COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

October 17, 2003

BOARD MEETING DATE:

November 4, 2003

TO:

Honorable Board of Supervisors

FROM:

Neil R. Cullen, Director of Public Works

SUBJECT:

Resolution Adopting Revisions in the County Compensation Rate and Landfill Rate Schedule at the Ox Mountain Sanitary Landfill

Recommendation

Adopt a resolution:

1)

Rescinding changes in the County compensation rates at the Ox Mountain Sanitary Landfill (Compensation Rate) that were previously approved on June 10, 2003; and

2)

Revising the Compensation Rate by:

a)

increasing the rate from $5.02 per ton and $1.25 per yard for certain wastes, to $7.02 per ton and $1.75 per yard for certain wastes, effective January 1, 2004; and

b)

excluding competitively bid commodities such as contaminated soil, auto shredder fluff and inert materials from the increase in the Compensation Rates.

Previous Board Action

1.

Entered into an agreement (Agreement) with Browning-Ferris Industries of California (BFI) on September 1, 1999, which covers landfill operations at the Ox Mountain Sanitary Landfill (Landfill), including the payment of a fee to the County based on the Compensation Rates established by your Board and the amount of solid waste received at the Landfill.

2.

Adopted Resolution Number 066011 on June 10, 2003, which increased the County Compensation Rate effective as of July 1, 2003, and again on July 1, 2004.

Key Facts

1.

BFI has requested that the increase in the Compensation Rate be postponed from July 1, 2003, until January 1, 2004, as they have fixed price contracts with some Landfill users that do not automatically increase if the Compensation Rates increase.

2.

The rate can be postponed until January 1, 2004, with no net decrease in revenue to the County, if the July 1, 2004, rate is implemented at that time.

Discussion

The Compensation Rates approved by your Board provided for a $1.00 per ton and $0.25 per yard increase on July 1, 2003, and an additional $1.00 per ton and $0.25 per yard increase on July 1, 2004.

BFI notified us that implementing the increase in Compensation Rates on July 1, 2003, would result in a net loss in income to them as they have contracts that contain set unit prices for some users of the Landfill, and these contracts do not automatically adjust to allow for increases in the County Compensation Rate. It was not the County's intent to cause BFI any loss in net revenue, and BFI has requested that any increase be delayed in order to give them time to make the necessary adjustments in their set unit price contracts.

BFI has requested that your Board consider revisions in the Compensation Rate to one increase that would be effective January 1, 2004 (i.e. $2.00 per ton and $0.50 per yard increase effective January 1, 2004) in lieu of two increases - one on July 1, 2003, followed by another on July 1, 2004. This would essentially provide the same revenue stream to the County.

BFI has also requested that certain competitively bid commodities such as contaminated soil, auto shredder fluff and inert materials, be exempted from the increase in the County Compensation Rate. BFI is requesting this in order to remain competitive in the bidding for these materials. These materials are needed for construction at the landfill, and since the flow of such materials to the Ox Mountain Landfill benefits the County, it is recommended that these materials be exempted from the increase in the County Compensation Rates.

We will give BFI a formal notice of the increase in the County Compensation Rates if your Board approves the changes in the Compensation Rates as proposed.

Vision Alignment

This action is a revision of the terms of the earlier resolution and remains consistent with the Shared Commitment to "ensure basic health and safety for all," and Goal Number 5, "residents have access to health care and prevention care," identified in the Board Report that accompanied the earlier action.

Fiscal Impact

The proposed amendment to the Compensation Rates as originally set forth in Resolution No. 066011 will result in an equivalent revenue being collected, but in the latter part of the current Fiscal Year. However, since payments from BFI are received quarterly in arrears, this amendment will result in less revenue in FY 03-04 and more revenue in FY 04-05 than previously estimated.

We estimate that the elimination of the increase in the Compensation Rates on commodities such as contaminated soil, auto shredder fluff and inert materials will reduce County Revenues by approximately $45,000 per year, assuming the same volume of these materials being disposed of at the Landfill. However, the County would lose an estimated $225,000 in revenues if the current volume of these materials were no longer disposed of at the Landfill due to BFI's rates no longer being competitive as a result of the increase in the Compensation Rate.

There is no additional impact to the General Fund.

A form of resolution has been approved by County Counsel.