COUNTY OF LAKE

Public Services Department
333 Second Street Lakeport, CA 95453 Telephone (707) 262-1618 FAX (707) 262-0973

KIM KEVIN CLYMIRE Director CAROLINE C. CHAVEZ Deputy Director

MEMORANDUM
To:

Honorable Board of Supervisors Kim K. Clymire, Director Caroline C. Chavez, Deputy Director Eastlake Landfill Gate Fees and Proposal for Import of Refuse April 25, 2011

From:

Subject: Date:

Since the height of the building boom in Lake County in 2006, the Eastlake Landfill has experienced more than a 25% decrease in annual landfill tonnage— approximately 13,000 fewer tons in 2009 and in 2010 than the 54,000 tons we received in 2006. This dramatic drop has precipitated a major reduction in our revenues to the point that we have to take immediate steps to address how we cover our on-going operational and increased compliance costs. The following highlights our current financial condition: • • Revenues are down to $1.5 million from the high in 2005/06 of $2.5 million and $500K down from the normal annual revenue of $2 million+. Closure of the Transfer Station in December 2009 and elimination of staffing for that facility (due to the decreasing tonnage) allowed an annual savings of approximately $300K but those savings have been offset by decreasing revenues and increasing and unfunded mandated compliance costs. Undesignated (unrestricted) reserves for landfill expansion and equipment have been largely depleted to create a structurally balanced budget the past two years. The reserves cannot be brought to necessary levels without additional revenues. Operational and regulatory compliance costs are not tied to the amount of tonnage received. AB 32, the Green House Gas (GHG) reduction bill, could trigger the installation a landfil gas system costing $3 million in the next one to three years (assuming it ives current court challenges for CEQA compliance). Other proposed w storm water monitoring and reporting requirements could cost another $30-50K annually. Planning and permitting for landfill expansion into adjacent land already owned by the County needs to occur in the next few years. Expansion, including design and permitting costs, is estimated to cost $3-5 million dollars, and will need to be

Page 2 completed by approximately 2026-2030 when the current permitted lined landfill airspace is projected to be depleted. Dwindling tonnage means that the cost of operations and compliance will be spread over fewer tons resulting in an increased cost per ton to dispose. No rate increase at landfill was needed or implemented in nearly 17 years because the revenues were sufficient to fund operations and increase and maintain reserves up until the last three years. During this same period, franchise haulers were allowed CPI increases.

• •

The current recession has been a major cause of revenue loss. Another significant factor in the decline of our disposed tonnage (and the associated revenue) has been our success in diverting recyclables from the landfill, which saves our natural resources and extends the life of the landfill. Currently the State mandates 50% diversion, but new legislation is pending that would increase the mandate from 50% diversion to 75%, and our ultimate "zero waste" goal will add to the financial dilemma because diminished tonnage means diminished revenues. This problem is exacerbated by the continuing increase in operational costs plus dramatically increasing compliance costs. Landfills must adopt new models to survive, something that we have been addressing and transitioning to for the past several years. It is a certain that new diversion programs will continue to be developed, and our tonnage will continue to decline. Our cost to dispose a ton of waste in 2006 was near $37. Today, spreading operation and mandated costs over fewer tons means the cost "to landfill" a ton of waste is $48. In the coming years, those costs will be even higher unless we develop other sources of income. The focus of this discussion is on how our landfill can financially survive in a world of declining tonnage and revenue. In the past, we have promoted free recycling and green waste service as part of our curbside collection program, having disposal costs subsidizes them. In light of the success of those programs and the recession, that is no longer feasible within the current revenue stream. As a result, rates need to be increased in order to continue to fund landfill operations, unfunded mandated capital improvements, recycling and green waste diversion programs, and reserves. Solid Waste staff met with members of the Solid Waste Task Force Committee (SWTF) in early October 2010 to highlight the financial problems facing the County's landfill operations. The committee consists of two members of the Board of Supervisors, two members from each of the cities, a representative from each of the three franchise haulers, a representative from the Environmental Health Department, and a public member. Although neither city sent representatives to that meeting, all members were provided a report on the issues that are driving the need for a rate increase. A copy of the staff report which discussed the financial situation and various options is attached. (Appendix A) Discussion centered on the viable means to cover operational and compliance costs. As part of the discussion, the SWTF was introduced to a proposal by Solid Waste Solutions (SWS), a sister company of LCWS and a contractor for the City of Ukiah, to bring tonnage from their Ukiah Transfer Station operation beginning January 2012 when their export contract to Potrero Hills expires. The SWTF discussed the potential impact on the landfill lifespan if import were allowed

Page 3 and the impact on curbside rates for the citizens and businesses with or without import. Considerable concern was voiced over the impact any significant rate increase could have on the business community whose commercial rates could be devastating in an already fragile economy. With SWTF direction, Solid Waste staff agreed to continue exploration of the various options and to look at ways to reallocate the imposition of any curbside fee increase so that commercial accounts paid a smaller percentage share than the lower residential rates. Public Services staff has examined the limited options available to address our growing revenue shortfall. The options fall into three categories or a combination of them: IOptions to Reduce Expenses I Closure of the Transfer Station completed: Lake County already took significant steps to reduce costs by closing the Lakeport Transfer Station in December 2009, saving the division about $300K annually in equipment, salaries, utilities, and fuel. This decision was made after the amount of waste delivered to the Transfer Station dropped to about 10% of the total County waste. The cost of processing and transporting that small amount of refuse was simply not cost-effective. The change was gradual, first reducing the number of days the facility was open, and then through prudent planning, the County was able to dovetail the timing of the closure with the expansion of the Lake County Waste Solutions recycling yard nearby into a convenient one-stop disposal and recycling site for customers, at rates equivalent to those that had been in effect at the Lakeport Transfer Station. Reduce landfill hours: Shortening the landfill hours on any given day(s) would not produce a savings and would not adequately serve the needs of the public. Closure of 1-2 days per week would be the only viable way to save money. However, contractors, businesses and franchise haulers want Monday through Friday hours, and residents and those owning vacation homes need weekend days. Further, reducing landfill hours does nothing to decrease the cost of compliance issues, and the amount of tonnage would not be reduced. Any decrease in landfill hours would likely produce more illegal dumping. The savings would do little to address the problem for the need of increased revenue to cover the operational and compliance costs required regardless of the hours of operation. Reduce or eliminate free or subsidized recycling programs funded by the County: Lake County currently funds a number of subsidized programs, such as the Hazmobile, appliance disposal, and sharps disposal. Even if all of those programs were eliminated, there would only be a cost savings of about $165K annually. The fallout of eliminating funding for those programs would certainly cause more illegal disposal of these items which would harm the environment, endanger the citizens and landfill employees, and create enormous additional expense for illegal disposal cleanup and enforcement which is unavailable. Increase Gate Fees The average rate in landfills and transfer stations surrounding Lake County is nearly double our rate. Lake County has not had a rate increase since 1995 and has made a concerted effort to keep rates low

Page 4 and affordable both at the gate and at curbside in the unincorporated areas in order to encourage proper disposal and reduce personal accumulations of trash and curb illegal dumping. While a rate increase of some kind is a necessity, staff is cognizant of the fact that a significant increase would create numerous negative consequences, including more financial hardship on our citizens and businesses, further reduction in tonnage received, more personal accumulation of trash, and more illegal dumping. To cover our ongoing $500K annual operational expense deficit, we would need to raise our gate fees by 39% immediately. To cover the additional millions of dollars required for pending compliance requirements we would need to increase them well beyond that figure. Residential selfhaulers and the businesses who bring in refuse would immediately see the full impact of this increase. Those who subscribe to curbside service would see a smaller passthru percentage increase of roughly 4-7%, since the disposal cost is only a portion of the cost of curbside service. Figure 1 shows what the impact on gate fees would be if we were to raise our tonnage and cubic yard fees to cover the initial $500K shortfall beginning July 1, 2011. The rate increases proposed below also include raising the overall minimum fee for disposal and an increase on several individual items that are significantly low given the size or special handling required. Figure 2 (NO IMPORT) which follows shows the overall revenue projections of the 39% increase if tonnage remains static. FIGURE 1 (Year 1 without import) LANDFILL RATES (39% increase) Minimum fee 30-gal container or bag 55-gallon container Mattresses/boxsprings Twin mattress Full/queen/king Box springs (any size) Couch Hide-a-bed (body) Overstuffed chair Volume (up to 5 cubic yards) Tonnage (over 5 cubic yards) Franchise Hauler tonnage Current rate $ 2.00 $ 1.00 $ 2.00 $ 5.00 Rates to cover $500K deficit $ 5.00 $ 2.00 $ 4.00 $10.00 $15.00 $10.00 $10.00 $15.00 $ 5.00 $ 7.25/yd $51.43/ton $43.09/ton

$ 4.00 $ 2.00 $ 5.25/yd $37.00/ton $31.00/ton

Lake County Landfill Origin Based on 2010 Landfill tonnage Qtr 1 2 3 4 Year TOTAL LF Rate Current Revenue I 39.00% New 2011 Revenue Difference I 0.00% New 2012 Revenue Difference I 0.00% I New 2013 Revenue Difference I 0.00% I New 2014 Revenue Difference LCWS-D 1,255.30 1,282.61 1,310.02 1,160.28 5,008.21 $31.00 $155,254.51 $43.09 $215,803.77 $60,549.26 $43.09 $215,803.77 $0.00 $43.09 $215,803.77 $0.00 $43.09 $215,803.77 $0.00 LCWS-TS 1,132.80 1,075.61 1,023.56 1,080.23 4,312.20 $31.00 $133,678.20 $43.09 $185,812.70 $52,134.50 $43.09 $185,812.70 $0.00 $43.09 $185,812.70 $0.00 $43.09 $185,812.70 $0.00 CWS 1,225.90 1,280.62 1,252.25 1,234.23 4,993.00 $31.00 $154,783.00 $43.09 $215,148.37 $60,365.37 $43.09 $215,148.37 $0.00 $43.09 $215,148.37 $0.00 $43.09 $215,148.37 $0.00

