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Home My WebLink AboutS3- Public Services CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: James Howell, Director Subject: Current status on Waste Disposal Agreement with County of San Dept: Public Services r"n�' ' " ' Bernardino Waste Systems Division. Date: December 10, 1997 Synopsis of Previous Council Action: During the presentation of Waste Disposal Agreement with County on November 17, 1997, staff was directed to renegotiate the terms of the contract. Recommended Motion: 1) That the attached status report regarding the negotiations between the City and County regarding the Waste Disposal Agreement be received and filed; 2) That the Council direct staff to seek competitive bids for waste transfer and disposal services from qualified vendors. Signature - Contact person: Lynn Merrill, Solid Waste Manager Phone: 5140 Supporting data attached: Attached Staff Report from James Howell Ward: All FUNDING REQUIREMENTS: Amount: n/a Source:(Acct. No.) 527-412-5179 & 527-413-5179 (Acct. Description) DUMP FEES Finance: Council Notes: Res 97- ,3 71 Agenda Item No. STAFF REPORT December 10, 1997 On November 17th, staff was directed by the Mayor and Common Council to renegotiate the terms of the Waste Disposal Agreement (WDA) as presented by the County of San Bernardino. The Council expressed dissatisfaction with three elements of the WDA: 1. The length of term of fifteen years was too long; 2. The penalty for early termination of the agreement by the City would result in a significant financial impact; and, 3. The tipping fee escalation rate was unclear and its potential impact on rates uncertain. At the same time, Council questioned staff regarding whether a competitive bid process had been used to secure the best pricing for the City, and whether any consideration for pricing discounts had been given by the County for the City's large quantity of tonnage. Since November 17th,the following actions have occurred: • Staff met with Gerry Newcombe, Contract Administrator with the County's Waste System Division on December 3rd to determine if the concerns expressed by the Council could be renegotiated. According to Gerry Newcombe, the County has adopted the position that the terms set forth in the WDA are reasonable and that they will not consider renegotiation at this time. The County provided a letter dated December 10, 1997,with answers to questions raised during the November 17th Council meeting. Additional detailed analysis was provided by the County and is referenced in their letter; this detailed analysis has been provided separately to the Council. • The cities of Rialto and Victorville adopted the Waste Disposal Agreement on December 2nd, • The City of Fontana scheduled this item for reconsideration on December 9th; however, Fontana has continued the item for an additional week for additional information. Since the County is unwilling to reconsider any amendments to the agreement, staff is recommending that the Mayor and Common Council consider one of the following options: • Reconsider execution of the Waste Disposal Agreement as originally prepared and presented by the County to the Council at the November 17, 1997 meeting; • Direct staff to seek competitive bids for waste transfer and disposal service from qualified vendors. The alternatives that may be available through a competitive bid include: the County of Riverside's Robert Nelson Transfer Station located at 1850 Agua Mansa Road south of Rialto which opened and began receiving waste deliveries on December 1st (This facility is operated under contract with Burrtec Industries and would be available to receive City wastes); other private waste handlers have expressed interest in providing theses services to the City; and the County of San Bernardino may submit response to a bid as well. a CITY OF SAN BERNARDINO PUBLIC SERVICES INTER-OFFICE MEMORANDUM TO: Mayor's Office City Administrative Office Council Office City Attorney's Office City Clerk's Office r FROM: Jim Howell, Director of Public Se DATE: December 11, 1997 SUBJECT: Waste Disposal Agreement Detailed Analysis COPIES: Lynn Merrill, Solid Waste Manager Please find attached, additional detailed analysis from the County as referenced in Agenda Item#S5. JH/7l Attch COUNTY OF SAN BERNARDINO WASTE SYSTEM DIVISION PUBLIC SERVICES GROUP e222 West Hospitality Lane,Second Floor • San Bernardino,CA 92415-0017 GERRY NEWCOMBE (909)386-8722 • Fax(909)386-8786 Contract Administrator December 10, 1997 Mr. James R. Howell,Director Public Services Department City of San Bernardino 300 North `D' Street San Bernardino CA 92418-0001 Dear Mr. Howell, Thank you for your letter of December 3, 1997 regarding your Council's direction to reopen negotiations with the County on the Waste Delivery Agreement(WDA). As we discussed during our meeting on December 3rd,the Waste System Division is always willing to meet and discuss and further clarify any issues related to the WDA's. We have prepared and made available to Council members the following analysis addressing their specific questions. We would like to meet with you to review these analyses. 1. Detailed analysis of the WDA cost of living adjustment and its specific impact on the City of San Bernardino. 2. Question and Answer sheet based on the items raised by your Council during their November 17, 1997 meeting. 3. Detailed comparison of the WDA to other disposal alternatives. As you are aware, during the development of the WDA,both the City Consortium and the County agreed that the final document produced through the negotiation process would be the same for all cities in the County. In fact, Section 3.5 states that the County shall not enter into WDA's with terms and provisions more favorable to one entity without first offering those same terms and provisions to all other cities. The Waste System Division is confident that the terms of the existing WDA,when further understood based on the additional information included in this letter,represent the most favorable agreement that can be presented to the County's cities. Additionally,the WDA has been adopted by the cities of Victorville and Rialto, and the Board of Supervisors will have those agreements on its December 16, 1997 agenda for final approval,to be effective January 1, 1998. Please contact me if I can provide any additional information. Sincerely, Public Works Group �p��/ WASTE SYSTEM DIVISION l c fGWNEE� 5.1N�E�N�DiNO Gerry Newcombe Contract Administrator PAUL Maann GLASS Engineering 8 Operations GN Js Prm1ed un Recycled Pep,, cc: Jim Bateman NORCAL Office(909)386-8735 222 W.Hospitality lane,2nd Floor Fax(909)386- San Bernardino,CA 92415M17 Conway Collis, Collis Associates k ;1 c1{=` ai8 C6t1EY1t5t Y13 S.1'dE. - bea'i . ........ . .... r ta;aDEN!".-*, EFdGER Third S3isgril TIM KELLY A R`�'t ALKEFi ...,........ Fourth District - ° Assi tar,t County Admini.�j:l-�-,c- RP� Fm=iii sertriccs Gr,Ovp eKK,arnw. PROVIDED BY COUNTY OF SAN BERNARDINO QUESTIONS AND ANSWERS 1. Is the County's indemnification limited to the $10 million environmental liability insurance policy? No. The County will indemnify the city for any liability arising out of the cities past use of the County disposal system and any liability arising from cities use during the term of this agreement. The fact that the County possesses$10 million worth of insurance just adds to its ability to stand behind the indemnification. 2. Is the city open to exaggerated cost increases based on the Cost of Living Adjustment? The COLA utilizes Federal Producer Price and Employment Cost Indices that are published for the Southern California Region. The allowable increase in any one year is limited to the published amount of these indices and nothing more. There is also an increase for Change in Law or Statute that effects all landfill operators in the country or state. This increase must be demonstrated by the County and is subject to challenge by the city. 3. Why is there no escape clause like the `market out' provision that was in the PSA? In order for the Contract Rate to be brought down as much as possible, the basic philosophy of the agreement changed to one that contains a low rate with specked adjustments and limited termination opportunities. This approach met the cities goal of a predictable rate adjustment process and the lowest possible initial rate. ` 4. Why did San Bernardino not get a better rate since it brings the majority of waste to the table? The County has long had a policy of providing its landfill services to all County citizens for the same rate. The intent of the WDA negotiation process (and also the PSA process) was that each city would have the same agreement and rate. The existence of the 'Most Favored Nation'language in both agreements speaks to how strongly that concept was voiced by all parties at the negotiating table. Negotiating different rates depending on the size of a particular waste stream would serve only to divide the cities,fragment the system, and not provide the rate stability and liability protection being sought. 5. Are cities that host expansion landfills getting a different deal? No. The WDA is the same for all cities regardless of whether or not they host a landfill. There are separate agreements with those cities that address the mitigation of impacts of a landfill located within their city boundaries. Those agreements have been in place since 1991 and are reasonable and fair mechanisms for addressing the impacts caused from landfill operations. 6. Does Section 3.1(F)allow the County to terminate the WDA if the city's tonnage falls below 93%? No. This section only applies if there is a successful legal challenge to the cities ability to deliver waste under this agreement. If the WDA is found to be unlawful or unenforceable and that decision results in the cities waste falling below 93% of the amount delivered in the preceding year, then the County could terminate the WDA. Drops in tonnage that are not related to legal challenges do not give the County any termination rights or any rights to increase the Contract Rate. 7. When will the County's debt service on the current bond program be concluded? The current bond financing program that is providing funds for closure, expansion, and ground water remediation costs, requires debt service payments until 2017. 8. Why is a 15 year term necessary? It is impossible to predict what may happen in 15 years. The Contract Rate of$28.50 represents the lowest long term rate available to the city based on today's market. In order for the County to be able to offer this rate, assurances regarding the length of time the cities waste would remain in the system needed to be made. The County is constructing expanded landfills to provide guaranteed capacity to the cities as part of this agreement and even at 15 years, the County's capital costs and debt service will exceed the agreement term. Additionally, the cities are receiving an indemnification for all past and present liabilities that survives the term of the agreement. The opportunity for a low rate with predictable increases and complete indemnification is of enough value today to justify the potential gains of participating in an unpredictable future market. jj MCz, 4 Dec 97 Illustration of Effect of WDA Cost of Living Adjustment Purpose: The cost of living adjustment clause (COLA) in the proposed WDA has been questioned as to accuracy and effect on the tipping fee over time. This memo addresses: • Derivation of formula • Relevance of formula • History of the values of the indices used in the formula • Projection of rates over the term of the WDA • Savings to the City over the term of the WDA • Conclusions Derivation and Relevance. The COLA clause is included in the WDA contract because some of the County's costs will escalate over the term of the WDA. Because most of these costs are associated with the actual operations of system, the concept employed was to use the same j general style COLA adjustment as in the contract between the County and Norcal. Section 4.2(B) of the WDA (attachment 1) presents the formula. As shown, the $28.50 starting WDA rate is separated into two portions (see "A" on attachment 1): i 4 • Fixed Portion: $10.87 represents costs that are not expected to vary much year to year over the life of the WDA. These include debt service, General Fund reimbursement, AB 1220 fees, and DEHS fees. Actually, the $10.87 is an average of the costs over the 15-year WDA term; there is some year to year variation. • Escalating Portion: $17.63 represents the "escalation portion" of the $28.50. This number is simply the remainder ($28.50-10.87=17.63). It is this portion F of the rate that is adjusted by the computed COLA adjustment factor. The COLA adjustment factor is further broken down into two components (see "B" on attachment 1), which together comprise the "index" by which the escalating portion of the rate is adjusted: • Labor Portion: Approximately 30% of the escalating costs are associated with labor costs. Therefore, the COLA adjuster includes the term ".3 times the Employment Cost Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. Please note the correction on attachment 1 to the specific data to be employed. • Commodity Portion: Approximately 70% of the escalating costs are associated with commodity costs such as fuel, repair parts, etc. Therefore, the COLA adjuster includes the term ".7 times the Producer Price Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. History and Projection: Attachment 2 contains tables and graphs that illustrate the following: • History of Indices Values: A ten year history is shown for the Employment Cost Index (EI) and the Producer Price Index (PPI) that are used in the COLA adjustment. Also, a ten year history of the- Consumer Price Index (CPI) is shown. Although this is not used in any way in the COLA- adjustment, it provides a comparison to the IE and PPI that may be useful. • Projected Values of the Indices: The method by which such indices are projected is always arguable. However, for this illustration, we have projected the values for the future 15-year term of the WDA as the average of the 10 previous years. In view of the trend of the indices being somewhat downward over the 10 year history, the use of the 10 year average would seem to portray a projection that would produce higher than expected near term WDA COLA adjustments. In other words, perhaps we are showing here a "worst case." • Projected WDA COLA Adjustments and Rates: Please note that the estimated COLA adjustment averages 1.83% per year over the WDA term, using the projection assumptions employed here. Please also note that this is well below the projected CPI, EI, and PPI. Savings to the City of San Bernardino: Attachment 2 also contains tables and graphs that illustrate the following: • Yearly savings to be enjoyed by the City of San Bernardino by using the WDA rate rather than the non-contract gate tipping fee. The savings range between $500,000 and $800,000 per year, depending upon the solid waste tonnage that year and the spread of the rates. • Total WDA savings to be enjoyed by the City over the life of the WDA is approximately $9 million. Conclusions: 1) The WDA COLA adjustment formula is logical, fair, and accurate (as corrected). 2) The WDA rate is expected to go up by no more than 1.83% per year as an average over the term of the WDA. This is well below the inflating rate of almost everything else the City would buy in this period. 3) The City will save about $9 million by entering into the WDA, when compared - to the County's non-contract rate. This is a lot of savings, and Norcal believes it would take major changes in the disposal market (over many years) and a significant investment by the City in a transfer station to save more than $9 million. The WDA is the City's best real deal. 0 ARTICLE IV CONTRACT RATE SECTION 4.1. CHARGING AND SEC rRTMr ae�TvfFN 'OFCONTRA (BATS. The City acknowledges that the County shall have the right to charge and collect a Contract Rate for the acceptance and disposal of Controllable Waste delivered to the System by any Franchise Hauler. The Contract Rate shall be calculated and established,and may be modified,as provided in Section 4.2 hereof. In addition,the City acknowledges that the County shall have the right to establish as part of the operating rules and regulations reasonable measures to secure the payment of all Contract Rates.Notwithstanding Section 4.2(A),the County shall have the right to impose special charges for the receipt of hard to handle materials,such as bulky materials,construction em ntal demolition debris,tires and to the County of accepting such hard loch charges shall be calculated to reflect the reasonable m materials. SECTION 4.2. CONTRACT RA (A) Gene rally Effective January 1, 1998, the Contract Rate payable by each Franchise Hauler shall be $28.50 per ton, subject to potential adjustment necessary to reflect the circumstances set forth below: (i) increased costs incurred by the County (in excess of available insurance proceeds) due to the occurrence of one or more Uncontrollable Circumstances,including Changes in Law;and (ii) escalation during the Term of this Agreement calculated in accordance with Section 4.2(B). Prior to adjusting the Contract Rate as a result of any of the circumstances described in Section 4.2(Axi),the County shall utilize the following remedy: reduce the costs of operating the Disposal System to the extent practicable. Any adjustments to the Contract Rate permitted by this Section 4.2(A)(i)shall be calculated by the County to reflect the actual costs or expenses of addressing the circumstance or circumstances pursuant to which the adjustment is authorized,and shall also reflect,where applicable, the then remaining capacity in the Disposal System.Such adjustment may not reflect circumstances other than the circumstances described in Section 4.2(Axi). (B) Calculation ) Escalation. For purposes of Section 4.2(A)(ii), the Contract Rate shall be ` adjusted in accordance with the formula described in this Section each July 1 during the term hereof, commencing July 1, 1999.The adjustment shall be calculated in accordance with the following formula: Contract Rate= Fixed Portion+[Escalating Portion x Index] Where, SEE 'DIScvS5ior1 Fixed Portion = $10.87 Escalating Portion = $17.63 Index = Price Index, which shall be determined in accordance with the following formula I = .7[PPI11PPI0+.3[EI1/EI21 .D 4E SS ION 20 ppl, = The Producer Price Index,Industrial Commodities,as published by the United States Department of Labor Statistics in the publication Producer Price Indices,Table 6, for the month of February in the year the adjustment is being made(e.g., the first adjustment will use the February, 1999 value) pp12 = Producer Price Index, Industrial Commodities for the month of February, 1998 El, = Employment Cost Index,Compensation,Private Industry Workers, as published by the United States Department of Labor Statistics in the publication Monthly Labor Review,Table 22 fore-mentk ��G las} q�a..l c� o++�`�- ery•ie the year the adjustment is being made(e.g.,the first adjustment will use the February, 1999 value) EI2 = Employment Cost Index,Compensation,Private Industry Workers established for February, 1998 If the Employment Cost Index or Producer Price Index are no longer published, or are otherwise unavailable, then the Cost of Living Adjustment shall be determined by using standard official statistics measuring changes to, respectively, labor costs and cost of materials, as the parties shall mutually agree. (C) Procedtire for Rate Adiustments. In the event the County determines that it is entitled to an adjustment of the Contract Rate pursuant to Section 4.2(A)(i), it shall utilize the procedures - described in this Section 4.2(C). The County shall be required to provide the City with at least 60 days prior written notice of the adjustment, which notice shall identify the specific event(s)or circumstances which require the adjustment. The notice shall also specify the earliest date on which the County Board of Supervisors shall consider the proposed adjustment. At least 45 days prior to such meeting of the Board of Supervisors,the County shall provide the City with a report which shall contain the following information: a description of the specific event(s)or circumstances which require the adjustment;a description(including cost estimates) of any activities (which may include, but not be limited to capital improvements to the Disposal System)required in order to remedy such event or circumstance;certification by the County that it has implemented the remedy described in Section 4.2 prior to requiring the rate adjustment; and a description of the methodology used by the County to calculate the adjustment to the Contract Rate (hereinafter the"County Report"). In the event the City disputes the adjustment, it shall provide the County ith a written description of the reason for the dispute at least 10 dad s prior to the nteetin�,of the Board of Supervisors identified in the initial notice of the County(hereinafter the"City Report'). The City Report ' shall be provided to the Board of Supervisors for consideration at such meeting in connection with the proposed rate adjustment. At any time from and after the date that the County provides the City with the County Report, upon the request of either party, the City and County shall meet and confer in good faith to resolve any dispute that may arise regarding the proposed adjustment to the Contract Rate. In the event the Board of Supervisors approves all or a portion of the proposed rate adjustment,such rate adjustment shall become effective on the date identified in the initial notice sent by the County, but subject to potential reimbursement pursuant to Section 4.2(D). (D) ChallenQPs to Rate Adiustment. In the event that the City challenges a Rate Adjustment made pursuant to Section 4.2(A) and a court of applicable jurisdiction determines that any portion of the r County's adjusted Contract Rate was improperly imposed,the County shall,within 30 days of the date of the statement of decision, reimburse to the City the amount improperly imposed, together with interest 1 21 Z 10z EL a w 1102 OIOZ 60OZ rOf 9002 LOOZ I U .3 S �< 9002 SOOZ 4 H 0 3Ooz Q : o r ON J a m CO ICQZ m V Oooz U L } N 6661 Q 1 N cn 9661 L661 9661 = ' 5661 ►661 111 da Z661 v T 1661 > 0661 - #4 . Q ,• 6961 9961 0 o c O O O N N abuogo m I LL A 'o a 3 ►j_ Zlot 11oZ .y oloZ .. 5002 (• � 9GOZ 4 LOOZ � _..v . . SCoZ c- 2 VON c0 � CCU CL T W a Q- Z J Zool Uc Z IOOZ 0. 000Z } 66b! � a 8661 _ _ - :Y :"' �s"•�l- 9661 5661 H51 £5bi Q '6;t 1661 0661 6961 9961 C! °o c w N N r O 1ff O as j josods:d r w. L J Shines m;c!nwn Qf a0 n tD uY M fV ^ O t LL. 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This memo explores this assertion relative to the y completed for the City of San Bernardino. Background The recent study completed for the City of San Bernardino by HFH (Hilton, Farnkopf & Hokson, 6 Nov 97) evaluated costs for refuse disposal. The three top-ranked alternatives in the study were: Best) Direct haul by city trucks to county landfills at $28.00 per ton. 2nd Best) Build a transfer station to serve the city and ship waste to the Olinda Alpha.Landfill in Orange County using the waste disposal contract of Taormina Industries. LL 3rd Best) Deliver waste to the Agua Mansa Transfer Station in Riverside County for subsequent disposal in Riverside County landfills. These three constitute the only real deals; the El Sobrante Landfill expansion is not yet approved and the outcome and schedule is unclear. This memo does the following: 1) Updates the 1998 numbers for all alternatives. For all three of the above alternatives, some corrections were necessary. 2) Projects the numbers into the future so that the net effect over the proposed 15 year term of the WDA can be examined. The alternatives all have different cost- of-living adjustments that dramatically affect the big picture over the 15 years. 3) Draws conclusions on the above analysis. dates and Projections: The attached spreadsheets reflect the following: For the "A Alternative: The actual WDA rate of $28.50 is used and the cost of living adjustment to the WDA is presented (see other memo on this topic for more detail). For the'City Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Taormina contract is corrected for COLA (based on CPI). • The future landfill per ton tipping fees are projected based on CPIs per their contract and consistent throughout this analysis. Even though the Taormina contract expires in December 2005 and the rate must be renegotiated for any contract renewal, I assumed a simple COLA adjustment going forward. • The per ton operational costs of the transfer station and the transport to the landfill are assumed to follow projected PPIs (which are lower than CPIs). • The hauling efficiency of $1,010,000 per year (HFH result) is properly reflected when comparing the dollar savings of the WDA to the city transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative more expensive to the city. For the Agua Mansa Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Burrtec contract is corrected for COLA (based on CPI). The adjustment in the Burrtec contract takes place in July, so the 1998 number shown reflects an average of half a year of actual CPI and a half a year of projected CPI. • The future landfill per ton tipping fees are projected based on CPIs per their contract and consistent throughout this analysis. The Burrtec contract with Riverside CountX expires in 2017. • The per ton operational costs of the transfer station and the transport to the landfill are based on projected CPIs per their contract and consistent throughout this analysis. • The hauling inefficiency of $96,000 per year (HFH result) is properly reflected when comparing the dollar savings of the WDA to the Agua Mansa transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative less expensive to the city, but not enough the affect the conclusions below. Conclusions: The spreadsheet analysis and the plot shows: 1) The per ton rate for disposal (once the the city trucks get to either the landfill or the transfer station) is best via the WDA over the entire 15 year term. 2) The per ton rate for disposal for the WDA inflates at a lower rate than the other two alternatives. The WDA rate inflates an average of 1.83% per year while the other two alternative are expected to inflate at higher rates. 3) Even when the route efficiency of the closer city transfer station is taken into account, the WDA still provides the greatest savings over the 15 year term: The WDA is cheaper than the current County non-contract rate by about $9.0 million over the 15 years. The WDA is cheaper than the use of a city transfer station by about$22.3 million over the 15 years (assuming the transfer station were available for use on 1 Jan 98). The WDA is cheaper than the use of the Agua Mansa transfer station by about $20.0 million over the 15 years. 4) The WDA is the best real deal for the City of San Bernardino, and will be for the foreseeable future. Ir N N 0 NI N P° q "Y O r Y ..�° • I� . In,O ao III' .- NN OI loll N O Ol x_10 O Y_O O , I I o n o O o G I I^O N �' YO PP O COf- ° P10 6 N.L C � Y gib mm t9 N O1 ep O� Q1 cp 1p,> o II`r �rNj' en N a0 M off tO�Obi acpp- o C Tj f I °.In C o I Q N r M°�- 1�1 N N 0 e � Y = 0 C1 o O 3 N ;-•� �iO N'N 7 w 17 I l � N O ! ? IW 3g �_ °e6 ° r rte. E ^2G n n !h �N Nf7 N/h O Y':N O)OYC <8 - N �p p� pf 11A� �:O C• O {s <N r� aN 3�t0� O 0{'o00)tr;` O Pf Ov�i 7{7C ON N m pppp � Y ^P 10 N 1 Yf� N ^N- n .-t�f � Nao I-n vi ale �In 01 N 01 N N 7 10 ID a; O N Pf _ N N f� Y'1 i0 7 N O! 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O � ...,x:.._•-::•-aaz-.._.:�F'r.[::::°.:s�[tt:a:°:� _..... .........._. _._._�:.....:::-::::itE:ggp�i;x;_ _S:•.i-�:.�=:-_s :..... . •, ..o::::ra.�.zb":::FEEStiz'tstE:dt"gift. _ _ �"j -::�:::`=•:x--::-•.�: -••m:^�;a-•.::.::::::::::::x::.;,:za '" Vii:?'° ?ss:.°E�S:•.E��'.�•z�::._ _ _ _._._.__ ........._........,._... .__._.__:_.::::. r i° O 5 ' a _ V B i : (Ob Z H M o £66L M e Y; 3 Z66 N iN �) •Z �:w ►. i w e N .. 066 L j , �• $ga P$ 696L N Q Q Q Q ...::� -Q -. ._. 996 L m607 pO pO pV V O O Uol rad 1500 leio.L O d N f e H� o K rz3U r � > Zi E h N•,�o O } U1 ' T 56ufnCC ;,iipn,un) Of CO /D off M N ^ O f i C a _ V H ►� to O T to co C _ l0 37' o W U 0 T t=•:: V) - CD 1� t0 off O O O O O 0 0 O 1 RESOLUTION NO. 2 3 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING IRE EXECUTION OF THE WASTE DISPOSAL AGREEMENT BETWEEN THE COUNTY 4 OF SAN BERNARDINO WASTE SYSTEMS DIVISION AND THE CITY OF SAN 5 BERNARDINO. 6 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE 7 CITY OF SAN BERNARDINO AS FOLLOWS: 8 SECTION 1. The Mayor is hereby authorized and directed to execute on behalf of said 9 City the Waste Disposal Agreement between the County of San Bernardino and the City of San 10 Bernardino, a copy of which is attached hereto, marked Exhibit"A"and incorporated herein by 11 reference as full though set forth at length. 12 13 SECTION 2. The authorization to execute the above referenced agreement is rescinded 14 if the parties to the agreement fail to execute it within sixty (60) says of the passage of this 15 resolution. 16 17 18 19 20 /// Pntprc!d m // tn Record at �2 -T 21 ;Vljpvt,ms Mtq: 22 25 City ClerkICDC Secy 26 City of San Bernardigo 27 November 06, 1997 28 1 • r 1 1 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE 2 EXECUTION OF THE WASTE DISPOSAL AGREEMENT BETWEEN THE COUNTY OF SAN BERNARDINO AND THE CITY OF SAN BERNARDINO 3 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and 4 Common Council of the City of San Bernardino at a meeting thereof,held on the 5 day of , 1997 by the following vote,to wit: 6 Council Members AYES NAYS ABSTAIN ABSENT 7 8 NEGRETE 9 CURLIN 10 ARIAS 11 OBERHELMAN 12 DEVLIN 13 14 ANDERSON 15 MILLER 16 17 The foregoing resolution is hereby approved this day of 11997. 18 19 20 TOM MINOR,Mayor City of San Bernardino 21 22 Approved as to form and 23 legal content: 24 James F. nman, 25 City A 26 BY: 27 November 6, 1997 28 2 CITY OF SAN BERNARDINO i INTEROFFICE MEMORANDUM TO: Jim Penman City Attorney / FROM: Huston T. Carlyle,Jr. , Sr. Assistant City A o e i DATE: November 10, 1997 RE: Waste Disposal Agreement Between City and County Reference is made to the above-indicated subject. In that regard, I have reviewed the attached Waste Disposal Agreement and note that the prior legal concerns raised by you in meeting(s) with Martin Czerniak appear to have been all resolved in favor of your position. However,since the prior meetings were working off of the County's version and the Waste Disposal Agreement we have received is the product of the negotiations with the "consortium," I note the following sections in the Agreement with a brief description to assist in your analysis,particularly the last section mentioned, Section 73: 1 Section 2.1 -The representations and warranties contained therein by the City appear to be accurate, including the "No Litigation" representation under 2.1(D). 2. Section 3.1(D) -This section requires the City to use its best efforts to amend and modify any outstanding waste disposal agreements to make them consistent with this Agreement. The City would also notify in writing each franchise hauler of the County's third part beneficiary rights in the outstanding agreements. 3. Section 3.1(F)-This section obligates the City to use its best efforts to preserve,protect and defend the integrity of this Agreement in court, if necessary. 4. Section 3.1(1) - This section indicates that the City agrees not to conduct any disposal services which would be in competition with what is being provided by the County, although the County acknowledges that the mere development by the City of a materials recovery facility or a transfer station does not, by itself, violate this section. 5. Sections 4.2(A) & (B) - These sections set the rate which would be paid to the County ($28.50 per ton)and provides an escalator clause for rate adjustments in future years. 6. Sections 5.1, 5.2 &5.3 -These sections set forth the remedies that both the City and County have(it is the full range of legal redress) should a breach occur by one party or another. They also set forth the grounds upon which the City can terminate,both for convenience and for cause. 7. Section 5.6 - This section provides that all legal actions and proceedings related to this Agreement shall be solely and exclusively initiated and maintained in courts of the State of California having appropriate jurisdiction. 8. Section 6.1 - It is proposed that this Agreement be for a term of 15 years. 9. Section 7.3 -The County agrees to indemnify,defend with competent counsel reasonably selected by the County,protect and hold harmless the City,its officers,employees and assigns from and against all Loss-and-Expense, including natural resources damages, injuries, costs, response, assessment,remediation and removal costs,losses,demands,debts,liens,liabilities,causes of action, suits,legal or administrative proceedings,interest,fines,charges,penalties and expenses(including but not limited to attorneys' and expert witness fees and costs incurred in connection with defending against any of the foregoing or in enforcing this indemnity). The County does not indemnify for willful,deliberate or grossly negligent delivery by the City of Hazardous Substances or Hazardous Waste in the Disposal System, or to vehicle accidents or waste delivery activities or to any Hazardous Substances, Hazardous Waste, petroleum product or other Unacceptable Waste not accepted for disposal in the Disposal System. This section further indicates that City agrees that the County may provide counsel to jointly represent itself, the City and any and all other parties who disposed of waste in the joint representation of such parties pursuant to this indemnity,and that the City agrees to cooperate fully and completely with the County and will waive, in writing, any conflict, actual or apparent, created by the joint representation of such parties pursuant to this indemnity. Finally,this section bestows upon the County complete discretion in the conduct of any matter to which this indemnity applies, and may resolve or settle such matters to which this indemnity applies in its sole discretion without the permission or approval of the City. attachment •' CITY OF SAN BERNARDINO INTEROFFICE MEMORANDUM TO: Jim Penman City Attorney r FROM: Huston T. Carlyle,Jr. Sr. Assistant City Atto'' y DATE: November 12, 1997 RE: Waste Disposal Agreement Betw 11citv a nd County Attached is a proposed Resolution of the City of San Bernardino authorizing the execution of the Waste Disposal Agreement between the County of San Bernardino and the City of San Bernardino. I have reviewed the Agreement and, in addition to my observations contained in my memorandum to you dated November 10, offer one additional note: Section 3.5 (A) states as follows: "(A)Generally. The County shall have the right to enter into waste disposal agreements with other cities in the County, Sanitary Districts,Transfer Stations or Independent Haulers; provided,however,that in no event shall such agreements have terms and provisions more favorable than the terms and provisions of this Agreement(including but not limited to the Contract Rate and availability-of disposal capacity) unless the County has first offered the City such more favorable contract(or amendments to this Agreement)." This "most favored nation clause" is different that the past versions in that past versions also permitted the City,whether it was shopping around or simply became aware of a"better deal," the option to offer it to the County and if the County declined,the City could get out of the Agreement in a specified manner. As a result of negotiations,the"most favored nation clause" contained in this Agreement applies only to San Bernardino County agreements. This may or may not be important (right now, this Agreement is better than anything else out there according to the staff report), depending on what happens in the industry in the next 15 years,but it is a change from prior versions again, due to negotiations (such as a more favorable rate per ton and the ability of the City to terminate for convenience, albeit with a payment clause). These observations are set forth for your consideration on whether or not this office should sign off on the resolution. EXECUTION COPY WASTE DISPOSAL AGREEMENT Bct%%een THE COUNTY OF SAN BERNARDINO,CALIFORNIA and Dated , 1997 Count}Authorization Date: City Authorization Date: County Notice Address: City Notice Address: Emergency C Emergency Contact s k TABLE OF CONTENTS Page RECITALS . . . . . . . . . . . . . . . . ... . . . . .. .. ..... . ... . ..... . . . .. 3 ARTICLE I DEFINITIONS AND INTERPRETATION ....... . . . . . ........................ 3 SECTION 1.1. DEFINITION ..................... ............ ....... . 8 SECTION 1.2.Rj u pR F.TATIOi`i . ....... .. ....... . .. . .. ............... • 10 ARTICLE II REPRESENTATIONS AND WARRANTIES�ewTtFS.OF THE GT�d . .. ......... . l0� SECTION 2.1. ItEPRESFNTATIONS AND WAR, at=pttFSFNTATIONS AND W euR e>vTtF.S OF THE 0 M . • • • ••.. . 10 SECTION ...2. :_-- - ARTICLE III DELIVERY AND ACCEPTANCE OF WASTE I I AND PROVISION OF DISPOSAL SERVICE . . . . . . . . . . . . . . .. . .. . • • • • • 11 SECTION 3.1. D-El IVFRY Q E WASTE . . . . . ... . . . . . . . . . .. ..... ... . .......• .. . 14 SECTION 3.2. PROVISION Or^*c�SAL SERVICES BY THE COUN�C •••••••- rnt TNTY RIGuT TO RFFLISE WASH . . . . . . ... .................. . 16 SECTION 3.3. SECTION 3.4. aMCENE F R�I TONAL MAIMM•• •••••' ' ' ' „ ,,•... . 117 7 m SECTION 3.5. u SERVICES . . 17 SECTION 3.6. COWTY PROVIclnt�t nT: WASTE DIVERSIO — ARTICLE IV CONTRACT RAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . ... . . . . • • • • • • • • • • • • . . . . . . . . . . . . . . . . . . . . . .. . . . . . SECTION 4.1. CUYMENT OF CONTRACT RAID 1 SECTION 4.2. CONTRACT RATE . . . . .. . . ........ . . . . . . . ........ . . .......... . . 21 SECTION 4.3. OR sill 21 SECTION 4.4. Rtt t ING OF . . . . . . . .......... . .......... . ARTICLE V BREACH, ENFORCEMENT AND TERMINATION . . . . .. ...... . . ... ...... . . . 22 I 22 SECTION 5.1. RRFACH' REMEDIF 22 SECTION 5.2. . . . . . ......... ... ..... .. . . . 22 SECTION 5.3. -rFMNATtON . . . . . . .. ... ....... . .. . . ... .......... ...... 23 SECTION 5.4. NO WAIVERS . . . . . .. . . . . . ... .. . . . . . . . . . ............. .. ...... . . 23 SECTION 5.5 . . . . .. . . . . . . . . . . .. .. . . . . . . . . . ... ....... .. ... ... . . 23 SECTION 5.6. rnR11M FOR DISP��TF t2FD .IITIQN . . . .. .. ........ .. .... .. • ..... . ......... . . . 24 ARTICLE VI TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 6.L EFFECTIVE DATE ANQTERM • • • • • • • • • • " "" ”' .. ... . . . . 25 ARTICLE VII GENERAL PROVISION* �sr IEN"NCE OF THE DISPOSAL SYSTEM . • • . 25 SECTION 7.l• �*��nN T�OLLABLE c'iRCUMSTANGES GENERALLY •••••• • . 25 SECTION 72. .... . . 25 SECTION 7.3. tNnFMN1FICATION�1 . . . . . ...... . . .. ... .. ......... .. ...... 26 SECTION 7.4. RFi�ATiONSHIPOFTNEPA&TI=S • • •••• •••••-••••••""'�•••• • • • 26 SECTION 7.5. uml Un REC BUL . . . . . . . ... . . . ... ........................ . 26 SECTION 7.6. PRA �xtcT�GRIGHTSI ANDLIABILITIES .•••••••••••""•••• • •• 21 SECTION 7.7. NO VESTED RIGHTS . . . . . . . . .... . ............... ........ SECTION 7.8. LIABILITY FOR COLLECTION. ANSSBOOLIAD& .. .. 27 AND PROCESSING . . . . . . . . .. .... . ............... .......... SECTION 7.9. NO C .................. 27 SECTION 7.10. A IpMEM .. ................ . ............. . .............. 27 SECTION 7.11.NOTICE OF LITIGATION ............ . . ........... ......... ..... 27 SECTION 7.12.El MnM ASSURANCES ........................ ............... 27 SECTION 7.13. w ccT-9-NMM OF AGREEMENT ...... .......................... 27 �" SECTION 7.14. ,� M ON OVERDUE OBLIGATIONS ....................... . 27 SECTION 7.1 S.BINDR [F. • 27 SECTION 7.16.NQnM........ ............................................. 27 APPENDIX 1 DESIGNATED DISPOSAL FACILITY APPENDIX 2 FORM OF HAULER ACKNOWLEDGMENT WASTE DISPOSAL AGREEMENT MS WASTE DISPOSAL AGREEMENT is made and dated as of the date indicated on the cover page hereof between the County of San Bernardino,a political subdivision of the State of California (the"County"),and the City designated on the cover page of this Agreement,a general law or charter city and political subdivision of the State of California(the"City"). RECITALS The County owns, manages and operates a sanitary landfill system for the disposal of municipal solid waste generated in the unincorporated area within the County and which it has made available for the disposal of municipal solid waste generated within cities located within the County(the "Disposal System").The Disposal System currently includes 12 active landfills and is expected to consist of five active landfills-upon implementation of the Solid Waste Partnership Strategy and Implementation Plan. The Disposal System is used for the disposal of municipal solid waste which is not composted, reused, recycled, transformed or otherwise diverted from landfill disposal, pursuant to the California Integrated Waste Management Act of 1989(Division 30 of the California Public Resources Code). The Act,which mandates the diversion of 501/6 of waste from landfill disposal by 2000,has already reduced the volume of waste delivered to the landfills. The County wishes to enter into an agreement with the City to accept all of the City's municipal solid waste in the Disposal System for the term and subject to the provisions of this Agreement, and the City desires to use all legal and contractual powers it possesses to deliver or cause to be delivered the municipal solid waste generated within its boundaries to the Disposal System for the term of and subject to the provisions of this Agreement. The City, in the exercise of its police power and its powers under the Act, either(i) has entered into a franchise or other agreement with or issued permits or licenses to one or more private haulers for the collection and disposal of municipal solid waste generated within the City or(ii)collects municipal solid waste generated within the City in City owned and operated collection vehicles. The City has determined that the execution of this Agreement by the City will serve the public health, safety and welfare of the City by providing greater disposal rate stability, more predictable and reliable long-term disposal service,and the continuation of sound environmental management. The County has determined that the execution by the County of this Agreement will serve the public health,safety and welfare by providing a more stable,predictable and reliable supply of municipal solid waste and the resulting service payment revenue to the Disposal System, thereby enabling the County to plan, manage,operate and finance improvements to the Disposal System on a more prudent and sound long term, businesslike basis. Official action approving this Agreement and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the County on the County authorization date indicated on the cover page hereof. Official action approving this Agreement and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the City on the City authorization date indicated on the cover page hereof. 