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HomeMy WebLinkAbout2002-05-14; City Council; 16745; Agreement For Transfer Station/Disposal ServicesCITY OF CARLSBAD -AGENDA BILL 4B# 16,745 CITY MGK- )EPT. CITY MGR CITYATTY. (\m STATION AND DISPOSAL SERVICES JITG. 5/7/02 DEPT. HD. % m: APPROVAL OF AGREEMENT FOR TRANSFER RECOMMENDED ACTION: Adopt Resolution No. 2002-140 approving Agreement for Transfer Station and Disposal Services between the City of Carlsbad and Palomar Transfer Station, Inc. substantially in the form presented, direct the Mayor to execute the appropriate documents in the form approved by the City Attorney, and direct staff to solicit proposals for solid waste rate review. ITEM EXPLANATION: The Palomar Transfer Station (PTS) has served as the operating center for the City solid waste collector, Coast Waste Management (CWM) for over twenty years. The Palomar Transfer Station has also served as a solid waste transfer station for over seven years since the closing of the San Marcos Landfill. For the past five years, the City of Carlsbad has leased the Palomar Transfer Station from the County of San Diego and in turn, subleased the facility to CWM as an operating center and to manage and operate the Transfer Station. The Palomar Transfer Station was leased to the City as part of an agreement to settle litigation over solid waste issues. The current County-City lease and the City-CWM sublease terminate on May 31,2002. In order to recover from financial losses it experienced with failure of its North County Recycling Facility in San Marcos, the County sold its landfills to Allied Waste. As part of its agreement with the County of San Diego for the purchase of its landfills, Allied Waste acquired a twenty-five year lease, with options for 14 five-year extensions, on the PTS beginning June 1, 2002, upon expiration of the current City lease. Allied subsequently assigned its lease to a wholly-owned affiliate company, Palomar Transfer Station, Inc. (PTS, Inc.) The City Council, as a matter of prudent planning and based on the difficult intergovernmental relationships and market uncertainties experienced during early to mid 199Os, established a strategy to maintain the ability to shop the marketplace for the best solid waste disposal alternatives. The City has evaluated a number of different alternatives for the disposal of solid waste. The Council feels the best way to do so is to maintain a viable solid waste transfer function at the Palomar Transfer Station, ideally under the operation and control of the City. The City’s ability to operate and control the Palomar Transfer Station, however, is constrained by the County’s lease to PTS, Inc. The City and PTS, Inc. entered into extensive and protracted negotiations over the Palomar Transfer Station. As a result of these negotiations, the City and PTS, Inc. have come to an agreement that will meet the needs of both parties and provide stability and reliability for the Page 2 of Agenda Bill No. 16,745 pricing of solid waste transfer and disposal services in Carlsbad for the next ten years and thereafter, and provide the City with the ability to take advantage of marketplace opportunities. As a result of this Agreement, PTS, Inc. will assign its entire lease with the County of San Diego to the City. The City will commit to dispose of all solid waste generated in the City at the Palomar Transfer Station for ten years for a negotiated fee of $36/ton subject to an annual CPI adjustment not to exceed 5%. The City shall benefit from a most favored customer provision, guaranteeing the City the lowest disposal fee at the Palomar Transfer Station. The City will be guaranteed access to and have first use priority at the Palomar Transfer Station for solid waste disposal. After ten years, the City will have the right, but not an obligation, to use the Palomar Transfer Station. The City may use the Palomar Transfer Station for transfer of waste at a negotiated price, and may dispose of its solid waste at a landfill of its choice. PTS, Inc. will maintain the right to operate the Palomar Transfer Station for 25 years in order to realize a return on its $3 million advance lease payment to San Diego County. PTS, Inc. will be able to market capacity in excess of that guaranteed to the City subject to the capacity limits set by the Conditional Use Permit for the Palomar Transfer Station. The current permitted capacity of the Palomar Transfer Station is 800 tons per day. Currently, the Palomar Transfer Station is operating at its permitted capacity of which approximately 290 tons per day is generated in the City of Carlsbad. After 25 years, the City will gain complete control of the Palomar Transfer Station lease and the Agreement with PTS, Inc. will terminate. The Agreement with PTS, Inc. also contemplates the possibility the City may someday desire to build another transfer station at another location in the City. Although the City has no current intention to do so, if another transfer station were built during the term of the Agreement, PTS, Inc. would have certain capacity and operating rights at such a facility. The Palomar Transfer Station will continue to serve as an operating center for CWM. PTS, Inc. and CWM have entered into a sublease that will allow CWM to continue to use the Palomar Transfer Station for ten years following the effective date of PTS, Inc. lease with the County. The PTS, Inc. lease with the County that will be assigned to the City will be subject to this sublease. The Agreement with PTS, Inc. is very complex in detail, but relatively simple in concept. A conceptual outline of the Agreement is