NO IMPORT - Covers Deficit only in Yr One, NO capital improvements or Reserve Savings LCTS 853.04 1,112.54 1,202.73 994.64 4,162.95 $31.00 $129,051.45 $43.09 $179,381.52 $50,330.07 $43.09 $179,381.52 $0.00 $43.09 $179,381.52 $0.00 $43.09 $179,381.52 $0.00 Bales 588.85 672.88 625.30 545.68 2,432.71 $31.00 $75,414.01 $43.09 $104,825.47 $29,411.46 $43.09 $104,825.47 $0.00 $43.09 $104,825.47 $0.00 $43.09 $104,825.47 $0.00 LPD-TS 613.08 522.95 320.18 85.00 1,541.21 $37.00 $57,024.77 $51.43 $79,264.43 $22,239.66 $51.43 $79,264.43 $0.00 $51.43 $79,264.43 $0.00 $51.43 $79,264.43 $0.00 Est LPD-D Est Self Haul Est S. Lake TOTAL TONS 5,668.97 5,947.21 5,734.04 5,100.06 17,999.72 40,450.00 Revenue $37.00 $72,475.23 $51.43 $100,740.57 $28,265.34 $51.43 $100,740.57 $0.00 $51.43, $100,740.57 $0.00 $51.43 $100,740.57 $0.00 $37.00 $203,500.00 $51.43 $282,865.00 $79,365.00 $51.43 $282,865.00 $0.00 $51.43 $282,865.00 $0.00 $51.43 $282,865.00 $0.00 $31.00 $326,768.83 $43.09 $454,208.67 $127,439.84 $43.09 $454,208.67 $0.00 $43.09 $454,208.67 $0.00 $43.09 $454,208.67 $0.00 $1,307,950.00 $1,818,050.50 $510,100.50 $1,818,050.50 $0.00 $1,818,050.50 $0.00 $1,818,050.50 $0.00
H G") GO 7c1 tri

1,958.79 1,958.79

5,500.00 5,500.00

10,540.93 10,540.93

$510,100.50 4 yr Deficit Reduction

Page 6 The possibility of applying a parcel fee to raise revenue was not examined in light of the fact that this option was rejected in the late 1990s after Proposition 218 passed by the voters, making it a requirement to have 2/3 voter approval for such a fee. The parcel fee in place up until that time was in fact eliminated by the Board of Supervisors, on staff's recommendation, because the gate fee revenue at that time was more than sufficient to meet operational, capital improvements, and reserve needs. Another Short-Term Option: Combine Wastestreams

1

Competition for waste is being pursued by many landfill operators who are facing the same revenue shortfalls as Lake County. With fewer landfills in the state, many jurisdictions have no other option but to export their refuse. The price of gate fees is becoming fiercely competitive as landfills struggle to cover their costs through accepting increased tonnage instead of increasing rates and pricing themselves out of the competitive market. However, even with this competition to attract tonnage, the cost of fuel and transportation is a significant factor in determining what is viable for the exporting jurisdictions. Although Lake County has been fiercely protective of our landfill space, in light of the serious problem we are facing with revenue loses, staff evaluated the request and proposal we received unsolicited from Solid Waste Solutions, Inc. (SWS), who operates the Ukiah Transfer Station for the City of Ukiah. As mentioned earlier in this backup, this proposal was shared with the Solid Waste Task Force. The long term goal of SWS and the City of Ukiah is to develop a 20-year export disposal contract. However, County staff made it clear that the County would not be interested in a long-term contract and instead would consider a short-term contract of five years with a five-year extension option. "Short-term" in the landfill business is five years. During the initial 5-year period, Lake County could use the revenue from the imported waste to offset large gate fee increases, replenish depleted reserves, evaluate and fund future landfill expansion that is scheduled to begin in the next year or so even without import, and track the future state of the economy, the waste industry and regulatory environment. During that same time period, SWS would explore the possibility of reopening the inactive Ukiah landfill to which they hope to eventually take the Ukiah waste. Depending on the evaluation of all of these factors, the two parties could decide whether or not it would be mutually beneficial to extend the term of the contract another five years. SWS estimates that up to 21,500 tons annually would need to be exported from their Ukiah Transfer Station to a landfill in another county as Mendocino County currently has no active landfill. This tonnage amount equates to three transfer trucks per day of pre-sorted materials for up to six days per week. Refuse leaving the Ukiah Transfer Station has already been floor sorted and large amount of recyclables removed. Staff has negotiated a tonnage fee for import of $38.25 per ton that is expected to generate approximately $850K annually for Lake County beginning in 2012. While our proposed fee is

Page 7 significantly higher than quotes SWS received from other landfills located in the North Bay area, they recognize that our proximity represents a significant fuel and time savings for them in transportation costs. Other landfills' rates are at least 50% less than our rates (specific rates are proprietary), but the cost of fuel, staff and equipment to transport the loads makes our price competitive. The County's proposed fee is designed to be static the first three years, then increase each year by the Consumer Price Index (CPI) or 4%, whichever is higher. The County ordinance bans the import of refuse except by contract with the Lake County Board of Supervisors. In addition, if your Board were to approve this import proposal, it would also have to be accepted by the City of Ukiah. The City has provided a signed letter supporting the terms upon which we have agreed (Attached Appendix B). The timing of the end of the first 5-year importation agreement would roughly coincide with the end of the current collection contract period with LCWS, as our franchise hauler, for a large portion of the unincorporated area. While this is not directly related to the sister company SWS, it is relevant that a wide variety of solid waste issues will be reviewed at the same time as they affect our overall solid waste decisions in 2017. How would import affect our local gate fees and revenues? • • Import would not begin until January 2012, but we have an immediate need for additional income, and we will continue to have a need after import ceases. There is no guarantee that Lake County or SWS will want to exercise the 5-year extension option. A variety of changing factors will determine that decision. Therefore it is imperative that we do not rely on import to erase our need for a rate increase to make us self-sustaining. Without a local increase, the County could return to its same precarious financial situation it faces today of not having enough local revenue to cover the operational costs, and a large increase would then have to be imposed at that time if further import was not desired or feasible at that time. A 5-year contract would allow us time to gradually increase gate fees over a 4-year period instead of imposing an immediate large increase in July 2011. In order to achieve this, staff would recommend a 16% increase in the first year (July 2011) with approximately a 6% annual increase in each of the next 3 years. (See Figure 2) Cumulatively this would achieve a slighter lower overall gate fee rate but produce the same local $500K gate fee revenue by the fourth year making the landfill operation self-sustaining by the time the initial 5-year contract period ends. This would place the County in a more stable financial situation to decide if further import is desired by either party. The bulk of the revenue from the contract would be applied to replenishing our reserve funds for expansion, LFG systems, required closure funding and other compliance or capital improvement projects without placing that additional burden on our ratepayers. If import is not allowed, gate fees will necessarily need to be even higher to cover these costs. After the initial 39% gate fee increase (without import) in July 2011, staff would return to your Board with a schedule of future gate fees that would be necessary to cover the capital costs. It is likely those increases could mirror the initial increase of 30-40% in the second and third years to raise those required compliance funds. Figure 3 shows how the gate fees would be raised over a 4-year period if import was accepted for an initial period of five years. Figure 4 is a spreadsheet showing how the

Page 8 revenues from import will replenish and augment our required reserve funding while allowing a slower and lower public rate increase over a 5-year schedule. FIGURE 3 - 4-Year Gate Rate Structure With Import LANDFILL RATES Minimum fee 30-gal container or bag 55-gallon container Mattresses/boxsprings Twin mattress Full/queen/king Box springs (any size) Couch Hide-a-bed (body) Overstuffed chair Volume (up to 5 cubic yards) Year 1 (16%) Year 2 (6%) Year 3 (6%) Year 4 (6%) Tonnage (over 5 cubic yards) Year 1 (16%) Year 2 (6%) Year 3 (6%) Year 4 (6%) Franchise Hauler tonnage Year 1 (16%) Year 2 (6%) Year 3 (6%) Year 4 (6%) Current rate $ 2.00 $ 1.00 $ 2.00 $ 5.00 Rates to cover $500K deficit $ 5.00 $ 2.00 $ 4.00 $10.00 $15.00 $10.00 $10.00 $15.00 $ 5.00

$ 4.00 $ 2.00 $ 5.25/yd

$ 6.10/yd $ 6.50/yd $ 6.85/yd $ 7.25/yd $37.00/ton $42.92 $45.50 $48.22 $51.12 $31.00/ton $35.96 $38.12 $40.40 $42.83

Lake County Landfill Origin Based on 2010 Landfill tonage Qtr 1 2 3 4 Year TOTAL LCWS-D 1,255.30 1,282.61 1,310.02 1,160.28 5,008.21 LCWS-TS 1,132.80 1,075.61 1,023.56 1,080.23 4,312.20 $31.00 $133,678.20 $35.96 $155,066.71 $21,388.51 $38.12 $164,370.71 $9,304.00 $40.40 $174,232.96 $9,862.24 $42.83 $184,686.94 $10,453.98
Ma

4 Yr deficit Reduction with Import Revenue - Same % allocation
ka5 EaIn

1,225.90 1,280.62 1,252.25 1,234.23 4,993.00 $31.00 $154,783.00 $35.96 $179,548.28 $24,765.28 $38.12 $190,321.18 $10,772.90 $40.40 $201,740.45 $11,419.27 $42.83 $213,844.87 $12,104.43

853.04 1,112.54 1,202.73 994.64 4,162.95 $31.00 $129,051.45 $35.96 $149,699.68 $20,648.23 $38.12 $158,681.66 $8,981.98 $40.40 $168,202.56 $9,520.90 $42.83 $178,294.72 $10,092.15

588.85 672.88 625.30 545.68 2,432.71 $31.00 $75,414.01 $35.96 $87,480.25 $12,066.24 $38.12 $92,729.07 $5,248.82 $40.40 $98,292.81 $5,563.74 $42.83 $104,190.38 $5,897.57

LPD-TS-D 613.08 522.95 320.18 85.00 1,541.21 $37.00 $57,024.77 $42.92 $66,148.73 $9,123.96 $45.50 $70,117.66 $3,968.92 $48.22 $74,324.72 $4,207.06 $51.12 $78,784.20 $4,459.48

Est LPD-D

Est Self Haul

Est
5_,W e

1,958.79 1,958.79 $37.00 $72,475.23 $42.92 $84,071.27 $11,596.04 $45.50 $89,115.54 $5,044.28 $48.22 $94,462.48 $5,346.93 $51.12 $100,130.22 $5,667.75

5,500.00 5,500.00 $37.00 $203,500.00 $42.92
$236,060.00

10,540.93 10,540.93 $31.00 $326,768.83 $35.96 $379,051.84 $52,283.01 $38.12 $401,794.95 $22,743.11 $40.40 $425,902.65 $24,107.70 $42.83 $451,456.81 $25,554.16

TOTAL TONS 5,668.97 5,947.21 5,734.04 5,100.06 17,999.72 40,450.00 Revenue $1,307,950.00 $1,517,222.00 $209,272.00 $1,608,255.32 $91,033.32 $1,704,750.64 $96,495.32 $1,807,035.68 $102,285.04 Import Revenue $38.25 20,000 Total Landfill Revenue per Yr tons/yr

