RECYCLING ECYCLING, DIVERSION AND SOLID WASTE PROPOSAL FOR COUNTY SOLID WASTE FACILITIES. April 9, 2013

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1 RECYCLING ECYCLING, DIVERSION AND SOLID WASTE PROPOSAL FOR COUNTY SOLID WASTE FACILITIES April 9, 2013

2 HISTORY October 2009 Board of Supervisors voted not to sell County Solid Waste System assets Why? Needed more Regional / Public Process Concern over the Loss of Control afforded d by County Ownership Put or Pay Provisions were part of the Purchase Agreement leading to Rate Instability The Deal was Landfill focused; not Diversion focused

3 OW.. BETWEEN THEN AND NOW The Sonoma County/City Solid Waste Advisory Group (SWAG) was created with elected representation from each governmental jurisdiction in Sonoma County Between January 2010 and the present the SWAG held 37 open public meetings to establi tablish regional goals for the the solid waste system and identify feasible recommendations as to how to reach those goals.

4 SOLID WASTE SYSTEM TREN DS 600,000 80% Disposal System Tons 70% 500,000 60% 400,000 50% 300,000 40% 30% 200,000 20% 100,000 10% Diversion Rate Disposal System Tons Diversion Rate %

5 CHALLENGES DUE TO TRENDS RENDS Unsustainable funding mechanism for County and Agency Solid Waste and Diversion Programs Tipping fees increased 100% over last 10 fiscal years to balance revenues with expenditures Agency surcharge increased 70% over same period CPI increased only 22% during the same period No guaranteed waste flow to rely on for financing of major capital improvements

6 OPPORTUNITIES Increase countywide diversion Address climate protection Create a sustainable funding source for all programs Achieve economies of scale

7 2007 W WASTE CHARACTERIZATI ON Hazardous & E- waste, 1.4% Special Waste, 1.7% Mixe d Resid idue, 3.1% Paper, 16.3% Divertibility Analysis Construction & Demolition, 27.4% Glass, 2.6% Plastic, 7.4% Metal, 3.9% Other Materials 30.2% Divertible Materials 25.4% Organics, 36.3% Waste Composition Compostable Materials 32.1% Potentially Divertibl e Materials 12.3%

8 SWAG R RECOMMENDATION Work with the existing contractors at the Central Landfill and Transfer Stations to develop regional system model that t includes public ownership with private operations and meets the SWAG s adopted goals for diversion, cost efficiency and local control.

9 BOARD OF SUPERVISORS RECOMMENDATION ECOMMENDATION At their June 12, 2012 meeting, the Board of Supervisors direct ted staff to develop a l ong-term agreement with Private Parties for Operating County Solid Waste Facilities. Private party should develop of Central Landfill in accordance with permits Private party should develop additional diversion facilities on Central Landfill property Private party shall assume liabilities associated with Central Landfill and Transfer Stations The Operations agreement with private party musta establish a sustainable funding structure

10 WHAT ARE THE BENEFITS TO THE PUBLIC FROM THE AGREEMENT GREEMENT? Attains regional goal to divert 80% of all waste from Landfill disposal. 74%

11 BENEFITS CONT D. D Achieves in-county Landfill, to stop out-haul of waste to Bay Area landfills, reducing truck traffic and associated green house gas emissions Implements county-wide commercial food waste diversion program, reducing the organic stream of waste into our local landfill, further reducing green house gas emissions

12 BENEFITS BENEFITS CONT D. D The project creates a stable rate structure with a revenue stream that covers liabilities for Central Landfill, the transfer stations and the other closed landfills to protect the environment. The project benefits the local economy with construction of the landfill liners and environmental systems, and through construction of the Material Recovery Facility (MRF).

13 OVERVIEW OF BASIC STRUCTURE Master Operations Agreement between Republic Services and the County of Sonoma Scope of services to be provided by Republic Property ownership Capital Improvements Scope of services to be performed by North Bay Corp. as subcontractor

14 TERM ERM/F /FLOW COMMITMENT SWAG Goal: Retain local control of facilities and support development of an in-county disposal Description: Waste Flow Commitments T erm of Master O Operations AAgreement

15 DIVERSION AND CLIMATE P G PROTECTION GOALS SWAG Goal: Agreement should support goal to Reach 80% regional diversion by 2015 Description: Construction of Material Recovery Facility Commercial Food Waste Diversion Continues existing Recycling Programs at the Facilities Green House Gas Reduction New Technologies Existing Compost Program

16 RATES/FINANCIAL CONSIDERATIONS ONSIDERATIONS SWAG Goal: Agreement should provide for local control of rates, and cost efficiency. Description: Initial Tip Fee Rates for Self Haul Waste Long-term Rate Control Spread of Fees for Sustainability bilit

17 RATES/FINANCIAL CONSIDERATIONS Disposal Rate Trends $ $ $ Compacted Rates $90.00 $80.00 $70.00 $ CPI Change in Compacted Rate Change in CPI $50.00 Year Year July July July July July July July July July

18 RATES/FINANCIAL CONSIDERATIONS - CONT D Value of Long-term Investments Republic will make at the Central Landfill Construction of Landfill Liners & Environmental Control Systems over the life of the Central Site $60M Construction of the MRF at Central Landfill $ 5M Closure of the Central Landfill $28M 30 year Post Closure Maintenance Funds $26M Total $119M (in today s dollars)

19 OPPORTUNITIES FOR OTHER LOCAL BUSINESSES SWAG Goal: Protect local business and provide opportunities for local business to participate in the regional system. Description: Flow commitments won t impact independent loc al service providers Local contractors will continue providing services to the C ounty and Republic Beneficial rates for other local recycling processors for disposal of their residual materials

20 EMPLOYEE IMPACTS SWAG Goal: Turn over operations to private entities to achieve diversion goals, an in-county landfill, liability release and economic efficiencies Description: 26 occupied County positions impacted Republic to provide transitional opportunities for 15 Up to 24 weeks severance paid by Republic

21 LIABILITIES,, SECURITIES & ASSURANCES Liability release for the Central Landfill Creation of a revenue stream for remaining liabilities Parent Company Guaranty from a company with $8 Billion in gross revenues Financial Assurances required by CalRecycle and the Regional Water Quality Control Board Remedies for Breach Pollution I nsurance $30M Robust County Oversight

22 CONTRACTOR SELECTION Republic selected through two prior competitive processes Subcontractor selected through prior competitive process

23 INDEPENDENT FINANCIAL ANALYSIS - SCOPE C (CPFG) t R budget R ounty hired Capital Public Finance Group PFG) to perform an indepen dent analysi is eviewed the existing operations, contracts and eviewed the Proposed Master Operations Agreement, and the subcontract with the Ratto Group I ndependently built a 20-year Financial Projection for the Operations and prepared a R isk Analysis P m c h uch anges i C erformed Sensitivity Analysis to determine how bottom line results change with minor i n assumptions omparison to similar operations

24 INDEPENDENT FINANCIAL ANALYSIS - CONCLUSION Republic Services proposal appears to have a profit margin of 13.5%. CPFG believes that is reasonable given the risk factors involved with the scope of work in the Agreement Primary Risk Factors - closure, post-closure and corrective action/remediation activities for the Central Landfill which continue in perpetuity Restriction from bringing in out-of-county waste customers, if the total quantity of in-county waste and recyclable materials declines over time.

25 RECOMMENDATION Accept this report and provide feedback and direction to staff to continue with preparation of the final Master Operations Agreement to be brought back to the Board on April 23, 2013 for consideration of approval.

26 Questions and Comments