shown in an exhibit to this agenda bill. The Agreement is on file in the office of the City Clerk. FISCAL IMPACT: The residential household trash rate in Carlsbad is currently $14.52 per month. A portion of that rate is to pay for disposal of solid waste. Most residential household trash generated in the City is disposed of at the Palomar Transfer Station. The City’s franchised solid waste collector, CWM, currently pays $38 per ton to dispose of solid waste at the Palomar Transfer Station. This Agreement will reduce that cost to $36 per ton. Page 3 of Agenda Bill No. 16,745 Although disposal costs will be reduced, the effect on rates charged to customers will need to be evaluated. The current rate has remained unchanged for five years and operating costs for CWM have changed, therefore, it is recommended that a rate review by conducted in order to evaluate the need to change rates to customers. Adoption of the Agreement will result in nominal cost increases to the City. The City currently devotes staff resources to solid waste program management. It is anticipated the additional administrative and inspection duties required as a result of this Agreement will be absorbed by existing staff. Any additional cost can be funded from the Solid Waste Fund. Currently, a non-jurisdictional waste processing fee of $2.50 is paid for each ton of trash generated outside the City, which is disposed of at the Palomar Transfer Station. This waste processing fee will continue and be collected on all trash disposed of at the Palomar Transfer Station. The revenue from this fee will continue to be deposited in the Solid Waste Fund. ENVIRONMENTAL REVIEW: The establishment of legal relationships among the City and the other parties does not constitute or propose any physical change to the environment and does not qualify as a project pursuant to Section 15378 of the California Environmental Quality Act (CEQA) and, therefore, is exempt from environmental review. A Notice of Exemption will be filed by the Planning Director after Council action. The CUP for the PTS will be subject to the appropriate level of CEQA review. EXHIBITS: 1. Conceptual outline of Agreement 2. Resolution No. 2002-140 (Agreement between City of Carlsbad and Palomar Transfer Station, Inc. on file in the office of the City Clerk) a t- e rl s n Q E v, 5 . 3 $ Q) Q) M ed E E 0 a I c, G 2 L Q) a eo 0 a c, a m m 2 .I m s 1 c, m .I B 0 ;L. M 0 h c, c, .I 3 z % ed E 3 E H . c) 0 m N d . 4 5 1 I 1 ! 4 5 6 I 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 2002-140 A RESOLUTION OF THE ClTY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING AN AGREEMENT FOR TRANSFER STATION AND DISPOSAL SERVICES BETWEEN THE CITY OF CARLSBAD AND PALOMAR TRANSFER STATION, INC. WHEREAS, the State of California through enactment of the California Integrated Waste Management Act of 1989, has directed all local agencies, to plan for disposal of municipal solid waste generated in the City and this Agreement will assist the City in meeting these requirements; and WHEREAS, the City needs a facility to Accept and Transfer Solid Waste and wishes to ensure the long-term viability of such a facility by securing capacity at a Transfer Station owned by others or by owning a Transfer Station itself; and WHEREAS, the Palomar Transfer Station, Inc. has entered into a certain Palomar Transfer Station Lease Agreement, with the County of San Diego for the Palomar Tkansfer Station for a term of (25) years commencing June 1, 2002, with the right to (14) five (5) year extensions; and WHEREAS, as of the Effective Date of the Agreement, Palomar Transfer Station, Inc. shall assign its interest in the County Lease to the City and the City shall become lessee under the County Lease; and WHEREAS, Palomar Transfer Station, Inc. has the qualifications and experience to operate the Palomar Transfer Station and can do so in a manner and on terms contemplated herein; and WHEREAS, the City needs to secure Disposal capacity at one or more landfills to serve as the place of safe, legal, and permitted Disposal for Solid Waste that is not otherwise Diverted through source reduction, reuse, or recycling efforts; and I1 /I 1 2 3 4 5 6 7 E S 1C 11 12 15 14 15 1f 1; 1f 15 2( 21 2: 2: 21 2: 2( 2 2: WHEREAS, Palomar Transfer Station, Inc. andor its Affiliates are the owners and operators of several landfill sites in the County' of San Diego that can fulfill the City's needs with regards to securing Disposal capacity as provided herein; and WHEREAS, the City has the right to secure the services herein from Palomar Transfer Station, Inc. through negotiations and has the authority to enter into this agreement; and WHEREAS, the City wishes to engage Palomar Transfer Station, Inc. to. provide the services specified within this Agreement, in accordance with the terms and conditions negotiated between the Parties and documented in this Agreement. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the preparation of an Agreement for Transfer Station and Disposal Services between the City of Carlsbad and Palomar Transfer Station, Inc. with the deal points contained in the conceptual outline attached as Exhibit 1 to Agenda Bill 16,745 is hereby approved. 2. That the Mayor of the City of Carlsbad is hereby authorized and directed to sign said agreement for and on behalf of the City of Carlsbad once the agreement is in a form approved by the City Attorney. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 7th day of MAY , 2002 by the following vote: AYES: Council Members Lewis, Nyga NOES: None ABSENT: Council Member Kulchin CLAUD A LEWIS, Mayor 7 , Page 2 of Resolution No. 2002-140 -2-