LF Rate $31.00 Current $155,254.51 Revenue 16.00% I New 2011 $35.96 $180,095.23 Revenue $24,840.72 Difference I 6.00% $38.12 New 2012 $190,900.95 Revenue $10,805.71 Difference I 6.00% New 2013 $40.40 $202,355.00 Revenue $11,454.06 Difference I 6.00% New 2014 $42.83 $214,496.30 Revenue $12,141.30 Difference

$32,560.00 $45.50 $250,223.60 $14,163.60 $48.22 $265,237.02 $15,013.42 $51.12 $281,151.24 $15,914.22

$382,500.00

Jan-Jun

$1,899,722.00

$765,000.00

Jul-Jun

$2,373,255.32

$765,000.00

Jul-Jun

$2,469,750.64

$780,300.00 $2,692,800.00

Jul-jun
Yrs

$2,587,335.68 $9,330,063.64

$499,085.68
4yr Deficit Reduction

1-4

Page 10 How would import affect our landfill lifespan? • In 2005 the County updated its Preliminary Closure Post Closure Plan which was approved by the Waste and Water Boards in 2006-2007. At that pre-recession time, projections were that the landfill would reach its site life capacity by 2025-26. With that in mind, staff was expecting to begin to plan for expansion of the existing landfill in about 2011-12. However, the dramatic fall of 13,000 tons per year over the last few years and our reliance on tarps in lieu of using dirt for daily cover has extended the site life by at least five years. The projected 21,500 tons of import annual tonnage would return us back to our 2006 tonnage levels plus an additional 8,000 tons. The import tonnage would backfill the tonnage reduction we've seen as a result of the recession, and therefore it is expected that during proposed initial 5-year import period, our landfill sitelife would return to 2025-2030 projections, not including expansion. The next five-year optional period could be affected by the likely continued reduction in tonnage caused by increased diversions programs. However, the possibility of this new flow of refuse could support a RRF that is currently on the drawing boards for LCWS. Without import, there would not likely be enough local feedstock to support this type of facility, but with import, that opportunity would increase and so would the amount of diversion they could achieve by running both streams of tonnage through the RRF. The estimated diversion of an additional 30% removed from the Ukiah refuse would return us to 2006 tonnage rates. Removing 30% from local tonnage will reduce our overall tonnage even more. The amount of revenue generated by import during the first five years will provide the funds needed for expansion over the next 15 years instead of tapping local residents for the additional expense.

How would import affect curbside rates? • • A slowdown in the increase in gate fees that would be feasible if import were allowed would also cause a slowdown in the increase of curbside rates. Attached Tables 5, 6, and 7 are several scenarios for each of the three franchise zones in the unincorporated area. Following the suggestion of the SWTF, the scenarios show how rates would be spread among residential and commercial customers evenly or if instead residents picked up 75% of the impact. Each scenario is analyzed with import and without import. Each zone rate sheet also shows the additional costs (add ons) that would be allowed annually for the franchise haulers. Annual 4% increase • 50-60 cents/month/residential customer

The potential fuel surcharge (a separate item under consideration by your Board today that would be calculated on a quarterly basis and listed separately on the customer's bill. That surcharge would fluctuate quarterly with the price of fuel and appear as an addition or deduction depending how the rate compared to the last high fuel period in 2008. However, using the average fuel costs for the most current 3-month period available, Current fuel surcharge 4% 50-60 cents/month/ residential customer

Therefore, a net base increase of about 8% is likely before the import and cost split issue

Page 11 is determined. Those percentage increases for the different landfill rates and splits would be as follows: 39% gate increase LCWS Residential Commercial South Lake Zones 3 &4 Residential Commercial 50/50 split 7% 7% 75/25 split 10.4% 3.4%

40/0 4%

6.2% 2.1%

16% gate increase (Year 1) LCWS Residential Commercial South Lake Zones 3 & 4 Residential Commercial •

50/50 split 3% 3%

75/25 split 4.0 % 1.4%

1.7% 1.7%

2.5% <1.0%

The two cities will need to negotiate with their respective haulers to approve the methodology of applying a gate fee increase to their curbside customers.

Page 12 FIGURE 5

Lake County Waste Solutions

Rate Scenarios (to make up $500K annual deficit)
Landfill Rate - No import % increase Current rate 39% $ 1-Jul-11 Landfill Rate - With import % increase Current rate 37.00 16% $ 51.43 Jul 1 2011 6% $ Jul 1 2012 6% $ Jul 1 2013 6% $ Jul 1 2014 37.00 42.93 45.50 48.22 51.12

Monthly Rate*

Annual Increase*

I

Commercial Commercial Residential Residential 2 cy 1x/wk 32 gal 1x/wk Scenario 1 - No import (50/50 split between residential and commercial) % increase LCWS 157.03 11.69 $ Current rate $ 127.92 9.72 $ $ 167.69 $ 39% Year #1 (7/1/11) 12.50 $

Scenario 2 - No import (75/25 split between residential and commercial) LCWS 157.03 11.69 Current rate 14.64 $ 162.36 $ 12.91 Year #1 (7/1/11) 39% $

63.96

Scenario 3 - With import (50/50 split between residentia I and commercial) LCWS 157.03 11.69 $ Current rate $ 3.96 $ 161.40 12.02 $ Year #1 (7/1/11) 16% $ 1.80 $ 163.36 12.17 $ $ Year #2 6% 1.92 $ 165.46 12.33 $ $ Year #3 6% 2.04 $ 167.71 12.50 $ $ 6% Year #4

52.44 23.52 25.20 27.00

Scenario 4 - With import (75/25 split between residentia LCWS 157.03 11.69 Current rate 159.22 12.19 16% Year #1 (7/1/11) 160.18 12.42 6% Year #2 161.21 12.66 6% Year #3 162.31 12.92 6% Year #4 *Add-ons to monthly charge Fuel index example (using March info) 4% or CPI annual increase (7/1/11) TOTAL ADD-ONS 0.44 0.47 0.91 5.89 2.19 8.08

I and commercial)

$ $ $ $

6.00 $ 2.76 $ 2.88 $ 3.12 $

26.28 11.52 12.36 13.20

Page 13 FIGURE 6

South Lake Refuse Zone 3
Rate Scenarios (to make up $500K annual deficit)
Landfill Rate - No import % increase Current rate 1-Jul-11 39% $ Landfill Rate - With import % increase 37.00 Current rate $ 16% $ 51.43 Jul 1 2011 6% $ Jul 1 2012 6% $ Jul 1 2013 6% $ Jul 1 2014

37.00 42.93 45.50 48.22 51.12

Monthly Rate*

1 Annual Increase* 1

Residential Commercial Residential Commercial 32 gal 1x/wk 2 cy 1x/wk Scenario 1 - No import (50/50 split between residential and commercial) SL Area #3 % increase 174.64 Current rate 12.83 $ 39% $ Year #1 (711/11) 86.12 6.33 $ 181.82 $ 13.36 $ Scenario:2 - No import (75125 split between residential and commercial) SL Area #3 174.64 $ 12.83 $ Current rate 39% $ Year #1 (7/1/11) 178.23 $ 9.49 $ 13.62 $

43.06

Scenario 3 - With import (60150 split between residential and commercial) SL Area #3 174.64 $ 12.83 $ Current rate 35.33 13.05 $ 177.58 $ 16% $ 2.60 $ Year #1 (7/1/11) 13.47 0.99 $ 13.13 $ 178.71 $ $ 6% Year #2 1.00 $ 13.56 179.84 $ 6% $ 13.21 $ Year #3 $ 13.30 $ 180.97 $ 1.00 $ 13.64 6% Year #4 Scenario 4 - With import (75/25 split between residential and commercial) SL Area #3 $ 12.83 $ 174.64 Current rate 176.11 $ 13.15 $ 3.89 $ 17.67 $ 16% Year #1 (7/1/11) 176.67 $ 13.28 $ 1.50 $ $ 6.68 6% Year #2 1.51 $ 13.41 $ 177.23 $ 6.70 $ 6% Year #3 177.79 $ 13.53 $ 1.53 $ 6.72 $ 6% Year #4 Add-ons to monthly charge 4% Fuel index example (using March info) 4% or CPI annual increase (7/1/11) TOTAL ADD-ONS 0.53 1 $ 0.51 1 $ 1.05 $
7.241 $ 6.991 $ 6.39 1 $ 6.16 1 $ 86.92 83.83 1

14.23 $

12.54 $

170.75

Page 14 FIGURE 7

South Lake Refuse Zone 4
Rate Scenarios (to make up $500K annual deficit)
Landfill Rate - No import % increase Current rate 1-Jul-11 39% $ Landfill Rate - With import % increase $ 37.00 Current rate 16% $ 51.43 Jul 1 2011 6% $ Jul 1 2012 6% $ Jul 1 2013 6% $ Jul 1 2014

37.00 42.93 45.50 48.22 51.12

I

Commercial Residential Commercial Residential 2 cy 1xJwk 32 gal 1x/wk Scenario 1 - No import (50/50 split between residential and commercial) % increase SL Area #4 210.40 15.26 $ $ Current rate 7.52 $ 103.75 219.05 $ Year #1 (7/1/11) 15.89 $ 39% $ Scenario 2 - No import (75/25 split between residential and commercial) • SL Area #4 210.40 15.26 $ $ Current rate 214.72 $ 11.29 $ Year #1 (7/1/11) 16.20 $ $ 39%

Monthly Rate*

I Annual Increase* I

51.88

Scenario 3 - With import (50/50 split between residential and commercial) SL Area #4 210.40 15.26 $ $ Current rate 42.56 3.09 $ 213.95 $ 15.52 $ $ 16% (7/1/11) Year #1 16.23 1.18 $ 215.30 $ 15.62 $ $ 6% Year #2 16.33 1.18 $ 216.66 $ 15.71 $ $ 6% Year #3 16.44 1.19 $ 218.03 $ 15.81 $ $ 6% Year #4 Scenario 4 - With import (75125 split between residential and commercial) SL Area #4 210.40 15.26 $ $ Current rate 212.17 $ 4.63 $ 21.28 15.65 $ $ 16% Year #1 (7/1/11) 8.05 1.78 $ 212.84 $ 15.79 $ $ 6% Year #2 8.07 1.80 $ 213.52 $ 15.94 $ $ 6% Year #3 8.10 1.81 $ 214.19 $ 16.10 $ $ 6% Year #4 Add-ons to monthly charge 4% Fuel index example (using March info) 4% or CPI annual increase (7/1/11) TOTAL ADD-ONS $ 0.63 I $ 0.61 1 $ 1.24 $ 8.73 I $ 8.42 I $ 17.14 $ 7.60 I $ 7.32 1$ 14.92 $ 104.72 I 100.99 I 205.71