1 It is,therefore,agreed as follows: 2 ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1. DEFTNITIONS. As used in this Agreement,the following terms shall have the meanings set forth below. "Acceptable Waste"means all garbage,refuse,rubbish and other materials and substances discarded or rejected as being spent,useless,worthless or in excess to the owners at the time of such discard or rejection and which are normally disposed of by or collected from residential(single family and multi- family�commercial,industrial,governmental and institutional establishments which are acceptable at Class III landfills under Applicable Law(including,without limitation,the Legal Entitlements for each facility). "Act"means the California integrated Waste Management Act of 1989(Division 30 of the California Public Resources Code),as amended,supplemented,superseded and replaced from time to time. "Agreement"means this Waste Disposal Agreement between the County and the City as the same may be amended or modified from time to time in accordance herewith. "Appendix"means an appendix to this Agreement,as the same may be amended or modified from time to time in accordance with the terms hereof. "Applicable Law" means the Act, the San Bernardino County Code, CERCLA, RCRA, CEQA, any Legal Entitlement and any federal or state rule, regulation, requirement, guideline, permit, action,determination or order of any Governmental Body having jurisdiction,applicable from time to time to the siting, design, permitting, acquisition, construcuon, equipping, financing, ownership, possession, operation or maintenance of the Disposal System, the transfer, handling, transportation and disposal of Acceptable Waste,Unacceptable Waste,or any other transaction or matter contemplated hereby(including any of the foregoing which concern health, safety, fine, environmental protection, mitigation monitoring plans and building codes.). "Board" means the California Integrated Waste Management Board. "CEQA"means the California Environmental Quality Act,codified at Cal. Pub. Res.Code Section 21000 et g&.(West 1996)as amended or superseded,and the regulations promulgated thereunder. "CERCLA" means the Comprehensive Environmental Responsibility Compensation and Liability Act,42 U.S.C.A.Section 9601 et=.(West 1995 & Supp. 1996),as amended or superseded,and the regulations promulgated thereunder. "Change in Law" means any of the following events or conditions which has a material and adverse effect on the performance by the parties of their respective obligations under this Agreement(except for payment obligations),or on the siting,design,permitting,acquisition,construction,equipping,financing. ownership, possession, operation or maintenance of the Disposal System or other matters to which Applicable Law applies: (1) the enactment,adoption,promulgation,issuance,material modification or written change in administrative or judicial interpretation on or after the Commencement Date of any Applicable Law(other than Applicable Law enacted by the County); 3 (2) the order or judgment of any Governmental Body(other than the County),on or r after the Commencement Date,to the extent such order or judgment is not the result of willful or negligent action, error or omission or lack of reasonable diligence of the County or of the City, whichever is asserting the occurrence of a Change in Law;provided however,that the contesting in good faith or the good faith decision not to contest any such order or judgment shall not constitute or be construed as such a willful or negligent action, error or omission or lack of reasonable diligence;or (3) the denial of an application for, delay in the review, issuance or renewal of, or suspension,termination,interruption,imposition of a new or more stringent condition in connection with the issuance,renewal or failure of issuance or renewal on or after the Commencement Date of any Legal Entitlement to the extent that such denial,delay,suspension,termination, interruption, imposition or failure materially and adversely interferes with the performance of this Agreement, if and to the extent that such denial, delay, suspension, termination, interruption, imposition or failure is not the result of willful or negligent action, error or omission or a lack of reasonable diligence of the County or of the City,whichever is asserting the occurrence of a Change in Law; provided.however that the contesting in good faith or the good faith decision not to contest any such denial,delay,suspension,termination, interruption, imposition or failure shall not be construed as such a willful or negligent action,error or omission or lack of reasonable diligence. 'Change in Law' shall not include actions taken by Governmental Bodies to enforce requirements of Applicable Law. "City" means, as applicable, the city designated on the cover page of this Agreement and party to this Agreement. "City Acceptable Waste" means all Acceptable Waste which was originally discarded by the first generator thereof within the geographical limits of the City, and Residue from the fo:egeing(or Tonnage equivalencies of such Residues, as and to the extent provided in subsection 3.1(C)hereof). "Contract Date" means the date of delivery of this Agreement as executed by the parties hereto. "Contract Rate" has the meaning specified in Section 4.2 hereof. "Contract Year"means the fiscal year commencing on July 1 in any year and ending on June 30 of the following year. "Controllable Waste"means all City Acceptable Waste with respect to which the City has the legal or contractual ability to determine the disposal location therefor and which is: (1) Non-Diverted City Acceptable Waste; (2) not generated from the operations of the Governmental Bodies which, under Applicable Law,have the independent power to arrange for the disposal of the waste they generate (such as school districts and State correctional facilities); (3) not Residue excluded from the Waste Delivery Covenant pursuant to Section 3.1(C); (4) not inert materials, construction and demolition debris, green waste and other materials which can be disposed at landfills other than Class III landfills;and (5) collected and hauled by Franchise Haulers. 4 "County" means the County of San Bernardino, a political subdivision of the State of California and party to this Agreement. "County Waste Management Enterprise Fund"means the waste management enterprise fund established and managed by the County pursuant to Section 25261 of the Government Code separate from its other funds and accounts for receipts and disbursements in connection with the Disposal System. "County-wide Recycling Services"has the meaning set forth in subsection 3.7(A)hereof. "Designated Disposal Facility"means the sanitary landfill or other facility operated by or for the County as part of the Disposal System which is u designated t hereto Appendix I hereto as the Commencemetnt Date,or location for Controllable Waste delivered to the County pursuant or other disposal facilities as may be such other additional, alternate or replacement sanitary designated by the County as the Designated Disposal Facility (subject to the approval of the City) in accordance with Section 3.2 hereof. "Disposal Agreements"means each of the waste disposal agreements entered into between the County and any city within the County in accordance herewith. "Disposal Services"means the solid waste disposal services to be provided by the County pursuant to the Service Covenant and otherwise hereunder. "Disposal System"means all sanitary landfills and other solid waste transfer,transportation, storage,handling,processing and disposal facilities,now or at any time owned,leased,managed,operated by or under contract to the County for the acceptance,handling,processing and disposal of Acceptable Waste delivered by or on behalf of the City under this Agreement, including the Designated Disposal Facilities listed on Appendix 2 and any expansion thereof, all as more particularly described in the Solid Waste Partnership Strategy and Implementation Plan. "Disposal System Component" means any landfill,facility,structure,work,equipment,site or other real or personal property constituting a component part of the Disposal System. "Diverted City Acceptable Waste" means any otherwise Controllable Waste which is separated from Acceptable Waste by the generator thereof or by processing and which is"diverted"within the meaning of Section 40180 of the Public Resources Code. "Franchise Hauler"means any hauler or collector who provides Acceptable Waste collection services within the City pursuant to,or under authority granted by,a contract, franchise or other agreement with the City. The term Franchise Hauler includes the City itself if Acceptable Waste collection and transportation services are provided directly by City operated municipal collection service. "Governmental Body" means any federal, State, county, city or regional legislative, executive,judicial or other governmental board,agency,authority,committee,administra ion,court or other body,or any officer thereof acting within the scope of his or her authority. "Hazardous Substance"has the meaning given such term in the Resource Conservation and Recovery Act,42 U.S.C.6901 et seq.,CERCLA, and all future amendments to either of them or as defined by California statute or by the California Environmental Protection Agency or the California Integrated Waste Management Board,or any of them. 5 "Hazardous Waste" means (a) any waste which by reason of its quality, concentration, composition or physical, chemical or infectious characteristics may do either of the following: cause,or significantly contribute to,an increase in mortality or an increase in serious irreversible,or incapacitating reversible,illness,or pose a substantial threat or potential hazard to human health or the environment,or any waste which is defined or regulated as a hazardous waste,toxic substance,hazardous chemical substance or mixture,or asbestos under Applicable Law,as amended from time to time including,but not limited to:(1) the Resource Conservation and Recovery Act and the regulations contained in 40 CFR Parts 260-281;(2) the Toxic Substances Control Act(15 U.S.C.Sections 2601 d=.)and the regulations contained in 40 CFR Parts 761-766;(3)the California Health and Safety Code,Section 25117(West 1992 8t Supp. 1996);(4)the California Public Resources Code,Section 40141 (West 1996);(5)CERCLA and regulations promulgated thereunder and(6)future additional or substitute Applicable Law pertaining to the identification,treatment, storage or disposal of toxic substances or hazardous wastes;or(b)radioactive materials which are source, special nuclear or by-product material as defined by the Atomic Energy Act of 1954(42 U.S.C.Section 2011 gS=.)and the regulations contained in 10 CFR Part 40. "Imported Acceptable Waste" means Acceptable Waste that is generated outside of the geographical boundaries of the County and delivered to the Disposal System. "In-County Processing Facility" means any Processing Facility located within the geographical boundaries of the County,whether owned and/or operated by the County,any city,or private operator. "Independent Haulers" means those waste collection/hauler companies primarily engaged as a principal business in the collection and transportation of municipal solid waste generated in the County of San Bernardino and not under a franchise or other contract with a city in the County. "Term" has the meaning specified in Section 6.1(A)hereof. "Legal Entitlement" means all permits, licenses, approvals, authorizations, consents and entitlements of whatever kind and however described which are required under Applicable Law to be obtained or maintained by any person with respect to the Disposal System or the performance of any obligation under this Agreement or the matters covered hereby. "Legal Proceeding" means every action, suit, litigation, arbitration, administrative proceeding,and other legal or equitable proceeding having a bearing upon this Agreement. "Loss-and-Expense" means any and all loss, liability,obligation, damage, delay, penalty, judgment, deposit,cost, expense,claim, demand,charge,tax,or expense, including all fees and costs. 'Out-of-County Processing Facility' means a Processing Facility located outside the geographical boundaries of the County. "Non-Diverted City Acceptable Waste"means all City Acceptable Waste other than Diverted City Acceptable Waste. "Overdue Rate"means the post judgment rate of interest specified by the laws of the State. 'Processing Facility' means any materials recovery facility, composting facility, intermediate processing center,recycling center, incinerator or other waste management facility to which City Acceptable Waste is delivered for processing prior to disposal. 6 "Prohibited Medical Waste"means arty medical or infectious waste prohibited or restricted under Applicable Law from being received by or disposed at the Disposal System. "Qualified Household Hazardous Waste"means waste materials determined by the Board, the Department of Health Services,the State Water Resources Control Board,or the Air Resources Board to be: (1) Of a nature that they must be listed as hazardous in State statutes and regulations; (2) Toxic/ignitable/corrosive/reactive;and (3) Carcinogenic/mutagenic/teratogenic; which are discarded from households as opposed to businesses. Qualified Household Hazardous Waste shall not include Unacceptable Waste. "Residue" means any material remaining from the processing in permitted solid waste facilities or other facilities,by any means and to any extent,of City Acceptable Waste or Diverted City Acceptable Waste. "Resource Conservation and Recovery Act"or"RCRA"means the Resource Conservation and Recovery Act,42 U.S.C.A.Section 6901 c=-(West 1983&Supp 1989),as amended and superseded. "Self-Hauled Waste" means City Acceptable Waste collected and hauled by Self-Haulers. "Self-Hauler" means any person not engaged commercially in waste haulage who collects ` and hauls Acceptable Waste generated from residential or business activities conducted by such person. "Service Covenant"means the covenants and agreements of the County set forth in Sections 3.2 and 3.3 hereof. "State" means the State of California. "Term"shall mean the Term of this Agreement specified in Section 6.1. "Ton" means a"short ton"of 2,000 pounds. "Transfer Station"means any transfer station or other waste handling or management facility to which solid waste collected for the City is delivered for transfer, processing or transformation before disposal in the Disposal System. "Unacceptable Waste"means Hazardous Waste;Hazardous Substances;Prohibited Medical Waste; Qualified Household Hazardous Waste separated from Acceptable Waste(or otherwise identified by the County in loads otherwise containing Acceptable Waste);explosives,ordnance,highly flammable substances,and noxious materials and lead-acid batteries(except if delivered in minimal quantities);drums and closed containers; liquid waste, oil, human wastes; machinery and equipment from commercial or industrial sources,such as hardened gears,shafts,motor vehicles or major components thereof,agricultural equipment,trailers,marine vessels and steel cable;hot loads;and any waste which the Disposal System is prohibited from receiving under Applicable Law. "Uncontrollable Circumstance" means any act, event or condition affecting the Disposal System,the County,the City,or any of their Franchise Haulers,contractors or suppliers to the extent that 7 it materially and adversely affects the ability of either party to perform any obligation under the Agreement (except for payment obligations),if such act,event or condition is beyond the reasonable control and is not also the result of the willful or negligent act,error or omission or failure to exercise reasonable diligence on the part of the party relying thereon as justification for not performing an obligation or complying with any condition required of such party under the Agreement;provided•however,that the contesting in good faith or the good faith decision not to contest such action or inaction shall not be construed as willful or negligent action or a lack of reasonable diligence of either party.Examples of Uncontrollable Circumstances are: (1)an act of God,landslide,lightning,earthquake,fire,explosion,flood,sabotage or similar occurrence,acts of a public enemy,extortion,war,blockade or insurrection,riot or civil disturbance; and (2)a Change in Law. It is specifically understood that none of the following acts or conditions shall constitute Uncontrollable Circumstances:(a)general economic conditions, interest or inflation rates,currency fluctuations or changes in the cost of fuel, the availability of commodities, supplies or equipment; (b) changes in the financial condition of the County,the City or any Subcontractor affecting their ability to perform their obligations; (c)the consequences of errors,neglect or omissions by the County,the City,or any Subcontractor of any tier in the performance of their obligations hereunder,(d)union work rules,requirements or demands which have the effect of increasing the number of employees employed in connection with the Disposal System or otherwise increase the cost to the County of operating and maintaining the Disposal System or providing the Disposal Services;(e)strikes,work stoppages or other labor disputes or disturbances occurring with respect to any activity performed or to be performed by the City or the County or any of the City's or County's Subcontractors in connection with the Disposal System or the Disposal Services; (f) any failure of any Subcontractor to furnish labor,materials,service or equipment for any reason(other than an Uncontrollable .Circumstance);(g)equipment failure;(h)any impact of minimum wage law,prevailing wage law,customs or practices on the County's construction or cperating costs;or(i)changing conditions in the local,regional, or national waste disposal market. "Unincorporated Area"means those portions of the County which are not contained within the jurisdictional boundaries of incorporated cities. "Waste Disposal Covenant" means the covenants and agreements of the City set forth in Section 3.1 hereof. SECTION 1.2. INTERPRETATION. In this Agreement, unless the context otherwise requires: (A)References Hereto. The terms"hereby","hereof","herein","hereunder"and any similar terms are references to this Agreement, and the term "hereafter" means after, and the term "heretofore" means before,the Contract Date. (B) Gender and Plurality. Words of the masculine gender mean and include correlative words of the feminine and neuter genders and words importing the singular number mean and include the plural number and vice versa (C) Persons. Words importing persons include firms, companies, associations, general partnerships, limited partnerships, trusts, business trusts, corporations and other legal entities, including public bodies,as well as individuals. ° 8 (D)wings. The table of contents and any headings preceding the text of the Articles, Sections and subsections of this Agreement shall be solely for convenience of reference and shall not constitute a part of this Agreement,nor shall they affect its meaning,construction or effect. (E)Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement and,except as expressly provided otherwise herein,nothing in this Agreement is intended to confer on haulers or any other person other than the parties hereto and their respective permitted successors and assigns hereunder any rights or remedies under or by reason of this Agreement. (F)Counterparts. This Agreement may be executed in any number of original counterparts. All such counterparts shall constitute but one and the same Agreement. (G) Applicable Law. This Agreement shall be governed by and construed in accordance with the Applicable Laws of the State of California. (1I) Accounting Terms. All accounting terms used but not specifically defined herein shall be construed in accordance with,all accounting determinations hereunder to be made shall be prepared in accordance with generally acceptable accounting principles applied on a consistent basis. (1)Severability. If any clause, provision,subsection, Section or Article of this Agreement shall be ruled invalid by any court of jurisdiction,then the parties shall: (1)promptly meet and negotiate a substitute for such clause,provision,subsection,Section or Article which shall,to the greatest extent legally permissible,effect the intent of the parties therein;(2)if necessary or desirable to accomplish item(1)above, apply to the court having declared such invalidity for a judicial construction of the invalidated portion of this Agreement;and(3)negotiate such changes in,substitutions for or additions to the remaining provisions of this Agreement as may be necessary in addition to and in conjunction with items(1)and(2)above to effect the intent of the parties in the invalid provision.The invalidity of such clause,provision,subsection, Section or Article shall not affect any of the remaining provisions hereof,and this Agreement shall be construed and enforced as if such invalid portion did not exist, unless such invalidity frustrates the underlying primary purpose of the Agreement. (J) Integration. This Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereby.This Agreement shall completely and fully supersede all prior understandings and agreements between the Parties with respect to such transactions. (K) Recitals. The recitals to this Agreement are not intended to bind the parties hereto. In the event of a conflict between the recitals and the operative provisions of this Agreement, the operative provisions shall prevail. The recitals shall not be used to interpret the provisions of the Agreement. 9 ARTICLE II REPRESENTATIONS AND WARRANTIES SECTION 2.1. WARRANTIES OF THE CITY. The City represents and warrants that: (A) xistence The City is a general law or charter city validly existing under the Constitution and laws of the State. (B) Due Authorization. The City has duly authorized the execution and delivery of this Agreement, and this Agreement has been duly executed and delivered by the City. (C)NI Conflict. Neither the execution nor the delivery by the City of this Agreement nor the performance by the City of its obligations hereunder nor the consummation by the City of the transactions contemplated hereby(1)conflicts with,violates or results in a breach of any Applicable Law or(2)conflicts with,violates or results in a breach of any term or conditions of any contract, agreement, franchise,judgment, instrument or decree to which the City is a party or by which the City or any of its properties or assets are bound,or constitutes a default under any such contract,franchise,judgment,decree, agreement or instrument. (D)No iti¢ation. There is no action,suit or other proceeding,at law or equity,before or by any court or Governmental Body pending or,to the City's best knowledge,threatened against the City in which an unfavorable decision, ruling or finding which would materially and adversely affect the validity of or enforceability of this Agreement or any other agreement or instrument to be entered into by the City hereby,or which would materially and adversely affect the contemplated he , in connection with the transactions p Y performance by the City of its obligations hereunder or under any such other agreement or instrument. SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COUNTY. The County represents and warrants that: (A) Existence. The County is a political subdivision of the State of California validly existing under the Constitution and laws of the State. (B)Ile Au ho aho. The County has duly authorized the execution and delivery of this Agreement, and this Agreement has been duly executed and delivered by the County. (C)No Conflict. Neither the execution nor the delivery by the County of this Agreement nor the performance by the County of its obligations hereunder nor the consummation by the County of the transactions contemplated hereby(1)conflicts with,violates or results in a breach of any Applicable Law. or(2) conflicts with, violates or results in a breach of any term or conditions of any contract, agreement, franchise,judgment,instrument or decree to which the County is a party or by which the County or any of its properties or assets are bound, or constitutes a default under any such contract, franchise,judgment, decree,agreement or instrument. (D)No 'ligation. There is no action,suit or other proceeding,at law or equity,before or by any court or Governmental Body pending or, to the County's best knowledge, threatened against the County in which an unfavorable decision,ruling or finding which would materially and adversely affect the validity of or enforceability of this Agreement or any other agreement or instrument to be entered into by the County in connection with the transactions contemplated hereby, or which would materially and 10 adversely affect the performance by the County of its obligations hereunder or under any such other agreement or instrument. l it ARTICLE III DELIVERY AND ACCEPTANCE OF WASTE AND PROVISION OF DISPOSAL SERVICE SECTION 3.1. DELIVERY OF WASTE. (A)Waste DisWsal Covenant Subject to the occurrence of the Commencement Date and throughout the Term of this Agreement,the City shall exercise all legal and contractual power and authority which it may possess from time to time to deliver or cause the delivery of all Controllable Waste to the Disposal System in accordance herewith beginning on January 1, 1998. (B) Diverted jty Acceptable Waste. The parties hereto acknowledge the responsibility of the City to meet the recycling and landfill diversion goals contained in the Act. Nothing in this` Agreement is intended_or shall be interpreted to prohibit or impair the ability.of the City to meet or exceed such responsibilities, or to restrict the right of the residents, businesses or organizations in the City to practice source separation, source reduction, recycling,composting or other materials recovery activities, or to restrict the right of the City to conduct,sponsor,encourage or require such activities in any form. No reduction in the amount of Controllable Waste generated in the City and delivered to the Disposal System by or on behalf of the City which may result from any such source separation or recycling program(whether or not such program meets er exceeds the diversion requirements of the Act)shall cause the City any liability hereunder and shall not constitute a breach of this Agreement. [SECTION TO BE USED IF ALL WASTE CURRENTLY STAYS WITHIN COUNTY] (C) Waste Delivered to Transfer Station or Procesi4t Facilities. Subject to the provisions of this Section, all Residue from any processing of Controllable Waste by materials recovery, composting, recycling or other means, performed at In-County Processing Facilities or Out-of-County Processing Facilities shall constitute Controllable Waste and be subject to the Waste Disposal Covenant.The County specifically acknowledges that the City shall have the right to deliver or cause the delivery of City Acceptable Waste to Out-of-County Processing Facilities,and that the City is not obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(i) 40% of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or(ii)2% of the total amount of Controllable Waste generated in the City during such Contract Year.To the extent that Residue from the processing of Controllable Waste exceeds the amount specified in the preceding sentence,the City shall exercise all legal and contractual authority which it may possess from time to time to require that such excess Residue be delivered to the Disposal System, and shall include a requirement to that effect in any contracts, agreements or other arrangements for processing at Out-of-County Processing Facilities which it enters into or amends after the Contract Date. Where City Acceptable Waste is processed at an In-County or Out-of-County Processing Facility which concurrently processes other Acceptable Waste in a manner which produces commingled residue which cannot be traced to a geographic source,generic residues from. such Processing Facility in Tonnage equal to the residues that would have been produced had City Acceptable Waste only been processed at the facility shall constitute Controllable Waste and be subject to the Waste Disposal Covenant(subject to the exclusion from Controllable Waste of the amounts of Residue from Out-of-County Processing Facilities specified in this Section 3.1(Q.)Such generic residues shall be delivered to the Disposal System regularly, in approximately the same frequency as deliveries of City Acceptable Waste to the Processing Facility. (In making any determination of Residue attributable to the City, the City may rely on the reports or certifications of the owner or operator of the Transfer Station or Processing Facility.) [FOLLOWING SECTION TO BE USED IF WASTE CURRENTLY PROCESSED OUT-OF- COUNTY] 12 (C) Waste Delivered to Transfer Station or Processing Facilities. Subject to the provisions of this Section, all Residue from any processing of Controllable Waste by materials recovery, composting, recycling or other means, performed at In-County Processing Facilities or Out-of-County Processing Facilities shall constitute Controllable Waste and be subject to the Waste Disposal Covenant.The County acknowledges that a portion of Controllable Waste,(i)the subject of a franchise,contract or other agreement which provides for the processing of such portion of Controllable Waste at an Out-of-County Processing Facility and(ii)was,as of July 1, 1997,and is,as of the Contract Date being actually delivered to an Out-of County Processing Facility pursuant to such franchise, contract or other agreement. With respect to the portion of Controllable Waste which is subject to the franchise,contract or other agreement described in this Section the City is not obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(i) 400/6 of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or (ii) 70/6 of the total amount of Controllable Waste generated in the City during such Contract Year. However, the City agrees that upon the expiration date of such franchise, contract or agreement (as such expiration date exists as of the Contract Date, without any renewal, amendment or modification thereof) the City will not be obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(i) 40% of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or(ii)2%of the total amount of Controllable Waste generated in the City during such Contract Year To the extent that Residue from the processing of Controllable Waste exceeds the amount specified in this Section,the City shall exercise all legal and contractual authority which it may possess from to time to time to require that such excess Residue be delivered to the Disposal System, and shall include a requirement to that effect in any contracts, agreements or other arrangements for processing at Out-of-County Processing Facilities which it enters into or amends after the Contract Date. Where City Acceptable Waste is processed at an In-County or Out-of-County Processing Facility which concurrert!y processes other Acceptable Waste in a manner which produces commingled residue which cannot be traced to a geographic source, generic residues from such Processing Facility in Tonnage equal to the residues that would have been produced had City Acceptable Waste only been processed at the facility shall constitute Controllable Waste and be subject to the Waste Disposal Covenant(subject to the exclusion from Controllable Waste of the amounts of Residue from Out-of-County Processing Facilities specified this Section 3.1(Q.)Such generic residues shall be delivered to the Disposal System regularly, in approximately the same frequency as deliveries of City Acceptable Waste to the Processing Facility. (In making any determination of Residue attributable to the City, the City may rely on the reports or certifications of the owner or operator of the Transfer Station or Processing Facility.) (D) Power to Oblate Waste Disposal and Comply with this Agreement. On or before January 1, 1998,(1)any City franchise,contract, lease,or other agreement which is lawfully in effect relating to or affecting Controllable Waste shall provide,or shall have been amended to provide,that the City shall have the right without material restriction on and after the January 1, 1998 to direct the delivery of all Controllable Waste to a disposal location selected by the City(whether or not such Controllable Waste is delivered to a transfer station as an intermediate step prior to landfill disposal)and otherwise to comply with its obligations under this Agreement with respect to Controllable Waste and Franchise Haulers,(ii)the City shall designate the Designated Disposal Site as the disposal location pursuant to such franchise,contrad, lease or other agreement and(iii)the City's Franchise Hauler shall execute the Hauler Acknowledgment attached hereto as Appendix 2,pursuant to which the Franchise Hauler acknowledges the City's execution of this Agreement,and agrees to comply with the Waste Disposal Covenant. Throughout the Term of this Agreement the City(a)shall not enter into any franchise,contract, lease,agreement or obligation, issue any permit, license or approval,or adopt any ordinance, resolution or law which is materially inconsistent with 13 the requirements of the Waste Disposal Covenant, and (b) shall maintain non-exclusive or exclusive I franchises or other contractual arrangements (or collection through City owned and operated collection services) over any City Acceptable Waste which, as of the Contract Date, is subject to non-exclusive or exclusive franchise or other contractual arrangements.The City agrees that the County shall be a third party beneficiary of the obligation of Franchise Haulers to deliver Controllable Waste to the Disposal System,and may directly enforce such obligation through any legal or means available; provided,however,that such designation of the County as a third party beneficiary does not relieve the City of its obligations hereunder to enforce the waste delivery obligation of the Franchise Haulers. The City shall notify in writing each Franchise Hauler of the County's third party beneficiary rights. (E) Waste Flow Enforcement. The City,in cooperation with the County,shall establish, implement, carry out and enforct a waste flow enforcement program which is sufficient to assure the delivery of all Controllable Waste to the Disposal System pursuant to and in accordance with the Waste Disposal Covenant for disposal at the times and in the manner provided herein. The waste flow enforcement program shall consist of amending City franchises with all Franchise Haulers,to the extent required by this Section,and shall include in addition,to the extent necessary and appropriate in the circumstances to assure compliance with the Waste Disposal Covenant, but shall not be limited to: (1) licensing or permitting Franchise Haulers.upon the condition of compliance with the Waste Disposal Covenant,(2)providing for and taking appropriate enforcement action under any such franchise, license, or permit, such as but not limited to the suspension, revocation and termination of collection rights and privileges,the imposition of fines or collection of damages,and the exercise of injunctive relief against non-complying Franchise Haulers and (3) causing any Transfer Station to which Controllable Waste is delivered for processing to deliver certification, under the penalty of perjury, of the amounts of Controllable Waste received and Residue remaining from processing at such Transfer Station. The City acknowledges and agrees that in the event of a breach of the Waste Disposal Covenant by the City,the City shall pay the County an amount equal to 1000/6 - multiplied by the Contract Rate in effect at the time of such breach multiplied by the number of tons of Controllable Waste which were not delivered to the Disposal System as a result of the failure of the City to comply with tree Waste Disposal Covenant.The parties recognize that if the City fails to meet its obligations hereunder, the County will suffer damages and that it is and will be impracticable and extremely difficult to ascertain and determine the exact amount of such damages. Therefore,the parties agree that the damages specified above represent a reasonable estimate of the amount of such damages, considering all of the circumstances existing on the date hereto, including the relationship of the sums to the range of harm to the County that reasonably could be anticipated and anticipation that proof of actual damages would be costly or inconvenient.In signing this Agreement,each party specifically confirms the accuracy of the statements made above and the fact that each party had ample opportunity to consult with legal counsel and obtain an explanation of this liquidated damage provision at the time that this Agreement was made. (F) Legal Challenges to Franchise System. The City shall use its best efforts to preserve, protect and defend(by diligent pursuit of claims through the trial court level) its right to exercise- and comply with the Waste Disposal Covenant against any challenge thereto, legal or otherwise(including any lawsuits against the City or the County,whether as plaintiff or defendant),by a Franchise Hauler or any other person,based upon breach of contact,violation of law or any other legal theory. The City shall bear the cost and expense of any such Legal Proceeding or other challenge. In the event any such Legal Proceeding relating to the Waste Disposal Covenant or the City's exercise thereof establishes in a final determination that such covenant or exercise thereof is void,unlawful or unenforceable,or if any Franchise Hauler fails to deliver Controllable Waste to the Disposal System in breach of its franchise with the City on the grounds that a judicial determination made by any court or other Applicable Law has rendered its obligation to deliver Controllable Waste to the Disposal System void,unlawful or unenforceable on any legal grounds,with the result that actual waste deliveries of the City's Controllable Waste to the Disposal System in any Contract Year fall below 93% of the amount of the City's Controllable Waste delivered to the 14 t Disposal System during the preceding Contract Year, the County shall be entitled to terminate this Agreement upon 60 days prior written notice to the City. Such right of the County to terminate must be exercised within one year of the end of the Contract Year during which the delivery shortfalls described in this Section giving rise to the right to terminate occurred.Upon any termination by the County pursuant to the provisions of this Section,the obligations of the County pursuant to Section 7.3 hereof shall not apply to any Loss-and-Expense of the City which may arise from deliveries of waste to the Disposal System after such date of termination. (G) Franchise Haulers. The City shall compile and provide the County with the following information concerning all Franchise Haulers: name, address and phone number, identification number, area of collection and transportation;and franchise and permit terms. (H) Waste Information Sygem. The City shall cooperate with the County in collecting information and otherwise monitoring Franchise Haulers in order to assure compliance with this Agreement. Such information may include, to the extent practicable,data pertaining to Controllable Waste collected, transported, stored, processed and disposed of; Diverted City Acceptable Waste collected, transported, stored, processed and marketed or disposed of; Franchise Haulers' franchise, permit or license terms, collection areas,transportation routes and compliance with Applicable Law;and all other information which may reasonably be required by the County in connection with this Agreement. (I) City Actions Affecting CouM. The City agrees not to conduct any disposal services for Controllable Waste to be provided in competition with the Disposal Services provided by the County hereunder, and not to take or omit to take any action with respect to Controllable Waste or its collection, transportation,transfer,storage,treatment or disposal that may materially and adversely affect the County's ability to achieve such timely compliance. The County acknowledges that development by the City (or cooperation by the City in connection with the private development of)any materials recovery facility or transfer station located within or without the City shall not violate the provisions of this section as long as the ultimate disposal site for any Controllable Waste (or Residue therefrom) which is delivered to such materials recovery facility or transfer station is the Disposal System.Notwithstanding the foregoing,the City shall not be required to (i) approve or deny any permit or license or grant or refuse to grant any approval while exercising its police powers or(ii)waive,modify or otherwise limit in any manner the City's land use authority. (J) No Right of Waste Substitution. Nothing in this Agreement shall authorize or entitle the City to deliver or cause the delivery to the Disposal System of Acceptable Waste originating from or generated outside the jurisdiction of the City, nor obligate the County to receive or dispose of any such Acceptable Waste. The City shall not assign in whole or in part its right to deliver or cause to be delivered Controllable Waste to the