TO: Board of Supervisors
FROM: Steven Lederer, Director, Public Works
REPORT BY: Steven Lederer, Director, Public Works
SUBJECT: Approve the Fourth 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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Director of Public Works requests approval of and authorization for the Chair to sign Amendment No. 4 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.
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EXECUTIVE SUMMARY
The proposed fourth amendment to Napa County Agreement No. 6430/City of Napa Agreement No. 8782 (Memorandum of Understanding (MOU) relating to the Napa Materials Diversion Facility (MDF)) ensures the City will provide preferred pricing for additional County generated recyclable materials in return for the County’s commitment that all such materials be delivered to the MDF (and not some other facility). The additional materials covered by this expanded preferred MOU pricing include chipped wood (including sawdust), drywall, carpet, concrete (including rock) and asphalt. The term of the agreement remains unchanged (through December 31, 2030). The MOU will be incorporated into the County's Franchise Agreement with Napa County Recycling & Waste Services (NCRWS). The terms of the MOU, which NCRWS concurs with, will continue to include traditional recyclable materials, including curbside recyclables and organics.
The 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.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it currently budgeted? |
No |
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Where is it budgeted? |
N/A |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Although the amount is small, unincorporated county residents with garbage service in Zone 1 will benefit from the cost savings of preferred pricing. |
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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. |
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County Strategic Plan pillar addressed: |
Effective and Open Government |
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Additional Information |
None |
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).
BACKGROUND AND DISCUSSION
In May of 2005, the City and County of Napa executed a Memorandum of Understanding (MOU) that secured a flow of recyclable and compostable materials from south unincorporated Napa County (known as County Zone 1) to be delivered and processed at the City’s Materials Diversion Facility (MDF) beginning in October of 2005. The original MOU was very successful for both parties. The MOU described the relationship and provisions for the delivery, processing and payments between the City and County. The original 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 agreement and extended the base term of the MOU through December 31, 2030 and allows for up to five one-year extensions through the end of calendar year 2035.
The proposed Amendment No. 4 seeks to modify and clarify certain terms and conditions of the MOU including:
1. Sets contract MOU pricing for a three-year period through September 30, 2024.
2. Establishes 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).
3. Better defines and describes process for adjusting MOU pricing beyond October 1, 2024 and authorizes the City’s Utilities Director and Napa County Public Works 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.
4. Language was added to address relatively new charges (known as “gate fees”) for appliances and microwave ovens.
The cost of processing and recovery of wood waste received at the City’s MDF is currently very volatile and uncertain (and unfortunately continues to increase). 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 would be a potential future amendment to the MOU where preferred MOU pricing could be offered to Napa County in exchange for a flow commitment for wood waste to be delivered to the City’s MDF.
The City Council voted approval of Amendment No. 4 to the MOU on September 7, 2021.
Total revenue to the City from the City-County MOU is approximately $1,105,000 per fiscal year. Amendment No. 4 would result in a minor decrease in what the County’s hauler would have to pay the city for certain recyclable materials in return for the County guaranteeing that materials will flow to the City facility. Along with traditional recyclable materials that were already covered by the MOU, additional materials impacted by this expanded preferred MOU pricing include chipped wood (including sawdust), drywall, carpet, concrete (including rock) and asphalt. Taken together, these materials delivered by Napa County were approximately 4,200 tons in FY2020/21. If these volumes remained steady and at a weighed savings of approximately $3 per ton below public self-haul gate fees, the County MOU preferred pricing reduces overall MDF gate fee revenue by approximately $12,600 (4,200 tons X $3/ton) for FY2021/22. These cost savings (minor as they are) will be passed onto our rate payers at the next Zone 1 rate review.
While there is a slight reduction in revenue for the City, the secured flow of materials to the City MDF from the MOU with Napa County are very helpful and important factors for rate payers in helping to spread out the fixed costs of capital improvements and upgraded systems at the MDF. Finally, the 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.