Page 15 What other impacts would import have? • The Eastlake Landfill is allowed under its permit to accept an average of 200 tons per day of refuse. Currently winter tons are running about 100-110 tons per day and summer tons are running about 120-130 tons per day. Staff does not want to or intend to ask for an increase in the daily tonnage allowance. Under the terms negotiated, SWS would be allowed to bring three transfer trucks a day (Monday through Saturday) to the landfill up to a maximum of 65 tons per day. Each truck weighs about 20 tons each. If they have a need for additional disposal and if our tonnage limit allows, they can request approval from the landfill supervisor to bring a fourth load. Transfer trucks would generally be arriving five days a week (Mondays through Fridays) unless our landfill daily tonnage limits requires us to turn away a load during the week. Saturday deliveries would only be necessary if they have not been able to dispose of their hauled refuse between Monday and Friday. The trucks would travel from Ukiah to our landfill using Hwy 29, as the connecting route, instead of Hwy 20. LCWS has been planning for some time to build and operate an RRF (Resource Recovery Facility) at its Soda Bay yard at no cost to the County, but funded from their curbside and transfer station revenues. The building materials are already on site, and the permits and pad are in place. However, plans were delayed due to the economic downturn and associated reduction in tonnage that prevented such a facility to be financially feasible. The import of the waste could provide the required wastestream to support the RRF. With an RRF facility, LCWS anticipates it could remove an additional 30% of the waste coming in from its loads in the County and from Ukiah before transporting the rest to the Eastlake Landfill. They are also considering sending more of their loads from their franchise area in Lake County through the same RRF including the loads from the City of Clearlake, further reducing the waste that would end up at our landfill, which in turn increases diversion and extends our landfill life. It is anticipated the end result would be that we would return to approximately the same tonnage and revenue that we were receiving in 2005/06, meaning that we would recapture our lost revenue of $5-600,000 annually and realize an additional $250,000 annually. This, along with our current revenues would provide sufficient funding to cover the costs of our mandated capital improvement projects of landfill gas extraction and remediation, air and groundwater monitoring, landfill expansion, and operations without placing the entire burden on the residents of Lake County through significant rate increases of approximately 39% or more as mentioned earlier in this report.

• •

COUNTY OPTIONS Option 1 (No Import): The County could continue to ban the import of any refuse and place the responsibility of covering the deficit on the County residents through increased landfill and curbside fees. The increase would include a 39% increase of landfill gate fees to cover the current deficit. Staff recommends that increase become effective July 1, 2011, to allow the franchise haulers to pass through the rate at curbside at the normal time of their annual increase. The increase on curbside rates would range from 7-10% increase for residential customers. This option does not address the funding for major capital improvement or equipment costs, and staff would return at a later date with recommendations for further increases to accommodate capital improvement programs on the

Page 16 horizon. As part of Option 1, your Board may choose from two scenarios to split the curbside rate impact: Scenario A. 50/50 split between residential and commercial curbside customers Scenario B. 75/25 split between residential and commercial curbside customers Option 2 (With Import): This option includes importation of Ukiah-area refuse beginning January 2012 after the LCWS contract with Potrero Hills expires. Under this option, staff has calculated that a 16% local increase would begin July 1, 2011, followed up by three years of a 6% increase. The curbside passthrough is estimated to be about 3-4% in the first year, depending on which cost-split option. This option funds major capital improvement/equipment costs without further projected gate fee increases. Your Board may choose from two scenarios to split the curbside rate impact: Scenario A. 50/50 split between residential and commercial curbside customers Scenario B. 75/25 split between residential and commercial curbside customers STAFF RECOMMENDATION: Staff recommends Option 2. To implement Option 2, the following actions are necessary: 1) 2) Approval of the attached contract with LCWS to import waste beginning January 1, 2012, with an option for a five-year extension Approval of a gate fee increase schedule over a period of four years beginning July 1, 2011, which includes new minimums for a variety of materials and a tonnage and volume rate increase of 16% the first year and 6% on July 1 st of each of the following three years. Selection and approval of the preferred curbside rate split for curbside rates between commercial and residential customers.

3)

To implement Option 1 which allows no import, the following actions are necessary: 1) Approval of the attached gate fee increase schedule which includes new minimums for a variety of materials and a tonnage and volume rate increase of 39% effective July 1, 2011. Selection and approval of the preferred curbside rate split for curbside rates between commercial and residential customers.

2)

Attachments: Import contract Gate Fee Ordinance with two options for Exhibit A for import/no import Appendix A - SWTF item Appendix B - City of Ukiah letter cc: Franchise Haulers, Cities of Lakeport and Clearlake
SA2011 solid waste rate increase.wpd

BOARD OF SUPERVISORS, COUNTY OF LAKE, STATE OF CALIFORNIA 2 3 4 5 6 7 8 9 10 11 THE BOARD OF SUPERVISORS OF THE COUNTY OF LAKE, STATE OF ALIFORNIA ORDAINS AS FOLLOWS: ection 1: The purpose of this ordinance is to establish a schedule of gate fees and special AN ORDINANCE AMENDING GATE FEES TO BE CHARGED AT THE EASTLAKE LANDFILL FOR COUNTY SOLID WASTE SERVICES ORDINANCE NO.

andling fees to recover the costs of solid waste services provided by the County of Lake. ection 2: The amounts set forth in the Disposal Fee Schedule attached hereto as Exhibit

12 `A" are hereby established as the gate and special handling fees for acceptance of refuse at the 13 14 15 16 17 18 19 20 21 22 23 24 25 Chairman, Board of Supervisors 26 27 28 TTEST: KELLY F. COX Clerk of the Board APPROVED AS TO FORM: ANITA L. GRANT, County Counsel ounty's Eastlake Sanitary Landfill. ection 3. All ordinances or parts of ordinances or resolutions or parts of resolution in

onflict herewith are hereby repealed to the extent of such conflict and no further.. ection 4. This ordinance shall take effect on the 1st day of July, 2011, and before the

xpiration of fifteen days after its passage, is shall be published at least once in a newspaper of eneral circulation in the County of Lake. The foregoing ordinance was introduced before the Board of Supervisors on the ays of 011. AYES: NOES: ABSENT OR NOT VOTING: , 2011, and passed by the following vote on the day of

Exhibit A - One-year Schedule

COUNTY OF LAKE EASTLAKE LANDFILL DISPOSAL FEE SCHEDULE
Effective July 1, 2011 Franchise Hauler Fees
Note: Lakeport Disposal Fees fall under Public Tipping Fees Tonnage Rate (per ton) Volume Rate (holidays) Loose loads Compacted loads $43.09 $6.81 $20.43

Public Tipping Fees
Minimum fee $5.00 $2.00 $4.00

30-gallon container or bag 55-gallon container
Mattresses/box springs

Twin mattress Full/queen/king mattress Box springs (any size)
Couch

$10.00 $15.00 $10.00 $10.00 $15.00 $4.00

Hide-a-bed
Stuffed Chair Volume (up to 5 cubic yards) Tonnage (over 5 cubic yards) Non-recycling Surcharge Loads with more than 25% recylables or 4 cu yds, whichever is less Unsecured Load Surcharge Vehicles which arrive at facility with unsecured loads

$7.25
$51.43 Fee Doubles $15 minimum

$10 pickups/trailers $100 vehicles - 25,000 lbs gvw

Exhibit A - 4-year schedule

COUNTY OF LAKE EASTLAKE LANDFILL DISPOSAL FEE SCHEDULE
Effective July 1, Effective July 1, Effective July 1, Effective July 1, 2011 2012 2013 2014

Franchise Hauler Fees
Note: Lakeport Disposal Fees fall under Public Tipping Fees Tonnage Rate Loose loads (holidays) Compacted loads (holidays)

$35.96 $5.68/cy $17.05/cy

$38.12 $6.03/cy $18.08/cy

$40.40 $6.39/cy $19.16/cy

$42.83 $6.77/cy $20.31/cy

Public Tipping Fees
Minimum fee 30-gallon container or bag 55-gallon container Mattresses/box springs Twin mattress Full/queen/king Box springs (any size) Couch Hideabed Stuffed Chair $5.00 $2.00 $4.00 $10.00 $15.00 $10.00 $10.00 $15.00 $4.00 $5.00 $2.00 $5.00 $2.00 $5.00 $2.00

$10.00 $15.00 $10.00 $10.00 $15.00 $4.00

$10.00 $15.00 $10.00 $10.00 $15.00 $4.00

$10.00 $15.00 $10.00 $10.00 $15.00 $4.00

Volume (up to 5 cubic yards) Tonnage (over 5 cubic yards) Non-recycling Surcharge
Loads with more than 25% recylables or 4 cu yds, whichever is less

$6.10 $42.92

$6.50 $45.50

$6.85 $48.22

$7.25 $51.12

Fee Doubles $15 minimum

Fee Doubles $15 minimum

Fee Doubles $15 minimum

Fee Doubles $15 minimum

Unsecured Load Surcharge
Vehicles which arrive at facility with unsecured loads $10 pickups/trlrs $100 vehicles with 25,000 lbs gvw $10 pickups/trlrs $100 vehicles with 25,000 lbs gvw $10 pickups/irks $100 vehicles with 25,000 lbs gvw $10 pickups/trlrs $100 vehicles with 25,000 lbs gvw

APPENDIX A

COUNTY OF LAKE
Public Services Department 333 Second Street Lakeport, CA 95453 Telephone (707) 262-1618 FAX (707) 262-0973

KIM KEVIN CLYMIRE Director CAROLINE C. CHAVEZ Deputy Director

STAFF REPORT

To:

Solid Waste Task Force Members Caroline C. Chavez, Deputy Director Eastlake Landfill Revenues/Fees and Discussion of Lake County Waste Solutions (LCWS) Request to Import Refuse from Mendocino County. October 6, 2010

From:

Subject:

Date:

BACKGROUND - DECLINING TONNAGE, REVENUE AND ECONOMY

The Eastlake Landfill's revenues have been significantly impacted by the downturn in the economy and by our recycling program success driven by voluntary recycling and the state's A.B. 939 bill that requires a 50% recycling diversion. The annual cost of solid waste operations has historically hovered near the $2.3 million mark, and up until fiscal year 2006/07, our revenues ranged between $2.4-2.5million and covered the costs of salaries, equipment, and regulatory requirements. It also allowed us to set aside money in our reserve accounts for equipment replacement, eventual expansion, and mandated funds for closure and thirty years of post closure maintenance. However, beginning in fiscal year 2007/08 our revenues dropped by approximately $500,000 from its $2.5 million revenue high due to the significant decline in the construction industry that had helped fuel the economy. As we have continued to successfully promote curbside service with single-stream recycling plus a variety of low-cost and no-cost recycling programs, our customer numbers and tonnage are still dropping. In 2003 Quackenbush Material Recovery Facility (MRF) opened and began taking green waste, dirt, concrete, asphalt and rock to divert those materials from our landfill. The transfer station represented 50% of all customers in 2002, but increases in curbside customers and recycling, caused the customer share there to drop by 20,000 customers to 35% in 2004. Lakeport's implementation of mandatory service further reduced transfer station customers and tonnage, and by 2009 the transfer station customer share dropped to 20% of the total customers between the landfill and transfer station, and only represented 10% of the total tonnage being delivered to the landfill. Our progressive programs helped increase our diversion and extend the life of our landfill, but it also made us a victim of our success by reducing our revenues. The reduction in transfer station tonnage and customers allowed the County to reduce the number of operational days of the transfer station in 2004 from 7 days to 5 days and then to close permanently in December 2009. LCWS' Transfer Station on Soda Bay Road was able to pick up

Page 2 what was left of self-haul loads as well as accept refuse from Lakeport Disposal that was previously going to the transfer station. Closing the transfer station allowed the County to save about $250K annually in salaries and operational costs including the expensive repairs and annual maintenance to the Amfab compactor, transfer trucks and trailers, as well as eliminating fuel and utilities costs. The failure of the economy to rebound, also known as the recession, is reflected in the furthering decline in refuse and revenue. The decline in refuse is in part a result of the increased recycling LCWS is able to do on their transfer station tipping floor and also in part is a result of residents and businesses doing their part to recycle in order to reduce their refuse and disposal costs. The effect was that even though we reduced our operation expenses down to $2 million resulting from the transfer station closure, total gate fees in 2009/10 were down from approximately $2.0 M to $1.5M, leaving a $500,000 deficit. Since the high point in the construction boom five years ago, our revenues have dropped from a high of $2.5 million to $1.5 million last year, but we have only been able to reduce our expenses to $2 million based on the Transfer Station closure. RATE HISTORY AND CALCULATION The last rate increase for the landfill was implemented in 1994 as staff evaluated the cost to expand the landfill into Area II, the canyon where refuse is currently being disposed and to meet new environmental regulations and recycling diversion requirements of 50% by 2000. The rate increase was reviewed by a committee who was provided information regarding construction requirements and costs. The committee's recommendations were forwarded to the Board of Supervisors for adoption with new revenue projections estimated at approximately $1 million. At the same time, the parcel tax fee (that has since been eliminated) was raised to $37 per single family dwelling which was expected to generate $1.1 million in annual revenue. However, the passage of Proposition 218 in November 1996 lead staff to recommend the eventual elimination of the parcel fee for FY 97/98 because the new legislation categorized the fee as a tax and would have required a two-thirds voter approval. This decision was determined to be feasible because revenues were deemed sufficient, without the parcel fee, to cover the operational costs at that time. In 2002 rate adjustments were made to convert to scale operations at the landfill for large loads, and in 2003 a rate increase adjustment was made at the Transfer Station to a reflect the extra processing and transporting cost associated with the refuse received there. FILLING THE DEFICIT GAP The shortfall in FY 09/10 budget was partially covered by a half-year operational savings from the transfer station closure in December 2009 and sale of the transfer trucks and trailers and loader from the transfer station. In addition, in order to have a structurally balanced budget, for FY 09-10 and FY 10-11 staff had to adjust reserves downward by moving reserve funds into the operating budget. Franchise haulers proposed a large rate increase to staff this year based on the loss in revenues from recycling commodities and the State's decision to reduce recycling subsidies to the franchise haulers from California Redemption Funds (CRV) revenues. The State used those fees to help balance the State budget shortfall instead. Staff negotiated with the franchise haulers to lower their increase request of 20% for a single year to 4% per year for the next five years (see attached staff report). At the same time, staff informed the Board of Supervisors that a proposal would likely be brought to

Page 3 the Board this year for a corresponding landfill rate increase, effective for four years, beginning July 1, 2011. However, since that time we have further evaluated the deficit gap that, despite the savings from the transfer station closure, is currently still in the $500K range and we have also evaluated the cost of upcoming capital improvement requirements. Upcoming capital improvements include: 1) Installation of a small landfill gas (LFG) extraction system to reduce the level of LFG in one perimeter LFG probe. Completion Deadline: Aug 2011 Estimated Cost $100-125,000 Installation of a full landfill gas system around the entire perimeter of the landfill is a new requirement under AB32 unless Proposition 23* on the November ballot defers it until the unemployment rate drops to 5.5%. Staff has performed a LFGTE (landfill gas to energy project) feasibility study and determined there may be an opportunity to produce some energy to sell back to PG&E, but the cost of the construction means we may try to find an investor to build the system, but we would still incur design and permitting costs in the next 12-18 months. Completion Deadline: 18-24 months* Estimated Cost $3-5 million Planning for future landfill expansion is a regulatory requirement that is triggered when our remaining capacity is only enough to accommodate 15 years of refuse. The intent is to expand south from our current tipping area, to other county-owned property adjacent to the current tipping area, but the time to develop the plan, seek permit approval by the Waste and Water Boards, and to construct the project is estimated at about $3-5 million dollars. The planning process would need to begin next year because we are currently in the 16-year range. Planning and permitting and the associated costs will begin in 2011 and is expected to take an estimated five years. Construction could begin in about 7-10 years depending on fill rate. Planning Start Date: 2011/12 Required completion date:2025 Estimated Total Cost $3-5 million Other upcoming or significant on-going costs include: 4) Additional regulatory tracking/monitoring requirements are constantly increasing. We spent over $62,000 on these services last fiscal year for ground and surface water monitoring. When the new Air Quality and Landfill Gas (LFG) monitoring and reporting requirements become effective in the next 12 or so months, we can expect to spend at least an equal amount annually for those services for the foreseeable future unless AB 32 is.deferred or delayed. Waiver or subsidy of disposal costs for many materials banned from the landfill.

2)

5)

Page 4 In an effort to encourage proper disposal and discourage illegal dumping and personal accumulation, the Solid Waste Division pays for the bulk of the disposal costs of tires, Hazmobile Events costs, used oil, sharps, appliances, illegal dumping, roadside litter, and the Revitalization Program for disposal of old trailers and mobile homes. Last year those costs amounted to $193,000, and only about $30,000 is covered by grant funds. Equipment fuel, maintenance, repair and replacement. Our current heavy equipment fleet consists of several very large scrapers, compactors, and loaders. We budget and spend nearly $100,000 annually for maintenance and repair of this equipment and another $100,000 in diesel fuel. Most recently we bought a new compactor that cost $450,000, but we also just sent its backup for repair and that repair could cost up to $60,000. The good news is that all of our heavy equipment has been replaced over the last several years and should last for several years to come. Sales tax. The County pays the Board of Equalization $60-70K annually in what is equivalent sales tax for the tonnage we accept. At $1.40/ton that amount will increase if we return to higher tonnage amounts. Closure/Postclosure Funding: We currently have over $4.5 million in restricted reserves for closure/po stclo sure costs and generally have to increase it by $100-200K annually depending on the rate of fill and the amount of remaining landfill space.

6)

7)

8)

FUNDING OPTIONS Initial Concept: Initially we had planned to propose a rate increase of 4% annually for the next four years beginning July 1, 2011. This was designed to dovetail into the 4% rate increase for our two franchise haulers (who requested 20% for FY 2010-2011 but agreed to a 5-year phased increase) that was approved by the Board of Supervisors in July 2010 to begin July 1, 2010. The board agenda item is attached for your reference about the franchise hauler increase and includes a discussion of the possible gate increase with its impact on future curbside rates. The 4% rate increase we originally considered would have be the equivalent to 25 cents increase per cubic yard per year or a $1 increase over the next four years beginning July 2011. The public tonnage fee of $37 was originally anticipated to increase the same 4% ($1.50 per year), and our franchise hauler fee of $31 would increase $1.25/year. However, utilizing for calculation purposes the low tonnage numbers from refuse received in place from 2009, this would only translate to an additional $61,000 in revenue the first year, $122,00 the second year, $186,000 in the third year, and $247,000 in the fourth year. By itself, this increase would not cover our current deficit, unless the economy and tonnage rebounds. Unfortunately there seems to be no near-future improvement in the economy, and the data we have collected since that time on the costs of required capital improvements could necessitate a much higher increase. To cover the current $500K annual deficit if there is no significant improvement in the economy, the increase would need to be approximately 33%, a rate that would cause significant hardship, illegal dumping and/or personal accumulation of trash among our residents and businesses. That does not begin to cover the cost of the impending capital improvement

Page 5 requirements over the next five years. LCWS Proposal: C and S Waste Solutions, the parent company of LCWS, operates the Ukiah Transfer Station for the City of Ukiah. Currently, the refuse they receive there from the city and surrounding unincorporated areas of Mendocino County is hauled to Potrero Hills Landfill in Fairfield, but their contract expires at the end of 2011. Consequently, the California Integrated Waste Management Board is requiring the City of Ukiah to develop a 15-year plan for the disposal of their refuse, and LCWS is seeking viable proposals to dispose the Mendocino refuse at another facility, other than Potrero Hills. Their goal is to develop a 20-year contract, but they recognize that we do not have sufficient information on the impact, so they are willing to propose a 2-5 year proposal with an option to extend the proposal for the remaining 15-18 years. They are estimating that up to 22,500 tons annually would need to be exported from their Ukiah Transfer Station, that equates to three transfer trucks per day, and disposed of in another county. This includes the reduction of tonnage by the floor sorting they are currently doing a the Ukiah Transfer which they estimates reduced the tonnage by 30%. Other possibilities they are proposing include the construction of a Resource Recovery Facility (RRF) adjacent to their Lakeport transfer station facility. The facility could potentially reduce the refuse delivered to it from Ukiah destined for our landfill by an estimated additional 30%. They are also considering sending all of their loads from their franchise area in Lake County through the same RRF including the loads from the City of Clearlake, further reducing the waste that would end up at our landfill, that would in turn reduce our revenues for tipping fees. As a result of this proposal we believe the end result would be that we would return to approximately the same tonnage and revenue that we were receiving in 2005/06, meaning that we would recapture our lost revenue of $500,000 annually and then some. This, along with our current revenues would provide sufficient funding to cover the costs of our mandated capital improvement projects of landfill gas extraction and remediation, air and groundwater monitoring, landfill expansion, and operations without placing the entire burden on the residents of Lake County through significant rate increases of approximately 33% as mentioned earlier in this report. Discussion Points 1) Our County Code does not allow the import of refuse. The intent of the code is to preserve the landfill space for Lake County's use. If this concept/contract is approved by the Board of Supervisors, the code will need to be modified to reflect the specific exception. Under this proposal, LCWS proposes to bring to our landfill, by importation from out of County and from within the County, tonnages at a level that would generally equate to the tonnage we were receiving from them prior to 2008. This will allow us to recapture our $500,000 revenue loss and return to pre-recession revenue levels after they reduce the total tonnage by 30% by floor sorting or more if they decide it is economically feasible to construct an RFF at their Lakeport facility to further reduce the tonnage. We have a maximum allowable amount of daily tonnage of 200 tons that we can accept under our current permit with the Waste Board. We do not want to amend our permit to accept LCWS loads beyond an amount that would require amending our permit. We have