County hereunder, and shall not permit any Acceptable Waste originating from or generated outside the jurisdiction of the City to be substituted for Controllable Waste for any purpose hereunder. (K) Annexations and Restructuring. It is the intention of the parties that this Agreement and the obligations and rights of the City hereunder,including particularly the Waste Disposal Covenant and the Contract Rate, shall, to the extent permitted by Applicable Law (and subject to any rights of waste haulers operating in such areas prior to such annexation),extend to any territory annexed by the City(or any territory with respect to which the City assumes solid waste management responsibility from a sanitary district or other public entity)and shall bind any successor or restructured Governmental Body which shall assume or succeed to the rights of the City under Applicable Law. 15 SECTION 3.2. PRnVI�ION OF DISPOSAL SERVICES BY THE COUN�C•(A)Service. ovenant. Commencing January 1, 1998,the County shall provide or cause the provision of the service of (i)receiving and disposing of all Controllable Waste at the Designated Disposal Facility,(2)disposing in accordance with subsection 3.2(C)hereof of Controllable Waste which,at any time and for any reason,is in excess of the disposal capacity of the Designated Disposal Facility,and(3)in accordance with subsection 33(C)hereof,disposing of Unacceptable Waste inadvertently accepted at the Designated Disposal Facility. The County shall do and perform all acts and things which may be necessary or desirable in connection with its covenants in this subsection, including without limitation all planning, development, administration, implementation,construction,operation, maintenance, management, financing and contract work related thereto or undertaken in connection therewith. The County shall exercise all reasonable efforts to minimize the costs incurred in complying with the Service Covenant consistent with its responsibilities hereunder and under this Agreement, Applicable Law and prudent solid waste management practice and environmental considerations, so as to enable the County to provide the services hereunder at the Contract Rate. (B) TmmpnrarX Ilnav ail,bilitY of Designated Di,.00sal Facility- Provision of Transfer Capacily.The County shall immediately advise the City and Franchise Hauler by telephone and facsimile of any situation,event or circumstance which results in the partial or complete inability of the County to receive Controllable Waste at the Designated Disposal Facility, its effect on the County's ability to perform its obligations hereunder,and the County's best estimate of the probable duration. The County shall confirm such advice in writing within 24 hours of he occurrence of any such inability. The County shall use its best efforts to resume normal operation of the Designated Disposal Facility as soon as possible in accordance with subsection 3.2(C)hereof.In the event that,an any time during the term hereof,the County is unable to accept City Acceptable Waste for disposal at any particular Designated Disposal Facility for a period in excess of 14 consecutive days, it shall nonetheless provide sufficient transfer capacity at such Designated Disposal Facility, and shall accept for transfer and disposal City Acceptable Waste at such Designated Disposal Facility for the Contract Rate.In the event that the County cannot provide such transfer capacity, it shall be obligated to accept such City Acceptable Waste at another facility within the Disposal System and to reimburse the City for any increased transportation cost(including without limitation, equipment rental costs,overtime and increased fuel costs resulting from the unavailability of the Designated Disposal Facility) incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to another disposal facility within the Disposal System.In the event that the County cannot provide disposal capacity at another facility within the Disposal System, it shall be obligated to reimburse the City for (i) any increased transportation cost(including without limitation,equipment rental costs,overtime and increased fuel costs resulting from the unavailability of he Designated Disposal Facility) incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to any other disposal facility used by he City or Franchise Hauler and(ii)the amount, if any,by which the tipping fee at the alternative facility utilized by the City or Franchise Hauler(because of the unavailability of any facility wih sof he amount invoiced. then current Contract Rate.The invoice shall include reasonable substantiation (C) Termination by `'""^"' '" "amain Circumstances. In the event that the Designated Disposal Facility becomes unavailable pursuant to Section 3.2(B) for a period exceeding 14 days,the County shall have the right to terminate this Agreement pursuant to this Section.The County may exercise such right by providing 10 days prior written notice thereof to the City. In the event that the County exercises such right, the County shall be obligated to pay the City an amount equal to(i)any aggregate increased transportation cost(including without limitation,equipment rental costs,overtime and increased fuel costs resulting from the unavailability of the Designated Disposal Facility)reasonably expected to be incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to any other disposal facility used by the City of Franchise Hauler for a period of one year following the date of termination and(ii)the aggregate amount, if any,by which the tipping fee at the alternative facility utilized by the City or Franchise Hauler(because of the unavailability of any facility within the Disposal System)is reasonably expected to exceed the then 16 current Contract Rate for a period of one year following the date of termination. Such amounts shall be payable by the County within 60 days of the date of termination. (D) Chang cility by Mutual Consent The Designated Disposal Facility has been initially designated in Appendix 1 hereto. The Designated Disposal Facility may be changed, and other Designated Disposal Facilities added, at any time with the mutual consent of the parties. (E) Change in teS at City Request. In the event the City wishes to change the Designated Disposal Facility to another Disposal System Component,the City shall provide written notice and the reasons therefor to the County, and shall indicate whether the requested change is permanent or temporary. The County shall consider any such request in good faith and provide a response to the City within 14 days, taking into account the reasons for the request, the County's obligations to other cities which have executed Disposal Agreements,the requirements of Applicable Law, and the implications of any such change for the Disposal System as a whole. The County shall honor any such request to the extent commercially practicable based on such considerations and the overall interests of the Disposal System. (F) Annual Notification Remaining Diis tal acacity. At the end of each Contract Year,the City shall advise the County in writing as to the expected delivery levels of Controllable Waste during the next Contact Year,and the County shall submit to the City a statement specifying(1)the amount of disposal capacity at the Designated Disposal Facility expected to be available for use by the City during the next Contract Year,(2)the aggregate amount of Disposal System capacity expected to be available for use by the cities which have executed Disposal Agreements during the remaining Term of this Agreement; and (3) any plans the County may have with respect to redesignating the Designated Disposal Facility, increasing or decreasing the number of cities using the Designated Disposal Facility, or curtailing or expanding the use of the Designated Disposal Facility.The annual notification to be provided by the County pursuant to this Section shall also describe the status of any permits required with respect to the Designated Disposal Facility, including a description of(i)any permit revisions expected to be proposed by the County, and (ii) any abatement orders or other permit compliance or enforcement actions taken or proposed by Governmental Bodies. SECTION 3.3. COUNTY RIGHT TO REFUSE WASTE. (A) Right of Refusal. Notwithstanding any other provision hereof,the County may refuse delivery of: (1) Unacceptable Waste; and (2) Controllable Waste delivered at hours other than those provided in Section 3.5 hereof. (B)Identification of Ungac,ceAtab ate. The County shall have the right(but not the duty or the obligation)to inspect the vehicles of all Franchise Haulers delivering material to the Disposal System, and may require that the Franchise Hauler remove any Unacceptable Waste from such vehicle before it is unloaded.If the County determines that it is impractical to separate Controllable Waste from Unacceptable Waste in any vehicle,or if the Franchise Hauler delivering such waste is unwilling to make such separation, or if any vehicle is carrying waste which may spill or leak,then the County may reject the entire vehicle,and the County shall require that the Franchise Hauler shall forthwith remove or cause the removal of the entire delivery from the Disposal System. (C) Na�ardou� Waste and Hazardous Substances. The parties acknowledge that the Disposal System has not been designed or permitted,and is not intended to be used in any manner or to any 17 extent, for the handling,transportation,storage or disposal of Hazardous Waste or Hazardous Substances. Neither the County nor the City shall countenance or knowingly permit the delivery of Hazardous Waste or Hazardous Substances to the Disposal System. (D) i:-., .� .cr r..,,.....,�,ble Waste and Hazardous Waste.If Unacceptable Waste or Hazardous Waste is discovered in a vehicle at any landfill within the Disposal System,the driver of the vehicle will not be permitted to discharge the load.If a vehicle is observed unloading Unacceptable Waste or Hazardous Waste in the tipping area of a landfill within the Disposal System County personnel will use reasonable efforts to assure that such material has been characterized,properly secured and its disposition resolved. The return or reloading on to the delivery vehicle of any Hazardous Waste,Prohibited Medical Waste or other waste requiring handling or transportation shall be conducted in accordance with Applicable Law. Whenever Hazardous Waste is detected at any landfill within the Disposal System,the County shall take immediate action in accordance with Applicable Law.In addition, if the County inadvertently accepts Unacceptable Waste, it shall have the right to pursue any remedies which it may against the person delivering such Unacceptable Waste to recoup the cost of handling and properly disposing of such Unacceptable Waste. (E) Environmental Insurance. Prior to the Contract Date, the County will obtain insurance for potential CERCLA or other environmental liability of the Disposal System,in an amount equal to S10,000,000 with deductibles of: (i) 51,000,000 for events giving rise to coverage which events occurred prior to October 1, 1995 and(ii) 5250,000 for events giving rise to coverage which events occurred on or after October 1, 1995.The County shall maintain comparable insurance throughout the term hereof so long as commercially available on reasonable terms,as determined in the reasonable discretion of the County risk manager. The County shall notify the City in the event that the County does not maintain the insurance described in this Section. SECTION 3.4. MISCELLANEOUS r A_Nl;OL1S OPERATIONAL MATTERS. (A)Permit Revisions or Stipulated Orders.The County shall provide,the City with any application of the County to revise the Legal Entitlements for the Designated Disposal Facility (or any draft or final stipulated notice and order relating to the Designated Disposal Facility which may be under consideration by the local enforcement agency with jurisdiction over the Designated Disposal Facility). Such applications shall be provided to the City concurrently with its submittal to the appropriate regulatory agency. (B)Scales and Weighin¢.The County shall operate and maintain permanent scales at the Disposal System in compliance with Applicable Law. The County shall weigh all vehicles delivering Controllable Waste by or on behalf of the City(whether or not the County accepts such waste)and prepare a daily weight record with regard to such delivery.(In the event that scales are temporarily unavailable,the County shall reasonably estimate the weight of Controllable Waste delivered by volume.) SECTION 3.5. OTHER USERS OF THE_DISP)SAL. SYSTEM. (A) QOS34. The County shall have the right to enter into waste disposal agreements with other cities in the County,Sanitary Districts, Transfer Stations or Independent Haulers; provided, however, that in no event shall such agreements have terms and provisions more favorable than the terms and provisions of this Agreement (including but not limited to the Contract Rate and availability of disposal capacity)unless the County has first offered the City such more favorable contract(or amendments to this Agreement). (B) feint of ImNrted Acceptable Waste on a Contract is.The County shall have the right to enter into a contract or other agreement with any municipal or private non-County entity for the delivery of Imported Acceptable Waste on terms and conditions that the County determines to be necessary to ensure and enhance the viability of the Disposal System for the benefit of the County and the cities which t8 have executed Disposal Agreements. The County shall not enter into any such arrangements if such arrangements would materially and adversely affect the ability of the County to receive and dispose of Acceptable Waste from the cities which have executed Disposal Agreements in accordance with the Disposal Agreements throughout the Term thereof. Any such agreements shall provide that, in the event there is insufficient capacity at the Designated Disposal Facility for both Controllable Waste and Imported Acceptable Waste,Controllable Waste shall have priority with respect to existing capacity. SECTION 3.6. COUNTY PROVISION OF WASTE DIVERSION SERVICES. oun -Wide RW&Ii_ng Services. This Agreement does not require the County to provide for any source reduction,materials recovery,recycling,composting,or other waste diversion services by the County nor any payment therefor by the City,by Franchise Haulers or by ratepayers; provided,however,any County- Wide Recycling Services,or recycling services provided at any Design Disposal Facility(such as providing drop boxes for wood waste,green waste or other recyclable materials delivered to such Designated Disposal Facility), may be funded through the County Waste Management Enterprise Fund. Any such recycling services may be expanded,contracted or modified by the County at any time in its sole discretion. (B) Separate oily+ only Diversion Service A¢reeme ts. Nothing in this Agreement is intended to limit the right of the County to enter into a separate agreement with the City or any other person to provide source reduction, materials recovery, recycling, composting or other waste diversion services. Any such program conducted by the County,whether in participation with the City.any other of the cities which have executed Disposal Agreements, other cities, Sanitary Districts, Transfer Stations, Independent Haulers,Unincorporated Area or non-County entity,shall be operated,managed and accounted for as a program separate and distinct from the Disposal Services program contemplated by the Disposal Agreements and shall not be funded through the general revenues of the Disposal System. (C) Diversion Promwis in UnincoWrated Ar .To the extent the County implements diversion or other related programs in the Unincorporated Area of the County,the cost of such diversion programs shall be paid by the residences and businesses receiving the benefit of such diversion programs,and shall not be payable from the revenues of the Disposal System. 19 ARTICLE IV ! CONTRACT RATE SECTION 4.1. CHARGING AND SECURING PAYMENT OF CONTRACT RATE. The City acknowledges that the County shall have the right to charge and collect a Contract Rate for the acceptance and disposal of Controllable Waste delivered to the System by any Franchise Hauler. The Contract Rate shall be calculated and established,and may be modified,as provided in Section 41 hereof. In addition,the City acknowledges that the County shall have the right to establish as part of the operating rules and regulations reasonable measures to secure the payment of all Contract Rates.Notwithstanding Section 4.2(A),the County shall have the right to impose special charges for the receipt of hard to handle materials,such as bulky materials,construction and demolition debris,tires and sludge.Such special charges shall be calculated to reflect the reasonable incremental costs to the County of accepting such hard to handle materials. SECTION 4.2. CONTRACT RATE. (A) Generally. Effective January 1, 1998, the Contract Rate payable by each Franchise Hauler shall be $28.50 per ton, subject to potential adjustment necessary to reflect the circumstances set forth below: (i) increased costs incurred by the County (in excess of available insurance proceeds) due to the occurrence of one or more Uncontrollable Circumstances,including Changes in Law;and (ii) escalation during the Term of this Agreement calculated in accordance with Section 4.2(B). Prior to adjusting the Contract Rate as a result of any of the circumstances described in Section 41(Axi�the County shall utilize the following remedy;reduce the costs of operating the Disposal System to the extent practicable. Any adjustments to the Contract Rate permitted by this Section 4.2(A)(i)shall be calculated by the County to reflect the actual costs or expenses of addressing the circumstance or circumstances pursuant to which the adjustment is authorized,and shall also reflect,where applicable, the then remaining capacity in the Disposal System.Such adjustment may not reflect circumstances other than the circumstances described in Section 4.2(A)(i). (B) C•alcularior of Escalation. For purposes of Section 4.2(Axii), the Contract Rate shall be adjusted in accordance with the formula described in this Section each July 1 during the term hereof, commencing July 1, 1999.The adjustment shall be calculated in accordance with the following formula: Contract Rate = Fixed Portion + [Escalating Portion x Index] Where, Fixed Portion = $10.87 Escalating Portion = $17.63 Index = Price Index, which shall be determined in accordance with the following formula I = .7[PPI1/PPIJ+.3[EI1/Elj 20 PPI, = The Producer Price Index,Industrial Commodities,as published by the United States Department of Labor Statistics in the publication Producer Price Indices,Table 6, for the month of February in the year the adjustment is being made(e.g.,the first adjustment will use the February, 1999 value) PP12 = Producer Price Index, Industrial Commodities for the month of February, 1998 EI, = Employment Cost Index,Compensation,Private Industry Workers, as published by the United States Department of labor Statistics in the publication Monthly Labor Review,Table 22 for the month of February in the year the adjustment is being made(e.g.,the first adjustment will use the February, 1999 value) EI2 = Employment Cost Index,Compensation,Private Industry Workers established for February, 1993 If the Employment Cost Index or Producer Price Index are no longer published,or are otherwise unavailable, then the Cost of Living Adjustment shall be determined by using standard official statistics measuring changes to, respectively, labor costs and cost of materials, as the parties shall mutually agree. (C) procedure for Rate Adjustments. In the event the County determines that it is entitled to an adjustment of the Contract Rate pursuant to Section 4.2(Axi), it shall utilize the procedures described in this Section 4.2(C). The County shall be required to provide the City with at least 60 days prior written notice of the adjustment,which notice shall identify the specific event(s)or circumstances which require the adjustment. The notice shall also specify the earliest date on which the County Board of Supervisors shall consider the proposed adjustment. At least 45 days prior to such meeting of the Board of Supervisors,the County shall provide the City with a report which shall contain the following information: a description of the specific event(s)or circumstances which require the adjustment;a description(including cost estimates) of any activities (which may include, but not be limited to capital improvements to the Disposal System) required in order to remedy such event or circumstance;certification by the County that it has implemented the remedies described in Section 4.2 prior to requiring the rate adjustment; and a description of the methodology used by the County to calculate the adjustment to the Contract Rate (hereinafter the"County Report"). In the event the City disputes the adjustment,it shall provide the County with a written description of the reason for the dispute at least 10 days prior to the meeting of the Board of Supervisors identified in the initial notice of the County(hereinafter the"City Report"). The City Report shall be provided to the Board of Supervisors for consideration at such meeting in connection with the proposed rate adjustment. At any time from and after the date that the County provides the City with the.- County Report,upon the request of either party,the City and County shall meet and confer in good faith to resolve any dispute that may arise regarding the proposed adjustment to the Contract Rate. In the event the Board of Supervisors approves all or a portion of the proposed rate adjustment,such rate adjustment shall become effective on the date identified in the initial notice sent by the County, but subject to potential reimbursement pursuant to Section 4.2(D). (D) Challenges to Rate A justment.In the event that the City challenges a Rate Adjustment made pursuant to Section 4.2(A)and a court of applicable jurisdiction determines that any portion of the County's adjusted Contract Rate was improperly imposed,the County shalt,within 30 days of the date of the statement of decision, reimburse to the City the amount improperly imposed,together with interest calculated at the 21 Overdue Rate. Such reimbursement may be made in the form of a reduction described ractmRate for a future period reasonably calculated to provide full reimbursement of the amounts SECTION 4.3. ceonuSIB tTy FOR PA .(A)�n by City. In the event and to the extent(1)the City uses municipal collection forces directly for the haulage of Controllable Waste to the Disposal System Contract Rate from City revenues, the City franchise hall Haulers for collection but nonetheless elects to pay the and other responsibility for payment of the Contract Rate,and shall take all such budgetary,appropriation action as may be necessary to provide for the timely payment of the Contract Rate. Such action may include, depending upon the means authorized by the City to provide for such payment,the levy and collection of general or special taxes, the imposition of benefit assessments, or the collection of user fees, generator charges or other similar impositions for municipal solid waste disposal. The City shall use best efforts in accordance with Applicable Law to levy and impose all such taxes,assessments,fees or charoes, and will take all steps, actions and proceedings for the enforcement, collection nd payment the extent prom"d d in which shall become delinquent,to the full extent permitted by Applicable Section 7.5 hereof,the obligation of the City Funds From the Commencem Transfer Dat Rates the date of expiration or amounts in the Cites Solid Waste Enterprise the Contract Rate or Transfer Rate,to the or termination of this Agreement,the obligation of the City to pay extent the City rather than Franchise Haulers is responsible directly for payment and provided that the Service Covenant has been complied with, shall be absolute and unconditional and shall not be subject to laim delay or diminution by reason of set-off, abatemen al l�ircumstanc�existence es toamounts amounts available in any enterprise fund obligation of the City hereunder shall be limited i fund created by the City for solid waste management ated to purposes, d waste management no recourse purposes for amounts against the City's general fund or other funds not owed by the City hereunder. (B) Pa my ent by Franchise en. With respect to Controllable Waste delivered by Franchise Haulers other than City municipal collect n forces,s,the obligation City has agreed with the Rate shall County to rest with such Franchise Haulers and not with the City be responsible for Franchise Hauler payments,the r ports on thereof whoen nsible due for In the event of failure by such Franchise Hauler to pay the Con tact Rat or any any such failure,the County and the City shall cooperate with each other and use their best effo to timely payment. Such efforts by the County may include, as appropriate, requiring cash payments for disposal rights from such Franchise Hauler and bringing legal proceeding o uspe d revoke orrterminate the efforts by the City shall include, as appropriate, g proceedings Franchise Haulees franchise, permit or license rights. by the (C) Dilautei. If the City or the Franchise Hauler disputes any amount billed amounts County in any Billing Statement,the City or the Franchise Hauler shall nonetheless pay undisputed identified on such Billing Statement and shall provide the s being disputed objection providing all reasons reasons. the receipt of such Billing Statement indicating the amount then known to the City or the Franchise Hauler for any objection°additional documentation substantiating the County shall then respond to such written objection(providing amount disputed if applicable)within 30 days of receipt of the written days after the County's response, then Hauler and the County are not able to resolve such dispute w Y the City or Franchise party may pursue appropriate legal remedies.In addition,in the event of nonpayment by the it may have had Hauler,as applicable, Hauler,and requere cash payment for subsequent deliveries. with the City or r SECTION 4.4. BILLING OF THE CONTRACT RATE,The County shall continue to bill Contract Rate after January 1, 1998,in the same manner as it has customarily billed tipping fees.Subject to ( the other provisions of this Agreement,the County shall have the right to modify or amend such manner of j billing on reasonable notice to affected parties. 23 ARTICLE V BREACH,ENFORCEMENT AND TERMINATION SECTION 5.I. BREACH:REMEDIES.The parties acknowledge that the money damages provided hereunder may not be adequate to compensate either party for the other party's nonperformance. The parties agree that in the event either party breaches any obligation under this Agreement or any representation made by either party hereunder is untrue in any material respect,the other party shall have the right to take any action at law or in equity(including actions for injunctive relief,mandamus and specific performance)it may have to enforce the payment of any amounts due or the performance of any obligations to be performed hereunder. Neither party shall have the right to terminate this Agreement except as provided in Section 3.1(F), Section 3.2(C), Section 5.2 and Section 5.3 hereof or as otherwise provided in this Agreement. SECTION 5.2. CITY CONVEMENCE TERMINATION.The City shall have the right to terminate this Agreement in its sole discretion,for its convenience and without cause at any time during the Term hereof upon 90 days'written notice to the County. If the City exercises its rights to terminate the Agreement pursuant to this Section, the City shall pay the County a termination fee equal to (x) $14.25 multiplied by (y) the amount of Controllable Waste delivered to the Disposal System during the prior Contract Year multiplied by(z)remaining term of the Waste Disposal Agreement,stated in years(assuming such termination for convenience did not occur).Upon any termination by the City pursuant to the provisions of this Section, the obligations of the County pursuant to Section 7.3(A) hereof shall not survive such termination, notwithstanding Section 6.1(B). SECTION 5.3. TERMINATION. (A)By City. Except as expressly provided herein,the City shall have no right to terminate this Agreement for cause except in the event of the repeated failure or refusal by the County substantially to perform any material obligation under this Agreement unless such failure or refusal is excused by an Uncontrollable Circumstance;except that no such failure or refusal shall give the City the right to terminate this Agreement for cause under this subsection unless: (1) The City has given prior written notice to the County stating that a specified failure or refusal to perform exists which will, unless corrected, constitute a material breach of this Agreement on the part of the County and which will, in its opinion, give the City the right to terminate this Agreement for cause under this subsection unless such breach is corrected within a reasonable period of time,and (2) The County has neither challenged in an appropriate forum (in accordance with Section 5.6)the City's conclusion that such failure or refusal to perform has occurred or constitutes a material breach of this Agreement nor corrected or diligently taken steps to correct such breach within a reasonable period of time not more than 90 days from the date of the notice given pursuant. to clause(1)of this subsection(but if the County shall have diligently taken steps to correct such breach within such reasonable period of time,the same shall not constitute a breach giving rise to the right of termination for as long as the County is continuing to take such steps to correct such breach). (B) B CY ounir. Except as expressly provided herein,the County shall have no right to terminate this Agreement for cause except in the event of the repeated failure or refusal by the City substantially to perform any material obligation under this Agreement unless such failure or refusal is excused by an Uncontrollable Circumstance;except that no such failure or refusal shall give the County the right to terminate this Agreement for cause under this subsection unless: 24 (1) The County has given prior written notice to the City stating that a specified failure or refusal to perform exists which will, unless corrected, constitute a material breach of this c Agreement on the part of the City and which will,in its opinion,give the County right to terminate this Agreement for cause under this subsection unless such breach is corrected within a reasonable period of time,and (2) The City has neither challenged in an appropriate forum(in accordance with Section 5.5)the County's conclusion that such failure or refusal to perform has occurred or constitutes a material breach of this Agreement nor corrected or diligently taken steps to correct such breach within a reasonable period of time not more than 90 days from the date of the notice given pursuant to clause(1)of this subsection(but if the City shall have diligently taken steps to correct such breach within such reasonable period of time,the same shall not constitute a breach giving rise to the right of termination for as long as the City is continuing to take such steps to correct such breach). SECTION 5.4. NO WAIVERS. No action of the County or the City pursuant to this Agreement(including,but not limited to,any investigation or payment),and no failure to act,shall constitute a waiver by either party of the other party s compliance with any term or provision of this Agreement. No course of dealing or delay by the County or the City in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof or otherwise prejudice such party's rights,powers and remedies. No single or partial exercise of(or failure to exercise)any right,power or remedy of the County or the City under this Agreement shall preclude any other or further exercise thereof of the exercise of any other right, power or remedy. SECTION 5.5 DAMAGES.(A)City. In the event that the City terminates the Agreement pursuant to Section 5.3(A),the County shall be obligated to pay to the City as damages the amount by which the City's reasonably expected cost of transporting and disposing of City Acceptable Waste(for a period commencing on the date of termination and ending one year after such date of termination) exceeds the aggregate Contract Rate that would have been payable with respect to such City Acceptable Waste had the County met its obligations hereunder and the Agreement had not been terminated. (B)County. In the event that the County terminates the Agreement pursuant to Section 5.3(B),the City shall pay the County as damages an amount equal to the Contract Rate in effect at the time of such termination multiplied by the number of tons of City Acceptable Waste delivered to the Disposal System during the preceding twelve months. SECTION 5.6. FORUM FOR DISPUTE RESOLUTION. It is the express intention of the parties that all legal actions and proceedings related to this Agreement or to the Disposal System or to any rights or any relationship between the parties arising therefrom shall be solely and exclusively initiated and maintained in courts of the State of California having appropriate jurisdiction. 25 ARTICLE VI f TERM SECTION 6.1. EFFECITVE DATE AND TERM. (A) I=. This Agreement shall become effective,shall be in full force and effect and shall be legally binding upon the City and the County from the Contract Date and shall continue in full force and effect until the fifteenth anniversary of the Contract Date, unless earlier terminated in accordance with its terms. (g) Survival_: Accrued Rigs. The rights and obligations of the parties hereto pursuant to Sections 3.1(E),5.1,5.3,5.5,71,73 provided,however,that Section 73 shall not survive if the termination of the Waste Disposal Agreement is due to the occurrence of an Event of Default on the part of the City,7.5, 7.7, 7.8, 7.9, and 7.10 hereof shall survive the termination or expiration of this Agreement, and no such termination or expiration shall limit or otherwise affect the respective rights and obligations of the parties hereto accrued prior to the date of such termination or expiration. At the end of the Term of this Agreement, all other obligations of the parties shall terminate. 26 ARTICLE VII GENERAL PROVISIONS SECTION 7.1. OPERATION w D "n rE1ANCF OF THE DISPOSAL SYSTEM. The County, at its cost and expense through the County Solid Waste Enterprise Fund,shall at all times operate, or cause to be operated,the Disposal System in accordance with Applicable Law and the operating rules and regulations of the County. SECTION 7.2. UNCONTROLLABLE CIRCUMSTANCES GENERALLY. (A)Performance Excused. Except as otherwise specifically provided in this Agreement,neither the County. nor the City shall be liable to the other for any failure or delay in the performance of any obligation under this Agreement(other than any payment at the time due and owing)to the extent such failure or delay is due to the occurrence of an Uncontrollable Circumstance. (B) Notice.Mitigation. The party experiencing an Uncontrollable Circumstance shall notify the other party by telecommunication or telephone and in writing,on or promptly after the date the party experiencing such Uncontrollable Circumstance first knew of the commencement thereof, followed within IS days by a written description of(1)the Uncontrollable Circumstance and the cause thereof(to the extent known), (2) the date the Uncontrollable Circumstance began and the cause thereof, its estimated duration, the estimated time during which the performance of such party's obligations hereunder will be delayed,(3)the estimated amount, if any,by which the Contract Rate may need to be adjusted as a result of such Uncontrollable Circumstance,(4) its estimated impact on the other obligations of such party under this Agreement and(S) potential mitigating actions which might be taken by the County or City and any areas where costs might be reduced and the approximate amount of such cost reductions. Each party shall provide prompt written notice of the cessation of such Uncontrollable Circumstance. Whenever such act,event or condition shall occur,the party claiming to be adversely affected thereby shall,as promptly as reasonably possible,use its best efforts to eliminate the cause therefor,reduce costs and resume performance under this Agreement. In addition, with respect to Changes in Law, the County shall diligently contest any such changes the imposition of which would have a material adverse impact on the Disposal System. While the delay continues, the County or City shall give notice to the other party, before the first day of each succeeding month, updating the information previously submitted. (C) Impact on Contract Rate. If and to the extent that Uncontrollable Circumstances interfere with,delay or increase the cost to the County of meeting its obligations hereunder and providing Disposal Services to the cities which have executed Disposal Agreements in accordance herewith,the County shall be entitled to an increase in the Contract Rate as provided in Section 4.2 herein or an extension in the schedule for performance equal to the amount of the increased cost or the time lost as a result thereof. The proceeds of any insurance available to meet any such increased cost shall be applied to such purpose prior to any determination of cost increases payable under this subsection. Any cost reductions achieved through the mitigating measures undertaken by the County pursuant to subsection 7.2(B)hereof upon the occurrence of an Uncontrollable Circumstance shall be reflected in a reduction of the amount by which the Contract Rate would have otherwise been increased or shall serve to reduce the Contract Rate to reflect such mitigation measures,as applicable. SECTION 7.3. tNDE 4NIFICAMN.The County shall indemnify,defend with competent counsel reasonably selected by the County, protect and hold harmless City, its officers, employees and assigns from and against all Loss-and-Expense, including natural resources damages, injuries, costs, response, assessment, remediation and removal costs, losses, demands, debts, liens, liabilities, causes of action,suits, legal or administrative proceedings, interest, fines,charges,penalties and expenses(including but not limited to attorneys'and expert witness fees and costs incurred in connection with defending against 27 tires any of the foregoing or in enforcing this indemnity)of any kind whatsoever paid, incurred or suffered by, or asserted against,City or its officers or employees arising from or attributable to any repair,cleanup or detoxification,or preparation and implementation of any removal,remedial,response,closure or other plan (regardless of whether undertaken due to governmental action) or replacement or restoration of natural resources arising from or related to Hazardous Substance or Hazardous Wastes or petroleum products at any place where County transfers,stores or disposes of municipal solid waste pursuant to this agreement,or the County's activities pursuant to this Agreement which result in a release or threatened release of Hazardous Substances or Hazardous Wastes or petroleum products into the environment.The foregoing indemnity is intended to operate as an agreement pursuant to but not limited to Section 107(e)of the Comprehensive Environmental Response, Compensation and liability Act('CERCLA'). 