TO: Napa-Vallejo Waste Management Board of Directors
FROM: Chris Celsi, Executive Director
REPORT BY: Chris Celsi, Executive Director
SUBJECT: Northern Recycling Operations & Waste Services, LLC Extension
RECOMMENDATION
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Approval and authorization for the Chair to sign the Second Amended and Restated Agreement No. 07-03 with Northern Recycling Operations & Waste Services, LLC (NROWS) for Municipal Solid Waste Diversion, Transfer, and Transport Services at the Devlin Road Recycling & Transfer Facility (DRRTF). This Agreement will govern operations from January 1, 2026, to December 31, 2040, with the option for the Authority to extend the Agreement for 5 more years.
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EXECUTIVE SUMMARY
On April 19, 2007, the Authority entered into Agreement No. 07-03 with NROWS, LLC effective July 1, 2007 for municipal solid waste diversion, transfer and transport services at the Authority's DRRTF. The base term expired on December 31, 2022, with 4 one-year options to renew of which the Authority has exercised three. The current agreement will expire on December 31, 2025. The Authority and NROWS have negotiated a long-term extension to the agreement which will cover operation of the DRRTF for at least the next 15 years. The long-term extension is necessary for NROWS to invest in new equipment to improve recycling at the facility. Staff utilized the services of R3 Consulting Services to review and analyze the existing agreement with NROWS and provide negotiation support and recommendations related to extending the agreement.
Over the past year, the Authority and NROWS worked very closely to arrive at a fair and equitable extension of the agreement to continue operating the DRTS. This Second Amended and Restated Agreement is substantially similar to the existing agreement, with the following changes related to compensation:
Service Fee (Section 8.02(a)):
1). Base Component (up to Base Tonnage of 290,000 tons):
Year 1 (2026) $605,432 per month
Year 2 (2027) $711,270 per month
Year 3 and each Year Thereafter Prior Year’s monthly rate adjusted for CPI
2). Per Ton Component (over Base Tonnage):
Year 1 (2026) $22.33 Per Ton over 290,000 Tons (Base Tonnage)
Year 2 (2027) $24.27 Per Ton over 290,000 Tons (Base Tonnage)
Year 3 and each Year Thereafter Prior Year’s per ton rate over 290,000 Tons adjusted for CPI.
The Authority has agreed to incentivize NROWS to divert more tonnage to our new Construction & Demolition facility, which is the following:
Diversion Incentive Payment (Section (8.02(b)) beginning January 1, 2026:
Year 1 (2026) $15 Per Ton of Accepted C&D Loads over 120,000 Tons.
Year 2 (2027) $20 Per Ton of Accepted C&D Loads over 125,000 Tons.
Year 3 and each Year Thereafter Prior Year’s Per Ton rate of Accepted C&D Loads over 125,000 Tons adjusted for CPI.
In addition, both parties have agreed to a Diversion Shortfall Payment and Diversion Rebate Payment which is the following:
Diversion Shortfall Payment and Diversion Rebate Payment (Section 8.02(c) and (d)) (Neither is imposed until one year after the C&D Facility is completed)
Diversion Guaranty (calculated by dividing the number of tons of C&D Waste Diverted at the C&D Facility (outbound tons) by the total number of tons of Accepted C&D Loads (inbound tons)):
75% including ADC
40% excluding ADC
Diversion Shortfall Payment equals:
$5,000 per percent (100 basis points) below 75% C&D diversion.
$2,000 per percent (100 basis points) below 40% excluding ADC diversion
Diversion Rebate Payment equals:
$2,000 per percent (100 basis points) over 75% C&D diversion.
$5,000 per percent (100 basis points) over 40% excluding ADC diversion
Lastly, the Authority and NROWS will share Net Recycling Revenues equally.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
Yes |
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Where is it budgeted? |
8100-8100020 |
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Is it Mandatory or Discretionary? |
Discretionary |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
The NROWS contract is a significant cost for the Authority but will be covered by increases to our gate rate. |
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Consequences if not approved: |
If not approved, the DRTS facility could experience operational issues. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is categorically exempt from the California Environmental Quality Act under CEQA Guidelines section 15301, as the operation of existing public facilities involving negligible or no expansion of existing or former use.