2)

3)

Page 6 discussed only accepting deliveries from LCWS with their representatives on days when our daily tonnage rates are historically low. Otherwise, LCWS would have to transport their loads to another landfill when our limits would be exceeded by acceptance of their loads. We will reserve first rights to our landfill space. Therefore, any likely daily exceedence in tonnage would mean that we would refuse the LCWS loads. This is a common practice for landfills, and LCWS is aware of the possibility and would need to plan accordingly. 4) The County would propose an out-of-county tipping fee that is higher than the current public tipping fee. Currently we are considering a fee of $40 per ton, which is $3.00 per ton more than our public rate for in County refuse and $7 more than the current franchise hauler rate, which equates to a $157,500 annual non residence refuse fee. At that rate, 22,500 tons would be $900,000 in revenue annually to Lake County but that may be adjusted down with increased diversion through better recycling. This fee may rise as other tipping fee increases go into effect, or be set to an average that would cover the first trial period rate increases. We want to explore ways to regain any lost landfill space. LCWS is considering the option to reactivate the Mendocino Landfill that is currently inactive. If they are successful, we want to discuss the potential option of utilizing an equivalent amount of their space to reclaim the space we will lose if this proposal is approved by the Lake County Board of Supervisors. The cost of that space would need to be negotiated and would have to include transportation. export costs. The approval of the import proposal is not contingent on a landfill space exchange and stands alone. Even though the import of refuse would accelerate our current, recession driven, reduced rate of fill, it would only bring the fill rate back to the same rate as a few years ago before the recession occurred. Landfill expansion planning will need to begin this year because we have less than 15 years of capacity left which is projected to be 2025. After discussing the concept with our consultants, we have a reasonable level of comfort that we could obtain an expansion permit since we own the adjacent property and have an existing facility, but it would likely take 2-5 years to confirm the Waste and Water Board support/approval. It is anticipated the expansion would provide us with at least another 25 years of capacity to 2060. Acceptance of the LCWS proposal may provide an opportunity to replace the bulk of our deficit in a viable timeframe as well as fund capital improvements needed in the near future and fund the planning and construction of the next phase of the current landfill to allow us many more years of disposal. However, the decision and implementation of this import proposal depends on a fairly quick timeframe of 3-12 months. Doing so could prevent a significant need for an increase in our tipping fees for our residences beginning sometime in mid 2011 and would allow us to keep the increase to only 4% for four years instead of trying to cover all of our costs alone. (See attached table of rates and projected revenues) Any significant increase above 4% for Lake County citizens would certainly cause a hardship for our residents and businesses and would likely increase illegal dumping and personal accumulations of trash significantly. Whatever increase we apply to our landfill will be passed through to curbside customers and

5)

6)

7)

8)

9)

Page 7 by the LCWS transfer station. Each franchise hauler and jurisdiction will need to assess what that increase would mean to them and their residents. LCWS and Southlake Refuse have already calculated the impact of the 4% landfill rate. 10) LCWS also has parameters of what is an acceptable rate which is based on the cost of transport plus the landfill fee. That fee also needs the approval of the Ukiah City Council who is looking for a solution for a minimum of 2-5 years plus a viable opportunity to extend the agreement over the next 15-year period to meet the required 15-year disposal plan required by the Waste Board Other - There are clearly other issues that will be identified and will need to be considered as this proposal is evaluated. SWTF members can help develop those additional issues.

11)

Solid Waste staff is seeking the recommendation of the SWTF for the Board of Supervisors consideration on whether or not to pursue negotiations with LCWS for the import of refuse for a limited or extended period of time. Our revenue needs and their space needs may create a "win/win" that would allow us to meet our disposal and regulatory costs requirements. If the SWTF agrees that this option is preferable to a significant gate fee increase, we will continue to explore the option and bring the results to the Board of Supervisors as quickly as possible. cc: Kim K. Clymire, Public Services Director Attachments: Franchise Hauler 2010 Rate Increase Agenda Item Income/Reverthe History Revenue Calculation Spreadsheet
S:\Solid Waste\FINANCE\Rate Increases\SWTF agenda for gate fee and import discussion.Wpd October 6, 2010 (2:49pm)

COUNTY OF LAKE
Public Services Department
333 Second Street Lakeport, CA 95453 Telephone (707) 262-1618 FAX (707) 262-0973

KIM KEVIN CLYMIRE Director CAROLINE C. CHAVEZ Deputy Director

MEMORANDUM To: From: Honorable Board of Supervisors Kim K. Clymire, Director Caroline C. Chavez, Deputy Director Franchise Haulers Contract Amendments June 29, 2010

Subject: Date: Background .

The local, State and national economy has had an enormous impact on the revenues of both of Lake County's franchise haulm's. Similar to what our Eastlake Landfill experienced in the last two years, total revenue and refuse collected has dropped significantly even though the cost of operations has not seen a similar reduction. The landfill and the franchise haulers provide a service similar to other utilities such as water, power, and sewer, and ensuring their financial ability to continue providing refuse services is a necessary aspect and cost of residing and doing business in Lake County. The loss of refuse from franchise haulers customers like Konocti Harbor Inn, reduction in refuse from other commercial customers, and the near absence of refuse from the construction industry has lowered revenue for both the County's Waste Management Division and the two franchise haulers contracted for curbside collection and recycling. For many years, the commercial base of a refuse collection company has supported the residential base to keep residential rates low and attractive. The loss and/or reduction in commercial refuse has had a major impact on revenues and therefore commercial collections can no longer subsidize residential collection as much as it has in the past. On a regional and State level, the State has withdrawn many of its recycling subsidies previously paid to franchise haulers for collecting recyclables. Funds for these subsidies are generated from California Redemption fees charged to consumers for beverage containers. Payments to the recycling center operators were designed to reimburse the operators for the redemption fees they pay out to residents and to cover other recycling programs. Over the past year the State has been using those funds for its other budgetary shortfalls. Therefore, those funds are significantly reduced and can no longer be considered a reliable way to subsidize local no-cost recycling programs. As a result of the State taking away those funds, Lake County Waste Solutions (LCWS) has lost approximately $50K in State reimbursements for recyclables and Southlake Refuse (SLR) has lost approximately $30 annually. While well-meaning and responsible residents try to recycle more to save our natural resources, extend the life of our landfill and save on disposal costs, the commodities market which buys the recycled materials from our franchise haulers has experienced a significant revenue reduction in the

Page 2 last two years for scrap metal, plastic, cardboard, paper, etc. As a result, our franchise haulers experienced deep cuts into the recycling revenues that helped keep refuse rates low. SLR estimated a loss of nearly $200K a year from the commodities highs. To compound the problem, some customers, in order to save on disposal costs or from lack of proper recycling knowledge, are throwing more non-recyclables in their recycling bin resulting in contaminated loads and in turn adding additional operational expense to separate contaminants from recyclables. Despite these financial downturns, the franchise haulers are still under contract to provide service to all customers in the unincorporated area, and the current Consumer Price Index (CPI), that is part of their contract to cover increased operating costs, is so low that the haulers are only entitled to a 1.98% increase, an amount that would not allow them to sustain their current operations. Last year's CPI was also so low that they opted not to ask for the increase hoping the economy would rebound, which as we all know, has not. County's Waste Management Division Revenue Discussion The County's Waste Management Division staff is also examining its landfill rates to determine if there will be sufficient funds to pay for operations, the upcoming regulatory requirements that include a landfill gas system, and the cost ofplanning and implementing landfill expansion. Planning for the landfill's expansion or relocation or exportation is a regulatory requirement that is triggered to begin once we have fifteen years or less capacity left in the current permitted area. We are only one to three years from that trigger point. Staff supports landfill expansion because we are fortunate in that we own over 40 acres south of our current tipping area and plan to apply for approval to expand. If approved, that expansion would extend the life of the landfill to approximately 2060 making us the envy of every county in the state. Preliminary estimates show we will need to raise the landfill rates to cover these costs. To avoid impacting the citizens and businesses in the current economy, staff proposes to initiate landfill gate fee increases beginning next year instead of this year (which is not to be confused with hauler rate increases). The proposal will be brought to the Solid Waste Task Force to review the needs and costs. The last landfill increase was before 1995, and in the interim, the parcel tax that helped support operations was eliminated because the passage of Proposition 218 would have required a vote to continue the parcel fee. Currently we are considering an increase of about 4% per year to gradually raise the landfill rates. This translates to a 250 increase per cubic yard each year beginning next year and continuing for at least four years. For tonnage charges, the rate would increase $1.50 per ton for the general public and $1.25 per ton for our franchise haulers. Even with our proposed increases, our landfill rates would still be significantly lower than disposal sites in surrounding areas (see attached charts). However, whatever rate we adopt would necessarily be passed through by the franchise haulers to their customers. Universal Collection Consideration A majority of households already have voluntarily signed up for curbside service. Staff estimates approximately 85% of households are already customers. Most of the remaining residents and businesses self-haul their refuse responsibly. Only a small percentage create the illegal dumping and personal accumulation problem.

