attachment C - Refuse Rate Index Calculations; on file with the Clerk of the Board
Attachment D - SVSWA and MRWMD Jurisdictional Boundary Map; on file with the Clerk of the Board
Attachment E - SVSWA AB939 Fee Distribution Effective July1, 2015; on file with the Clerk of the Board
Attachment F - Unified Franchise Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3; and Amendment No. 4 on file with the Clerk of the Board
cc: Lew Bauman, County Administrative Officer
Charles J. McKee, County Counsel
Michael Miller, Auditor Controller
Mary Grace Perry, Deputy County Counsel