RESOURCE MANAGEMENT AGENCY - B. BARNES

Receive and approve Waste Connection Landfill Contract 2016 COLA.

The County’s Contractor for operations of the John Smith Road Landfill, Waste Connections Inc, has submitted the annual contracted calculated amount for Cost of Living Adjustment and Change Of Law costs.  The Landfill Ad Hoc Committee has made recommendation for Board's review, discussion, and decision.

SBC FILE NUMBER: 75.4

Waste Connections is the County’s Contractor for operations of the John Smith Road Landfill.  The New Landfill Operating Agreement between the County and Waste Connections became effective April 1, 2014 and was approved by the Board of Supervisors on 12/21/10.

Section 6.2 of the agreement outlines the process for an annual Cost-of-Living Adjustment (COLA) and Change of Law (COL).  Per the agreement, the calculations for COLA adjustment will be no less than 2% and no greater than 6% and is based on Employment Cost Index, Producer Price Index for Fuel, and the Price Index of Urban San Francisco-San Jose Area.  The contract calculation for COL (change of law) is based on cost and expense impacts required to fulfill the imposed new change of laws. The landfill agreement states “As soon as WCI determines that a pending Change of Law that will result in increased landfill operation costs (or otherwise cause an adverse economic impact to WCI), WCI shall provide written notice to the County within 21 business days of the date of determination. Once the pending Change of Law is finalized and an effective date is known, WCI shall provide County with a written assessment of cost and expense impacts due to the Change in Law within 30 business days. The compensation for the costs of the Change of Law shall be calculated based on a prorate or per ton basis, spread over all Acceptable Waste tons disposed coming from all customers equally”.   

Waste Connections has requested the following:

1)   A COLA increase for 2016 of $45,340. 

2)   A COL (change in law) increase for 2016 of $55,638.

On May 19, 2015, Supervisor Barrios and Muenzer were appointed as the Ad Hoc Committee. The Ad Hoc Committee met regarding Waste Connections' request on May 23, 2016 and recommended the COLA adjustment be approved. The Ad Hoc Committee did not recommend the COL be approved due to the fact WCI did not follow the required COL procedures.

To pay for the COLA the Board of Supervisors can choose to

·          raise landfill gate  rates,

·         make a payment from the landfill reserve account, or

·         approve a combined approach of raising landfill gate rates and make a payment from the landfill reserves.

Should a majority of the Board approve a rate increase, a ten-day noticed Public Hearing is required by law. 

It is recommended that the Board of Supervisors:

1. Approve the COLA payment to Waste Connections in the amount of $45,340 from landfills reserves and direct staff to make this payment as per staff recommendation; and,

2. Not approve the Change Of Law amount of $55,638, and direct staff to work with Waste Connections to provide future documentation for COL costs.

Or alternatively, the Board may provide staff other direction as to the combination of payments for the 2016 COLA and COL costs.