Page 3 Given the high level of participation that already exists, universal or mandatory collection would be difficult or unwarranted in many areas where the non-publicly maintained roads are not accessible or safe for collection vehicles. Those customers would have to bring or leave their carts out on an accessible road. Most of the residents who have this problem choose to directly haul to the disposal sites. Other residents and part-time residents do not have sufficient refuse to warrant year-round service. There would be a significant amount of work to determine who could opt out and for what reasons and when. Changes in occupancy and ownership would need to be tracked by someone, which would be particularly difficult with the high vacancy rate in buildings and the high transiency rate of renters. Currently the franchise haulers have no mechanism to collect accounts payable other than cutting off service. These are some of the reasons that thirty of the State's fifty-eight counties do not have mandatory residential or commercial service in their unincorporated area except in some densely populated areas. According to a survey recently conducted by R3 consulting Group on the behalf of one of their clients, seventeen counties have mandatory service in some but not all unincorporated areas. Santa Clara County is currently the only county with both mandatory commercial and residential service required throughout their unincorporated areas, and Monterey County is planning to implement it county-wide in October 20 IO. .Contra Costa has mandatory collection throughout its unincorporated residential areas, but they had to have legislation carried by their State representative to allow their franchise hauler(s) to bring unpaid accounts to the County to be placed on the property tax rolls. Lake County has the same option to seek legislation to allow this mechanism, but the repayment of the accounts receivable is not a guarantee of payment and would still cause a significant delay in any payment of a delinquent payment. County-wide implementation of mandatory service is not warranted at this time from the perspective of the current voluntary participation and economic climate. This additional expense could be an unnecessary and unwelcomed mandate when we have so many seniors, unemployed, and low-income households. Targeting densely populated areas may be an option, but most of those already have a high percentage of voluntary customers. Therefore, we propose to continue to attract voluntary customers with convenient and low-cost curbside services and not add additional government to our residents unnecessarily. Franchise Hauler Negotiations The franchise hauler contract specifies an annual allowable rate increase of 90% of the CPI plus extraordinary costs. Low CPI's and mounting regulatory requirements over the past several years have lead us to other creative ways to fund the operational revenue needs of the franchise haulers. In an effort to keep the customer rates low during the last twelve years of the current contract, we have reduced and/or eliminated some of the payments we required from the haulers including payments for marketing, the Hazmobile program, and tire disposal cost sharing. The franchise haulers also completed their 10-year payback of the improvements made to Davis and Moss Streets which serve as access roads to the landfill. Finally we reduced their disposal tonnage rates to help avoid higher customer rates. Most of these cuts were funded out of the Waste Management operations and/or grants we receive. When fuel costs skyrocketed, the County allowed a rate increase to offset those increased costs for the previous year. When the State mandated new air quality standards for garbage trucks and required each jurisdiction to ensure the funding for franchise haulers to meet these requirements by purchasing new trucks, we extended their contract from 2013 to 2018 in lieu of recommending a significant customer rate increase.

Page 4 We have been successful in keeping customer rates very low to encourage voluntary participation for customer service and to discourage illegal dumping and personal accumulation of trash. Our options to help reduce the haulers' costs have been exhausted, but we still want to maintain our attractive, award-winning, and exemplary curbside service and extensive recycling programs. We estimate 85% of households in the unincorporated area have curbside service and the vast majority of those households have increased their recycling dramatically. The Waste Management staff has been in negotiations with the County's two franchise haulers about customer rates for approximately six months. The initial requests approached 17% and included funding for a replacement program for aging carts, backfilling the loss of State revenues and other losses resulting from the economic downturn and commodity prices that more than offset the more stable fuel costs we currently have. Staff rejected that proposal, in part because there is no requirement for us to cover all revenue losses from reduced recycling commodity markets. However, we recognize that our successes in recycling, low rates and the recession have lowered overall revenue, and, as mentioned above, the allowable percentage for this year's CPI which would be 1.98% is not sufficient to sustain franchise hauler operations as outlined in their contract with us. Based on recognizing the low CPI and the need to generate revenue that will sustain continued operations, the haulers were asked to consider a gradual increase in the 4% range annually for the next five years instead of any large increase now. As part of that proposal, we proposed to delay a landfill rate increase until at least next year to prevent additional impact to our citizens in the current economy. This 4% increase is similar to the precedent set in the rate the County has been incorporating in licenses for antenna space on our courthouse and on Buckingham Peak. The antenna leases use the annual increase of 4% as a minimum or 100% of the CPI, whichever is greater. The haulers' initial counterproposal was to spread the increase over a three-year period, but staff also rejected that proposal as the annual increase to customers was still too high. Their second counterproposal was to use the 4% minimum increase (or CPI whichever is greater) over the remaining life of the contract which may end or be extended in 2018. The rationale is that an ongoing guaranteed minimum increase would be necessary to sustain operations. Other air quality regulations or increased fuel standards for refuse collection vehicles are being considered by the Air Quality Board as a future unfunded mandate and these may be addressed separately as extraordinary expenses. Additionally, the overall increase would bring the curbside rates closer to, but still significantly lower than, surrounding County's rates. Comparative rate information is attached. This plan avoids a large increase in rates. When Mendocino County went out to bid a few years ago, they initially received no bids on the first attempt, then received very high bids, and eventually ended up with rates in the $30/month range for residential curbside collection, in some cases over 100% higher than our rates. We do not want to impact our ratepayers with an immediate significant rate increase but instead prefer a more gradual increase. The following tables show a minimum 4% rate increase for the balance of the contract for each of the haulers. If the CPI is higher the rates would be increased accordingly. The tables also incorporate an anticipated annual increase of landfill rates beginning next year and continuing for a minimum of four years. At the current proposed rate, the increase in the landfill rate represents only a 5-70 increase per month per residential customer on top of the hauler increase to the customer for the standard 32-gallon weekly service in the first year of implementation. The landfill rates are subject to review by the Solid Waste Task Force and approval of your Board. The tables demonstrate that even with the proposed increases over the next eight-year life of the contract, our

Page 5 franchise hauler rates and our landfill rates will generally be lower than today's rates for surrounding jurisdictions. Rate Tables LCWS Inc/Mo Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 $6.04 $6.28 $6.53 $6.79 $7.07 $7.35 $7.64 $7.95 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% COMMERCIAL % Inc Rate/Mo $150.99 $157.03 $163.31 $169.84 $176.64 . $183.70 $191.05 $198.69 $206.64 $157.03 $164.24 $171.71 $179.44 $187.44 $194.79 $202.43 $210.38 $ .45 $ .47 $ .49 $ .51 $ .53 $ .55 $ .57 $ .59 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% w/ gate increase Inc/Mo RESIDENTIAL % Inc Rate/Mo $11.24 $11.69 $12.16 $12.64 $13.15 $13.68 $14.22 $14.79 $15.38 $11.69 $12.23 $12.78 $13.36 $13.95 $14.50 $15.07 $15.66 w/ gate increase

SLR Area 3 Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 $6.72 $6.99 $7.26 $7.56 $7.86 $8.17 $8.50 $8.84 Inc/Mo

COMMERCIAL % Inc Rate/Mo $167.92 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% $174.64 $181.62 $188.89 $196.44 $204.30 $212.47 $220.97 $229.81 $182.35 $190.41 $198.82 $207.60 $215.78 $224.28 $233.11 $ .49 $ .51 $ .53 $ .56 $ .58 $ .60 $ .62 $ .65 w/ gate increase Inc/Mo

RESIDENTIAL % Inc Rate/Mo $12.34 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% $12.83 $13.35 $13.88 $14.44 $15.01 $15.61 $16.24 $16.89 $13.40 $13.99 $14.61 $15.26 $15.86 $16.48 $17.13 w/ gate increase

Page 6 SLR Area 4 Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 $8.09 $8.42 $8.75 $9.10 $9.47 $9.85 $10.24 $10.65 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Inc/Mo COMMERCIAL % Inc Rate/Mo $202.30 $210.39 $218.81 $227.56 $236.66 $246.13 $255.97 $266.21 $276.86 $210.39 $219.69 $229.39 $239.53 $250.11 $259.95 $270.19 $280.84 $ .59 $ .61 $ .63 $ .66 $ .69 $ .71 $ .74 $ .77 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% w/ gate increase Inc/Mo RESIDENTIAL % Inc Rate/Mo $14.67 $15.26 $15.87 $16.50 $17.16 $17.85 $18.56 $19.30 $20.08 $15.26 $15.93 $16.63 $17.37 $18.14 $18.85 $19.59 $20.37 w/ gate increase

Staff believes that the rates as proposed are acceptable and would allow the haulers to sustain their operations for the balance of the contract period. The alternatives are either 1) conduct annual negotiations for rates to cover expected revenue shortfalls and losses to support continuing operational costs and regulatory requirements or 2) an examination of where services can be cut. The latter is counterproductive to attracting and retaining customers. Staff requested the franchise haulers to provide a list possible service cuts in their order ofpreference should the rates (contract amendment) not be approved as presented in this report. The following possibilities are listed in order of preference: 1. 2. 3. 4. 5. 6. Elimination of Bulky Item Program for residential customers and elimination of the Dead Animal Pickup requirement along County roads and right-of-ways. County facilities refuse pick up would be charged instead of a free service. Increase of gate rates at the recycling yards for tires, appliances and greenwaste. Elimination of electronics waste acceptance (other than CPUs and monitors) at the recycling yards. Elimination of curbside greenwaste collection. Elimination curbside recycle collection.

Staff finds none of these service cuts attractive and does not support the elimination of service. The County could choose to allow any or all of the first three service cuts which would place an additional cost on the County and/or its customers for these services, and may result in an increase in illegal dumping. The last three options would have dramatic impacts on our illegal dumping, code enforcement, fire safety, and landfill life. Eliminating curbside recyclable collection would require a major shift in program configuration to provide acceptable alternatives so we are not in violation of our State AB 939 diversion requirements of 50%. Currently the County's recycling diversion rate is in the mid-40 percentile, but the State has recognized our good faith efforts and the fact that our pounds per person per day (ppd) of disposed refuse is far below the State average. The City of

Page 7 Clearlake is currently under direction of the State to increase their efforts or face fines. Some of the possible service cuts (Items 3 and 4) outlined by the franchise haulers would likely adversely affect both cities' diversion rates as well to cause them similar problems with increased illegal dumping and personal accumulation of trash. Staff Recommendation In light of all of the operational and regulatory costs of doing business, the current recession, and the fact that our rates are well below any county in the state and have become unsustainable, staff supports a contract amendment that allows an annual rate increase of 100% of the CPI or 4%, whichever is higher, for the remaining balance of the contract that is set to expire or be extended, for an additional five years, in 2018. This discussion was not held with the Solid Waste Task Force members because it affects our two franchise haulers that are on the committee and can not vote on it, does not affect the city representatives directly, and does not affect Lakeport Disposal who also sits on the committee. The other members are a County Environmental Health representative, a citizen at large, and Supervisors Smith and Farrington. Since Supervisors Smith and Farrington are part of this discussion and your Board's decision, staff did not believe a review by the Task Force would be necessary, appropriate or objective. This is a contractual decision for the Board of Supervisors. Staff also recommends your Board . support a continued review of landfill rates by staff and the SWTF for possible implementation of an increase beginning July 1, 2011. The contract language already includes the ability of our franchise haulers to pass through any landfill rate increases to their customers. Any landfill gate fee increase will affect Lakeport Disposal rates, Lake County Waste Solutions, Clearlake Waste Solutions, South Lake Refuse , and self-haul customers. Alternatives Your Board may choose to: 1) Reject staffs proposal and authorize the 1.98% CPI only and allow franchise haulers to propose service cuts to allow them to operate within their revenue limits. Direct staff to work with the haulers to define service cuts or other price increases at the recycling yards to operate within their revenue levels. Approve staffs recommendation to approve the attached amendment to allow 100% of the CPI or 4%, whichever is higher, for the balance of the contract term. Direct Waste Management staff to meet with the Solid Waste Task Force to examine and recommend rate increases at the Eastlake Landfill for implementation on July 1, 2011 including rates the Board sets at the recycling yards for the franchise haulers. Allow the CPI and a dollar amount for the loss of State subsidies they've recently experienced. The spread of those dollars would be the subject to further negotiations.