42 U.S.C. Section 9607(e), and California Health and Safety Code Section 25364,to defend,protect,hold harmless and indemnify City from liability. This indemnity shall not apply to willful,deliberate or grossly negligent delivery by the City of Hazardous Substances or Hazardous Waste to the Disposal System.This indemnity shall also not apply with respect to (i) vehicle accidents or other waste delivery activities or (ii) to any Hazardous Substances, Hazardous Waste,petroleum product or other Unacceptable Waste not accepted for disposal in the Disposal System.The City agrees that the County may provide counsel to jointly represent itself,the City and any and all other parties who disposed of waste in the Disposal System.The City hereby agrees to waive,in writing, any conflict,actual or apparent,created by the joint representation of such parties pursuant to this indemnity. The City also hereby agreesw,cooperate fully and completely with the County and with counsel provided by the County in resolving an ~legal matter that arises pursuant to this indemnity.The City further agrees that the County has complete discretion in the conduct of any matter to which this indemnity applies,and may resolve or settle such matters to which this indemnity applies in its sole discretion without the permission or approval of the City. The County agrees that it will not bring any action against the City claiming or alleging that the City has any responsibility for matters,actions or liabilities within the scope of the indemnity provided above. SECTION 7.4. RELATIONSHIP OF THE P_ARM. Neither party to this Agreement shall have any responsibility whatsoever with respect to services provided or contractual obligations or liabilities assumed by the other party hereto,whether accrued,absolute,contingent or otherwise,or whether due or to become due. The County is an independent contractor of the City and nothing in this Agreement shall be deemed to constitute either party a partner,agent or legal representative of the other party or to create any fiduciary relationship between the parties. SECTION 7.5. t IMTEp RFCOURa. (A) To the CjtY• Except in the event the City has not established or maintained a City Solid Waste Enterprise Fund,no recourse shall be had to the general funds or general credit of the City for the payment of any amount due the County hereunder, or the performance of any obligation incurred hereunder, including any Loss-and-Expense of any nature arising from the performance or non-performance of the City's obligations hereunder. The sole recourse of the County for all such amounts shall be to the funds held in any such Solid Waste Enterprise Fund. All amounts held in any City Solid Waste Enterprise Fund shall be held for the uses permitted and required thereby,and no such amounts shall constitute property of the County. The City shall make adequate provision in the administration of any City Solid Waste Enterprise Fund for the payment of any amount or the performance of any obligation which may be due hereunder. (B) To the Countv. No recourse shall be had to the general funds or general credit of the County for the payment of any amount due the City hereunder,or the performance of any obligation incurred hereunder, including any Loss-and-Expense of any nature arising from the performance or non- performance of the County's obligations hereunder. The sole recourse of the City for all such amounts shall be to the funds held in the County Solid Waste Enterprise Fund in accordance with the terms of this Agreement. All amounts held in the County Solid Waste Enterprise Fund shall be held for the uses permitted 28 and required thereby, and no such amounts shall constitute property of the City. The County shall make adequate provision in the administration of the County Solid Waste Enterprise Fund for the payment of any amount or the performance of any obligation which may be due hereunder. SECTION 7.6. PRE-EXISTING RIGHTS AND LIABILITIES. Except as specifically set forth herein,nothing in this Agreement is intended to affect,release,waive or modify any rights,obligations or liabilities which any party hereto may have to or against the other party as of the Contract Date relating to the disposal of waste in the Disposal System or any other related matter. SECTION 7.7. NO VESTED RIGHTS. The City shall not acquire any vested property, license or other rights in the Disposal System by reason of this Agreement. SECTION 7.8. LIABILITY ITV FOR COLLECTION TRANSPORTATION AND PROCESSING. Any liability incurred by the City as a result of collecting Acceptable Waste or processing it for diversion from landfill, or as a result of causing, franchising, permitting, licensing, authorizing or arranging any of the foregoing, shall be its sole liability,except as expressly otherwise provided herein. SECTION 7.9. NO CONSEQUENTIAL OR PUNITIVE. DAMAGES. In no event shall either party hereto be liable to the other or obligated in any manner to pay to the other any special,incidental, consequential, punitive or similar damages based upon claims arising out of or in connection with the performance or non-performance of its obligations or otherwise under this Agreement, or the material inaccuracy of any representation made in this Agreement,whether such claims are based upon contract,tort, negligence,warranty or other legal theory. SECTION 7.10.AMENDMENTS. Neither this Agreement nor any provision hereof may be changed,modified,amended or waived except by written agreement duly authorized and executed by both parties. SECTION 7.11.NOTICE OF LITIGA11 Each party shall deliver written notice to the other of any Legal Proceeding to which it is a party and which questions the validity or enforceability of this Agreement executed by the City or the County or any Legal Entitlement issued in connection herewith. SECTION 7.12.FURTHER ASSURANCES. At any and all times the City and the County so far as may be authorized by law shall pass,make,do,execute,acknowledge and deliver any and every such further resolutions,acts,deeds,conveyances,instruments,assignments,transfers and assurances as may be necessary or reasonably requested by the other in order to give full effect to this Agreement. SECTION 7.13. ASSIGNMENT OF AGREEMENT. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party,which may be withheld in the other party's sole discretion.Notwithstanding the foregoing, that either party may assign this Agreement to another successor public entity, subject to the reasonable consent of the other party. In such circumstances the party not requesting the assignment shall have the right to demand assurances of the financial,technical and legal ability of the proposed assignee to undertake the responsibilities and obligations of the assigning party. SECTION 7.14. tNTFRFST ON OVERDUE OBLIGATIONS. Except as otherwise provided herein,all amounts due hereunder,whether as damages,credits,revenue or reimbursements,that are not paid when due shall bear interest at the Overdue Rate on the amount outstanding from time to time, on the basis of a 365-day year,counting the actual number of days elapsed,and all such interest accrued at any time shall,to the extent permitted by Applicable Law,be deemed added to the amount due,as accrued. 29 SECTION 7.IS.RINDING E This Agreement shall bind and inure to the benefit of the parties hereto and any successor or assignee acquiring an interest hereunder consistent with the provisions of Section 7.13 hereof. SECTION 7.16.NOIIM Any notice or communication required or permitted hereunder shall be in writing and sufficia*given if delivered in person or sent by certified or 1egbtea+ed mail,postage prepaid, to the notice address of the respective parties sat forth on the cover page of this Agreement. Changes in the respective addresses to which such notices may be directed may be made from time to time by any ply by notice to the other party. i 30 IN WITNESS WHEREOF,the parties have caused this Agreement to be executed by their duly authorized officers or representatives as of the day and year fast above written. COUNTY OF SAN BERNARDINO Date BY Chairman,Board of Supervisors SIGNED AND CERTIFIED THAT A COPY OF _ THIS CONTRACT HAS BEEN DELIVERED TO THE CHAIRMAN OF THE BOARD 3 ' Data By Clerk of the Board of Supervisors Of San Bernardino County,California Date By APPROVED AS TO FORM: COUNTY COUNSEL SAN BERNARDINO COUNTY,CALIFORNIA By Date 31 APPENDIX 1 DESIGNATED DISPOSAL FACMM . l APPENDIX Z FORM OF HAULER ACKNOWLEDGMENT [CAN BE USED TO SATISFY CITY WASTE DELIVERY OBLIGATION PURSUANT TO SECTION 3.1(E)] i l FRANCHISE HAULER ACKNOWLEDGMENT THIS FRANCHISE HAULER ACKNOWLEDGMENT, dated as of , 1997 (the "Acknowledgment"), by and between the City of (the "City-) and (the "Franchise Hauler"). WITNESSETH WHEREAS, the City and the Hauler have heretofore entered into an agreement entitled dated as of (the 'Franchise"); and WHEREAS, the Franchise provides for the collection and disposal of certain municipal solid waste as described therein("Franchise Waste") generated within the City; and 'i WHEREAS,San Bernardino County(the'County')owns,manages and operates a sanitary landfill disposal system for municipal solid waste generated within the County; and WHEREAS, the City and the County have heretofore entered into a Waste Disposal Agreement, dated as of , 1997 (the 'Disposal Agreement")determining that the execution of such Disposal Agreement will serve the public health, safety and welfare of the residents of the City and County; and WHEREAS, under the Disposal Agreement, the County has agreed to provide long-term disposal of all municipal solid waste generated within the City and the City has agreed to exercise all legal, and contractual power which it possesses from time to time to deliver or cause the delivery of such waste to the the San Bernardino County Landfill Disposal System(the 'Disposal System"); and WHEREAS, the provisions of the Waste Disposal Agreement which guarantee capacity for the long term disposal of waste at specified rates generated in the City provide significant benefits to the Hauler; WHEREAS, notwithstanding any Franchise provisions to the contrary, the Franchise Hauler explicitly acknowledges the aforementioned benefits to the City, the County and the Hauler in providing for the disposal of all Franchise Waste to the Disposal System; and WHEREAS, the City and the Franchise Hauler desire to enter into this Acknowledgment to assure that the City and the Hauler will be entitled to the benefits of the Waste Disposal Agreement and to assure conformity with the waste delivery obligations which have been agreed to by the City under the Disposal Agreement through the delivery of waste by the Franchise Hauler to the Disposal System; and WHEREAS, the Franchise Hauler's agreement to deliver Franchise Waste to the Disposal System under this Acknowledgment is given in consideration of the Franchise Hauler's right to receive the Contract Rate for such disposal as provided in the Disposal Agreement. i NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Capitalized terms used and not otherwise defined herein are used as defined in the Disposal Agreement. 2. The Franchise Hauler hereby waives any right which it may possess under Applicable Law to contest on any ground, constitutional, statutory, case law, eve or otherwise, (a) the right, power or authority of the County or the City to enter into or perform their respective. obligations under the Disposal Agreement, (b) the enforceability against the County or the City of the Disposal Agreement,or(c)the right, power or authority of the City to deliver or cause the delivery of all Controllable Waste to the Designated Disposal Facility in accordance with this Acknowledgment. 3. The City and the Franchise Hauler each hereby represent that this Acknowledgment has been duly authorized by all necessary action of their respective governing bodies. 4. The Franchise Hauler shall deliver or cause to be delivered all Controllable Waste (including residue from the processing by any means, wherever conducted, of Controllable Waste to the extent provided in the Disposal Agreement), to the Disposal System, and shall otherwise assist the City in complying with its obligations under the Waste Disposal Covenant in Section 3.1 of the Disposal Agreement. 5. The Franchise Hauler shall not haul Controllable Waste to any materials recovery facility, composting facility, intermediate processing facility, recycling center, transfer station or other waste handling or management facility unless the contract or other agreement or arrangement between the Franchise Hauler and the operator of such facility is sufficient in the opinion of the City to assure that the Residue from such facility constituting City Acceptable Waste (or Tonnage equivalencies) and the City Acceptable Waste transferred by such facility shall be delivered to the Designated Disposal Facility to the extent required by the Waste Disposal Covenant. 6. The Franchise Hauler shall pay the Contract Rate imposed by the County at the Designated Disposal Facility for the disposal of all Controllable Waste, which rate shall be subject to potential adjustment necessary to reflect the circumstances set forth in the Disposal Agreemeru. 7. Nothing in this Acknowledgment is intended to restrict any right or responsibility explicitly given the Franchise Hauler in the Franchise to recycle City Acceptable Waste, except as provided in paragraph 5 above with respect to Residue from any such recycling operations. 8. The obligations of the Franchise Hauler under this Acknowledgment shall apply notwithstanding any provision of the Franchise which may conflict herewith. 9. This Acknowledgment may be enforced by the City by any available leVI means. In any enforcement action by the City, the burden of proof shall be on the Franchise Hauler to demon ate compliance herewith. ii 10. This Acknowledgment shall be in frill force and effect and shall be legally binding upon the City and Franchise Hauler from the dated hereof and shall continue in full force and effect until the earlier of(i)the end of the term of the Franchise or(n)the end of the term of the Disposal Agreement. 11. The City and Hauler agree that the County shall be an expo third key beneficiary of this Acknowledgment,and shall be entitled to independently enforce through any available legal means, including specific performance, the obligations of the Hauler hereunder. The parties acknowledge that the money damages provided hereunder may not be adequate to compensate either party for the other party's nonperformance.In addition, in the event that the Hauler delivers Controllable Waste outside of the Disposal System in violation of the Disposal Agreement, the Hauler agrees that the County. shall be entitled to draw on any bond or other security instrument or deposit held by the County in an amount equal to the Contract Rate multiplied by the number of ton of Controllable Waste delivered outside of the Disposal System-by the Hauler in violation of the Disposal Agreement. The Hauler shall execute a revised security agreement to effectuate the provision of this Section. l CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION ?rom: James Howell, Director Subject: A resolution of the City of San Bernardino authorizing the Dept: Public Services execution of an agreement with County of San Bernardino Waste Date: November 06, 1997 Systems Division. Synopsis of Previous Council Action: Norcal proposal of June 26, 1997 was continued from August 4,1997 to October 06, 1997, to November 3, 1997. Recommended Motion: Adopt the Resolution authorizing the Mayor to execute the Waste Disposal Agreement between the City of San Bernardino and the County of San Bernardino Waste Systems Division. Si Contact person: Lynn Merrill, Solid Waste Manager Phone: 5140 Supporting data attached: Attached Staff Report from James Howell Ward: All FUNDING REQUIREMENTS: Amount: n/a Source:(Acct. No.) 527-412-5179 & 527-413-5179 (Acct. Description) DUMP FEES Finance: Council Notes: Agenda Item No. STAFF REPORT November 6, 1997 Staff is requesting Council adopt the attached Waste Disposal Agreement (WDA) between the City of San Bernardino and the County of San Bernardino. On November 4, 1997, the Board of Supervisors approved the language contained in the WDA and authorized County Staff to present the WDA to the cities for execution. This agreement is for a fifteen year period and provides for the following benefits to the City of San Bernardino: • A reduction of the landfill tipping fee charged to the City, from $33.00 per ton to $28.50 per ton, effective January 1, 1998. Estimated savings for remaining FY 97-98 are expected to be $250,000. Savings for FY98-99 are estimated to be $546,000 and will be reflected in next year's budget. • Indemnification for environmental liability in the amount of$15.0 million for the City's use of the County landfill system. This includes liability protection for past usage, as well as any potential current and future liability, excluding CERCLA and RCRA. This indemnification will survive the fifteen year period of the agreement. r • Strict control over future tipping fee rate increases, including definition of a process for tipping fee rate adjustments by the County. • This agreement does not affect the City's ability to aggressively pursue waste reduction and recycling opportunities in accordance with the mandates set forth in AB939 and which may further reduce the City's disposal costs. While the tipping fee presented in this agreement is not the lowest tipping fees available within Southern California when compared to rates presented in either Orange County ($22.00 per ton) or Riverside County ($23.50 per ton), staff believes that this rate is competitive when the cost to transfer the wastes from the City to these distant counties is included in the analysis. During the FY97-98 budget process, Council sought a reduction in the disposal costs of the Refuse Division in the amount of$330,000. Staff is confident that, with the proposed savings of $250,000 in disposal cost, as well as $80,000 savings resulting from two unfilled Refuse Route Supervisor vacancies within the Refuse Division, the$330,000 budget reduction will be met. Staff is requesting that the Common Council authorize the Mayor to execute the Waste Disposal Agreement . WASTE SYSTEM DIVISION NOV 0 71997 cow"Sam=War 222 ftd Hospitality Lane,Second Fim • San Bwrw&i%CA ilw?i11WT GERRY NEWCOMBE 'a09)3868722 • Fax(909)386$786 Contract Administrator November 6, 1997 City of San Bernardino Fred Wilson,Acting City Administrator 300 North"D"Street San Bernardino,California 92418 Dear Mr. Wilson, After several months of negotiations between a Consortium of 17 cities and County staff,a landmark agreement has been reached regarding the continued use of County landfills by the cities and the related costs and liabilities of doing so.This Waste Delivery Agreement(WDA)meets everyone's goal of guaranteed,long term disposal capacity and flow for a predictable rate.The Contract Rate of S28.50/ton is 54.50 lower that the present tipping fee of S33/ton,and will be available beginning on January 1, 1998,to any city executing a WDA. On November 4, 1997,the San Bernardino County Board of Supervisors approved the standard WDA and directed staff to present the agreement to each city in the County for consideration. County staff and the Consortium's negotiating committee are confident that the WDA is beneficial to both parties,and will be available to jointly present the agreement to city executives as they review and consider it for adoption. In addition to attending the November 20, 1997 City Managers meeting,we plan to contact each manager individually and arrange a time to meet and discuss the WDA. A copy of the final agreement is attached for your information and review. Please feel free to contact me or any member of the Consortium negotiating team with any question or comments. We look forward to meeting with you and moving this process to its final phase of executed Waste Delivery Agreements between the cities and the County. Sincerely, GQ IViq Gerry Newcombe Contract Administrator GN-.js Attachment cc: Honorable Board of Supervisors Tim Kelly,Assistant County Administrator John Davis,Mojave Desert/Mountain JPA Ken Jeske,City of Fontana Lynn Merrill,City of San Bernardino Marsha Godwin,City of Chino Conway Collis,Collis Associates Jim Bateman,NORCAL -3card of Super.scrs KATHY a D S =-st District DENNIS HANSSERGER :::: Tt:rtl Dis!r cr S<=cro District LARRY WALKER P_urth Ctst Ct .;E-'n'Y _AYES ................. Fitth District CITY OF ADELANTO TOWN OF APPLE VALLEY CITY OF BARSTOW MIKE SAKAMOTO,CITY MANAGER BRUCE WILLIAMS,TOWN MANAGER PAUL WARNER,CITY MANAGER 11600 AIRBASE ROAD 20440 HWY 18 220 E MOUNTAIN VIEW P 0 BOX 10 P O BOX 429 BARSTOW CA 92311 DELANTO CA 92301 APPLE VALLEY CA 92307 CITY OF BIG BEAR LAKE CITY OF CHINO CITY OF CHINO HILLS RUSSELL CARLSEN,CITY MANAGER GLEN ROJAS,CITY MANAGER DOUGLAS LA BELLE,CITY MANAGER P 0 BOX 10000 13220 CENTRAL AVENUE 2001 GRAND AVENUE 39707 BIG BEAR BLVD P 0 BOX 667 CHINO HILLS CA 91709 BIG BEAR LAKE CA 92315 CHINO CA 91710 CITY OF COLTON CITY OF FONTANA CITY OF HESPERIA LEN WOOD SAMUEL C SCOTT INTERIM CITY MGR DAVID BENTZ INTERIM CITY MANAGER 8353 SIERRA AVENUE INTERIM CITY MANAGER 650 N LA CADENA DRIVE P 0 BOX 518 15776 MAIN STREET COLTON CA 92324 FONTANA CA 92335 HESPERIA CA 92340-7000 CITY OF HIGHLAND CITY OF LOMA LINDA CITY OF GRAND TERRACE SAM RACADIO,CITY MANAGER PETER R HILLS,CITY MANAGER THOMAS SCHWAB,CITY MANAGER 27215 BASELINE SUITE'A7 25541 BARTON ROAD 22795 BARTON ROAD HIGHLAND CA 92346 LOMA LINDA CA 92354 GRAND TERRACE CA 92313 CITY OF NEEDLES CITY OF ONTARIO CITY OF MONTCLAIR TOM PARRY,CITY MANAGER GREGORY DEVEREAUX,CITY MGR LEE MC DOUGAL,CITY MANAGER 1111 BAILEY AVENUE SUITE 9 303 E'B'STREET 5111 BENITO STREET NEEDLES CA 92363 ONTARIO CA 91764 P 0 BOX 2308 MONTCLAIR CA 91763 ITY OF REDLANDS CITY OF RIALTO CITY OF RANCHO CUCAMONGA GARY LUEBBERS,CITY MANAGER JOSEPH GUZZETTA,CITY MANAGER JACK LAM,CITY MANAGER 35 CAJON,SUITE 200 150 SOUTH PALM AVENUE 10500 CIVIC CENTER DRIVE P 0 BOX 3005 RIALTO CA 92376 P 0 BOX 807 REDLANDS CA 92373 RANCHO CUCAMONGA CA 91729 CITY OF TWENTYNINE PALMS CITY OF UPLAND CITY OF SAN BERNARDINO JIM HART,CITY MANAGER G MICHAEL MILHISER,CITY MGR FRED WILSON,ACTING 6136 ADOBE ROAD P 0 BOX 460 CITY ADMINISTRATOR P 0 BOX 995 460 N EUCLID AVENUE 300 NORTH'D'STREET TWENTYNINE PALMS CA 92277 UPLAND CA 91786 SAN BERNARDINO CA 92418 CITY OF YUCAIPA TOWN OF YUCCA VALLEY CITY OF VICTORVILLE JOHN TOOKER,CITY MANAGER BRAD KILGER.TOWN MANAGER JAMES L COX,CITY MANAGER 34272 YUCAIPA BLVD 57090 29 PALMS HWY 14343 CIVIC DRIVE YUCAIPA CA 92399 YUCCA VALLEY CA 92284 VICTORVILLE CA 92392 CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: James Howell, Director Subject: A resolution of the City of San Bernardino authorizing the Dept: Public Services . , ; execution of an agreement with County of San Bernardino Waste Date: November 06, 1997 " `Wd�'f �� • r Systems Division. Synopsis of Previous Council Action: Norcal proposal of June 26, 1997 was continued from August 4,1997 to October 06, 1997, to November 3, 1997. Recommended Motion: Adopt the Resolution authorizing the Mayor to execute the Waste Disposal Agreement between the City of San Bernardino and the County of San Bernardino Waste Systems Division. Q6A,-1�11V-eli/ Sig atur Contact person: Lynn Merrill, Solid Waste Manager Phone: 5140 Supporting data attached: Attached Staff Report from James Howell Ward: All FUNDING REQUIREMENTS: Amount: n/a Source:(Acct. No.) 527-412-5179 & 527-413-5179 (Acct. Description) DUMP FEES Finance: Council Notes: Agenda Iten STAFF REPORT November 6, 1997 Staff is requesting Council adopt the attached Waste Disposal Agreement (WDA) between the City of San Bernardino and the County of San Bernardino. On November 4, 1997, the Board of Supervisors approved the language contained in the WDA and authorized County Staff to present the WDA to the cities for execution. This agreement is for a fifteen year period and provides for the following benefits to the City of San Bernardino: • A reduction of the landfill tipping fee charged to the City, from $33.00 per ton to $28.50 per ton, effective January 1, 1998. Estimated savings for remaining FY 97-98 are expected to be $250,000. Savings for FY98-99 are estimated to be $546,000 and will be reflected in next year's budget. • Indemnification for environmental liability in the amount of$15.0 million for the City's use of the County landfill system. This includes liability protection for past usage, as well as any potential current and future liability, excluding CERCLA and RCRA. This indemnification will survive the fifteen year period of the agreement. • Strict control over future tipping fee rate increases, including definition of a process for tipping fee rate adjustments by the County. • This agreement does not affect the City's ability to aggressively pursue waste reduction and recycling opportunities in accordance with the mandates set forth in AB939 and which may further reduce the City's disposal costs. While the tipping fee presented in this agreement is not the lowest tipping fees available within Southern California when compared to rates presented in either Orange County ($22.00 per ton) or Riverside County ($23.50 per ton), staff believes that this rate is competitive when the cost to transfer the wastes from the City to these distant counties is included in the analysis. During the FY97-98 budget process, Council sought a reduction in the disposal costs of the Refuse Division in the amount of$330,000. Staff is confident that, with the proposed savings of $250,000 in disposal cost, as well as $80,000 savings resulting from two unfilled Refuse Route Supervisor vacancies within the Refuse Division, the $330,000 budget reduction will be met. Staff is requesting that the Common Council authorize the Mayor to execute the Waste Disposal Agreement . WASTE SYSTEM DIVISION NOV 0 7 1997 COUNTY OF F�t�ES G�UP O 222 West Hospitality Lane,Second Floor • San Bernardino,CA 92415.0017 °r GERRY NEWCOMBE (909)386-8722 • Fax(909)386-8786 Contract Administrator November 6, 1997 City of San Bernardino Fred Wilson,Acting City Administrator 300 North "D" Street San Bernardino,California 92418 Dear Mr. Wilson, After several months of negotiations between a Consortium of 17 cities and County staff,a landmark agreement has been reached regarding the continued use of County landfills by the cities and the related costs and liabilities of doing so. This Waste Delivery Agreement(WDA)meets everyone's goal of guaranteed, long term disposal capacity and flow for a predictable rate.The Contract Rate of$28.50/ton is$4.50 lower that the present tipping fee of$33/ton, and will be available beginning on January 1, 1998,to any city executing a WDA. On November 4, 1997,the San Bernardino County Board of Supervisors approved the standard WDA and directed staff to present the agreement to each city in the County for consideration. County staff and the Consortium's negotiating committee are confident that the WDA is beneficial to both parties, and will be available to jointly present the agreement to city executives as they review and consider it for adoption. In addition to attending the November 20, 1997 City Managers meeting,we plan to contact each manager individually and arrange a time to meet and discuss the WDA. A copy of the final agreement is attached for your information and review. Please feel free to contact me or any member of the Consortium negotiating team with any question or comments. We look forward to meeting with you and moving this process to its final phase of executed Waste Delivery Agreements between the cities and the County. Sincerely, Gerry Newcombe Contract Administrator GN:js Attachment cc: Honorable Board of Supervisors Tim Kelly,Assistant County Administrator John Davis,Mojave Desert/Mountain JPA Ken Jeske,City of Fontana Lynn Merrill,City of San Bernardino Marsha Godwin,City of Chino Conway Collis, Collis Associates Jim Bateman,NORCAL '�L.. ,Atm-r-:strat,Ve 0*f Ze, i 9card of Supers scrs �� icL`}" -Irst �is:nct DENNIS H '•iSBERGER 7h4rd Dis _ �h D. :1'K=LS . . . . . . ... Second Distr-ct ' " 't ARRY la_hER -_urth Die. Sa. .+c�s ;up JERRY EAVES F t-t, District M., /nr CITY OF ADELANTO TOWN OF APPLE VALLEY CITY OF BARSTOW MIKE SAKAMOTO,CITY MANAGER BRUCE WILLIAMS,TOWN MANAGER PAUL WARNER,CITY MANAGER 11600 AlRBASE ROAD 20440 HWY 18 220 E MOUNTAIN VIEW P O BOX 10 P O BOX 429 BARSTOW CA 92311 ADELANTO CA 92301 APPLE VALLEY CA 92307 CITY OF BIG BEAR LAKE CITY OF CHINO CITY OF CHINO HILLS RUSSELL CARLSEN,CITY MANAGER GLEN ROJAS,CITY MANAGER DOUGLAS LA BELLE,CITY MANAGER P O BOX 10000 13220 CENTRAL AVENUE 2001 GRAND AVENUE 39707 BIG BEAR BLVD P O BOX 667 CHINO HILLS CA 91709 BIG BEAR LAKE CA 92315 CHINO CA 91710 CITY OF COLTON CITY OF HESPERIA LEN WOOD CITY OF FONTANA DAVID BENTZ INTERIM CITY MANAGER SAMUEL C SCOTT INTERIM CITY MGR 8353 SIERRA AVENUE INTERIM CITY MANAGER 650 N LA CADENA DRIVE P O BOX 518 15776 MAIN STREET COLTON CA 92324 FONTANA CA 92335 HESPERIA CA 92340-7000 CITY OF HIGHLAND CITY OF LOMA LINDA CITY OF GRAND TERRACE SAM RACADIO,CITY MANAGER PETER R HILLS,CITY MANAGER THOMAS SCHWAB,CITY MANAGER 27215 BASELINE SUITE"A" 25541 BARTON ROAD 22795 BARTON ROAD HIGHLAND CA 92346 LOMA LINDA CA 92354 GRAND TERRACE CA 92313 CITY OF NEEDLES CITY OF ONTARIO CITY OF MONTCLAIR TOM PARRY,CITY MANAGER GREGORY DEVEREAUX,CITY MGR LEE MC DOUGAL,CITY MANAGER 1111 BAILEY AVENUE SUITE 9 303 E"B"STREET 5111 BENITO STREET NEEDLES CA 92363 ONTARIO CA 91764 P O BOX 2308 MONTCLAIR CA 91763 CITY OF REDLANDS CITY OF RIALTO CITY OF RANCHO CUCAMONGA GARY LUEBBERS,CITY MANAGER JOSEPH GUZZETTA,CITY MANAGER JACK LAM,CITY MANAGER 35 CAJON, SUITE 200 150 SOUTH PALM AVENUE 10500 CIVIC CENTER DRIVE P O BOX 3005 RIALTO CA 92376 P O BOX 807 REDLANDS CA 92373 RANCHO CUCAMONGA CA 91729 CITY OF TWENTYNINE PALMS CITY OF UPLAND CITY OF SAN BERNARDINO JIM HART,CITY MANAGER G MICHAEL MILHISER,CITY MGR FRED WILSON,ACTING 6136 ADOBE ROAD P O BOX 460 CITY ADMINISTRATOR P O BOX 995 460 N EUCLID AVENUE 300 NORTH "D"STREET TWENTYNINE PALMS CA 92277 UPLAND CA 91786 SAN BERNARDINO CA 92418 CITY OF YUCAIPA TOWN OF YUCCA VALLEY CITY OF VICTORVILLE JOHN TOOKER,CITY MANAGER BRAD KILGER,TOWN MANAGER JAMES L COX,CITY MANAGER 34272 YUCAIPA BLVD 57090 29 PALMS HWY 14343 CIVIC DRIVE YUCAIPA CA 92399 YUCCA VALLEY CA 92284 VICTORVILLE CA 92392 CITY OF SAN BERNARDINO INTEROFFICE MEMORANDUM TO: Jim Penman City Attorney FROM: Huston T. Carlyle, Jr. C. Sr. Assistant City A o e DATE: November 10, 1997 RE: Waste Disposal Agreement Between City and County Reference is made to the above-indicated subject. In that regard, I have reviewed the attached Waste Disposal Agreement and note that the prior legal concerns raised by you in meeting(s) with Martin Czerniak appear to have been all resolved in favor of your position. However, since the prior meetings were working off of the County's version and the Waste Disposal Agreement we have received is the product of the negotiations with the "consortium," I note the following sections in the Agreement with a brief description to assist in your analysis, particularly the last section mentioned, Section 7.3: 1. Section 2.1 - The representations and warranties contained therein by the City appear to be accurate, including the "No Litigation" representation under 2.1(D). 2. Section 3.1(D) - This section requires the City to use its best efforts to amend and modify any outstanding waste disposal agreements to make them consistent with this Agreement. The City would also notify in writing each franchise hauler of the County's third part beneficiary rights in the outstanding agreements. 3. Section 3.1(F) - This section obligates the City to use its best efforts to preserve, protect and defend the integrity of this Agreement in court, if necessary. 4. Section 3.1(I) - This section indicates that the City agrees not to conduct any disposal services which would be in competition with what is being provided by the County, although the County acknowledges that the mere development by the City of a materials recovery facility or a transfer station does not, by itself, violate this section. 5. Sections 4.2(A) & (B) - These sections set the rate which would be paid to the County ($28.50 per ton) and provides an escalator clause for rate adjustments in future years. 6. Sections 5.1, 5.2 & 5.3 -These sections set forth the remedies that both the City and County have (it is the full range of legal redress) should a breach occur by one party or another. They also set forth the grounds upon which the City can terminate, both for convenience and for cause. 7. Section 5.6 - This section provides that all legal actions and proceedings related to this Agreement shall be solely and exclusively initiated and maintained in courts of the State of California having appropriate jurisdiction. 8. Section 6.1 - It is proposed that this Agreement be for a term of 15 years. 9. Section 7.3 - The County agrees to indemnify, defend with competent counsel reasonably selected by the County,protect and hold harmless the City, its officers, employees and assigns from and against all Loss-and-Expense, including natural resources damages, injuries, costs, response, assessment,remediation and removal costs,losses,demands,debts, liens, liabilities,causes of action, suits, legal or administrative proceedings, interest, fines, charges,penalties and expenses (including but not limited to attorneys' and expert witness fees and costs incurred in connection with defending against any of the foregoing or in enforcing this indemnity). The County does not indemnify for willful, deliberate or grossly negligent delivery by the City of Hazardous Substances or Hazardous Waste in the Disposal System, or to vehicle accidents or waste delivery activities or to any Hazardous Substances, Hazardous Waste, petroleum product or other Unacceptable Waste not accepted for disposal in the Disposal System. This section further indicates that City agrees that the County may provide counsel to jointly represent itself, the City and any and all other parties who disposed of waste in the joint representation of such parties pursuant to this indemnity, and that the City agrees to cooperate fully and completely with the County and will waive, in writing, any conflict, actual or apparent, created by the joint representation of such parties pursuant to this indemnity. Finally, this section bestows upon the County complete discretion in the conduct of any matter to which this indemnity applies, and may resolve or settle such matters to which this indemnity applies in its sole discretion without the permission or approval of the City. attachment CITY OF SAN BERNARDINO INTEROFFICE MEMORANDUM TO: Jim Penman City Attorney FROM: Huston T. Carlyle, Jr. t Sr. Assistant City Attor i y DATE: November 12, 1997 RE: Waste Disposal Agreement Between City and County Attached is a proposed Resolution of the City of San Bernardino authorizing the execution of the Waste Disposal Agreement between the County of San Bernardino and the City of San Bernardino. I have reviewed the Agreement and, in addition to my observations contained in my memorandum to you dated November 10, offer one additional note: Section 3.5 (A) states as follows: "(A)Generally. The County shall have the right to enter into waste disposal agreements with other cities in the County, Sanitary Districts, Transfer Stations or Independent Haulers; provided, however, that in no event shall such agreements have terms and provisions more favorable than the terms and provisions of this Agreement (including but not limited to the Contract Rate and availability of disposal capacity) unless the County has first offered the City such more favorable contract (or amendments to this Agreement)." This "most favored nation clause" is different that the past versions in that past versions also permitted the City, whether it was shopping around or simply became aware of a "better deal," the option to offer it to the County and if the County declined, the City could get out of the Agreement in a specified manner. As a result of negotiations,the "most favored nation clause" contained in this Agreement applies only to San Bernardino County agreements. This may or may not be important (right now, this Agreement is better than anything else out there according to the staff report), depending on what happens in the industry in the next 15 years,but it is a change from prior versions again, due to negotiations (such as a more favorable rate per ton and the ability of the City to terminate for convenience, albeit with a payment clause). These observations are set forth for your consideration on whether or not this office should sign off on the resolution. CCU 7J* l EXECUTION COPY WASTE DISPOSAL AGREEMENT Bem een THE COUNTY OF SAN BERNARDINO, CALIFORNIA and Dated , 1997 County Authorization Date: City Authorization Date: County Notice Address: City Notice Address: Emergency Contact: Emergency Contact: TABLE OF CONTENTS Page RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE I DEFINITIONS AND INTERPRETA'T'ION 3 SECTION I.I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 1.2. INTERPRETATI N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE 1I REPRESENTATIONS AND WARRANTIES . . . . . . SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE CITY . . . . . . . . . . . . . 10 SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COUNTY . . . . • • . . . 10 ARTICLE III DELIVERY AND ACCEPTANCE OF WASTE AND PROVISION OF DISPOSAL SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 3.1. DELIVERY OF WASTE . . . . . . . . . . . . . 14 SECTION 3.2. PROVISION OF DISPOSAL SERVICES BY THE COUNTY SECTION 3.3. COUNTY RIGHT TO REFUSE WASTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.4. MISCELLANEOUS OPERATIONAL ttyIATTERS . . . . . . . . . . . . . . . . . . . . . SECTION 3.5. OTHER USERS OF THE DISPOSAL SYSTE . . . . . • • • . . 17 SECTION 3.6. COUNTY PROVISION OF WASTE DIVERSION SERVICES . . . . . . . . . . 17 ARTICLE IV CONTRACT RATE . . . . . . . . . . . . . . . . . . . . . . . SECTION 4.1. CHARGING AND SECURING PAYMENT OF CONTRACT RATE . • • ' . . 19 SECTION 4.2. CONTRACT RATE . . . . . . . . . . . . SECTION 4.3. RESPONSIBILITY FOR PAYMENT OF THE CONTRACT . . . . . . . . . . 21 . . 21 SECTION 4.4. BILLING OF THE CONTRACT RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE V BREACH, ENFORCEMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5.1. BREACH; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • • • • • ' . . . . . . . 22 22 SECTION 5.2. CITY CONVENIENCE TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . SECTION 5.3. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 23 SECTION 5.4. NO WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 5.5 DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 5.6. FORUM FOR DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE VI TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 6.1. EFFECTIVE DATE AND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE VII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SECTION 7.1. OPERATION AND MAINTENANCE OF THE DISPOSAL-SYSTEM . . . . 25 SECTION 7.2. ir1NCONTROLLABLE CIRCUMSTANCF� SECTION 7.3. INDEMNIFICATION NSHI . . • • • • • • . . . . . . . . . . . . • • • • • " " " " . . . . . . . . 5 2• . 25 SECTION 7.4. RELATIOP OF THE PARTIES . . . . . . . . . . . . . . . . . . . . • • • • " " ' 26 SECTION 7.5. LIMITED RECOURSE . . . . . . . . . . . . • . . • • • • • • • • • • • • . . . . . . . . . . 26 SECTION 7.6. PRE EXISTING RIGHTS AND LI ABI IU_TIES 27 SECTION 7.7. NO VESTED RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SECTION 7.8. LIABILITY FOR COLLECTION TRANSPORTATION . . . . . . 27 AND PROCESSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i SECTION 7.9. NO CON FS�O1�NTtAL OR PUNITIVE DAMAGES . . . . . . . . . . . . . . . . . . 27 SECTION 7.10. AMENDME IN I'S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.11. `n Q DF i rT IM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.12. EZ 1RTHER AS MANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.13. AccrGNMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 INTEREST ON OVERDUE OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 7.15.BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 27 SECTION 7.16.NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 APPENDIX 1 DESIGNATED DISPOSAL FACILITY APPENDIX 2 FORM OF HAULER ACKNOWLEDGMENT WASTE DISPOSAL AGREEMENT THIS WASTE DISPOSAL AGREEMENT is made and dated as of the date indicated on the cover page hereof between the County of San Bernardino, a political subdivision of the State of California (the "County"), and the City designated on the cover page of this Agreement,a general law or charter city and political subdivision of the State of California(the "City"). RECITALS The County owns, manages and operates a sanitary landfill system for the disposal of municipal solid waste generated in the unincorporated area within the County and which it has made available for the disposal of municipal solid waste generated within cities located within the County(the "Disposal System"). The Disposal System currently includes 12 active landfills and is expected to consist of five active landfills upon implementation of the Solid Waste Partnership Strategy and Implementation Plan. The Disposal System is used for the disposal of municipal solid waste which is not composted, reused, recycled, transformed or otherwise diverted from landfill disposal, pursuant to the California Integrated Waste Management Act of 1989(Division 30 of the California Public Resources Code). The Act, which mandates the diversion of 50%of waste from landfill disposal by 2000,has already reduced the volume of waste delivered to the landfills. The County wishes to enter into an agreement with the City to accept all of the City's municipal solid waste in the Disposal System for the term and subject to the provisions of this Agreement, and the City desires to use all legal and contractual powers it possesses to deliver or cause to be delivered the municipal solid waste generated within its boundaries to the Disposal System for the term of and subject to the provisions of this Agreement. The City, in the exercise of its police power and its powers under the Act, either(i) has entered into a franchise or other agreement with or issued permits or licenses to one or more private haulers for the collection and disposal of municipal solid waste generated within the City or(ii)collects municipal solid waste generated within the City in City owned and operated collection vehicles. The City has determined that the execution of this Agreement by the City will serve the public health, safety and welfare of the City by providing greater disposal rate stability, more predictable and reliable long-term disposal service, and the continuation of sound environmental management. The County has determined that the execution by the County of this Agreement will serve the public health,safety and welfare by providing a more stable,predictable and reliable supply of municipal solid waste and the resulting service payment revenue to the Disposal System,thereby enabling the County to plan, manage, operate and finance improvements to the Disposal System on a more prudent and sound long term, businesslike basis. Official action approving this Agreement and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the County on the County authorization date indicated on the cover page hereof. Official action approving this Agreement and determining it to be in the public interest and authorizing its execution and delivery was duly taken by the City on the City authorization date indicated on the cover page hereof. 1 It is,therefore,agreed as follows: k k F 2 ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1. DEFIMTIONS. As used in this Agreement,the following terms shall have the meanings set forth below. "Acceptable Waste" means all garbage,refuse, rubbish and other materials and substances discarded or rejected as being spent, useless,worthless or in excess to the owners at the time of such discard or rejection and which are normally disposed of by or collected from residential (single family and multi- family),commercial, industrial, governmental and institutional establishments which are acceptable at Class III landfills under Applicable Law(including, without limitation,the Legal Entitlements for each facility). "Act" means the California Integrated Waste Management Act of 1989(Division 30 of the California Public Resources Code), as amended, supplemented,superseded and replaced from time to time. "Agreement" means this Waste Disposal Agreement between the County and the City as the same may be amended or modified from time to time in accordance herewith. "Appendix"means an appendix to this Agreement,as the same may be amended or modified from time to time in accordance with the terms hereof. "Applicable Law" means the Act, the San Bernardino County Code, CERCLA, RCRA, CEQA, any Legal Entitlement and any federal or state rule, regulation, requirement, guideline, permit, action,determination or order of any Governmental Body having jurisdiction, applicable from time to time to the siting, design, permitting, acquisition, construction, equipping, financing, ownership, possession, operation or maintenance of the Disposal System, the transfer, handling, transportation and disposal of Acceptable Waste,Unacceptable Waste,or any other transaction or matter contemplated hereby(including any of the foregoing which concern health, safety, fire, environmental protection, mitigation monitoring plans and building codes.). "Board" means the California Integrated Waste Management Board. "CEQA" means the California Environmental Quality Act,codified at Cal. Pub. Res. Code Section 21000 et sea.