TO: Board of Supervisors
FROM: Steven Lederer, Director, Public Works
REPORT BY: Amanda Griffis, Supervising Environmental Resource Specialist, Public Works
SUBJECT: Fifth Amendment to a Memorandum of Understanding with the City of Napa for use of the City's Material Diversion Facility with preferred pricing.
RECOMMENDATION
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Approval of and authorization to sign Amendment No. 5 to Agreement No. 6430 Memorandum of Understanding with the City of Napa for the County's use of the City's Material Diversion Facility to extend the preferred pricing arrangement to additional types of recyclable materials. (No Fiscal Impact; Discretionary)
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BACKGROUND
In May of 2005, the City of Napa (City) and Napa County executed a Memorandum of Understanding (MOU) that secured a flow of recyclable and compostable materials from south unincorporated Napa County to be delivered and processed at the City’s Materials Diversion Facility (MDF) beginning in October of 2005. The MOU has been very successful for both parties. The MOU outlines the relationship and provisions for the delivery, processing and payments between the City and County. The MOU’s initial base-term was through the end of November 2015. Amendment No’s 1 and 2 extended the MOU through December 31, 2019. Amendment No. 3 amended and restated the MOU and extended the MOU’s base term to December 31, 2030, and allowed up to five one-year extensions through the end of calendar year 2035. Amendment No. 4 amended and restated the MOU and modified certain terms including contractual MOU pricing through September 30, 2024, created an administrative process between the City and County for year-to-year adjustments beyond October 1, 2024, and added language for new charges (known as “gate fees”) for appliances and microwave ovens.
The proposed Amendment No. 5 to the MOU (Amended MOU) restates and amends the MOU with specific modifications and clarifications including:
1. Sets contract MOU pricing for a five-year period through September 30, 2029.
2. Continues future preferred MOU pricing to Napa County in exchange for an expanded list of materials that will be contractually committed to be delivered to the City’s MDF by Napa County and its authorized hauler, currently Napa County Recycling & Waste Services, LLC (NCRWS)
3. Authorizes the County’s Public Works Director and City’s Utilities Director to facilitate “routine” annual adjustments at an administrative level. Minor periodic changes to the list of recyclable and/or compostable materials accepted at the City’s MDF that do not impact pricing can also be addressed administratively without requiring a contract amendment.
The proposed incremental contractual pricing for the five-year period is based on the MDF gate analysis that set public self-haul gate fees for five years per City of Napa City Council resolution R2024-005. The current contractual MOU pricing for Recyclable Materials (including “single-stream” mixed recyclables and other source-separated recyclables) were established by City of Napa City Council resolution R2024-035 and are reviewed on annual basis depending on changing market conditions (and may be adjusted per Amended MOU section 2.4 if there are significant market changes year-to-year). The most significant underlying factors for the proposed contractual Amended MOU gate fee pricing include major capital improvements to the MDF (particularly to the composting system and stormwater management system), known contractual processing and transportation costs as well as projected future inflation impacts.
The cost of processing and recovery of wood waste received at the City’s MDF is currently very volatile, uncertain, and continues to increase each year. Because of this, the City is unable to provide future pricing for wood waste with a sufficient level of certainty and the County was not asked to provide a contractual material flow commitment for wood waste at this time. If the situation changes and stabilizes in the future, this is an area that the City may negotiate with the County for inclusion in the Amended MOU.
The City intends to take Amended MOU to the City of Napa City Council for consideration in March 2025.
The total MDF gate fee revenue to the City from the City-County MOU in fiscal year (FY) 2023/24 was approximately $833,000 for 48,000 tons delivered to the City’s MDF for processing. The amended MOU would result in higher revenue to the City from gate fees paid by the County’s hauler NCRWS for certain materials that have been afforded “preferred” pricing in exchange for contractual material flow commitments by the County to the City. Additional materials impacted by the preferred pricing include chipped wood (including sawdust), drywall, carpet, concrete (including rock) and asphalt. Taken together, these materials delivered by the County were approximately 4,200 tons in FY 2023/24 with increased gate fees ranging from $2 to $5 per ton projected for three quarters of current FY 2024/25.
The Amended MOU is beneficial to regional sustainability and pollution prevention efforts in providing an opportunity for compostable and recyclable materials to be processed locally and thus not requiring that they be hauled long distances at additional expense and environment costs.
Requested Action:
Approve and authorize Amendment 5 to Agreement No. 6430.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Unincorporated county residents and businesses with recycling and waste service in Zone 1 will benefit from the cost savings of preferred pricing. All costs associated with disposal are paid by rate payers, not the County. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
Preferred pricing will continue into future years, further benefiting the rate payer. |
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Consequences if not approved: |
Preferred pricing and benefits of such will not be enacted. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: This activity is not a project requiring further environmental review per Article 20, Definitions, Section 15378 of the California Environmental Quality Act (CEQA 14 CCR 15378(a).