2)

Staff appreciates your support of the Waste Management operations and its administration over the franchise haulers' contracts. If you have any questions regarding this matter, please feel free to contact either of us.

Page 8 Attachments: Comparative rates for other disposal facilities and curbside service in neighboring areas Amendment for Lake County Waste Solutions and corresponding revised "Exhibit B" Amendment for Southlake Refuse and corresponding revised "Exhibit B" cc: South Lake Refuse Lake County Waste Solutions

S:\Solid Waste\FRANCHISE HAULERS\2010 Rate Negotiations\2010 BOS rate increase memo.wpd

H:\SOLID WASTE\Admin\SW FINANCE \Expenditure History

P&L

I Projected I Actuals FY 05/06 FY 06/07 FY 07/08 FY 09/10 FY 10/11 FY 08/09 1.11 $ 699,737 $ 746,754 $ 818,284 $ 778,214 $ 728,140 $ 710,007 1.12 $ 18,349 $ 25,107 $ 35,797 $ 32,862 $ 15,419 $ 7,753 1.13 $ 4,308 $ 6,186 $ 4,428 $ 4,725 $ 6,200 $ 14,548 1.14 $ 934 $ 7,596 $ 3,862 $ 8,462 $ 6,852 $ 7,807 2.21 $ 53,194 $ 58,089 $ 62,612 $ 56,861 $ 55,324 60,956 $ 2.22 $ 78,004 $ 80,656 $ 89,043 $ 84,671 $ 80,254 88,516 $ 2.23 $ 47,162 $ 50,395 $ 55,361 $ 49,190 $ 48,025 52,602 $ 3.30 $ 84,590 $ 105,775 $ 127,002 $ 119,544 $ 111,348 $ 107,994 3.31 $ 4,787 $ 4,872 $ 5,505 $ - $ 6,504 5,284 $ 3.32 $ 9,400 $ 7,200 $ 7,200 $ 2,400 5,200 $ 2,133 $ 4.00 $ 111,236 $ 87,989 $ 103,735 $ 62,557 $ 63,809 97,676 $ Salaries $ 1,111,701 $ 1,180,619 $ 1,312,829 $ 1,254,040 $ 1,123,373 $ 1,104,425 11.00 $ 12.00 $ 14.00 $ 15.12 $ 15.13 $ 17.00 $ 18.00 $ 19.40 $ 20.00 $ 22.70 $ 22.71 $ 23.80 $ 23.81 $ 23.90 $ 25.00 $ 27.00 $ 28.30 $ 29.50 $ 29.51 $ 30.00 $ 38.00 $ Operations $ 46.20 48.00 52.10 60.00 61.60 62.71 62.74 $ 62.79 $ 63.01 68.41 70.00 $ 80.80 90.00 90.91 Other $ 1,566 $ 2,929 $ 2,044 $ 1,105 $ 3,989 $ 4,501 $ 4,328 $ 4,316 $ 1,032 $ 1,522 $ 1,477 $ 1,613 $ 18,071 $ 16,456 $ 28,853 $ 54,259 $ 5,826 $ 6,457 $ 7,021 $ 8,329 $ 116,701 $ 274,850 $ 216,756 $ 120,814 $ 30,930 $ 265,168 $ 28,355 $ 62,840 $ 79 $ - $ 24 $ 374 $ 195 $. 197 $ 199 $ 171 $ 5,417 $ 4,940 $ 5,896 $ 4,828 $ 788 $ 3,734 $ 1,027 $ 714 $ 266,270 $ 375,296 $ 359,464 $ 327,517 $ - $ -$ - $ - 40,837 $ 12,639 $ 16,434 $ 102,422 $ 9,037 $ 4,958 $ 18,092 $ 15,151 $ 1,163 $ 1,986 $ 2,246 $ • 662 $ 69,757 $ 61,733 $ 82,102 $ 82,532 $ 118,842 $ 145,807 $ 113,523 $ 119,263 $ $ - $ - $ 21,423 $ 27,108 $ 27,606 $ 29,859 $ 4,468 $ 5,091 $ 9,945 $ 11,499 $ 742,255 $ 1,202,202 1 $ 951,479 I $ 909,486 I $ $ $15,636 $ $ 499,269 499,269 1 $ 26,524 40,389 I $ 6,370 7,495 $6,711 $1,160 7,871 1 $ $454,921 15,636 1 $ 565,387 1 $ 10,240 1,338 4,630 554 71,741 7,237 104,417 69,104 135 171 4,154 661 347,796 86,612 6,311 587 64,847 93,934 1,410 4,720 1,700 86,495 7,283 100,300 91,300 150 200 4,000 750 422,748 2,000 49,433 17,900 1,500 65,900 99,500

19,686 $ 25,100 1,746 $ 4,000 885,660 I $ 986,389 110,000 467 240 10000

(16,750) 0 0 (16,750)1 $

-$29,500 -$37,000 0 (29,500)1 $ (37,000)1 $ -$44,500 (44,500)1 $ -$54,500 -$54,440

(54,500)1 $ (54,440)1

TOTAL EXPENSE Gate Income Profit/Loss Other Income Grants Loan Asset sales Interest

$ 2,336,475 I $ 2,393,710 I $ 2,235,179 I $ 2,134,662 I $ 2,519,920 j $2,046,614 1 $1,498,682 $1,544,600 $2,396,249 $1,771,586 $1,667,692 $2,561,781 ($463,593) ($466,970) ($1,021,238) ($502,014) $2,539 $225,306

April 8, 2011 Mr. David Carroll Solid Wastes System, Inc. P.O. Box 60 Ukiah, CA. 95482 Re: Change of Disposal Facility Dear Mr. Carroll: Pursuant to Section 3.d of the Consent to Sale Agreement between the City of Ukiah and Solid Wastes Systems, Inc., dated April 2008, you have requested approval to use the Eastlake Landfill located at 16015 Davis Street in the County of Lake, California as the Disposal Facility for the Ukiah Transfer Station. You have represented that the Eastlake Landfill is a properly licensed "Subtitle D" landfill. Under the Consent to Sale Agreement, as the City of Ukiah City Manager, I have the authority to approve the use of a landfill other than Portrero Hills as the Disposal Facility for refuse and garbage accepted at the Solid Wastes System Transfer Station ("Transfer Station") in Ukiah. I do not have authority to make any other changes to the 2001 Transfer Station Agreement (Exhibit A to the Consent to Sale Agreement) or the Consent to Sale Agreement without the approval of the Ukiah City Council. Based on your representations that the Eastlake Landfill is properly licensed and that it will accept a sufficient quantity of refuse and garbage to accommodate the quantity of refuse and garbage accepted at the Transfer Station, I approve the use of the Eastlake Landfill as the Disposal Facility (as defined in Section 1.09 of the 2001 Transfer Station Agreement) to which refuse and garbage accepted at the Transfer Station may be delivered for disposal. If you have any questions concerning this authorization, please feel free to contact me at the address or phone number on the above letterhead. Sincerely,

ane Chambers, City Manager cc: Ukiah City Council Public Works Director City Attorney

Phrmait 7f17/463-6200 Fax# 707/463-6204 Web Address: www.cityofukiah.com

300 SEMINARY AVENUE UKIAH, CA 95482-5400

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COUNTY OF LAKE
Board of Supervisors Agenda Transmittal Form

Request Item be Placed on:* Regular Agenda
Timed? Yes o No 0

q Consent Agenda

The original and 9 copies of this form and accompanying back-up material must be submitted to the Clerk of the Board's Office for agenda items. Attach this form as the last page of each copy of your back-up material. If timed, estimated time needed: Department: Meeting Date Requested: May 10, 2011 Public Services Dept. Previous BOS Discussion Dates: Contact: Phone: July 2010/Budget Preliminary Discussions 262-1760 Caroline C. Chavez Suggested Title for this Agenda Item: Eastlake Landfill Gate Fees and Proposal for Import of Refuse

Summary and Requested Board Action: Staff recommends approval of the attached contract with LCWS to import waste beginning January 1, 2012 with a five-year extension option. (2) Approval of a gate fee increase. (3) Selection and approval of the preferred curbside rate split for curbside rates between commercial and residential customers. Fiscal Impact:
Estimated Cost: Amount Budgeted: $

None

D

El Non-Budgeted (Revenue Increase $500,00Q to $850,00 Per Year) Budgeted 3 Source of Additional Funds: Budget Unit Amount: $ Budget Unit:

Amount: $

Budget Unit and Account Number: Additional Requested: $ Annual Cost (if planned for future years): $

Unanticipated Revenue: $ Revenue Code: Budget Transfer Attached: q Yes 0 No q N/A

Staffing Impact: q None Comments: Reviewed by:
Human Resources Risk Management Auditor Co. Counsel Co. Administration

0

Additional Full-time

0

Additional Extra Help

Agreement Attached: Resolution Attached: Ordinance Attached: x Comments:

q N/A 1,] Yes 0 No q N/A El Yes q No 12 N/A
Yes 0 No

Requested Distribution of Approved Documents by Clerk's Office:
q All County Departments 0 County Administration q Human Resources q Auditor q 0

*The Board Chair will make the final decision on whether the item will be scheduled for the regular or consent agenda.