(West 1996) as amended or superseded, and the regulations promulgated thereunder. s "CERCLA" means the Comprehensive Environmental Responsibility Compensation and Liability Act,42 U.S.C.A. Section 9601 et se4.(West 1995 & Supp. 1996), as amended or superseded, and the regulations promulgated thereunder. "Change in Law" means any of the following events or conditions which has a material and adverse effect on the performance by the parties of their respective obligations under this Agreement(except for payment obligations),or on the siting,design,permitting,acquisition,construction,equipping, financing, ownership, possession, operation or maintenance of the Disposal System or other matters to which Applicable Law applies: (1) the enactment,adoption, promulgation, issuance,material modification or written change in administrative or judicial interpretation on or after the Commencement Date of any Applicable Law(other than Applicable Law enacted by the County); 3 (2) the order or judgment of any Governmental Body (other than the County), on or after the Commencement Date, to the extent such order or judgment is not the result of willful or negligent action, error or omission or lack of reasonable diligence of the County or of the City, whichever is asserting the occurrence of a Change in Law; provided,however,that the contesting in good faith or the good faith decision not to contest any such order or judgment shall not constitute or be construed as such a willful or negligent action, error or omission or lack of reasonable diligence;or (3) the denial of an application for, delay in the review, issuance or renewal of, or suspension,termination, interruption, imposition of a new or more stringent condition in connection with the issuance, renewal or failure of issuance or renewal on or after the Commencement Date of any Legal Entitlement to the extent that such denial, delay, suspension,termination, interruption, imposition or failure materially and adversely interferes with the performance of this Agreement, if and to the extent that such denial, delay, suspension, termination, interruption, imposition or failure is not the result of willful or negligent action, error or omission or a lack of reasonable diligence of the County or of the City,whichever is asserting the occurrence of a Change in Law; provided,however that the contesting in good faith or the good faith decision not to contest any such denial, delay, suspension, termination, interruption, imposition or failure shall not be construed as such a willful or negligent action, error or omission or lack of reasonable diligence. "Change in Law" shall not include actions taken by Governmental Bodies to enforce requirements of Applicable Law. "City" means, as applicable,the city designated on the cover page of this Agreement and party to this Agreement. "City Acceptable Waste" means all Acceptable Waste which was originally discarded by the first generator thereof within the geographical limits of the City, and Residue from the foregoing(or Tonnage equivalencies of such Residues, as and to the extent provided in subsection 3.1(C)hereof). "Contract Date" means the date of delivery of this Agreement as executed by the parties hereto. "Contract Rate" has the meaning specified in Section 4.2 hereof. "Contract Year"means the fiscal year commencing on July 1 in any year and ending on June 30 of the following year. "Controllable Waste" means all City Acceptable Waste with respect to which the City has the legal or contractual ability to determine the disposal location therefor and which is: (1) Non-Diverted City Acceptable Waste; (2) not generated from the operations of the Governmental Bodies which, under Applicable Law,have the independent power to arrange for the disposal of the waste they generate (such as school districts and State correctional facilities); (3) not Residue excluded from the Waste Delivery Covenant pursuant to Section 3.1(C); (4) not inert materials, construction and demolition debris, green waste and other materials which can be disposed at landfills other than Class III landfills;and (5) collected and hauled by Franchise Haulers. 4 "County" means the County of San Bernardino, a political subdivision of the State of California and party to this Agreement. "County Waste Management Enterprise Fund"means the waste management enterprise fund established and managed by the County pursuant to Section 25261 of the Government Code separate from its other funds and accounts for receipts and disbursements in connection with the Disposal System. "County-wide Recycling Services" has the meaning set forth in subsection 3.7(A)hereof. "Designated Disposal Facility" means the sanitary landfill or other facility operated by or for the County as part of the Disposal System which is designated in Appendix 1 hereto as the disposal location for Controllable Waste delivered to the County pursuant hereto as of the Commencement Date, or such other additional, alternate or replacement sanitary landfills or other disposal facilities as may be designated by the County as the Designated Disposal Facility (subject to the approval of the City) in accordance with Section 3.2 hereof. "Disposal Agreements" means each of the waste disposal agreements entered into between the County and any city within the County in accordance herewith. "Disposal Services" means the solid waste disposal services to be provided by the County pursuant to the Service Covenant and otherwise hereunder. "Disposal System"means all sanitary landfills and other solid waste transfer,transportation, storage,handling, processing and disposal facilities, now or at any time owned, leased, managed,operated by or under contract to the County for the acceptance,handling,processing and disposal of Acceptable Waste delivered by or on behalf of the City under this Agreement, including the Designated Disposal Facilities listed on Appendix 2 and any expansion thereof, all as more particularly described in the Solid Waste Partnership Strategy and implementation Plan. "Disposal System Component" means any landfill,facility,structure,work,equipment, site or other real or personal property constituting a component part of the Disposal System. "Diverted City Acceptable Waste" means any otherwise Controllable Waste which is separated from Acceptable Waste by the generator thereof or by processing and which is "diverted" within the meaning of Section 40180 of the Public Resources Code. ,l "Franchise Hauler" means any hauler or collector who provides Acceptable Waste collection services within the City pursuant to,or under authority granted by, a contract, franchise or other agreement with the City. The term Franchise Hauler includes the City itself if Acceptable Waste collection and transportation services are provided directly by City operated municipal collection service. "Governmental Body" means any federal, State, county, city or regional legislative, executive,judicial or other governmental board,agency,authority,committee,administration,court or other body, or any officer thereof acting within the scope of his or her authority. "Hazardous Substance"has the meaning given such term in the Resource Conservation and Recovery Act,42 U.S.C.6901 et seq.,CERCLA, and all future amendments to either of them or as defined by California statute or by the California Environmental Protection Agency or the California Integrated Waste Management Board,or any of them. 1 5 F "Hazardous Waste, means (a) any waste which by reason of its quality, concentration, composition or physical, chemical or infectious characteristics may do either of the following: cause, or si g nificantl contribute to, an increase in mortality or an increase in serious irreversible,or incapacitating Y reversible, illness,or pose a substantial threat or potential hazard to human health or the environment,or any waste which is defined or regulated as a hazardous waste,toxic substance,hazardous chemical substance or mixture,or asbestos under Applicable Law,as amended from time to time including,but not limited to: (1) _ the Resource Conservation and Recovery Act and the regulations contained in 40 CFR Parts 260-281;(2) the Toxic Substances Control Act(15 U.S.C. Sections 2601 et sea.)and the regulations contained in 40 CFR Parts 761-766;(3)the California Health and Safety Code, Section 25117(West 1992&Supp. 1996);(4)the California Public Resources Code, Section 40141 (West 1996); (5)CERCLA and regulations promulgated thereunder and(6)future additional or substitute Applicable Law pertaining to the identification,treatment, storage or disposal of toxic substances or hazardous wastes; or(b)radioactive materials which are source, special nuclear or by-product material as defined by the Atomic Energy Act of 1954(42 U.S.C. Section 2011 gt agq.) and the regulations contained in 10 CFR Part 40. "Imported Acceptable Waste means Acceptable Waste that is generated outside of the geographical boundaries of the County and delivered to the Disposal System. "In-County Processing Facility" means any Processing Facility located within the geographical boundaries of the County,whether owned and/or operated by the County, any city,or private operator. "Independent Haulers" means those waste collection/hauler companies primarily engaged as a principal business in the collection and transportation of municipal solid waste generated in the County of San Bernardino and not under a franchise or other contract with a city in the County. l "Term" has the meaning specified in Section 6.1(A)hereof. "Legal Entitlement" means all permits, licenses, approvals, authorizations, consents and entitlements of whatever kind and however described which are required under Applicable Law to be obtained or maintained by any person with respect to the Disposal System or the performance of any obligation under this Agreement or the matters covered hereby. "Legal Proceeding" means every action, suit, litigation, arbitration, administrative proceeding, and other legal or equitable proceeding having a bearing upon this Agreement. "Loss-and-Expense means any and all loss, liability, obligation, damage, delay, penalty, judgment,deposit, cost, expense,claim, demand,charge,tax, or expense, including all fees and costs. "Out-of-County Processing Facility" means a Processing Facility located outside the geographical boundaries of the County. "Non-Diverted City Acceptable Waste"means all City Acceptable Waste other than Diverted City Acceptable Waste. "Overdue Rate"means the post-judgment rate of interest specified by the laws of the State. "Processing Facility" means any materials recovery facility, composting facility, intermediate processing center, recycling center, incinerator or other waste management facility to which City Acceptable Waste is delivered for processing prior to disposal. 6 "Prohibited Medical Waste" means any medical or infectious waste prohibited or restricted under Applicable Law from being received by or disposed at the Disposal System. "Qualified Household Hazardous Waste" means waste materials determined by the Board, the Department of Health Services,the State Water Resources Control Board,or the Air Resources Board to be: (1) Of a nature that they must be listed as hazardous in State statutes and regulations; (2) Toxic/ignitable/corrosive/reactive; and (3) Carcinogenic/mutagenic/teratogenic; which are discarded from households as opposed to businesses. Qualified Household Hazardous Waste shall not include Unacceptable Waste. "Residue" means any material remaining from the processing in permitted solid waste facilities or other facilities, by any means and to any extent, of City Acceptable Waste or Diverted City Acceptable Waste. "Resource Conservation and Recovery Act" or"RCRA" means the Resource Conservation and Recovery Act,42 U.S.C.A. Section 6901 et e .(West 1983 &Supp 1989),as amended and superseded. "Self-Hauled Waste" means City Acceptable Waste collected and hauled by Self-Haulers. "Self-Hauler" means any person not engaged commercially in waste haulage who collects and hauls Acceptable Waste generated from residential or business activities conducted by such person. "Service Covenant"means the covenants and agreements of the County set forth in Sections 3.2 and 3.3 hereof. 1 "State" means the State of California. "Term" shall mean the Term of this Agreement specified in Section 6.1. "Ton" means a"short ton" of 2,000 pounds. "Transfer Station"means any transfer station or other waste handling or management facility to which solid waste collected for the City is delivered for transfer, processing or transformation before disposal in the Disposal System. "Unacceptable Waste means Hazardous Waste;Hazardous Substances; Prohibited Medical Waste; Qualified Household Hazardous Waste separated from Acceptable Waste(or otherwise identified by the County in loads otherwise containing Acceptable Waste); explosives, ordnance, highly flammable substances,and noxious materials and lead-acid batteries(except if delivered in minimal quantities);drums and closed containers; liquid waste, oil, human wastes; machinery and equipment from commercial or industrial sources, such as hardened gears,shafts,motor vehicles or major components thereof,agricultural equipment,trailers, marine vessels and steel cable; hot loads; and any waste which the Disposal System is prohibited from receiving under Applicable Law. "Uncontrollable Circumstance" means any act, event or condition affecting the Disposal System,the County,the City, or any of their Franchise Haulers, contractors or suppliers to the extent that 7 it materially and adversely affects the ability of either party to perform any obligation under the Agreement (except for payment obligations), if such act,event or condition is beyond the reasonable control and is not also the result of the willful or negligent act,error or omission or failure to exercise reasonable diligence on the part of the party relying thereon as justification for not performing an obligation or complying with any condition required of such party under the Agreement; provided, however, that the contesting in good faith or the good faith decision not to contest such action or inaction shall not be construed as willful or negligent action or a lack of reasonable diligence of either party. Examples of Uncontrollable Circumstances are: (1)an act of God, landslide, lightning,earthquake, fire,explosion,flood,sabotage or similar occurrence,acts of a public enemy,extortion,war,blockade or insurrection,riot or civil disturbance; and (2)a Change in Law. It is specifically understood that none of the following acts or conditions shall constitute Uncontrollable Circumstances: (a)general economic conditions, interest or inflation rates,currency fluctuations or changes in the cost of fuel, the availability of commodities, supplies or equipment; (b) changes in the financial condition of the County,the City or any Subcontractor affecting their ability to perform their obligations; (c)the consequences of errors,neglect or omissions by the County,the City,or any Subcontractor of any tier in the performance of their obligations hereunder;(d)union work rules,requirements or demands which have the effect of increasing the number of employees employed in connection with the Disposal System or otherwise increase the cost to the County of operating and maintaining the Disposal System or providing the Disposal Services;(e)strikes,work stoppages or other labor disputes or disturbances occurring with respect to any activity performed or to be performed by the City or the County or any of the City's or County's Subcontractors in connection with the Disposal System or the Disposal Services; (f) any failure of any Subcontractor to furnish labor,materials, service or equipment for any reason(other than an Uncontrollable Circumstance); (g)equipment failure;(h)any impact of minimum wage law,prevailing wage law,customs or practices on the County's construction or operating costs;or(i)changing conditions in the local, regional, or national waste disposal market. "Unincorporated Area" means those portions of the County which are not contained within the jurisdictional boundaries of incorporated cities. "Waste Disposal Covenant" means the covenants and agreements of the City set forth in Section 3.1 hereof. SECTION 1.2. INTERPRETATION. In this Agreement, unless the context otherwise requires: (A)References Hereto. The terms"hereby","hereof',"herein","hereunder"and any similar terms are references to this Agreement, and the term "hereafter" means after, and the term "heretofore" means before,the Contract Date. (B) Gender and Plurality. Words of the masculine gender mean and include correlative words of the feminine and neuter genders and words importing the singular number mean and include the plural number and vice versa. (C) Persons. Words importing persons include firms, companies, associations, general partnerships, limited partnerships, trusts, business trusts, corporations and other legal entities, including public bodies, as well as individuals. 8 (D) HeadinQS. The table of contents and any headings preceding the text of the Articles, Sections and subsections of this Agreement shall be solely for convenience of reference and shall not constitute a part of this Agreement,nor shall they affect its meaning,construction or effect. (E)Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement and,except as expressly provided otherwise herein,nothing in this Agreement is intended to confer on haulers or any other person other than the parties hereto and their respective permitted successors and assigns hereunder any rights or remedies under or by reason of this Agreement. (F)Counterparts. This Agreement may be executed in any number of original counterparts. All such counterparts shall constitute but one and the same Agreement. (G) Applicable Law. This Agreement shall be governed by and construed in accordance with the Applicable Laws of the State of California. (H) Accounting Terms. All accounting terms used but not specifically defined herein shall be cor.stnied in accordance with, all accounting determinations hereunder to be made shall be prepared in accordance with generally acceptable accounting principles applied on a consistent basis. (1) Severability. If any clause, provision, subsection, Section or Article of this Agreement shall be ruled invalid by any court of jurisdiction,then the parties shall: (1)promptly meet and negotiate a substitute for such clause, provision, subsection, Section or Article which shall,to the greatest extent legally permissible,effect the intent of the parties therein;(2) if necessary or desirable to accomplish item(1)above, apply to the court having declared such invalidity for a judicial construction of the invalidated portion of this Agreement; and(3)negotiate such changes in, substitutions for or additions to the remaining provisions of this Agreement as may be necessary in addition to and in conjunction with items (1) and(2)above to effect the intent of the parties in the invalid provision.The invalidity of such clause,provision,subsection, Section or Article shall not affect any of the remaining provisions hereof, and this Agreement shall be construed and enforced as if such invalid portion did not exist, unless such invalidity frustrates the underlying primary purpose of the Agreement. (J) Integration. This Agreement contains the entire agreement between the parties with respect to the transactions contemplated hereby. This Agreement shall completely and fully supersede all prior understandings and agreements between the Parties with respect to such transactions. (K) Recitals. The recitals to this Agreement are not intended to bind the parties hereto. In the event of a conflict between the recitals and the operative provisions of this Agreement, the operative provisions shall prevail. The recitals shall not be used to interpret the provisions of the Agreement. 9 i ARTICLE II REPRESENTATIONS AND WARRANTIES SECTION 2.1. D WARRANTIES OF THE CITY. The City represents and warrants that: (A) Existence. The City is a general law or charter city validly existing under the Constitution and laws of the State. (B) Due Authorization. The City has duly authorized the execution and delivery of this Agreement, and this Agreement has been duly executed and delivered by the City. (C)No Conflict. Neither the execution nor the delivery by the City of this Agreement nor the performance by the City of its obligations hereunder nor the consummation by the City of the transactions contemplated hereby(1) conflicts with, violates or results in a breach of any Applicable Law or (2) conflicts with, violates or results in a breach of any term or conditions of any contract, agreement, franchise,judgment, instrument or decree to which the City is a party or by which the City or any of its properties or assets are bound,or constitutes a default under any such contract, franchise,judgment, decree, agreement or instrument. (D)No Litigation. There is no action, suit or other proceeding,at taw or equity, before or by any court or Governmental Body pending or,to the City's best knowledge,threatened against the City in which an unfavorable decision, ruling or finding which would materially and adversely affect the validity of or enforceability of this Agreement or any other agreement or instrument to be entered into by the City in connection with the transactions contemplated hereby,or which would materially and adversely affect the performance by the City of its obligations hereunder or under any such other agreement or instrument. SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COUNTY. The County represents and warrants that: (A) Ex istence. The County is a political subdivision of the State of California validly existing under the Constitution and laws of the State. (B)Due Authorization. The County has duly authorized the execution and delivery of this Agreement, and this Agreement has been duly executed and delivered by the County. (C)No Conflict. Neither the execution nor the delivery by the County of this Agreement nor the performance by the County of its obligations hereunder nor the consummation by the County of the transactions contemplated hereby (1)conflicts with, violates or results in a breach of any Applicable Law or (2) conflicts with, violates or results in a breach of any term or conditions of any contract, agreement, franchise,judgment, instrument or decree to which the County is a party or by which the County or any of its properties or assets are bound, or constitutes a default under any such contract, franchise,judgment, decree, agreement or instrument. (D)No Litigation. There is no action, suit or other proceeding,at law or equity, before or by any court or Governmental Body pending or, to the County's best knowledge, threatened against the County in which an unfavorable decision, ruling or finding which would materially and adversely affect the validity of or enforceability of this Agreement or any other agreement or instrument to be entered into by the County in connection with the transactions contemplated hereby, or which would materially and 10 i adversely affect the performance by the County of its obligations hereunder or under any such other agreement or instrument. a 11 ARTICLE III DELIVERY AND ACCEPTANCE OF WASTE AND PROVISION OF DISPOSAL SERVICE SECTION 3.1. DELIVERY OF WASTE. (A)Waste DisMsal Covenant. Subject to the occurrence of the Commencement Date and throughout the Term of this Agreement,the City shall exercise all legal and contractual power and authority which it may possess from time to time to deliver or cause the delivery of all Controllable Waste to the Disposal System in accordance herewith beginning on January 1, 1998. (B) Diverted City Acceptable Waste. The parties hereto acknowledge the responsibility of the City to meet the recycling and landfill diversion goals contained in the Act. Nothing in this Agreement is intended or shall be interpreted to prohibit or impair the ability.of the City to meet or exceed such responsibilities, or to restrict the right of the residents, businesses or organizations in the City to practice source separation, source reduction, recycling, composting or other materials recovery activities, or to restrict the right of the City to conduct, sponsor, encourage or require such activities in any form. No reduction in the amount of Controllable Waste generated in the City and delivered to the Disposal System by or on behalf of the City which may result from any such source separation or recycling program (whether or not such program meets or exceeds the diversion requirements of the Act)shall cause the City any liability hereunder and shall not constitute a breach of this Agreement. [SECTION TO BE USED IF ALL WASTE CURRENTLY STAYS WITHIN COUNTY] (C) Waste Delivered to Transfer Station or Processing Facilities. Subject to the provisions of this Section, all Residue from any processing of Controllable Waste by materials recovery, composting, recycling or other means, performed at In-County Processing Facilities or Out-of-County Processing Facilities shall constitute Controllable Waste and be subject to the Waste Disposal Covenant.The County specifically acknowledges that the City shall have the right to deliver or cause the delivery of City Acceptable Waste to Out-of-County Processing Facilities, and that the City is not obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(i) 40% of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or(ii) 2% of the total amount of Controllable Waste generated in the City during such Contract Year.To the extent that Residue from the processing of Controllable Waste exceeds the amount specified in the preceding sentence,the City shall exercise all legal and contractual authority which it may possess from time to time to require that such excess Residue be delivered to the Disposal System, and shall include a requirement to that effect in any contracts, agreements or other arrangements for processing at Out-of-County Processing Facilities which it enters into or amends after the Contract Date. Where City Acceptable Waste is processed at an In-County or Out-of-County Processing Facility which concurrently processes other Acceptable Waste in a manner which produces commingled residue which cannot be traced to a geographic source, generic residues from such Processing Facility in Tonnage equal to the residues that would have been produced had City Acceptable Waste only been processed at the facility shall constitute Controllable Waste and be subject to the Waste Disposal Covenant(subject to the exclusion from Controllable Waste of the amounts of Residue from Out-of-County Processing Facilities specified in this Section 3.1(Q.)Such generic residues shall be delivered to the Disposal System regularly, in approximately the same frequency as deliveries of City Acceptable Waste to the Processing Facility. (In making any determination of Residue attributable to the City, the City may rely on the reports or certifications of the owner or operator of the Transfer Station or Processing Facility.) [FOLLOWING SECTION TO BE USED IF WASTE CURRENTLY PROCESSED OUT-OF- COUNTY] 12 (C) Waste Delivered to Transfer Station or Processing Facilities. Subject to the provisions of this Section, all Residue from any processing of Controllable Waste by materials recovery, composting, recycling or other means, performed at In-County Processing Facilities or Out-of-County Processing Facilities shall constitute Controllable Waste and be subject to the Waste Disposal Covenant.The County acknowledges that a portion of Controllable Waste,(i)the subject of a franchise,contract or other agreement which provides for the processing of such portion of Controllable Waste at an Out-of-County Processing Facility and(ii)was,as of July 1, 1997,and is,as of the Contract Date being actually delivered to an Out-of County Processing Facility pursuant to such franchise, contract or other agreement. With respect to the portion of Controllable Waste which is subject to the franchise,contract or other agreement described in this Section the City is not obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(1) 40%of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or (ii) 7% of the total amount of Controllable Waste generated in the City during such Contract Year. However, the City agrees that upon the expiration date of such franchise, contract or agreement (as such expiration date exists as of the Contract Date, without any renewal, amendment or modification thereof) the City will not be obligated to require that Residue from such Out-of-County Processing Facilities be delivered to the Disposal System, after final processing or re-processing of such Residue as long as such Residue from Out-of-County Processing Facilities does not exceed, in any Contract Year, the lesser of(i) 40% of the amount of City Acceptable Waste delivered to such Out-of-County Processing Facility in such Contract Year or(ii)2%of the total amount of Controllable Waste generated in the City during such Contract Year To the extent that Residue from the processing of Controllable Waste exceeds the amount specified in this Section, the City shall exercise all legal and contractual authority which it may possess from to time to time to require that such excess Residue be delivered to the Disposal System, and shall include a requirement to that effect in any contracts, agreements or other arrangements for processing at Out-of-County Processing Facilities which it enters into or amends after the Contract Date. Where City Acceptable Waste is processed at an In-County or Out-of-County Processing Facility which concurrcnt!y processes other Acceptable Waste in a manner which produces commingled residue which cannot be traced to a geographic source, generic residues from such Processing Facility in Tonnage equal to the residues that would have been produced had City Acceptable Waste only been processed at the facility shall constitute Controllable Waste and be subject to the Waste Disposal Covenant(subject to the exclusion from Controllable Waste of the amounts of Residue from Out-of-County Processing Facilities specified this Section 3.1(Q.)Such generic residues shall be delivered to the Disposal System regularly, in approximately the same frequency as deliveries of City Acceptable Waste to the Processing Facility. (In making any determination of Residue attributable to the City, the City may rely on the reports or certifications of the owner or operator of the Transfer Station or Processing Facility.) (D) Power to Obligate Waste Disposal and Comkly with this Agreement. On or before January 1, 1998,(i)any City franchise,contract,lease,or other agreement which is lawfully in effect relating to or affecting Controllable Waste shall provide,or shall have been amended to provide,that the City shall have the right without material restriction on and after the January 1, 1998 to direct the delivery of all Controllable Waste to a disposal location selected by the City(whether or not such Controllable Waste is delivered to a transfer station as an intermediate step prior to landfill disposal)and otherwise to comply with its obligations under this Agreement with respect to Controllable Waste and Franchise Haulers,(ii)the City shall designate the Designated Disposal Site as the disposal location pursuant to such franchise, contract, lease or other agreement and (iii)the City's Franchise Hauler shall execute the Hauler Acknowledgment attached hereto as Appendix 2, pursuant to which the Franchise Hauler acknowledges the City's execution of this Agreement,and agrees to comply with the Waste Disposal Covenant. Throughout the Term of this Agreement the City(a)shall not enter into any franchise,contract, lease,agreement or obligation, issue any permit,license or approval,or adopt any ordinance, resolution or law which is materially inconsistent with 13 I t the requirements of the Waste Disposal Covenant, and (b) shall maintain non-exclusive or exclusive franchises or other contractual arrangements (or collection through City owned and operated collection services) over any City Acceptable Waste which, as of the Contract Date, is subject to non-exclusive or P exclusive franchise or other contractual arrangements.The City agrees that the County shall be a third party beneficiary of the obligation of Franchise Haulers to deliver Controllable Waste to the Disposal System,and may directly enforce such obligation through any legal or means available; provided, however, that such designation of the County as a third party beneficiary does not relieve the City of its obligations hereunder 1 to enforce the waste delivery obligation of the Franchise Haulers. The City shall notify in writing each Franchise Hauler of the County's third party beneficiary rights. (E) Waste Flow Enforcement. The City, in cooperation with the County,shall establish, implement, carry out and enforce a waste flow enforcement program which is sufficient to assure the delivery of all Controllable Waste to the Disposal System pursuant to and in accordance with the Waste Disposal Covenant for disposal at the times and in the manner provided herein. The waste flow enforcement program shall consist of amending City franchises with all Franchise Haulers,to the extent required by this Section, and shall include in addition,to the extent necessary and appropriate in the circumstances to assure compliance with the Waste Disposal Covenant, but shall not be limited to: (1) licensing or permitting Franchise Haulers, upon the condition of compliance with the Waste Disposal Covenant, (2) providing for and taking appropriate enforcement action under any such franchise, license, or permit, such as but not limited to the suspension, revocation and termination of collection rights and privileges, the imposition of fines or collection of damages,and the exercise of injunctive relief against non-complying Franchise Haulers I and (3) causing any Transfer Station to which Controllable Waste is delivered for processing to deliver certification, under the penalty of perjury, of the amounts of Controllable Waste received and Residue remaining from processing at such Transfer Station. The City acknowledges and agrees that in the event of a breach of the Waste Disposal Covenant by the City,the City shall pay the County an amount equal to 100% multiplied by the Contract Rate in effect at the time of such breach multiplied by the number of tons of Controllable Waste which were not delivered to the Disposal System as a result of the failure of the City to comply with the Waste Disposal Covenant.The parties recognize that if the City fails to meet its obligations hereunder, the County will suffer damages and that it is and will be impracticable and extremely difficult to ascertain and determine the exact amount of such damages. Therefore,the parties agree that the damages specified above represent a reasonable estimate of the amount of such damages, considering all of the circumstances existing on the date hereto, including the relationship of the sums to the range of harm to the County that reasonably could be anticipated and anticipation that proof of actual damages would be costly or inconvenient. In signing this Agreement,each party specifically confirms the accuracy of the statements made above and the fact that each party had ample opportunity to consult with legal counsel and obtain an explanation of this liquidated damage provision at the time that this Agreement was made. (F) Legal Challenges to Franchise System. The City shall use its best efforts to preserve, protect and defend (by diligent pursuit of claims through the trial court level) its right to exercise and comply with the Waste Disposal Covenant against any challenge thereto, legal or otherwise(including any lawsuits against the City or the County, whether as plaintiff or defendant),by a Franchise Hauler or any other person, based upon breach of contract,violation of law or any other legal theory. The City shall bear the cost and expense of any such Legal Proceeding or other challenge. In the event any such Legal Proceeding relating to the Waste Disposal Covenant or the City's exercise thereof establishes in a final determination that such covenant or exercise thereof is void,unlawful or unenforceable,or if any Franchise Hauler fails to deliver Controllable Waste to the Disposal System in breach of its franchise with the City on the grounds that a judicial determination made by any court or other Applicable Law has rendered its obligation to deliver Controllable Waste to the Disposal System void,unlawful or unenforceable on any legal grounds,with the result that actual waste deliveries of the City's Controllable Waste to the Disposal System in any Contract Year fall below 93% of the amount of the City's Controllable Waste delivered to the 14 Disposal System during the preceding Contract Year, the County shall be entitled to terminate this Agreement upon 60 days prior written notice to the City. Such right of the County to terminate must be exercised within one year of the end of the Contract Year during which the delivery shortfalls described in this Section giving rise to the right to terminate occurred. Upon any termination by the County pursuant to the provisions of this Section,the obligations of the County pursuant to Section 7.3 hereof shall not apply to any Loss-and-Expense of the City which may arise from deliveries of waste to the Disposal System after such date of termination. (G) Franchise Haulers. The City shall compile and provide the County with the following information concerning all Franchise Haulers: name, address and phone number; identification number; area of collection and transportation; and franchise and permit terms. (H) Waste Information System. The City shall cooperate with the County in collecting information and otherwise monitoring Franchise Haulers in order to assure compliance with this Agreement. Such information may include, to the extent practicable, data pertaining to Controllable Waste collccted, transported, stored, processed and disposed of; Diverted City Acceptable Waste collected, transported, stored, processed and marketed or disposed of; Franchise Haulers' franchise, permit or license terms, collection areas.transportation routes and compliance with Applicable Law;and all other information which may reasonably be required by the County in connection with this Agreement. (1) CCi1y Actions Affecting County. The City agrees not to conduct any disposal services for Controllable Waste to be provided in competition with the Disposal Services provided by the County hereunder, and not to take or omit to take any action with respect to Controllable Waste or its collection, transportation,transfer,storage,treatment or disposal that may materially and adversely affect the County's ability to achieve such timely compliance. The County acknowledges that development by the City (or cooperation by the City in connection with the private development of) any materials recovery facility or transfer station located within or without the City shall not violate the provisions of this section as long as the ultimate disposal site for any, Controllable Waste (or Residue therefrom) which is delivered to such materials recovery facility or transfer station is the Disposal System.Notwithstanding the foregoing,the City shall not be required to (i) approve or deny any permit or license or grant or refuse to grant any approval while exercising its police powers or(ii)waive,modify or otherwise limit in any manner the City's land use authority. (.n No Right of Waste Substitution. Nothing in this Agreement shall authorize or entitle the City to deliver or cause the delivery to the Disposal System of Acceptable Waste originating from or generated outside the jurisdiction of the City, nor obligate the County to receive or dispose of any such Acceptable Waste. The City shall not assign in whole or in part its right to deliver or cause to be delivered Controllable Waste to the County hereunder,and shall not permit any Acceptable Waste originating from or generated outside the jurisdiction of the City to be substituted for Controllable Waste for any purpose hereunder. (K) Annexations and Restructuring. It is the intention of the parties that this Agreement and the obligations and rights of the City hereunder,including particularly the Waste Disposal Covenant and the Contract Rate, shall, to the extent permitted by Applicable Law (and subject to any rights of waste haulers operating in such areas prior to such annexation),extend to any territory annexed by the City(or any territory with respect to which the City assumes solid waste management responsibility from a sanitary district or other public entity)and shall bind any successor or restructured Governmental Body which shall assume or succeed to the rights of the City under Applicable Law. 15 SECTION 3.2. PROVISION OF DISPOSAL SERVICES BY THE CQ I ML(A)Service Covenant. Commencing January 1, 1998,the County shall provide or cause the provision of the service of (1) receiving and disposing of all Controllable Waste at the Designated Disposal Facility,(2)disposing in accordance with subsection 3.2(C)hereof of Controllable Waste which, at any time and for any reason, is in excess of the disposal capacity of the Designated Disposal Facility,and(3)in accordance with subsection 33(C)hereof,disposing of Unacceptable Waste inadvertently accepted at the Designated Disposal Facility. The County shall do and perform all acts and things which may be necessary or desirable in connection with its covenants in this subsection, including without limitation all planning, development, administration, implementation, construction, operation, maintenance, management, financing and contract work related