To: Honorable Mayor and Members of City Council
From: Joy Eldredge, Utilities Director
Prepared By: Kevin Miller, Materials Diversion Administrator
TITLE:
Title
Fifth Amendment to City-County MOU for Napa County use of City’s Materials Diversion Facility
LABEL
RECOMMENDED ACTION:
Recommendation
Approve and authorize the Utilities Director to execute Amendment No. 5 to the Memorandum of Understanding (City Agreement No. 8782, County Agreement No. 6430) for continued Napa County use of the City’s Materials Diversion Facility (MDF) through December 31, 2030, with an option for five mutually agreed one-year extensions.
Body
DISCUSSION:
In May of 2005, the City and County of Napa (County) executed a Memorandum of Understanding (MOU) that secured a flow of recyclable and compostable materials from south unincorporated Napa County to be delivered and processed at the City’s Materials Diversion Facility (MDF) beginning in October of 2005. The MOU has been very successful for both parties. The MOU outlines the relationship and provisions for the delivery, processing and payments between the City and County. The MOU’s initial base-term was through the end of November 2015. Amendment No’s 1 and 2 extended the MOU through December 31, 2019. Amendment No. 3 amended and restated the MOU and extended the MOU’s base term to December 31, 2030, and allowed up to five one-year extensions through the end of calendar year 2035. Amendment No. 4 amended and restated the MOU and modified certain terms including contractual MOU pricing through September 30, 2024, created an administrative process between the City and County for year-to-year adjustments beyond October 1, 2024, and added language for new charges (known as “gate fees”) for appliances and microwave ovens.
The proposed Amendment No. 5 to the MOU (Amended MOU) restates and amends the MOU with specific modifications and clarifications including:
1. Sets contract MOU pricing for a five-year period through September 30, 2029.
2. Continues future preferred MOU pricing to Napa County in exchange for an expanded list of materials that will be contractually committed to be delivered to the City’s MDF by Napa County and its authorized hauler (currently Napa County Recycling & Waste Services, LLC).
3. Authorizes the City’s Utilities Director and Napa County Public Works Director to facilitate “routine” annual adjustments at an administrative level. Minor periodic changes to the list of recyclable and/or compostable materials accepted at the City’s MDF that do not impact pricing can also be addressed administratively without requiring a contract amendment.
The proposed incremental contractual pricing for the five-year period is based on the MDF gate analysis that set public self-haul gate fees for five years per Council resolution R2024-005 (see second attachment to this staff report). Further details on the City’s MDF gates fees are described in the January 16, 2024, staff report (third attachment to this report) as well as the underlying detailed “MDF Gate Fee Analysis” (fourth attachment to this report). The current contractual MOU pricing for Recyclable Materials (including “single-stream” mixed recyclables and other source-separated recyclables) were established by Council resolution R2024-035 (fifth attachment to this staff report) and are reviewed on annual basis depending on changing market conditions (and may be adjusted per Amended MOU section 2.4 if there are significant market changes year-to-year). As described in these previous documents, the most significant underlying factors for the proposed contractual Amended MOU gate fee pricing include major capital improvements to the MDF (particularly to the composting system and stormwater management system), known contractual processing and transportation costs as well as projected future inflation impacts.
The cost of processing and recovery of wood waste received at the City’s MDF is currently very volatile, uncertain, and continues to increase each year. Because of this, the City is unable to provide future pricing for wood waste with a sufficient level of certainty and the County was not asked to provide a contractual material flow commitment for wood waste at this time. If the situation changes and stabilizes in the future, this is an area that the City may negotiate with the County for inclusion in the Amended MOU.
The County intends to take Amended MOU to the Napa County Board of Supervisors for consideration in March 2025.
FINANCIAL IMPACTS:
The total MDF gate fee revenue from the MOU in City fiscal year (FY) 2023/24 was approximately $833,000 for 48,000 tons delivered to the City’s MDF for processing. The Amended MOU would result in higher revenue from gate fees for certain materials that have been afforded “preferred” pricing in exchange for contractual material flow commitments by the County to the City. Additional materials impacted by the preferred pricing include chipped wood (including sawdust), drywall, carpet, concrete (including rock) and asphalt. Taken together, these materials delivered by the County were approximately 4,200 tons in City FY 2023/24 with increased gate fees ranging from $2 to $5 per ton projected for three quarters of current City FY 2024/25. The more substantial contractual pricing adjustments for Recyclable Materials were already approved per Council resolution R2024-035 and became effective July 1, 2024. As described in more detail in the staff report from April 16, 2024, the combined increased revenue impact was projected at $925,000 ($700,000 for County commercial recyclables and $225,000 for County residential recyclable materials) and $165,000 in lower expenditures for County single-stream (mixed recyclables) payments for residential recyclable materials delivered to the City’s MDF in FY 2024/25. The County materials and contractual pricing adjustments have already been factored into the current adopted Solid Waste/Recycling (SWR) enterprise fund budget for FY 2024/2025 and no additional budget adjustments are necessary at this time.
The secured flow of materials to the City MDF established by the MOU are very helpful and important factors for City rate payers in helping to spread out the fixed costs of capital improvements and upgraded systems at the MDF. The City’s contracted facility operator of the City’s MDF, NRWS has recently requested that concrete and asphalt from the County and those that “Self-Haul” no longer be processed at the City’s MDF effective July 1, 2025. This change would make approximately 50,000 square feet of space at the MDF available for compost curing and/or expanded compost contact water retention ponds in the future. If the Amended MOU is approved by the Napa City Council, the County will no longer be obligated to deliver County hauled concrete or asphalt to the City’s MDF and the City’s FY 2025/26 budget will be adjusted to reflect this change.
Finally, the Amended MOU is beneficial to regional sustainability and pollution prevention efforts in providing an opportunity for compostable and recyclable materials to be processed locally and thus not requiring that they be hauled long distances at additional expense and environment costs.
CEQA:
The Utilities Director has determined that the Recommended Action described in this Agenda Report is not subject to CEQA, pursuant to CEQA Guidelines Section 15060(c).
DOCUMENTS ATTACHED:
ATCH 1 -Amendment No. 5 (City Agreement No. 8782, County Agreement No. 6430)
ATCH 2 - Resolution R2024-005 for MDF Gate Fees effective 2024 to 2029
ATCH 3 - Staff report on proposed public self-haul MDF gate fees from 1/16/24 Napa City Council meeting
ATCH 4 - MDF Gate Fee Analysis
ATCH 5 - Resolution R2024-035 for Recyclable Materials Gate Fee Adjustment
NOTIFICATION:
Steve Lederer, Napa County Public Works Director (courtesy copy via email)
Peter Ex, Solid Waste Manager/Local Enforcement Agent, County of Napa (courtesy copy via email)
Amanda Griffis, Supervising Environmental Resource Specialist, Napa County Public Works (courtesy copy via email)
David Briggs, Environmental Resource Specialist, Napa County Public Works (courtesy copy via email)
Greg Kelley, General Manager/Managing Member, Napa Recycling & Waste Services/Napa County Recycling & Waste Services (courtesy copy via email)
Mike Murray, Chief Financial Officer, Napa Recycling & Waste Services/Napa County Recycling & Waste Services (courtesy copy via email)