REPORT TO THE CITY COUNCIL
October 30, 2014
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
BY: JERRY L. SCHUBER SR., Assistant Director
Department of Public Utilities, Solid Waste Management Division
SUBJECT
Title
Authorize the City Manager to enter into an Agreement with the County of Fresno for landfill disposal services at Fresno County's American Avenue Landfill
Body
RECOMMENDATION
Staff recommends that Council authorize the City Manager or designee to enter into a twenty year (20) agreement with the County of Fresno for landfill disposal services at the Fresno County's American Landfill, subject to City Attorney review and approval of the terms and conditions.
EXECUTIVE SUMMARY
In 1992, the City of Fresno entered into a contract with the County of Fresno for landfill disposal services at Fresno County's American Avenue Landfill. This contract expired June 30, 2014. Since this time, the City has continued to utilize the American Avenue Landfill through a month to month agreement that was approved by Council on September 25, 2014.
Negotiations between the City of Fresno and Fresno County, which began in March of this year, have resulted in the parties reaching a tentative agreement in which the City's tipping fees will be based on the number of tons of solid waste material that are delivered by the City of Fresno to the American Avenue Landfill.
The new tiered rate will result in the City's tipping charges being reduced from $23 per ton to 18.50 per ton, based on the amount of solid waste material currently being delivered. The annualized savings from the new rate is approximately $950,000. The lower rate also applies to the City's Commercial Solid Waste providers. In addition to a lower tipping fee, the new tiered-rated schedule also includes a fixed, annual cost escalator of 2.5% per year, with the first increase not occurring until July 1, 2016. The new agreement also includes a five year review in which actually costs will be analyzed.
BACKGROUND
In 1992, the City of Fresno, having closed its own sanitary landfill, negotiated a contract with the County of Fresno to bring all municipal solid waste to the American Avenue Landfill for disposal.
Over the last several months the Department of Public Utilities and the City Manager's Office have been in negotiations with the County of Fresno concerning the American Avenue Landfill contract, which expired on June 30, 2014. During this period, the parties agreed to continue to deliver material to the American Avenue Landfill through a month to month agreement at the current rate while negotiations progressed.
During the course of these negotiations staff also reviewed and considered other public and private landfill options for the citizens of Fresno. The factors considered included unit price, distance from transfer station used by the City, location of landfill (in county versus out of county), and currently permitted capacity of other landfills. While other public and private landfills are certainly feasible, the American Avenue Landfill offers our rate payers the optimum combination of price ($18.50/ton), distance (25 miles), location (Fresno County), and currently permitted capacity (24 million cubic yards) - all of which best serve the interests of the community by providing cost and capacity certainty for the next twenty years.
In addition, it is important to note that the County's proposed tipping fee of $18.50 per ton includes a $3.41 per ton charge to provide other important solid waste services for resident living the city of Fresno, such as household hazardous waste (HHW) program, solid waste facility inspections, and state record keeping and reporting. Accordingly, the effective tipping fee for solid waste disposal is actually $15.09 per ton, with the additional $3.41 per ton used to fund other state mandated solid waste programs.
The proposed rate of $18.50 is allocated to the following cost components:
· Operations, Maintenance, Equipment, Closure/Post Closure, Corrective Action, LF Expansion Fee: $13.69/ton
· Mandated Health Department Fee: $0.51/ton (includes inspection of facilities within City limits)
· Solid Waste Coordination Fee: $0.50/ton (Includes State and local reporting requirements, and solid waste-related commissions and boards)
· AB 939 Fee: $2.40/ton (Regional programs related to the management of the regional HHW permanent facility, education and outreach programs)
· State Waste Board Fee: $1.40/ton (AB 1220)
While the Council could consider disposing Fresno's municipal solid waste at another landfill located outside the county, the City would still be required to make the equivalent of a $3.41 per ton payment to the County of Fresno to cover the costs for the state mandated programs outlined above. The $3.41 charge would be in addition to increased transportation related costs that the City would be charged for transporting solid waste materials to landfill that is farther away.
Therefore, it is staff's recommendation is to enter into a landfill disposal agreement with Fresno County to secure necessary, sustainable, long-term, solid waste services for the citizens of Fresno.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, the award of this contract does not qualify as a "project" and is therefore exempt from the CEQA requirements.
LOCAL PREFERENCE
Not applicable
FISCAL IMPACT
The City's agreement with the County for the American Avenue Landfill is subject to tonnages hauled and disposed of at $18.50 per ton. The current per ton charge of $23.00 was included in the Division's FY16 Operating budget. The new rate of $18.50 will result in annualized savings of approximately $950,000.
It should be noted that the American Avenue Landfill agreement is one of three agreements that will either expire and/or change over the next year that will directly affect the cost of providing residential solid waste services. The ability to further reduce projected residential solid waste rate increases will, in large part, be predicated upon the outcome of these subsequent contract negotiations.
Attachment:
Rate Scale based on tonnages provided