thereto or undertaken in connection therewith. The County shall exercise all reasonable efforts to minimize the costs incurred in complying with the Service Covenant consistent with its responsibilities hereunder and under this Agreement, Applicable Law and prudent solid waste management practice and environmental considerations, so as to enable the County to provide the services hereunder at the Contract Rate. (B) Temporary navailabili of Designated Dial2osal Facili • Provi ion f Transfer Ca aci . The County shall immediately advise the City and Franchise Hauler by telephone and facsimile of any situation, event or circumstance which results in the partial or complete inability of the County to receive Controllable Waste at the Designated Disposal Facility, its effect on the County's ability to perform its obligations hereunder,and the County's best estimate of the probable duration. The County shall confir►n such advice in writing within 24 hours of the occurrence of any such inability. The County shall use its best efforts to resume normal operation of the Designated Disposal Facility as soon as possible in accordance with subsection 3.2(C)hereof. In the event that, an any time during the term hereof, the County is unable to accept City Acceptable Waste for disposal at any particular Designated Disposal Facility for a period in excess of 14 consecutive days, it shall nonetheless provide sufficient transfer capacity at such Designated Disposal Facility, and shall accept for transfer and disposal City Acceptable Waste at such Designated Disposal Facility for the Contract Rate. In the event that the County cannot provide such transfer capacity, it shall be obligated to accept such City Acceptable Waste at another facility within the Disposal System and to reimburse the City for any increased transportation cost(including without limitation, equipment rental costs,overtime and increased fuel costs resulting from the unavailability of the Designated Disposal Facility) incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to another disposal facility within the Disposal System.In the event that the County cannot provide disposal capacity at another facility within the Disposal System, it shall be obligated to reimburse the City for (i) any increased transportation cost(including without limitation,equipment rental costs,overtime and increased fuel costs resulting from the unavailability of the Designated Disposal Facility) incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to any other disposal facility used by the City or Franchise Hauler and(ii)the amount, if any,by which the tipping fee at the alternative facility utilized by the City or Franchise Hauler(because of the unavailability of any facility within the Disposal System)exceeds the then current Contract Rate. The invoice shall include reasonable substantiation of the amount invoiced. (C) Termination by County in Certain Circumstances. In the event that the Designated Disposal Facility becomes unavailable pursuant to Section 3.2(B) for a period exceeding 14 days,the County shall have the right to terminate this Agreement pursuant to this Section.The County may exercise such right by providing 10 days prior written notice thereof to the City. In the event that the County exercises such right, the County shall be obligated to pay the City an amount equal to(i)any aggregate increased transportation cost(including without limitation,equipment rental costs,overtime and increased fuel costs resulting from l the unavailability of the Designated Disposal Facility)reasonably expected to be incurred by the City or the Franchise Haulers in transporting City Acceptable Waste to any other disposal facility used by the City or Franchise Hauler for a period of one year following the date of termination and(ii)the aggregate amount, if any,by which the tipping fee at the alternative facility utilized by the City or Franchise Hauler(because of the unavailability of any facility within the Disposal System) is reasonably expected to exceed the then 16 current Contract Rate for a period of one year following the date of termination. Such amounts shall be payable by the County within 60 days of the date of termination. (D) Change in Designated Disposal Facility by Mutual Consent. The Designated Disposal Facility has been initially designated in Appendix 1 hereto. The Designated Disposal Facility may be changed, and other Designated Disposal Facilities added, at any time with the mutual consent of the parties. (E) Chafe in Designated Disposal Facility at City Request. In the event the City wishes to change the Designated Disposal Facility to another Disposal System Component, the City shall provide written notice and the reasons therefor to the County, and shall indicate whether the requested change is permanent or temporary. The County shall consider any such request in good faith and provide a response to the City within 14 days, taking into account the reasons for the request, the County's obligations to other cities which have executed Disposal Agreements,the requirements of Applicable Law, and the implications of any such change for the Disposal System as a whole. The County shall honor any such request to the extent commercially practicable based on such considerations and the overall interests of the Disposal System. (F) Annual Notification of Remaining Disposal Capacity. At the end of each Contract Year, the City shall advise the County in writing as to the expected delivery levels of Controllable Waste during the next Contract Year,and the County shall submit to the City a statement specifying(1)the amount of disposal capacity at the Designated Disposal Facility expected to be available for use by the City during the next Contract Year; (2)the aggregate amount of Disposal System capacity expected to be available for use by the cities which have executed Disposal Agreements during the remaining Term of this Agreement; and (3) any plans the County may have with respect to redesignating the Designated Disposal Facility, increasing or decreasing the number of cities using the Designated Disposal Facility, or curtailing or expanding the use of the Designated Disposal Facility.The annual notification to be provided by the County pursuant to this Section shall also describe the status of any permits required with respect to the Designated Disposal Facility, including a description of(i)any permit revisions expected to be proposed by the County; and (ii) any abatement orders or other permit compliance or enforcement actions taken or proposed by Governmental Bodies. SECTION 3.3. COUNTY RIGHT TO REFUSE WASTE. (A) Right of Refusal. Notwithstanding any other provision hereof, the County may refuse delivery of: (1) Unacceptable Waste; and (2) Controllable Waste delivered at hours other than those provided in Section 3.5 hereof. (B)Identification of Unacceptable Waste. The County shall have the right(but not the duty or the obligation)to inspect the vehicles of all Franchise Haulers delivering material to the Disposal System, and may require that the Franchise Hauler remove any Unacceptable Waste from such vehicle before it is unloaded. If the County determines that it is impractical to separate Controllable Waste from Unacceptable Waste in any vehicle,or if the Franchise Hauler delivering such waste is unwilling to make such separation, or if any vehicle is carrying waste which may spill or leak,then the County may reject the entire vehicle,and the County shall require that the Franchise Hauler shall forthwith remove'or cause the removal of the entire delivery from the Disposal System. (C) Hazardous Waste and Hazardous Substances. The parties acknowledge that the Disposal System has not been designed or permitted,and is not intended to be used in any manner or to any 17 f . I - extent, for the handling,transportation,storage or disposal of Hazardous Waste or Hazardous Substances. Neither the County nor the City shall countenance or knowingly permit the delivery of Hazardous Waste or Hazardous Substances to the Disposal System. (D) Disposal of Unacceptable Waste and Hazardous Waste. If Unacceptable Waste or Hazardous Waste is discovered in a vehicle at any landfill within the Disposal System, the driver of the vehicle will not be permitted to discharge the load. If a vehicle is observed unloading Unacceptable Waste or Hazardous Waste in the tipping area of a landfill within the Disposal System County personnel will use reasonable efforts to assure that such material has been characterized, properly secured and its disposition resolved. The return or reloading on to the delivery vehicle of any Hazardous Waste,Prohibited Medical Waste or other waste requiring handling or transportation shall be conducted in accordance with Applicable Law. Whenever Hazardous Waste is detected at any landfill within the Disposal System, the County shall take immediate action in accordance with Applicable Law. In addition, if the County inadvertently accepts Unacceptable Waste, it shall have the right to pursue any remedies which it may against the person delivering such Unacceptable Waste to recoup the cost of handling and properly disposing of such Unacceptable Waste. (E) Environmental Insurance. Prior to the Contract Date, the County will obtain insurance for potential CERCLA or other environmental liability of the Disposal System, in an amount equal to $10,000,000 with deductibles of: (i) $1,000,000 for events giving rise to coverage which events occurred prior to October 1, 1995 and (ii) $250,000 for events giving rise to coverage which events occurred on or after October 1, 1995.The County shall maintain comparable insurance throughout the term hereof so long as commercially available on reasonable terms,as determined in the reasonable discretion of the County risk manager. The County shall notify the City in the event that the County does not maintain the insurance described in this Section. SECTION 3.4. MISCELLANEOUS OPERATIONAL MATTERS. (A)Permit Revisions or Stipulated Orders. The County shall provide, the City with any application of the County to revise the Legal Entitlements for the Designated Disposal Facility (or any draft or final stipulated notice and order relating to the Designated Disposal Facility which may be under consideration by the local enforcement agency with jurisdiction over the Designated Disposal Facility). Such applications shall be provided to the City concurrently with its submittal to the appropriate regulatory agency. (B) Scales and Weighing. The County shall operate and maintain permanent scales at the Disposal System in compliance with Applicable Law. The County shall weigh all vehicles delivering Controllable Waste by or on behalf of the City(whether or not the County accepts such waste) and prepare a daily weight record with regard to such delivery. (In the event that scales are temporarily unavailable, the County shall reasonably estimate the weight of Controllable Waste delivered by volume.) SECTION 3.5. OTHER USERS OF THE DISPOSAL SYSTEM. (A) Generatly. The County shall have the right to enter into waste disposal agreements with other cities in the County, Sanitary Districts, Transfer Stations or Independent Haulers; provided, however, that in no event shall such agreements have terms and provisions more favorable than the terms and provisions of this Agreement (including but not limited to the Contract Rate and availability of disposal capacity) unless the County has first offered the City such more favorable contract(or amendments to this Agreement). (B) Receipt of ImpQrted Acceptable Waste on a Contract Basis.The County shall have the right to enter into a contract or other agreement with any municipal or private non-County entity for the delivery of Imported Acceptable Waste on terms and conditions that the County determines to be necessary to ensure and enhance the viability of the Disposal System for the benefit of the County and the cities which 18 have executed Disposal Agreements. The County shall not enter into any such arrangements if such arrangements would materially and adversely affect the ability of the County to receive and dispose of Acceptable Waste from the cities which have executed Disposal Agreements in accordance with the Disposal Agreements throughout the Term thereof. Any such agreements shall provide that, in the event there is insufficient capacity at the Designated Disposal Facility for both Controllable Waste and Imported Acceptable Waste,Controllable Waste shall have priority with respect to existing capacity. SECTION 3.6. COUNTY PROVISION OF WASTE DIVERSION SERVICES. (A)Counw-Wide Reecling Services. This Agreement does not require the County to provide for any source reduction, materials recovery, recycling,composting, or other waste diversion services by the County nor any payment therefor by the City,by Franchise Haulers or by ratepayers; provided,however,any County- Wide Recycling Services,or recycling services provided at any Design Disposal Facility (such as providing drop boxes for wood waste,green waste or other recyclable materials delivered to such Designated Disposal Facility), may be funded through the County Waste Management Enterprise Fund. Any such recycling services may be expanded, contracted or modified by the County at any time in its sole discretion. (B) Separate City-County Diversion Service Agreements. Nothing in this Agreement is intended to limit the right of the County to enter into a separate agreement with the City or any other person to provide source reduction, materials recovery, recycling, composting or other waste diversion services. Any such program conducted by the County,whether in participation with the City, any other of the cities %vhich have executed Disposal Agreements, other cities, Sanitary Districts, Transfer Stations, Independent Haulers,Unincorporated Area or non-County entity, shall be operated,managed and accounted for as a program separate and distinct from the Disposal Services program contemplated by the Disposal Agreements and shall not be funded through the general revenues of the Disposal System. (C) Diversion Programs in Unincorporated Areas.To the extent the County implements diversion or other related programs in the Unincorporated Area of the County, the cost of such diversion programs shall be paid by the residences and businesses receiving the benefit of such diversion programs, and shall not be payable from the revenues of the Disposal System. 19 ARTICLE IV CONTRACT RATE SECTION 4.1. CHARGING AND SECURING PAYMENT OF CONTRACT RATE. The City acknowledges that the County shall have the right to charge and collect a Contract Rate for the acceptance and disposal of Controllable Waste delivered to the System by any Franchise Hauler. The Contract Rate shall be calculated and established, and may be modified, as provided in Section 4.2 hereof. In addition,the City acknowledges that the County shall have the right to establish as part of the operating rules and regulations reasonable measures to secure the payment of all Contract Rates. Notwithstanding Section 4.2(A), the County shall have the right to impose special charges for the receipt of hard to handle materials,such as bulky materials,construction and demolition debris,tires and sludge. Such special charges shall be calculated to reflect the reasonable incremental costs to the County of accepting such hard to handle materials. SECTION 4.2. CONTRACT RATE. (A) Generally. Effective January 1, 1998, the Contract Rate payable by each Franchise Hauler shall be $28.50 per ton, subject to potential adjustment necessary to reflect the circumstances set forth below: (i) increased costs incurred by the County (in excess of available insurance proceeds) due to the occurrence of one or more Uncontrollable Circumstances, including Changes in Law;and (ii) escalation during the Term of this Agreement calculated in accordance with Section 4.2 (B). Prior to adjusting the Contract Rate as a result of any of the circumstances described in Section 4.2(A)(i),the County shall utilize the following remedy; reduce the costs of operating the Disposal System to the extent practicable. Any adjustments to the Contract Rate permitted by this Section 4.2(A)(i)shall be calculated by the County to reflect the actual costs or expenses of addressing the circumstance or circumstances pursuant to which the adjustment is authorized,and shall also reflect,where applicable, the then remaining capacity in the Disposal System. Such adjustment may not reflect circumstances other than the circumstances described in Section 4.2(A)(i). (B) Calculation of Escalation. For purposes of Section 4.2(A)(ii), the Contract Rate shall be adjusted in accordance with the formula described in this Section each July 1 during the term hereof, commencing July 1, 1999. The adjustment shall be calculated in accordance with the following formula: Contract Rate = Fixed Portion + [Escalating Portion x Index] Where, Fixed Portion = $10.87 Escalating Portion = $17.63 Index = Price Index, which shall be determined in accordance with the following formula I .7[PPI,/PPIJ+.3[EII/EIS] 20 PPI, = The Producer Price Index,Industrial Commodities,as published by the United States Department of Labor Statistics in the publication Producer Price Indices,Table 6, for the month of February in the year the adjustment is being made(e.g., the first adjustment will use the February, 1999 value) PPI2 = Producer Price Index, Industrial Commodities for the month of February, 1998 EIl = Employment Cost Index,Compensation,Private Industry Workers, as published by the United States Department of Labor Statistics in the publication Monthly Labor Review,Table 22 for the month of February in the year the adjustment is being made(e.g., the first adjustment will use the February, 1999 value) EI2 = Employment Cost Index,Compensation, Private Industry Workers established for February, 1998 If the Employment Cost Index or Producer Price Index are no longer published, or are otherwise unavailable, then the Cost of Living Adjustment shall be determined by using standard official statistics measuring changes to, respectively, labor costs and cost of materials, as the parties shall mutually agree. (C) Procedure for Rate Adjustments. In the event the County determines that it is entitled to an adjustment of the Contract Rate pursuant to Section 4.2(A)(i), it shall utilize the procedures described in this Section 4.2(C). The County shall be required to provide the City with at least 60 days prior written notice of the adjustment, which notice shall identify the specific event(s) or circumstances which require the adjustment. The notice shall also specify the earliest date on which the County Board of Supervisors shall consider the proposed adjustment. At least 45 days prior to such meeting of the Board of Supervisors,the County shall provide the City with a report which shall contain the following infonnation: a description of the specific event(s)or circumstances which require the adjustment; a description(including cost estimates) of any activities (which may include, but not be limited to capital improvements to the Disposal System) required in order to remedy such event or circumstance; certification by the County that i, it has implemented the remedies described in Section 4.2 prior to requiring the rate adjustment; and a description of the methodology used by the County to calculate the adjustment to the Contract Rate (hereinafter the"County Report"). In the event the City disputes the adjustment, it shall provide the County with a written description of the reason for the dispute at least 10 days prior to the meeting of the Board of y Supervisors identified in the initial notice of the County (hereinafter the "City Report"). The City Report shall be provided to the Board of Supervisors for consideration at such meeting in connection with the proposed rate adjustment. At any time from and after the date that the County provides the City with the County Report, upon the request of either party, the City and County shall meet and confer in good faith to resolve any dispute that may arise regarding the proposed adjustment to the Contract Rate. In the event the Board of Supervisors approves all or a portion of the proposed rate adjustment, such rate adjustment shall become effective on the date identified in the initial notice sent by the County, but subject to potential reimbursement pursuant to Section 4.2(D). (D) Challenges to Rate Adjustment.In the event that the City challenges a Rate Adjustment made pursuant to Section 4.2(A)and a court of applicable jurisdiction determines that any portion of the County's adjusted Contract Rate was improperly imposed,the County shall,within 30 days of the date of the statement of decision, reimburse to the City the amount improperly imposed, together with interest calculated at the 21 i I Overdue Rate. Such reimbursement may be made in the form of a reduction in the Contract Rate for a future period reasonably calculated to provide full reimbursement of the amounts described above. SECTION 4.3. gECPONSIBILITY FOR PAYMENT OF THE CONTRACT. A bX�i1X In the event and to the extent(1)the City uses municipal collection forces directly for the haulage of Controllable Waste to the Disposal System or (2) the City uses non-municipal Franchise Haulers for collection but nonetheless elects to pay the Contract Rate from City revenues, the City shall have direct responsibility for payment of the Contract Rate, and shall take all such budgetary, appropriation and other action as may be necessary to provide for the timely payment of the Contract Rate. Such action may include, depending upon the means authorized by the City to provide for such payment,the levy and collection of general or special taxes, the imposition of benefit assessments, or the collection of user fees, generator charges or other similar impositions for municipal solid waste disposal. The City shall use best efforts in accordance with Applicable Law to levy and impose all such taxes, assessments, fees or charocs, and will take all steps, actions and proceedings for the enforcement, collection and payment of all such amounts which shall become delinquent, to the full extent permitted by Applicable Law. To the extent provided in Section 7.5 hereof,the obligation of the City for such Contract Rate or Transfer Rates shall be limited to amounts in the City's Solid Waste Enterprise Fund. From the Commencement Date to the date of expiration or termination of this Agreement,the obligation of the City to pay the Contract Rate or Transfer Rate, to the extent the City rather than Franchise Haulers is responsible directly for payment and provided that the Service Covenant has been complied with, shall be absolute and unconditional and shall not be subject to delay or diminution by reason of set-off, abatement, counterclaim, existence of a dispute or otherwise. The obligation of the City hereunder shall be limited in all circumstances to amounts available in any enterprise fund created by the City for solid waste management purposes, and there shall be no recourse hereunder against the City's general fund or other funds not related to solid waste management purposes for amounts owed by the City hereunder. (B) Payment by Franchise Haulers. With respect to Controllable Waste delivered by Franchise Haulers other than City municipal collection forces, the obligation to pay the Contract Rate shall rest with such Franchise Haulers and not with the City and, unless the City has agreed with the County to be responsible for Franchise Hauler payments,the City shall not be financially responsible for any delay or failure by such Franchise Hauler to pay the Contract Rate or any portion thereof when due. In the event of any such failure,the County and the City shall cooperate with each other and use their best efforts to obtain timely payment. Such efforts by the County may include, as appropriate, requiring cash payments for disposal rights from such Franchise Hauler and bringing a legal proceeding for payment and damages. Such efforts by the City shall include, as appropriate, legal proceedings to suspend, revoke or terminate the Franchise Hauler's franchise, permit or license rights. (C) Dispute. . If the City or the Franchise Hauler disputes any amount billed by the County in any Billing Statement,the City or the Franchise Hauler shall nonetheless pay undisputed amounts identified on such Billing Statement and shall provide the County with written objection within 30 days of the receipt of such Billing Statement indicating the amount that is being disputed and providing all reasons then known to the City or the Franchise Hauler for any objection to or disagreement with such amount.The County shall then respond to such written objection(providing additional documentation substantiating the amount disputed if applicable)within 30 days of receipt of the written objection. If the City or the Franchise Hauler and the County are not able to resolve such dispute within 30 days after the County's response,either party may pursue appropriate legal remedies.In addition, in the event of nonpayment by the City or Franchise I Hauler, as applicable,the County shall have the right to discontinue any credit arrangements it may have had with the City or Franchise Hauler, and require cash payment for subsequent deliveries. l 22 SECTION 4.4. BTT i INr OF THE CONTRACT RATE.The County shall continue to bill Contract Rate after January 1, 1998, in the same manner as it has customarily billed tipping fees. Subject to the other provisions of this Agreement,the County shall have the right to modify or amend such manner of billing on reasonable notice to affected parties. h 23 ARTICLE V BREACH,ENFORCEMENT AND TERMINATION SECTION 5.1. BREACH REMEDIES.The parties acknowledge that the money damages provided hereunder may not be adequate to compensate either party for the other party's nonperformance. The parties agree that in the event either party breaches any obligation under this Agreement or any representation made by either party hereunder is untrue in any material respect,the other party shall have the right to take any action at law or in equity(including actions for injunctive relief,mandamus and specific performance) it may have to enforce the payment of any amounts due or the performance of any obligations to be performed hereunder. Neither party shall have the right to terminate this Agreement except as provided in Section 3.1(F), Section 3.2(C), Section 5.2 and Section 5.3 hereof or as otherwise provided in this Agreement. SECTION 5.2. CITY CONVENIENCE TERNIINATION.The City shall have the right to terminate this Agreement in its sole discretion, for its convenience and without cause at any time during the Term hereof upon 90 days' written notice to the County. If the City exercises its rights to terminate the Agreement pursuant to this Section, the City shall pay the County a termination fee equal to (x) $14.25 multiplied by (y) the amount of Controllable Waste delivered to the Disposal System during the prior Contract Year multiplied by(z)remaining term of the Waste Disposal Agreement,stated in years(assuming such termination for convenience did not occur).Upon any termination by the City pursuant to the provisions of this Section, the obligations of the County pursuant to Section 7.3(A) hereof shall not survive such termination, notwithstanding Section 6.1(B). SECTION 5.3. TERMINATION. (A) By Cil3(. Except as expressly provided herein,the City shall have no right to terminate this Agreement for cause except in the event of the repeated failure or refusal by the County substantially to perform any material obligation under this Agreement unless such failure or refusal is excused by an Uncontrollable Circumstance; except that no such failure or refusal shall give the City the right to terminate this Agreement for cause under this subsection unless: (1) The City has given prior written notice to the County stating that a specified failure or refusal to perform exists which will, unless corrected, constitute a material breach of this Agreement on the part of the County and which will, in its opinion, give the City the right to terminate this Agreement for cause under this subsection unless such breach is corrected within a reasonable period of time, and (2) The County has neither challenged in an appropriate forum (in accordance with Section 5.6)the City's conclusion that such failure or refusal to perform has occurred or constitutes a material breach of this Agreement nor corrected or diligently taken steps to correct such breach within a reasonable period of time not more than 90 days from the date of the notice given pursuant to clause(1)of this subsection (but if the County shall have diligently taken steps to correct such breach within such reasonable period of time,the same shall not constitute a breach giving rise to the right of termination for as long as the County is continuing to take such steps to correct such breach). (B) ByCounty. Except as expressly provided herein,the County shall have no right to terminate this Agreement for cause except in the event of the repeated failure or refusal by the City substantially to perform any material obligation under this Agreement unless such failure or refusal is excused by an Uncontrollable Circumstance; except that no such failure or refusal shall give the County the right to terminate this Agreement for cause under this subsection unless: 24 i (1) The County has given prior written notice to the City stating that a specified failure or refusal to perform exists which will, unless corrected, constitute a material breach of this Agreement on the part of the City and which will, in its opinion, give the County right to terminate this Agreement for cause under this subsection unless such breach is corrected within a reasonable period of time, and (2) The City has neither challenged in an appropriate forum(in accordance with Section 5.5) the County's conclusion that such failure or refusal to perform has occurred or constitutes a material breach of this Agreement nor corrected or diligently taken steps to correct such breach within a reasonable period of time not more than 90 days from the date of the notice given pursuan t to clause(1)of this subsection(but if the City shall have diligently taken steps to correct such breach within such reasonable period of time,the same shall not constitute a breach giving rise to the right of termination for as long as the City is continuing to take such steps to correct such breach). SECTION 5.4. NO WAIVERS. No action of the County or the City pursuant to this Agreement(including,but not limited to,any investigation or payment),and no failure to act,shall constitute a waiver by either party of the other party's compliance with any term or provision of this Agreement. No course of dealing or delay by the County or the City in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof or otherwise prejudice such party's rights, powers and remedies. No single or partial exercise of(or failure to exercise)any right, power or remedy of the County or the City under this Agreement shall preclude any other or further exercise thereof of the exercise of any other right, power or remedy. SECTION 5.5 DAMAGES.(A) it . In the event that the City terminates the Agreement pursuant to Section 5.3(A),the County shall be obligated to pay to the City as damages the amount by which the City's reasonably expected cost of transporting and disposing of City Acceptable Waste (for a period commencing on the date of termination and ending one year after such date of termination) exceeds the aggregate Contract Rate that would have been payable with respect to such City Acceptable Waste had the County met its obligations hereunder and the Agreement had not been terminated. (B)County.In the event that the County terminates the Agreement pursuant to Section 5.3(B),the City shall pay the County as damages an amount equal to the Contract Rate in effect at the time of such termination multiplied by the number of tons of City Acceptable Waste delivered to the Disposal System during the preceding twelve months. SECTION 5.6. FORUM FOR DISPUTE RESOLUTION. It is the express intention of the 3 parties that all legal actions and proceedings related to this Agreement or to the Disposal System or to any rights or any relationship between the parties arising therefrom shall be solely and exclusively initiated and maintained in courts of the State of California having appropriate jurisdiction. A l i 25 �7 ARTICLE VI TERM SECTION 6.1. EFFECTIVE DATR AND TEEM. (A) 1=. This Agreement shall become effective,shall be in full force and effect and shall be legally binding upon the City and the County from the Contract Date and shall continue in full force and effect until the fifteenth anniversary of the Contract Date, unless earlier terminated in accordance with its terms. (B) Survival: Accrued Rights. The rights and obligations of the parties hereto pursuant to Sections 3.1(E), 5.1, 5.3,5.5,7.2,7.3 provided,however,that Section 7.3 shall not survive if the termination of the Waste Disposal Agreement is due to the occurrence of an Event of Default on the part of the City, 7.5, 7.7, 7.8, 7.9, and 7.10 hereof shall survive the termination or expiration of this Agreement, and no such termination or expiration shall limit or otherwise affect the respective rights and obligations of the parties hereto accrued prior to the date of such termination or expiration. At the end of the Term of this Agreement, all other obligations of the parties shall terminate. 26 II ARTICLE VII GENERAL PROVISIONS SECTION 7.1. OPERATION AND MAINTENANCE OF THE DISPOSAL SYSTEM. The County,at its cost and expense through the County Solid Waste Enterprise Fund, shall at all times operate, or cause to be operated,the Disposal System in accordance with Applicable Law and the operating rules and regulations of the County. SECTION 7.2. [INCONTROLLABLE CIRCUMSTANCES GENERALLY. (A)Performance Excused. Except as otherwise specifically provided in this Agreement, neither the County. nor the City shall be liable to the other for any failure or delay in the performance of any obligation under this Agreement(other than any payment at the time due and owing)to the extent such failure or delay is due to the occurrence of an Uncontrollable Circumstance. (B) Notice,Miti ag tion. The party experiencing an Uncontrollable Circumstance shall notify the other party by telecommunication or telephone and in writing, on or promptly after the date the party experiencing such Uncontrollable Circumstance first knew of the commencement thereof, followed within 15 days by a written description of(1)the Uncontrollable Circumstance and the cause thereof(to the extent known), (2) the date the Uncontrollable Circumstance began and the cause thereof, its estimated duration, the estimated time during which the performance of such party's obligations hereunder will be delayed,(3)the estimated amount, if any,by which the Contract Rate may need to be adjusted as a result of such Uncontrollable Circumstance,(4) its estimated impact on the other obligations of such party under this Agreement and(5) potential mitigating actions which might be taken by the County or City and any areas where costs might be reduced and the approximate amount of such cost reductions. Each party shall provide prompt written notice of the cessation of such Uncontrollable Circumstance. Whenever such act, event or condition shall occur,the party claiming to be adversely affected thereby shall,as promptly as reasonably possible,use its best efforts to eliminate the cause therefor, reduce costs and resume performance under this Agreement. In addition, with respect to Changes in Law, the County shall diligently contest any such changes the imposition of which would have a material adverse impact on the Disposal System. While the delay continues, the County or City shall give notice to the other party, before the first day of each succeeding month, updating the information previously submitted. (C) Impact on Contract Rate. If and to the extent that Uncontrollable Circumstances interfere with,delay or increase the cost to the County of meeting its obligations hereunder and providing Disposal Services to the cities which have executed Disposal Agreements in accordance herewith,the County shall be entitled to an increase in the Contract Rate as provided in Section 4.2 herein or an extension in the schedule for performance equal to the amount of the increased cost or the time lost as a result thereof. The proceeds of any insurance available to meet any such increased cost shall be applied to such purpose prior to any determination of cost increases payable under this subsection. Any cost reductions achieved through the mitigating measures undertaken by the County pursuant to subsection 7.2(B)hereof upon the occurrence of an Uncontrollable Circumstance shall be reflected in a reduction of the amount by which the Contract Rate would have otherwise been increased or shall serve to reduce the Contract Rate to reflect such mitigation measures,as applicable. SECTION 7.3. INDEMNIFIC&MY The County shall indemnify,defend with competent counsel reasonably selected by the County, protect and hold harmless City, its officers, employees and assigns from and against all Loss-and-Expense, including natural resources damages, injuries, costs, response, assessment, remediation and removal costs, losses, demands, debts, liens, liabilities, causes of action, suits, legal or administrative proceedings, interest, fines,charges, penalties and expenses(including but not limited to attorneys'and expert witness fees and costs incurred in connection with defending against 27 any of the foregoing or in enforcing this indemnity)of any kind whatsoever paid, incurred or suffered by, or asserted against, City or its officers or employees arising from or attributable to any repair,cleanup or detoxification,or preparation and implementation of any removal,remedial,response,closure or other plan (regardless of whether undertaken due to governmental action) or replacement or restoration of natural resources arising from or related to Hazardous Substance or Hazardous Wastes or petroleum products at any place where County transfers, stores or disposes of municipal solid waste pursuant to this agreement, or the County's activities pursuant to this Agreement which result in a release or threatened release of Hazardous Substances or Hazardous Wastes or petroleum products into the environment.The foregoing indemnity is intended to operate as an agreement pursuant to but not limited to Section 107(e) of the Comprehensive Environmental Response, Compensation and liability Act ("CERCLA"). 42 U.S.C. Section 9607(e), and California Health and Safety Code Section 25364,to defend,protect,hold harmless and indemnify City from liability. This indemnity shall not apply to willful, deliberate or grossly negligent delivery by the City of Hazardous Substances or Hazardous Waste to the Disposal System.This indemnity shall also not apply with respect to (i) vehicle accidents or other waste delivery activities or (ii) to any Hazardous Substances, Hazardous Waste,petroleum product or other Unacceptable Waste not accepted for disposal in the Disposal System.The City agrees that the County may provide counsel to jointly represent itself,the City and any and all other parties who disposed of waste in the Disposal System.The City hereby agrees to waive, in writing, any conflict,actual or apparent,created by the joint representation of such parties pursuant to this indemnity. The City also hereby agrees to cooperate fully and completely with the County and with counsel provided by the County in resolving and legal matter that arises pursuant to this indemnity. The City further agrees that the County has complete discretion in the conduct of any matter to which this indemnity applies, and may resolve or settle such matters to which this indemnity applies in its sole discretion without the permission or approval of the City. The County agrees that it will not bring any action against the City claiming or alleging that the City has any responsibility for matters, actions or liabilities within the scope of the indemnity provided above. SECTION 7.4. RELATIONSHIP OF THE PARTIES. Neither party to this Agreement shall have any responsibility whatsoever with respect to services provided or contractual obligations or liabilities assumed by the other party hereto,whether accrued,absolute,contingent or otherwise, or whether due or to become due. The County is an independent contractor of the City and nothing in this Agreement shall be deemed to constitute either party a partner, agent or legal representative of the other party or to create any fiduciary relationship between the parties. SECTION 7.5. LIMITED RECOURSE. (A) To the i . Except in the event the City has not established or maintained a City Solid Waste Enterprise Fund, no recourse shall be had to the general funds or general credit of the City for the payment of any amount due the County hereunder, or the performance of any obligation incurred hereunder, including any Loss-and-Expense of any nature arising from the performance or non-performance of the City's obligations hereunder. The sole recourse of the County for all such amounts shall be to the funds held in any such Solid Waste Enterprise Fund. All amounts held in any City Solid Waste Enterprise Fund shall be held for the uses permitted and required thereby, and no such amounts shall constitute property of the County. The City shall make adequate provision in the administration of any City Solid Waste Enterprise Fund for the payment of any amount or the performance of any obligation which may be due hereunder. (B) To the County. No recourse shall be had to the general funds or general credit of the County for the payment of any amount due the City hereunder, or the performance of any obligation incurred hereunder, including any Loss-and-Expense of any nature arising from the performance or non- performance of the County's obligations hereunder. The sole recourse of the City for all such amounts shall be to the funds held in the County Solid Waste Enterprise Fund in accordance with the terms of this Agreement. All amounts held in the County Solid Waste Enterprise Fund shall be held for the uses permitted 28 and required thereby, and no such amounts shall constitute property of the City. The County shall make adequate provision in the administration of the County Solid Waste Enterprise Fund for the payment of any amount or the performance of any obligation which may be due hereunder. SECTION 7.6. PRE EXISTING RIGHTS AND LIABILITIES. Except as specifically set forth herein, nothing in this Agreement is intended to affect,release,waive or modify any rights,obligations or liabilities which any party hereto may have to or against the other party as of the Contract Date relating to the disposal of waste in the Disposal System or any other related matter. SECTION 7.7. NO VESTED RIGHT. The City shall not acquire any vested property, license or other rights in the Disposal System by reason of this Agreement. E SECTION 7.8. LIABILI FOR COLLECTION TRANSPORTATION AND PROCESSING. Any liability incurred by the City as a result of collecting Acceptable Waste or processing it for diversion from landfill, or as a result of causing, franchising, permitting, licensing, authorizing or arranging any of the foregoing, shall be its sole liability,except as expressly otherwise provided herein. SECTION 7.9. NO CONSEQUENTIAL OR PUNITIVE DAMAGES. In no event shall either party hereto be liable to the other or obligated in any manner to pay to the other any special, incidental, consequential, punitive or similar damages based upon claims arising out of or in connection with the performance or non-performance of its obligations or otherwise under this Agreement, or the material inaccuracy of any representation made in this Agreement,whether such claims are based upon contract,tort, negligence, warranty or other legal theory. SECTION 7.10.AMENDMENTS. Neither this Agreement nor any provision hereof may aived except by written agreement duly authorized and executed by both be changed,modified,amended or w parties. SECTION 7.11.NOTICE OF LITIGATION. Each party shall deliver written notice to the other of any Legal Proceeding to which it is a party and which questions the validity or enforceability of this Agreement executed by the City or the County or any Legal Entitlement issued in connection herewith. SECTION 7.12. FURTHER ASSURANCES. At any and all times the City and the County so far as may be authorized by law shall pass, make, do, execute, acknowledge and deliver any and every such further resolutions,acts,deeds,conveyances, instruments,assignments,transfers and assurances as may be necessary or reasonably requested by the other in order to give full effect to this Agreement. SECTION 7.13. ASSIGNMENT OF AGREEMENT. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party,which may be withheld in the other party's sole discretion.Notwithstanding the foregoing, that either party may assign this Agreement to another successor public entity, subject to the reasonable consent of the other party. In such circumstances the party not requesting the assignment shall have the right to demand assurances of the financial,technical and legal ability of the proposed assignee to undertake the responsibilities and obligations of the assigning party. SECTION 7.14. nirGRFCT ON OVERDUE OBLIGATIONS. Except as otherwise provided herein,all amounts due hereunder, whether as damages,credits, revenue or reimbursements,that are not paid when due shall bear interest at the Overdue Rate on the amount outstanding from time to time, on the basis of a 365-day year,counting the actual number of days elapsed, and all such interest accrued at any time shall,to the extent permitted by Applicable Law,be deemed added to the amount due,as accrued. 29 SECTION 7.15. BRWR G EFFECT. This Agreement shall bind and inure to the benefit of the parties hereto and any successor or assignee acquiring an interest hereunder consistent with the provisions of Section 7.13 hereof. SECTION 7.16.NOTIM. Any notice or communication required or permitted hereunder shall be in writing and sufficiently given if delivered in person or sent by certified or registered mail,postage prepaid, to the notice address of the respective parties set forth on the cover page of this Agreement. Changes in the respective addresses to which such notices may be directed may be made from time to time by any party by notice to the other party. 30 IN WITNESS WHEREOF,the Parties have caused this Agreement to be executed by their duly authorized officers or representatives as of the day and year first above written. COUNTY OF SAN BERNARDINO Date By Chairman,Board of Supervisors " SIGNED AND CERTIFIED THAT A COPY OF THIS CONTRACT HAS BEEN DELIVERED TO THE CHAIRMAN OF THE BOARD Date By Clerk of the Board of Supervisors Of San Bernardino County,California i Date By APPROVED AS TO FORM: COUNTY COUNSEL SAN BERNARDINO COUNTY,CALIFORNIA By Date 31 APPENDIX I DESIGNATED DISPOSAL FACILITY APPENDIX 2 FORM OF HAULER ACKNOWLE DGNIENT OBLIGATION [CAN BE USED TO URSUANT O SECTION 3.1(E)J y�� I FRANCHISE HAULER ACKNOWLEDGMENT THIS FRANCHISE HAULER ACKNOWLEDGMENT, dated as of City") and 1997 (the "Acknowledgment"), by and between the City of (the ty ) (the "Franchise Hauler"). WITNESSETH WHEREAS, the City and the Hauler have heretofore entered into an agreement entitled dated as of __(the "Franchise"); and WHEREAS, the Franchise provides for the collection and disposal of certain municipal solid waste as described therein("Franchise Waste") generated within the City; and WHEREAS,San Bernardino County(the "County")owns,manages and operates a sanitary landfill disposal system for municipal solid waste generated within the County; and WHEREAS, the City and the County have heretofore entered into a Waste Disposal Agreement, dated as of , 1997 (the "Disposal Agreement") determining that the execution of such Disposal Agreement will serve the public health, safety and welfare of the residents of the City and County; and WHEREAS, under the Disposal Agreement, the County has agreed to provide long-term disposal of all municipal solid waste generated within the City and the City has agreed to exercise all legal, and contractual power which it possesses from time to time to deliver or cause the delivery of such waste to the the San Bernardino County Landfill Disposal System(the "Disposal System"); and WHEREAS, the provisions of the Waste Disposal Agreement which guarantee capacity for the long term disposal of waste at specified rates generated in the City provide significant benefits to the Hauler; WHEREAS, notwithstanding any Franchise provisions to the contrary, the Franchise Hauler explicitly acknowledges the aforementioned benefits to the City, the County and the Hauler in providing for the disposal of all Franchise Waste to the Disposal System; and WHEREAS, the City and the Franchise Hauler desire to enter into Ackno wledgment m nt to assure that the City and the Hauler will be entitled to the benefits of the Was s Disposal to assure conformity with the waste delivery obligations which have been agreed to the by e it System; the Disposal Agreement through the delivery of waste by the Franchise H P WHEREAS, the Franchise Hauler's agreement to deliver Franchise Waste to the Disposal S stem under this Acknowledgment is given in consideration of the Franchise Hauler's right to receive the y Contract Rate for such disposal as provided in the Disposal Agreement. i I NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Capitalized terms used and not otherwise defined herein are used as defined in the Disposal Agreement. 2. The Franchise Hauler hereby waives any right which it may possess under Applicable Law to contest on any ground, constitutional, statutory, case law, administrative or otherwise, (a) the right, power or authority of the County or the City to enter into or perform their respective. obligations under the Disposal Agreement, (b) the enforceability against the County or the City of the Disposal Agreement, or (c) the right, power or authority of the City to deliver or cause the delivery of all Controllable Waste to the Designated Disposal Facility in accordance with this Acknowledgment. 3. The City and the Franchise Hauler each hereby represent that this Acknowledgment has been duly authorized by all necessary action of their respective governing bodies. 4. The Franchise Hauler shall deliver or cause to be delivered all Controllable Waste (including residue from the processing by any means, wherever conducted, of Controllable Waste to the extent provided in the Disposal Agreement), to the Disposal System, and shall otherwise assist the City in complying with its obligations under the Waste Disposal Covenant in Section 3.1 of the Disposal Agreement. i 5. The Franchise Hauler shall not haul Controllable Waste to any materials recovery facility, composting facility, intermediate processing facility, recycling center, transfer station or other waste handling or management facility unless the contract or other agreement or arrangement between the Franchise Hauler and the operator of such facility is sufficient in the opinion of the City to assure that the Residue from such facility constituting City Acceptable Waste (or Tonnage equivalencies) and the City Acceptable Waste transferred by such facility shall be delivered to the Designated Disposal Facility to the extent required by the Waste Disposal Covenant. 6. The Franchise Hauler shall pay the Contract Rate imposed by the County at the Designated Disposal Facility for the disposal of all Controllable Waste, which rate shall be subject to potential adjustment necessary to reflect the circumstances set forth in the Disposal Agreement. 7. Nothing in this Acknowledgment is intended to restrict any right or responsibility explicitly given the Franchise Hauler in the Franchise to recycle City Acceptable Waste, except as provided in paragraph 5 above with respect to Residue from any such recycling operations. 8. The obligations of the Franchise Hauler under this Acknowledgment shall apply notwithstanding any provision of the Franchise which may conflict herewith. 9. This Acknowledgment may be enforced by the City by any available legal means. In any enforcement action by the City, the burden of proof shall be on the Franchise Hauler to demonstrate compliance herewith. tt r 10. This Acknowledgment shall be in full force and effect and shall be legally binding upon the City and Franchise Hauler from the dated hereof and shall continue in full force and effect until the earlier of(i) the end of the term of the Franchise or(ii) the end of the term of the Disposal Agreement. 11. The City and Hauler agree that the County shall be an express third party beneficiary of this Acknowledgment, and shall be entitled to independently enforce through any available legal means, including specific performance, the obligations of the Hauler hereunder. The parties acknowledge that the money damages provided hereunder may not be adequate to compensate either party for the other party's nonperformance. In addition, in the event that the Hauler delivers Controllable Waste ti outside of the Disposal System in violation of the Disposal Agreement, the Hauler agrees that the County. shall be entitled to draw on any bond or other security instrument or deposit held by the County in an amount equal to the Contract Rate multiplied by the number of tens of Controllable Waste delivered outside of the Disposal System by the Hauler in violation of the Disposal Agreement. The Hauler shall execute a revised security agreement to effectuate the provisions of this Section. iu C'TY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: James Howell, Director Subject: Progress status report on the Waste Disposal Agreement Dept: Public Services a d yJ'i iY 4`i' Date: October 29, 1997 Synopsis of Previous Council Action: Norcal proposal of June 26, 1997 was continued from August 4,1997 to October 06, 1997, to November 3, 1997 Recommended Motion: That the status report dated October 29, 1997, on the Waste Disposal Agreement between the County of San Bernardino and the City of San Bernardino be received and filed. C� / - -- Signature Contact person: Lynn Merrill Solid Waste Manager Phone: 5140 Supporting data attached: Staff Report Dated October 29, 1997 from James Howell Ward: All FUNDING REQUIREMENTS: Amount: $250,000.00 Source:(Acct. No.) 527-412-5179 & 527-413-5179 (Acct. Description) DUMP FEES FEES Finance: Council Notes: Previously - # ,51 - 1110�07 Agenda Item No.. _ i STATUS REPORT October 29, 1997 The County of San Bernardino and the Consortium of Cities, including the City of San Bernardino, concluded their negotiations on the Waste Disposal Agreement (WDA) on October 28, 1997 and the final version of the WDA has been prepared. The Waste Systems Division of the County has scheduled this item for presentation to the Board of Supervisors on Tuesday, November 4, 1997. At that time, County staff is requesting that the Board of Supervisors approve the final version of the agreement as presented, and authorize the County staff to proceed with formal presentation of the WDA to the individual cities. Pending action by the Board of Supervisors, City staff is expecting to present this agreement for adoption by the Mayor and Common Council at the November 17th Council meeting after review by the City Attorney's office. This agreement is for a fifteen year period and provides for the following benefits to the City of San Bernardino: • A reduction of the landfill tipping fee charged to the City, from $33.00 per ton to $28.50 per ton, effective January 1, 1998. Estimated savings for remaining FY 97-98 are expected to be $250,000. Savings for FY98-99 are estimated to be $546,000 and will be reflected in next year's budget. • Indemnification for environmental liability in the amount of$15.0 million for the City's use of the County landfill system. This includes liability protection for past usage, as well as any potential current and future liability, excluding CERCLA and RCRA. This indemnification will survive the fifteen year period of the agreement. • Strict control over future tipping fee rate increases, including definition of a process for tipping fee rate adjustments by the County. • This agreement does not affect the City's ability to aggressively pursue waste reduction and recycling opportunities in accordance with the mandates set forth in AB939 and which may further reduce the City's disposal costs. While the tipping fee presented in this agreement is not the lowest tipping fees available within Southern California when compared to rates presented in either Orange County ($22.00 per ton) or Riverside County ($23.50 per ton), staff believes that this rate is competitive when the cost to transfer the wastes from the City to these distant counties is included in the analysis. During the FY97-98 budget process, Council directed a reduction in the disposal costs of the Refuse Division in the amount of$330,000. Staff is confident that, with the proposed savings of $250,000 in disposal cost, as well as $80,000 savings resulting from two unfilled Refuse Route Supervisor vacancies within the Refuse Division, the $330,000 budget reduction will be met. Staff is requesting that the Mayor and Common Council receive and file this report, and to direct staff to present the final version of the WDA at the November 17"meeting. 0 F { i i I I CITY OF SAN BERNARDINO PUBLIC SERVICES INTER-OFFICE MEMORANDUM TO: Mayor Tom Minor and Common Council r FROM: Jim Howell, Director of Public Services BY: Lynn Merrill, Solid Waste Manager'``' DATE: September 30, 1997 SUBJECT: Status and Update on Waste Disposal Agreement COPIES: James Penman, City Attorney Fred Wilson, City Administrator The following is the status and update regarding the negotiation process on the Waste Disposal Agreement between the consortium of cities and the County. Seven meetings were held during the month of September between the County and the consortium of cities. After an initial offer by the County of$31.00 per ton effective January 1, 1998 that was rejected by the consortium of cities, the County returned with a rate of $28.50 per ton, effective January 1, 1998 and a term length of fifteen (15) years. Savings in tipping fees for the remainder of the fiscal year are estimated at $250,000. Additional cost analysis was performed by the County and reviewed by the consortium of cities. During the week of September 29`h, both parties will be directing their respective attorneys to revise language of the Waste Disposal Agreement to reflect the current offer. Minor negotiating points remain to be discussed. Staff is recommending that this item be continued to the November 3rd Common Council meeting, at which time it is expected that a Waste Disposal Agreement will be available for formal presentation by staff. JH/LM/jj Previously - ,/3 ---(tlt'(-/-/ 7 CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: James R. Howell Subject: Progress and status report on the Waste Disposal Agreement Dept: Public Services Date: August 25, 1997 Synopsis of Previous Council Action: Norcal proposal of June 26, 1997 was continued from August 4, 1997 to September 2, 1997. Recommended Motion: That the progress and status on the Waste Disposal Agreement from the County of San Bernardino dated August 19, 1997 be received and filed; and request this item be continued to Council meeting of October 6, 1997. C)', g ature Contact person: Lynn Merrill Solid Waste Manager Phone: 5140 Supporting data attached: Memorandum dated August 20 1997 from James Howell and letter dated August 19 1997 from County of San Bernardino Ward: FUNDING REQUIREMENTS: Amount N/A Source: Finance: Council Notes: Previously - #J?y_ QC�/��/f J Agenda Item _ . . .....__... i CITY OF SAN BERNARDINO PUBLIC SERVICES DEPARTMENT INTER-OFFICE MEMORANDUM TO: Mayor and Common Council FROM: James R. Howell, Director of Public Services ,,��pp"'�a�� BY: Lynn Merrill, Solid Waste Manager p`�" SUBJECT: Progress and Status on the Waste Disposal Agreement DATE: August 20, 1997 CC: Fred Wilson, City Administrator; James Penman, City Attorney f r We received the attached letter from Gerry Newcombe, Contract Administrator for the County Waste System Division which provides a revised timeline and milestones regarding the Waste Disposal Agreement currently being negotiated by the consortium of 17 cities and the County. As presented in the letter, it is the intent of both parties to complete negotiations on the Waste Disposal Agreement by September 5t'. The County has requested this additional extension of time in order to determine the lowest possible rate which would be available to the cities who sign the WDAs. Based on the proposed timetable, it is anticipated that the final Waste Disposal Agreement will be placed on agenda for the October 6t' Council meeting. Staff is therefore requesting that discussion regarding the Participation and Service Agreement be continued. Al.'15-20-1997 10: 1G WASTE SYSTEM DIVISION 909 366 8786 P.01/01 COUNTY OF SAN BERNARDINO WASTE SYSTEM DIVISION POBUC SERVICES GROUP 0� :W— GERRY NEWCOMBE 222 West Hospitality Lane,Second floor • San Bernardino,CA 92415-0017 Contract Administrator (909)386-6722 • Fax(909)386-8786 August 19, 1997 Post-it'Fax Note 7671 pate K/2_0 � ► J To / Fr tun, 1JR1&-brn6 CoID pL Co Phone N Phone Mr. John Davis Fax N Mojave Desert& Mountain Solid Waste JPA F"`a 3 " J� 700 E. Redlands Blvd.,Suite 311 Redlands,California 92373 Dear John, During our meeting yesterday regarding the development of Waste Delivery Agreements(WDA)between the County and the consortium of 17 cities,the city negotiating team concurred with the County's request to extend the schedule for one week. The extension is necessary to allow sufficient time to run the Solid Waste System Financial Model to determine the lowest possible rate available to the cities who sign WDAs. The revised schedule is as follows: • August 21 - WSD to send list of model run assumptions to city negotiating members for review • August 27 - 10:00 A.M. meeting @ Norcal's office to review and finalize model assumptions August 29- Hold date for continued meeting on model assumptions, if necessary September 2- 1:00 P.M.meeting @ Fontana Performing Arts Center to negotiate AMA rate structure and amounts and finalize remaining agreement language issues. • September 3 -9:30 A.M. meeting @ Fontana to resolve any open items from September 2 meeting • Schedule additional meetings as necessary complete negotiations by September 5. The continued progress that has been made at our previous meetings is encouraging and we are all looking --� T p forward to bringing this process to a successful conclusion. Sincerely, Gerry ewc be Contract Administrator GN:js CC: Robert L. Jocks,County Counsel Marty Czerniak,NORCAL Conway Collis,Collis Associates JA'.tES J HLAWEK Board of Supervisors CUui:ty Ar)t;1u'1Slr3rnve Ott'cer ..... FirSt pi3triCt DENNIS HANSSERGER .- •• Third Distri< KATHY 4 DAMS..... . .. ... Fourth Distric TIM KELLY Sucono piatrict LARRY WALKER . ....... JON O.MIKELS . .- .. ...-.• Fifth District A—rd AS:.iSt:tnt Cuun±y Arlmini;trat�r JERRY EAVES ... C.•rviC's Gmua TOTAL P.01 CITY' OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Mayor Tom Minor Subject: That the Common Council table further consideration of PSA Dept: Mayor's Office , , - and direct discussions with County on Waste Disposal Agreement. Date: July 29, 1997 Synopsis of Previous Council Action: Recommended Motion: That the Common Council table further consideration of the Participation and Service Agreement and direct staff to continue discussions with the County on the Waste Disposal Agreement. Tom Minor, Mayor Contact person: James Howell, Director of Public Services Department Phone: 5140 Supporting data attached: N/A Ward: ALL FUNDING REQUIREMENTS: Amount N/A Source: Finance: Council Notes: Previously - # 3 Agenda Item No. i i CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Discussion with the County of San Bernardino regarding a long term waste flow agreement has been ongoing with the City for the past two years. I have closely monitored this issue in consideration of the significance of such an agreement. I recommend that the Council table further discussion regarding the County's Participation and Service Agreement (PSA) and direct staff to continue the current negotiation process on the proposed Waste Disposal Agreement (WDA). The first discussion meeting between the cities and the County occurred on July 30, and participants are confident that this process will result in an agreement acceptable to all parties. It is the goal of the participants to finalize negotiations in September, and for City staff to present this agreement for Council authorization soon thereafter. The following are some of the significant differences between the two agreements: TERM OF AGREEMENT The County PSA is for twenty-five (25) years while the City WDA is for ten (10)years. The longer term is unreasonable in consideration of the continuing advances/changes in the solid waste industry. MOST-FAVORED NATION CLAUSE The County PSA requires a lengthy meet and confer process in order to terminate the agreement, with special considerations to the County. Therefore, it is extremely difficult to terminate this agreement once executed. Additionally, once the PSA agreement is executed, any incentive on the County's part to continue negotiating the WDA agreement in order to obtain a "better deal" would be non-existent once the PSA is executed. COST The rate proposed in the PSA, $30 per ton, would be the highest disposal rate paid in Southern California. Riverside County charges $27.50 per ton, Los Angeles County charges $17.57 per ton and Orange County charges $28.25 per ton. It is the goal of the WDA to establish a rate of $26 per ton, which would translate into a annual savings of $770,000. LIABILITY The PSA agreement only agrees to indemnify the City for liability resulting from "Acceptable Waste" received by the system. Acceptable waste is defined as normal trash. However, the greater liability exposure occurs from hazardous wastes already disposed of within the system, or inadvertently disposed into the system without either the City or the County's knowledge. Gerry Newcombe stated in his letter of July 21, 1997 that "the County agrees to accept the liability for the landfill system, no matter what any court would decide". The County currently is liable for the system without the cities entering into a PSA agreement. Execution of the agreement as presented by the County places the City on the hook for liability it currently doesn't have. The WDA agreement provides adequate safeguards to minimize this liability. �m Tom Minor, Mayor CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: James R. Howell Subject: Response to Norcal Proposal of June 26, 1997 Dept: Public Services r 0,017 Y Date: Judy 16 1997 Synopsis of Previous Council Action: Recommended Motion: That the Mayor and Common Council receive and file Memorandum dated July 16, 1997 from James Howell, Director of Public Services, subject: Response to Norcal Proposal of June 26, 1997. Si nature Contact person: Director of Public Services Phone: 5140 Supporting data attached: Memorandum dated July 16, 1997 Ward: ALL FUNDING REQUIREMENTS: Amount N/A Source: Finance: Council Notes: Previously - # S,.6- 01A//�7 Agenda Item No. CITY OF SAN BERNARDINO PUBLIC SERVICES DEPARTMENT i INTER-OFFICE MEMORANDUM CIL i TO: MAYOR TOM MINOR;MEMBERS OF THE COMM��ON TN FROM: JAMES R.HOWELL,DIRECTOR OF PUBLIC SERVICE / }}" BY; LYNN MERRILL,ACTING SOLID WASTE MANAGER 14 ` SUBJECT: RESPONSE TO NORCAL PROPOSAL OF JUNE 26, 1997 DATE: JULY 16, 1997 CC: FRED WILSON,CITY ADMINISTRATOR;JAMES PENMAN,CITY ATTORNEY Staff has prepared the following information as follow up to staff's verbal presentation to the Mayor and Common Council on Monday,July 14`h. 1. The City has used the County Landfill system since approximately 1960. 2. While the total amount of wastes generated within the City's corporate boundary is approximately 205,000 tons, the City's Refuse Division only handles approximately 110,000 tons per year for which the City Pays a tipp ng lens e remainingl9 C tons of waste is handled by the franchise Disposal and Curran's) and individual businesses which self-haul their own wastes to the landfill. Norcal inflated the amount of tonnage directly under the City's control to make this offer appear attractive.The City's tonnage is estimated at 110,000 tons for FY97-98, and is expected to continue to decrease to approximately 80,000 tons by the year 2000 in response to increased recycling and waste diversion efforts. The City would see a reduction of approximately $330,000 per year in FY97-98 under the Norcal scenario at current tonnage. 3. The City has no financial interest in the ownership, management ly g that the City County landfill system. The City is only a user o ry P is a "stakeholder/investor" in the County's system may imply liability/responsibility that the City does not currently have. The County is the sole owner of the landfill system and contracts with Norcal/San Bernardino for it's operation. 4. The City, in cooperation with other cities within the County and the Waste Systems Division of the County, has been involved in on-going discussions related to the Participation and Service Agreement outlined to the Council by Norcal. Staff was recently authorized by the Mayor to expend $2,000 in order to participate with twelve other cities in preparing the Waste Disposal Agreement. The Mojave Desert and Mountain Solid Waste JPA has coordinated the hiring of a negotiator to prepare an agreement acceptable to the cities, and to have this negotiator represent their collective t' interests at the negotiating table. The cities felt this action was necessary due to the extreme lack of the responsiveness of the County/Norcal regarding issues of concern for the cities. 5. While Norcal represents that this agreement is a "win-win" for both parties, the proposed reduction in tipping fee rates and the length of term are inconsistent with those offered in both Orange and Riverside Counties for in-county waste. For example, Riverside County has proposed offering rates as low as $27.50 per ton for a ten year period. Given this rate, the proposed Riverside County rate represents a rate reduction of $5.50 per ton less than the existing Norcal/San Bernardino rate of $33.00 per ton. Staff has continually maintained that further savings are available to the City, however the County refuses to acknowledge this cost pressure. Additional downward pressure on rates will occur as large landfills such as Eagle Mountain an d Mesquite landfill. 6. A recent court decision in San Diego has established he landfill,the absent of contractual relationship between a city and a county operating t agreement, occurs at the scalehouse. While the County of San Bernardino has agreed to assume full liability for any environmental damage resulting from the operation of the landfills, this liability, as determined by this court decision, already rests with the County. While RCRA/CERCLA liability (Federal regulations) extends through to the users of the system,this liability exposure only occurs when the financial resources of the principal responsible party have been exhausted. At the present time, the City does not appear to have liability exposure from the County's system; entering into the PSA agreement as presented would increase this exposure. 7. While the County/Norval Participation and Service Agreement (PSA) contains a "most favored nation" clause, such a clause was intended only to cover more favorable terms such as a lower tipping fee that may be secured by other parties at a later date. If the City adopted the PSA as presented, it may not be possible to unilaterally replace the PSA with the proposed WDA without concurrence of both parties. Staff continues to believe that the present course of negotiations will result in an agreement which is acceptable to both parties and which will result in a tipping fee in the range of $26 per ton. 8. While the savings proposed by Norcal would result in an estimated savings of approximately $330,000 per year by lowering the tipping fee from $33.00 per ton, to $30.00 per ton the combination of a reduction in the tipping fee to $26 per ton and aggressive commercial recycling which reduces the amount of waste delivered to the County system from 110,000 tons to 80,000 tons may result in a total annual savings potential of approximately S 1.55 million per year. 2 i i CITY OF SAN BERNARDINO PUBLIC SERVICES INTER-OFFICE MEMORANDUM TO: Mayor's Office City Administrative Office Council Office City Attorney's Office City Clerk's Office r r FROM: Jim Howell, Director of Public Se i DATE: December 11, 1997 SUBJECT: Waste Disposal Agreement Detailed Analysis j COPIES: Lynn Merrill, Solid Waste Manager Please find attached, additional detailed analysis from the County as referenced in Agenda Item #S5. JH/» Attch AAMemoFormat.dm COUNTY OF SAN BERNARDINO WASTE SYSTEM DIVISION G PUBLIC SERVICES GROUP f , MN KI MIDiNO ■� 222 West Hospitality Lane,Second Floor • San Bernardino,CA 92415-0017 ' GERRY NEWCOMBE (909)386-8722 • Fax(909)386-8786 Contract Administrator December 10, 1997 Mr. James R. Howell, Director Public Services Department City of San Bemardino 300 North `D' Street San Bernardino CA 92418-0001 Dear Mr. Howell, Thank you for your letter of December 3, 1997 regarding your Council's direction to reopen negotiations with the County on the Waste Delivery Agreement(),VDA). As we discussed during our meeting on December 3rd,the Waste System Division is always willing to meet and discuss and further clarify any issues related to the WDA's. We have prepared and made available to Council members the following analysis addressing their specific questions. We would like to meet with you to review these analyses. 1. Detailed analysis of the WDA cost of living adjustment and its specific impact on the City of San Bernardino. 2. Question and Answer sheet based on the items raised by your Council during their November 17, 1997 meeting. 3. Detailed comparison of the WDA to other disposal alternatives. As you are aware,during the development of the WDA,both the City Consortium and the County agreed that the final document produced through the negotiation process would be the same for all cities in the County. In fact, Section 3.5 states that the County shall not enter into WDA's with terms and provisions more favorable to one entity without first offering those same terms and provisions to all other cities. The Waste System Division is confident that the terms of the existing WDA,when further understood based on the additional information included in this letter,represent the most favorable agreement that can be presented to the County's cities. Additionally,the WDA has been adopted by the cities of Victorville and Rialto,and the Board of Supervisors will have those agreements on its December 16, 1997 agenda for final approval,to be effective January 1, 1998. Please contact me if I can provide any additional information. Sincerely, t Gerry Newcombe Contract Administrator GN. cc: Jim Bateman,NORCAL Conway Collis,Collis Associates ,TAMES J.HLAWEK county Administrative Officer Boardol5upDEW43 1 KATHY A.DAMS......... ...... First Dtstrtet DENNrS HANSSERGER ....... Thu0 Disuic: TIM KELLY JON D.MIKELS ........ .... Second DEstrtot WALKER Fourth District Assistar,! ^o_n' Administrattlr ;ERRY EAVES ...... ........... Fifth Dist»ct I P u tt G r o p wr.�w Nr« WASTE DELIVERY AGREEMENT F SAN BERNARDINO CITY COUNCIL QUESTIONS AND ANSWERS I. Is the County's indemnification limited to the$10 million environmental liability insurance policy? No. The County will indemnify the city for any liability arising out of the cities past use of the County disposal system and any liability arising from cities use during the term of this agreement. The fact that the County possesses$10 million worth of insurance just adds to its ability to stand behind the indemnification. 2. Is the city open to exaggerated cost increases based on the Cost of Living Adjustment? The COLA utilizes Federal Producer Price and Employment Cost Indices that are published for the Southern California Region. The allowable increase in any one year is limited to the published amount of these indices and nothing more. There is also an increase for Change in Law or Statute that effects all landfill operators in the country or state. This increase must be demonstrated by the County and is subject to challenge by the city. 3. Why is there no escape clause like the `market out' provision that was in the PSA? In order for the Contract Rate to be brought down as much as possible, the basic philosophy of the agreement changed to one that contains a low rate with specified adjustments and limited termination opportunities. This approach met the cities goal of a predictable rate adjustment process and the lowest possible initial rate. 4. Why did San Bernardino not get a better rate since it brings the majority of waste to the table? The County s long had a policy o rovidin its landfill services to all County citizens h' g Po YIP g � for the same rate. The intent of the WDA negotiation process (and also the PSA process) was that each city would have the same agreement and rate. The existence of the `Most Favored Nation'language in both agreements speaks to how strongly that concept was voiced by all parties at the negotiating table. Negotiating different rates depending on the size of a particular waste stream would serve only to divide the cities,fragment the 4 system, and not provide the rate stability and liability protection being sought. 5. Are cities that host expansion landfills getting a different deal? No. The WDA is the same for all cities regardless of whether or not they host a landfill. There are separate agreements with those cities that address the mitigation of impacts of a landfill located within their city boundaries. Those agreements have been in place since 1991 and are reasonable and fair mechanisms for addressing the impacts caused ; ) from landfill operations. �7 , i 3 -3 6. Does Section 3.1(F)allow the County to terminate the WDA if the city's tonnage falls below 93%? No. This section only applies if there is a successful legal challenge to the cities ability to deliver waste under this agreement. If the WDA is found to be unlawful or unenforceable and that decision results in the cities waste falling below 93% of the amount delivered in the preceding year, then the County could terminate the WDA. Drops in tonnage that are not related to legal challenges do not give the County any termination rights or any rights to increase the Contract Rate. 7. When will the County's debt service on the current bond program be concluded? a The current bond financing program that is providing funds for closure, expansion, and ground water remediation costs, requires debt service payments until 2017. 8. Why is a 15 year term necessary? It is impossible to predict what may happen in 15 years. The Contract Rate of$28.50 represents the lowest long term rate available to the city based on today's market. In order for the County to be able to offer this rate, assurances regarding the length of time the cities waste would remain in the system needed to be made. The County is constructing expanded landfills to provide guaranteed capacity to the cities as part of this agreement and even at 15 years, the County's capital costs and debt service will exceed the agreement term. Additionally, the cities are receiving an indemnification for all past and present liabilities that survives the term of the agreement. The opportunity for a low rate with predictable increases and complete indemnification is of enough value today to juste the potential gains of participating in an unpredictable future market. l i MCz, 4 Dec 97 Illustration of Effect of WDA Cost of Living Adjustment Purpose: The cost of living adjustment clause (COLA) in the proposed WDA has been questioned as to accuracy and effect on the tipping fee over time. This memo addresses: • Derivation of formula • Relevance of formula • History of the values of the indices used in the formula • Projection of rates over the term of the WDA t • Savings to the City over the term of the WDA • Conclusions Derivation and Relevance. The COLA clause is included in the WDA contract because some of the County's costs will escalate over the term of the WDA. Because most of these costs are associated with the actual operations of system, the concept employed was to use the same general style COLA adjustment as in the contract between the County and Norcal. Section 4.2(B) of the WDA (attachment 1) presents the formula. As shown, the $28.50 starting WDA rate is separated into two portions (see "A" on attachment 1): • Fixed Portion: $10.87 represents costs that are not expected to vary much year to year over the life of the WDA. These include debt service, General Fund reimbursement, AB 1220 fees, and DEHS fees. Actually, the $10.87 is an average of the costs over the 15-year WDA term; there is some year to year variation. • Escalating Portion: $17.63 represents the "escalation portion" of the $28.50. This number is simply the remainder ($28.50-10.87=17.63). It is this portion of the rate that is adjusted by the computed COLA adjustment factor. The COLA adjustment factor is further broken down into two components (see "B" on attachment 1), which together comprise the "index" by which the escalating portion of the rate is adjusted: ` • Labor Portion: Approximately 30% of the escalating costs are associated with labor costs. Therefore, the COLA adjuster includes the term ".3 times the Employment Cost Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. Please note the correction on attachment 1 to the specific data to be employed. • Commodity Portion: Approximately 70% of the escalating costs are associated with commodity costs such as fuel, repair parts, etc. Therefore, the COLA adjuster includes the term ".7 times the Producer Price Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. NistgK and Protection: Attachment 2 contains tables and graphs that illustrate the following: • History of Indices Values: A ten year history is shown for the Employment Cost Index (EI) and the Producer Price Index (PPI) that are used in the COLA adjustment. Also, a ten year history of the- Consumer Price Index (CPI) is shown. Although this is not used in any way in the COLA adjustment, it provides a comparison to the IE and PPI that may be useful. • Projected Values of the Indices: The method by which such indices are projected is always arguable. However, for this illustration, we have projected the values for the future 15-year term of the WDA as the average of the 10 previous years. In view of the trend of the indices being somewhat downward over the 10 year history, the use of the 10 year average would seem to portray a projection that would produce higher than expected near term WDA COLA adjustments. In other words, perhaps we are showing here a "worst case." • Projected WDA COLA Adjustments and Rates: Please note that the estimated COLA adjustment averages 1.83% per year over the WDA term, using the projection assumptions employed here. Please also note that this is well below the projected CPI, EI, and PPI. Savings to the City of San Bernardino. Attachment 2 also contains tables and graphs that illustrate the following: • Yearly savings to be enjoyed by the City of San Bernardino by using the WDA rate rather than the non-contract gate tipping fee. The savings range between $500,000 and $800,000 per year, depending upon the solid waste tonnage that year and the spread of the rates. • Total WDA savings to be enjoyed by the City over the life of the WDA is approximately $9 million. Conclusions. 1) The WDA COLA adjustment formula is logical, fair, and accurate (as corrected). 2) The WDA rate is expected to go up by no more than 1.83% per year as an average over the term of the WDA. This is well below the inflating rate of almost everything else the City would buy in this period. 3) The City will save about $9 million by entering into the WDA, when compared to the County's non-contract rate. This is a lot of savings, and Norcal believes it would take major changes in the disposal market (over many years) and a significant investment by the City in a transfer station to save more than $9 million. The WDA is the City's best real deal. 1 co ARTICLE IV CONTRACT RATE SECTION 4.1. T r °eyT OF OCT RATS. The City acknowledges that the County shall have the right to charge and collect a Contract Rate for the acceptance and disposal of Controllable Waste delivered to the System by any Franchise Hauler. The Contract Rate shall be calculated and established, and may be modified,as provided in Section 4.2 hereof. In addition, the City acknowledges that the County shall have the right to establish as part of the operating rules and regulations reasonable measures to secure the payment of all Contract Rates. Notwithstanding Section 4.2(A), the County shall have the right to impose special charges for the receipt of hard to handle materials,such as bulky materials,construction and demolition debris,tires and sludge.Such special charges shall be calculated to reflect the reasonable incremental costs to the County of accepting such hard to handle materials. SECTION 4.2. CONTRACT RATE. (A) Generally. Effective January 1, 1998, the Contract Rate payable by each Franchise Hauler shall be $28.50 per ton, subject to potential adjustment necessary to reflect the circumstances set forth below: 0) increased costs incurred by the County (in excess of available insurance proceeds) due to the occurrence of one or more Uncontrollable Circumstances, including Changes in Law; and (ii) escalation during the Term of this Agreement calculated in accordance with Section r 4.2 (B). Prior to adjusting the Contract Rate as a result of any of the circumstances described in Section 4.2(A)(i),the County shall utilize the following remedy: reduce the costs of operating the Disposal System to the extent practicable. Any adjustments to the Contract Rate permitted by this Section 4.2(A)(i) shall be calculated by the County to reflect the actual costs or expenses of addressing the circumstance or circumstances pursuant to which the adjustment is authorized, and shall also reflect,where applicable, the then remaining capacity in the Disposal System.Such adjustment may not reflect circumstances other than the circumstances described in Section 4.2(A)(i). l (B) Calculatign of Escalation. For purposes of Section 4.2(A)(ii), the Contract Rate shall be { adjusted in accordance with the formula described in this Section each July 1 during the term hereof, commencing July 1, 1999. The adjustment shall be calculated in accordance with the following formula: Contract Rate= Fixed Portion + [Escalating Portion x Index] Where, SEE D1Scv551on1 Fixed Portion = $10.87 Escalating Portion = $17.63 Index = Price Index, which shall be determined in accordance with the following formula S-E E i I 7[PPI,/720 j]+.3[E[,/EI1] 'D15CV 5s100 PPI, = The Producer Price Index,Industrial Commodities,as published by the United States Department of Labor Statistics in the publication Producer Price Indices, Table 6, for the month of February in the year the adjustment is being made (e.g., the first adjustment will use the February, 1999 value) PP12 = Producer Price Index, Industrial Commodities for the month of February, 1998 Ell = Employment Cost Index,Compensation,Private Industry Workers, as published by the United States Department of Labor Statistics in the publication Monthly Labor Review,Table 22 for h the 1a51 quay 1�� o��`� the year the adjustment is being made(e.g.,the first "'(CC,v- adjustment will use the February, 1999 value) EI,_ = Employment Cost Index,Compensation, Private Industry Workers established for February, 1998 If the Employment Cost Index or Producer Price Index are no longer published, or are otherwise unavailable, then the Cost of Living Adjustment shall be determined by using standard official statistics measuring changes to, respectively, labor costs and cost of materials, as the parties shall mutually agree. (C) Procedure for Rate Adjustments. In the event the County determines that it is entitled to an adjustment of the Contract Rate pursuant to Section 4.2(A)(1), it shall utilize the procedures described in this Section 4.2(C). The County shall be required to provide the City with at least 60 days prior written notice of the adjustment, which notice shall identify the specific event(s) or circumstances which require the adjustment. The notice shall also specify the earliest date on which the County Board of Supervisors shall consider the proposed adjustment. At least 45 days prior to such meeting of the Board of Supervisors, the County shall provide the City with a report which shall contain the following information: a description of the specific event(s)or circumstances which require the adjustment; a description (including cost estimates) of any activities (which may include, but not be limited to capital improvements to the Disposal System)required in order to remedy such event or circumstance; certification by the County that it has implemented the remedy described in Section 4.2 prior to requiring the rate adjustment; and a description of the methodology used by the County to calculate the adjustment to the Contract Rate (hereinafter the"County Report"). In the event the City disputes the adjustment, it shall provide the County v,ith a written description of the reason for the dispute at least 10 dad s prior to the nieetin�,of the Board of Supervisors identified in the initial notice of the County (hereinafter the "City Report"). The City Report shall be provided to the Board of Supervisors for consideration at such meeting in connection with the proposed rate adjustment. At any time from and after the date that the County provides the City with the County Report, upon the request of either party, the City and County shall meet and confer in good faith to resolve any dispute that may arise regarding the proposed adjustment to the Contract Rate. In the event the Board of Supervisors approves all or a portion of the proposed rate adjustment,such rate adjustment shall become effective on the date identified in the initial notice sent by the County, but subject to potential reimbursement pursuant to Section 4.2(D). (D) Challenges to Rate Adjustment. In the event that the City challenges a Rate Adjustment _ made pursuant to Section 4.2(A) and a court of applicable jurisdiction determines that any portion of the ( County's adjusted Contract Rate was improperly imposed, the County shall, within 30 days of the date of the statement of decision, reimburse to the City the amount improperly imposed, together with interest 21 1 Q cw a w Itoz i oloz 60OZ 9GOZ LOOZ kL O ¢ SON D W oC r o �Ooz v J N m LOU � � N 000z } �, 6661 d L - 9661 R d } L66t 9661 3 i �i - 5661 0 4bbl He 111 0 CL 2661 : o N 0661 LL 696t 9961 0 0 0 0 0 0 0 0 0 tC Iff V Cn N O N abuoy� i m I� U. Q a o a T ltOZ ttOZ OtOZ 90GZ � 4 � �t 9OOZ SGOZ 2 KU U- c_ C, a T � CL ca 0 0 4 V 4 ZOOZ U L) l tGOZ ai z r OOOZ } CO) d o 6661 CL a BEbt L661 9661 • 5661 yE:t � fEEi Q 'EEt 1661 0661 6961 99E1 0 0 0 0 0 0 0 °o °o 0 0 0 0 0 0 o Q vi o vi o at < l'f rf N N @,)j iosod5:4 WASTE DELIVERY AGREEMENT SAN BERNARDINO CITY COUNCIL QUESTIONS AND ANSWERS I. Is the County's indemnification limited to the $10 million environmental liability insurance policy? No. The County will indemnify the city for any liability arising out of the cities past use of the County disposal system and any liability arising from cities use during the term of this agreement. The fact that the County possesses$10 million worth of insurance just adds to its ability to stand behind the indemnification. 2. Is the city open to exaggerated cost increases based on the Cost of Living Adjustment? The COLA utilizes Federal Producer Price and Employment Cost Indices that are published for the Southern California Region. The allowable increase in anyone year is limited to the published amount of these indices and nothing more. There is also an increase for Change in Law or Statute that effects all landfill operators in the country or state. This increase must be demonstrated by the County and is subject to challenge by the city. 3. Why is there no escape clause like the `market out' provision that was in the PSA? In order for the Contract Rate to be brought down as much as possible, the basic philosophy of the agreement changed to one that contains a low rate with specified adjustments and limited termination opportunities. This approach met the cities goal of a predictable rate adjustment process and the lowest possible initial rate. 4. Why did San Bernardino not get a better rate since it brings the majority of waste to the table? The County has long had a policy ofproviding its landfill services to all County citizens for the same rate. The intent of the WDA negotiation process (and also the PSA process) was that each city would have the same agreement and rate. The existence of the `Most Favored Nation'language in both agreements speaks to how strongly that concept was voiced by all parties at the negotiating table. Negotiating different rates depending on the size of a particular waste stream would serve only to divide the cities,fragment the system, and not provide the rate stability and liability protection being sought. 5. Are cities that host expansion landfills getting a different deal? No. The WDA is the same for all cities regardless of whether or not they host a landfill. There are separate agreements with those cities that address the mitigation of impacts of a landfill located within their city boundaries. Those agreements have been in place since 1991 and are reasonable and fair mechanisms for addressing the impacts caused from landfill operations. 6. Does Section 3.1(F)allow the County to terminate the WDA if the city's tonnage falls below 93%? No. This section only applies if there is a successful legal challenge to the cities ability to deliver waste under this agreement. If the WDA is found to be unlawful or unenforceable and that decision results in the cities waste falling below 93%of the amount delivered in the preceding year, then the County could terminate the WDA. Drops in tonnage that are not related to legal challenges do not give the County any termination rights or any rights to increase the Contract Rate. 7. When will the County's debt service on the current bond program be concluded? The current bond financing program that is providing funds for closure, expansion, and ground water remediation costs, requires debt service payments until 2017. 8. Why is a 15 year term necessary? It is impossible to predict what may happen in 15 years. The Contract Rate of$28.50 represents the lowest long term rate available to the city based on today's market. In order for the County to be able to offer this rate, assurances regarding the length of time the cities waste would remain in the system needed to be made. The County is constructing expanded landfills to provide guaranteed capacity to the cities as part of this agreement and even at 15 years, the County's capital costs and debt service will exceed the agreement term. Additionally, the cities are receiving an indemnification for all past and present liabilities that survives the term of the agreement. The opportunity for a low rate with predictable increases and complete indemnification is of enough value today to juste the potential gains of participating in an unpredictable future market. i s i MCz, 4 Dec 97 Illustration of Effect of WDA Cost of Living Adjustment Pur ose: The cost of living adjustment clause (COLA) in the proposed WDA has been questioned as to accuracy and effect on the tipping fee over time. This memo addresses: • Derivation of formula • Relevance of formula • History of the values of the indices used in the formula • Projection of rates over the term of the WDA • Savings to the City over the term of the WDA • Conclusions Derivation and Relevance: The COLA clause is included in the WDA contract because some of the County's costs will escalate over the term of the WDA. Because most of these costs are associated with the actual operations of system, the concept employed was to use the same general style COLA adjustment as in the contract between the County and Norcal. Section 4.2(B) of the WDA (attachment 1) presents the formula. As shown, the $28.50 starting WDA rate is separated into two portions (see "A" on attachment 1): • Fixed Portion: $10.87 represents costs that are not expected to vary much year to year over the life of the WDA. These include debt service, General Fund reimbursement, AB 1220 fees, and DEHS fees. Actually, the $10.87 is an average of the costs over the 15-year WDA term; there is some year to year variation. • Escalating Portion: $17.63 represents the "escalation portion" of the $28.50. This number is simply the remainder ($28.50-10.87=17.63). It is this portion of the rate that is adjusted by the computed COLA adjustment factor. The COLA adjustment factor is further broken down into two components (see "B" on attachment 1), which together comprise the "index" by which the escalating portion of the rate is adjusted: • Labor Portion: Approximately 30% of the escalating costs are associated with labor costs. Therefore, the COLA adjuster includes the term ".3 times the Employment Cost Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. Please note the correction on attachment 1 to the specific data to be employed. • Commodity Portion: Approximately 70% of the escalating costs are associated with commodity costs such as fuel, repair parts, etc. Therefore, the COLA adjuster includes the term ".7 times the Producer Price Index." The employment cost index used in the WDA is consistent with the County-Norcal contract, which was recommended by the County's consultant at the time the contract was negotiated. History and Pro'ction. Attachment 2 contains tables and graphs that illustrate the following: • History of Indices Values: A ten year history is shown for the Employment Cost Index (EI) and the Producer Price Index (PPI) that are used in the COLA adjustment. Also, a ten year history of the- Consumer Price Index (CPI) is shown. Although this is not used in any way in the COLA adjustment, it provides a comparison to the IE and PPI that may be useful. • Projected Values of the Indices: The method by which such indices are projected is always arguable. However, for this illustration, we have projected the values for the future 15-year term of the WDA as the average of the 10 previous years. In view of the trend of the indices being somewhat downward over the 10 year history, the use of the 10 year average would seem to portray a projection that would produce higher than expected near term WDA COLA adjustments. In other words, perhaps we are showing here a "worst case." • Projected WDA COLA Adjustments and Rates: Please note that the estimated COLA adjustment averages 1.83% per year over the WDA term, using the projection assumptions employed here. Please also note that this is well below the projected CPI, EI, and PPI. i Savings to the City of San Bernardino: Attachment 2 also contains tables and graphs that illustrate the following: E • Yearly savings to be enjoyed by the City of San Bernardino by using the WDA rate rather than the non-contract gate tipping fee. The savings range between $500,000 and $800,000 per year, depending upon the solid waste tonnage that year and the spread of the rates. • Total WDA savings to be enjoyed by the City over the life of the WDA is approximately $9 million. Conclusions: 1) The WDA COLA adjustment formula is logical, fair, and accurate (as corrected). 2) The WDA rate is expected to go up by no more than 1.83% per year as an average over the term of the WDA. This is well below the inflating rate of almost everything else the City would buy in this period. 3) The City will save about $9 million by entering into the WDA, when compared to the County's non-contract rate. This is a lot of savings, and Norcal believes it would take major changes in the disposal market (over many years) and a significant investment by the City in a transfer station to save more than $9 million. The WDA is the City's best real deal. O ARTICLE IV CONTRACT RATE SECTION 4.1. PAYMENT OF CONTRACT RLU. The City acknowledges that the County shall have the right to charge and collect a Contract Rate for the acceptance and disposal of Controllable Waste delivered to the System by any Franchise Hauler. The Contract Rate shall be calculated and established, and may be modified,as provided in Section 4.2 hereof. In addition,the City acknowledges that the County shall have the right to establish as part of the operating rules and regulations reasonable measures to secure the payment of all Contract Rates. Notwithstanding Section 4.2(A), the County shall have the right to impose special charges for the receipt of hard to handle materials,such as bulky materials,construction and demolition debris,tires and sludge.Such special charges shall be calculated to reflect the reasonable incremental costs to the County of accepting such hard to handle materials. SECTION 4.2. .O�' NTRACT RATE. (A) Generalt . Effective January 1, 1998, the Contract Rate payable by each Franchise Hauler shall be $28.50 per ton, subject to potential adjustment necessary to reflect the circumstances set forth below: (i) increased costs incurred by the County (in excess of available insurance proceeds) due to the occurrence of one or more Uncontrollable Circumstances, including Changes in Law; and (ii) escalation during the Term of this Agreement calculated in accordance with Section 4.2 (B). Prior to adjusting the Contract Rate as a result of any of the circumstances described in Section 4.2(A)(i),the County shall utilize the following remedy: reduce the costs of operating the Disposal System to the extent practicable. Any adjustments to the Contract Rate permitted by this Section 42(A)(i)shall be calculated by the County to reflect the actual costs or expenses of addressing the circumstance or circumstances pursuant to which the adjustment is authorized, and shall also reflect,where applicable, the then remaining capacity in the Disposal System.Such adjustment may not reflect circumstances other than the circumstances described in Section 4.2(A)(i). (B) Calculation of Escalation. For purposes of Section 42(A)(ii), the Contract Rate shalt be adjusted in accordance with the formula described in this Section each July 1 during the term hereof, 1 commencing July 1, 1999. The adjustment shall be calculated in accordance with the following formula: Contract Rate = Fixed Portion + [Escalating Portion x Index] Where, f� 1)Mcv551 0 r'1 Fixed Portion = $10.87 Escalating Portion = $17.63 Index = Price Index, which shall be determined in accordance with the following formula I = .7[PPI1/PPI2]+.3[El,1EI2] E 7r>15Cv SSloN 20 It i PP1t = The Producer Price Index, Industrial Commodities,as published by the United States Department of Labor Statistics in the publication Producer Price Indices, Table 6, for the month of February in the I year the adjustment is being made (e.g., the first adjustment will use the February, 1999 value) PP12 = Producer Price Index, Industrial Commodities for the month of February, 1998 Ell = Employment Cost Index,Compensation,Private Industry Workers, as published by the United States Department of Labor Statistics in the publication lfonthly Labor Review, Table 22 for th-e-wemk -��e- gvekv. 4 K o€ ry-+ft the year the adjustment is being made(e.g.,the first � k adjustment will use the February, 1999 value) EIl = Employment Cost Index,Compensation, Private Industry Workers established for February, 1998 If the Employment Cost Index or Producer Price Index are no longer published, or are otherwise unavailable, then the Cost of Living Adjustment shall be determined by using standard official statistics measuring changes to, respectively, labor costs and cost of materials, as the parties shall mutually agree. (C) Procedure for Rate Adiustments. In the event the County determines that it is entitled to an adjustment of the Contract Rate pursuant to Section 4.2(A)(1), it shall utilize the procedures described in this Section 4.2(C). The County shall be required to provide the City with at least 60 days prior written notice of the adjustment, which notice shall identify the specific event(s) or circumstances which require the adjustment. The notice shall also specify the earliest date on which the County Board of Supervisors shall consider the proposed adjustment. At least 45 days prior to such meeting of the Board of Supervisors,the County shall provide the City with a report which shall contain the following information: a description of the specific event(s)or circumstances which require the adjustment; a description(including cost estimates) of any activities (which may include, but not be limited to capital improvements to the Disposal System) required in order to remedy such event or circumstance;certification by the County that it has implemented the remedy described in Section 4.2 prior to requiring the rate adjustment; and a description of the methodology used by the County to calculate the adjustment to the Contract Rate (hereinafter the"County Report"). In the event the City disputes the adjustment, it shall provide the County with a v-,ritten description of the reason for the dispute at least 10 dad s prior to the meetin,of the Board of Supervisors identified in the initial notice of the County(hereinafter the "City Report"). The Cit} Report shall be provided to the Board of Supervisors for consideration at such meeting in connection with the proposed rate adjustment. At any time from and after the date that the County provides the City with the County Report, upon the request of either party, the City and County shall meet and confer in good faith to resolve any dispute that may arise regarding the proposed adjustment to the Contract Rate. In the event the Board of Supervisors approves all or a portion of the proposed rate adjustment, such rate adjustment shall become effective on the date identified in the initial notice sent by the County, but subject to potential reimbursement pursuant to Section 4.2(D). (D) Challenges to Rate Adjustment. 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Background- The recent study completed for the City of San Bernardino by HFH (Hilton, Farnkopf & Hopson, 6 Nov 97) evaluated costs for refuse disposal. The three top-ranked alternatives in the study were: Best) Direct haul by city trucks to county landfills at $28.00 per ton. 2nd Best) Build a transfer station to serve the city and ship waste to the Olinda Alpha Landfill in Orange County using the waste disposal contract of Taormina Industries. LL 3rd Best) Deliver waste to the Agua Mansa Transfer Station in Riverside County for subsequent disposal in Riverside County landfills. CLIO t These three constitute the only real deals; the El Sobrante Landfill expansion is not yet approved and the outcome and schedule is unclear. t This memo does the following: 1) Updates the 1998 numbers for all alternatives. For all three of the above alternatives, some corrections were necessary. 2) Projects the numbers into the future so that the net effect over the proposed 15 year term of the WDA can be examined. The alternatives all have different cost- of-living adjustments that dramatically affect the big picture over the 15 years. 3) Draws conclusions on the above analysis. Updates and Projections: The attached spreadsheets reflect the following: For the WDA Alternative: The actual WDA rate of $28.50 is used and the cost of living adjustment to the WDA is presented (see other memo on this topic for more detail). For the City Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Taormina contract is corrected for COLA (based on CPI). • The future landfill per ton tipping fees are projected based on CPIs per their contract and consistent throughout this analysis. Even though the Taormina contract expires in December 2005 and the rate must be renegotiated for any contract renewal, I assumed a simple COLA adjustment going forward. • The per ton operational costs of the transfer station and the transport to the landfill are assumed to follow projected PPIs (which are lower than CPIs). • The hauling efficiency of$1,010,000 per year (HFH result) is properly reflected when comparing the dollar savings of the WDA to the city transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative more expensive to the city. For the Agua Mansa Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Burrtec contract is corrected for COLA (based on CPI). The adjustment in the Burrtec contract takes place in July, so the 1998 number shown reflects an average of half a year of actual CPI and a half a year of i projected CPI. projected based on CPIs per their contract and • The future landfill per ton tipping fees are prod P consistent throughout this analysis. The Burrtec contract with Riverside County expires in 2017. • The per ton operational costs of the transfer station and the transport to the landfill are based on projected CPIs per their contract and consistent throughout this analysis. • The hauling inefficiency of $96,000 per year (HFH result) is properly reflected when comparing the dollar savings of the WDA to the Agua Mansa transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative less expensive to the city, but not enough the affect the conclusions below. Conclusions: The spreadsheet analysis and the plot shows: 1) The per ton rate for disposal (once the the city trucks get to either the landfill or the transfer station) is best via the WDA over the entire 15 year term. 2) The per ton rate for disposal for the WDA inflates at a lower rate than the other two alternatives. The WDA rate inflates an average of 1.83% per year while the other two alternative are expected to inflate at higher rates. 3) Even when the route efficiency of the closer city transfer station is taken into account, the WDA still provides the greatest savings over the 15 year term: The WDA is cheaper than the current County non-contract rate by about $9.0 million over the 15 years. The WDA is cheaper than the use of a city transfer station by about$22.3 million over the 15 years (assuming the transfer station were available for use on 1 Jan 98). The WDA is cheaper than the use of the Agua Mansa transfer station by about $20.0 million over the 15 years. 4) The WDA is the best real deal for the City of San Bernardino, and will be for the foreseeable future. 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Z Iz Z Z Z IZ + I NIY 1�cn QO O O cO l cO l w N Y V c7 r 1'1 C7 t� Ol ci « Q Q cD O O/�N olrnmve� a Q (� N.c'I M cniV N m A IO a0.:n IT N c fA c Icp 1c717 a7 O � N a0'tn iM h U Q � N 1 mr�cnv n c ❑ Z U Q I C4 40 M M.N< l0 U- rn J 0�7l�I1n O T N c7 c7NY N U ...... .... 1.LOZ 1�tw iR�Go N N A N c� O1 r r OI 0 �o ao .of C Q Q' OIOZ N;�,�v cn v N c; t�C 6CAZ $iv C4 ` X �nvoO1i C1 d m 8002 ga 0 o-� M04 C u ml, N.(n cn v'crn c ni LOOZ lcn rn•olo'v I C ' 9002 $n wcn Q o y cr,n'cnlol�' ._ soot i$O of im 0IN�c(1 n of Q k lc0 l0 p lch I� u >❑� 4�Z i io O OIO Iv-I I m m M 0 (n N �IMI�! a £OOZ I NiN I �Q d _ to m M !O O Ch-c7.N i ! oalow�co'v Q S Q ZOOZ ri•Ol o cn iN IM�N Y r) I y OO rn,O o+,N:rn c `v LOOZ 1(y)'O I-M N 1 c7 N c O1';e N'MIcn I N OOOZ i0 F- co - } rn$oI�In y' a 666L w ` rn$l 866L .r �,o Q L66L 966L- rn'� O1 'n y S66 L - R _ rniQ � �" ID 0 0 £66L en Z66 L I ''010 o y m miry _ m Y 066L I ; IN - I� 686 L zap a!Ioi 886 L I0,1N� V O V o O V V U I�'Iao 0o 0p op N c I� c0 � '�t th m�°o uoi 18d ISOO le)Oi s nilIaa� �i— m N c9 o Yl >0 0 3: 7 i HI 11. 11 1 COUNTY OF SAN BERNARDINO WASTE SYSTEM DIVISION = PUBLIC SERVICES GROUP 222 West Hospitality Lane,Second Floor • San Bernardino,CA 92415-0017 GERRY NEWCOMBE (909)386-8722 • Fax(909)386-8786 Contract Administrator December 10, 1997 Mr. James R. Howell, Director Public Services Department City of San Bernardino 300 North `D' Street San Bemardino CA 92418-0001 Dear Mr. Howell, Thank you for your letter of December 3, 1997 regarding your Council's direction to reopen negotiations with the County on the Waste Delivery Agreement(WDA). As we discussed during our meeting on December 3rd,the Waste System Division is always willing to meet and discuss and further clarify any issues related to the WDA's. We have prepared and made available to Council members the following analysis addressing their specific questions. We would like to meet with you to review these analyses. 1. Detailed analysis g J al sis of the WDA cost of living adjustment and its specific impact on the City of San Bernardino. 2. Question and Answer sheet based on the items raised by your Council during their November 17, 1997 meeting. 3. Detailed comparison of the WDA to other disposal altematives. As you are aware,during the development of the WDA,both the City Consortium and the County agreed that the final document produced through the negotiation process would be the same for all cities in the County. In fact, Section 3.5 states that the County shall not enter into WDA's with terms and provisions more favorable to one entity without first offering those same terms and provisions to all other cities. The Waste System Division is confident that the terms of the existing WDA,when further understood based on the additional information included in this letter,represent the most favorable agreement that can be presented to the County's cities. i Additionally,the WDA has been adopted by the cities of Victorville and Rialto,and the Board of Supervisors will have those agreements on its December 16, 1997 agenda for final approval,to be effective January 1, 1998. Please contact me if 1 can provide any additional information. Sincerely, 5 Gerry Newcombe Contract Administrator GN:js cc: Jim Bateman,NORCAL Conway Collis,Collis Associates i jAMES J.MLAWEK County Administrative officer Dowd of Stlperv�sors ` KATHY A.DAMS. ...... . ...... First Otsbiet _DElrIM8 MAN$BEROER ........ Third Distric: TIM KELLY JON D.MIKELS ......... ... Second District to M WALKER .. ......... Fourth District Assistant o:^•v Administra ERRY EAVES ... ............. Fifth District t Pub. Gro,;p I wr+/hrr ID ni N ?I I �n'° ail °a' ol�l� r°olm I I II rn loo I Ico ri' N V;6 6 ICI I ol�Im I I C! 0 ml N V �I'- N N N Olta l� to U O N R (4 N O N CIO I� rlm to ^O c7 N• M1(f 7< �102R a0 8 SI� mr C O N N N O O O y O 8 rI O1I CIS lag ivIN I+j CIO 10 O1 1�' NIA N t0' Z c0 ja O tO f� N Pflp�p If�� n ml�ti) ( mI OI i T 10 N IN`11 IO 00 l r' M I y m l O r N •-'IA RY O)N Ito Q�e �� C�1 7 O I�.j nj N c'1 N Q 10 OI tD S t0 in O ti a a, � �I y v` J ON - � N 0 3 ` C L E ►- a3 �oi6 ,'S�I Novi o u It O I IN v, '. aapp w V ui a N ^ N N,•m v $ my c O :a W O N r ti p N':cV Oi� c N vi m n (yy� I� W 0 N N rMO e- M o h Y1 > O N � j r JIM Q N aD aE IOI 1� N't0 m m <g �� 1A n �ou�cplm � nri m E LI W O N °i v N N ^I�'o ICI alvi N N LL m Lo op !� 1 voo, g _ m m AIM �• U � II na N N M N N M 'c�0 8'N in Ig ^I OlN m ICI II ? co-, � I � � RR••77ii �I� m .b Vii`' <� ,$' a m o �I�� mI� SIN IQ "i ' �irnlol� I �I o,�INI 1 i I� JI co 3 N NI y o m « c U Nei NN Q"' of l,; N•�iQn � ' °-n o roir- ?p m O Q O di CD c p LQ a N ca 11 Q N y t N of O N -vi co I�I nlCi m O ?�L m r CIS �IS ICI N i�ll Im n Yf 1N F j x O1 e-to O Q1 V S I S I y N C� NIN N m N ch I ICI it UI Y.O El cl ICI 0? C O O• V co -�13 4 In cl N N N PI y , a' y 7 I° E r r LI N C [� 1A m 7 r « SS ' •P e- 7 7 C') N N C O m � m7 pl m at S` 1� N N J Q C Q a m C r }}dd�� 0 t m IO 0I N O O Ol N I I3 m .O 7 ml irk ^c=am'�''�7I cc `E� m1 O N a0 N C1 I 11 T� I7 r ml ml yL AI U• 4 MI 77 I Imp �� ml =I cln �Ia m0�1.I I lO'I I C � am m O �C C x 7 3 i c0 « ' ` m can m OI? O m y N ' rIm 11 OI ;c 0 4-Z 0 = .2 V O ¢ ^'v o y r> � 4o�c o a c c U o t o m 3 3 o O m a> � E ilrmm `� c o CL CNI 0 °x E 01 aQ y w 0, m m m a t x°o N o a c CL _ c ! o M ° L m? «o co IGO N E U- > 0 �. m a moo Q ti l 0 u m u m calm E -a x u 1 :? m o �I v•c � mjm Nom a, mrc < Em °c —o- Pis al>m m (0 m R m C C Q O N L IY 1r I c E m 0 E m o m 1.0 mg m $ mm s > t a m o" 17 cr OU c oo N y a a Q L m `-'L m « L m Q Q Q L C 0 0 E m m m O m m cc `m - u u u °°° m min o 0 0 0 0 0 3} U1� ° aae° waR° 333a2u a' f- vv Hlu y z z z zlzllz C�Ro X87 asd�� ICz 15-Year Comparison of WDA to Other Disposal Alternatives CEIVED Cwill Parpose: The County claims that the WDA is the best real deal out ther r forsee able future. This memo explores this assertion relative to the y completed for the City of San Bernardino. Background.- The recent study completed for the City of San Bernardino by HFH (Hilton, Farnkopf & Hopson, 6 Nov 97) evaluated costs for refuse disposal. The three top-ranked alternatives in the study were: Best) Direct haul by city trucks to county landfills at $28.00 per ton. F 2nd Best) Build a transfer station to serve the city and ship waste to the Olinda Alpha Landfill in Orange County using the waste disposal contract of Taormina Industries. LL 3rd Best) Deliver waste to the Agua Mansa Transfer Station in Riverside j County for subsequent disposal in Riverside County landfills. These three constitute the only real deals; the El Sobrante Landfill expansion is not yet approved and the outcome and schedule is unclear. This memo does the following: 1) Updates the 1998 numbers for all alternatives. For all three of the above alternatives, some corrections were necessary. 2) Projects the numbers into the future so that the net effect over the proposed 15 year term of the WDA can be examined. The alternatives all have different cost- of-living adjustments that dramatically affect the big picture over the 15 years. a 3) Draws conclusions on the above analysis. Updates and Projections: The attached spreadsheets reflect the following: For the WDA Alternative: The actual WDA rate of $28.50 is used and the cost of living adjustment to the WDA is presented (see other memo on this topic for more detail). For the City Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Taormina contract is corrected for COLA (based on CPI). ,t • The future landfill per ton tipping fees are projected based on CPIs per their contract and consistent throughout this analysis. Even though the Taormina contract expires in December 2005 and the rate must be renegotiated for any contract renewal, I assumed a simple COLA adjustment going forward. 2 � C m' lu i s6UTACS aagojnwn3 rn co n co of v cn N o d d LA. - o. Q N - r C — �- t U U (n > O C R rt' 3• � R a �1 p S V V) is=• N f� cD � � fh N •— O O O O O O O O O SEuiACj �j:Cuf� i The per ton operational costs of the transfer station and the transport to the landfill are assumed to follow projected PPIs (which are lower than CPIs). • The hauling efficiency of $1,010,000 per year (HFH result) is properly reflected when a comparing the dollar savings of the WDA to the city transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative more expensive to the city. For the Agua Mansa Transfer Station Alternative: • The 1998 landfill per ton tipping fee in the Burrtec contract is corrected for COLA (based on CPI). The adjustment in the Burrtec contract takes place in July, so the 1998 number shown reflects an average of half a year of actual CPI and a half a year of projected CPI. • The future landfill per ton tipping fees are projected based on CPIs per their contract and consistent throughout this analysis. The Burrtec contract with Riverside County expires in 2017. • The per ton operational costs of the transfer station and the transport to the landfill are based on projected CPIs per their contract and consistent throughout this analysis. • The hauling inefficiency of $96,000 per year (HFH result) is properly reflected when comparing the dollar savings of the WDA to the Agua Mansa transfer station alternative. This was not adjusted for COLA going forward; if it had, it would have made this alternative less expensive to the city, but not enough the affect the conclusions below. Conclusions: The spreadsheet analysis and the plot shows: 1) The per ton rate for disposal (once the the city trucks get to either the landfill or the transfer station) is best via the WDA over the entire 15 year term. 2) The per ton rate for disposal for the WDA inflates at a lower rate than the other two alternatives. The WDA rate inflates an average of 1.83% per year while the other two alternative are expected to inflate at higher rates. 3) Even when the route efficiency of the closer city transfer station is taken into account, the WDA still provides the greatest savings over the 15 year term: The WDA is cheaper than the current County non-contract rate by about 1 $9.0 million over the 15 years. The WDA is cheaper than the use of a city transfer station by about$22.3 million over the 15 years (assuming the transfer station were available for use on 1 Jan 98). - The WDA is cheaper than the use of the Agua Mansa transfer station by about $20.0 million over the 15 years. t' 4) The WDA is the best real deal for the City of San Bernardino, and will be for the foreseeable future. q' P O 1?Im vlNtnl t0 Y? N� tnp�f0+� � tit fV Y�f1�: a0 eir��IMi�I 01 I� r to In e0 N O p O a0-n O 10' Q I^oI r o w mjI N N N O 10 3e g 8 ON, U N I 4I ON N O I m o v� NN �� °.tooO1 0� m1oc� m aIm o r:�c ao 0 3 N r c �N O� cp M rngp'o N r.- V7 a ro 8I$ �j1,,� ai N eq Q pl N N N m Ep ��p N O!t0 rf>P�V C �II Y ? 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Is the County's indemnification limited to the$10 million environmental till K��e�e�{'yy? No. The County will indemnify the city for any liability arising out 1J1Xe0`i§#sl,�i91 u#APAe County disposal system and any liability arising from cities use during the term of this agreement. The fact that the County possesses$10 million worth of insurance just adds to its ability to stand behind the indemnification. 2. Is the city open to exaggerated cost increases based on the Cost of Living Adjustment? The COLA utilizes Federal Producer Price and Employment Cost Indices that are published for the Southern California Region. The allowable increase in anyone year is limited to the published amount of these indices and nothing more. There is also an increase for Change in Law or Statute that effects all landfill operators in the country or state. This increase must be demonstrated by the County and is subject to challenge by the city. 3. Why is there no escape clause like the`market out' provision that was in the PSA? In order for the Contract Rate to be brought down as much as possible, the basic philosophy of the agreement changed to one that contains a low rate with specified adjustments and limited termination opportunities. This approach met the cities goal of a predictable rate adjustment process and the lowest possible initial rate. 4. Why not negotiate separate rates for each city depending on the size of its waste stream? The County has long had a policy ofproviding its landfill services to all County citizens for the same rate. The intent of the WDA negotiation process(and also the PSA process) was that each city would have the same agreement and rate. The existence of the `Most Favored Nation' language in both agreements speaks to how strongly that concept was voiced by all parties at the negotiating table. Negotiating different rates depending on the size of a particular waste stream j would serve only to divide the cities,fragment the system, and not provide the rate stability and liability protection being sought. r 5. Are cities that host expansion landfills getting a different deal? No. The WDA is the same for all cities regardless of whether or not they host a landfill. There F are separate agreements with those cities that address the mitigation of impacts of a landfill located within their city boundaries. Those agreements have been in place since 1991 and are reasonable and fair mechanisms for addressing the impacts caused from landfill operations. 6. Does Section 3.1(F)allow the County to terminate the WDA if the city's tonnage falls below 93%? No. This section only applies if there is a successful legal challenge to the cities ability to deliver waste under this agreement. If the WDA is found to be unlawful or unenforceable and that decision results in the cities waste falling below 93%of the amount delivered in the preceding year, then the County could terminate the WDA. Drops in tonnage that are not related to legal challenges do not give the County any termination rights or any rights to increase the Contract Rate. l7- �S�17 t� 7. When will the County's debt service on the current bond program be concluded? The current bond financing program that is providing funds for closure, expansion, and ground water remediation costs, requires debt service payments until 2017. 8. Why is a 15 year term necessary? It is impossible to predict what may happen in 15 years. The Contract Rate of$28.50 represents the lowest long term rate available to the city based on today's market. In order for the County to be able to offer this rate, assurances regarding the length of time the cities waste would remain in the system needed to be made. The County is constructing expanded landfills to provide guaranteed capacity to the cities as part of this agreement and even at 15 years, the County's capital costs and debt service will exceed the agreement term. Additionally, the cities are receiving an indemnification for all past and present liabilities that survives the term of the agreement. The opportunity for a low rate with predictable increases and complete indemnification is of enough value today to justify the potential gains of participating in an unpredictable future market. 9.Are there other technologies out there that could be more attractive and when might these be available? It appears unlikely that new technology will present a better alternative over the next several years. While we cannot predict long term technological advancements, we can see what is currently under development relative to disposal and it appears that these technologies will not compete economically with landfilling municipal solid waste. It is more likely that new technology will play a larger roll in waste stream diversion and recycling. 10. Will the WDA interfere with our diversion and recycling efforts? No. The WDA specifically relates to your waste stream that is not diverted. This mean waste that goes directly to the landfill and the residual waste from processing recyclables. If technology improves your diversion rate,you can enjoy these savings without breaching the contract. 11. Why should we accept a rate of$28.50 when there appear to be lower tipping fees outside of the County? The tipping fee is a component of your overall disposal cost. To compare competing tipping fees you must consider the lower tipping fee in the context of- * Increased handling costs(and the related capital costs), • Increased transportation costs(and the related capital costs), and • The value you place on the County's indemnification.