051011 Public Services Memo to Board of Supervisors

8/6/2019 051011 Public Services Memo to Board of Supervisors

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K IM K EVIN C LYMIR ED i r e c t o rC A R O L I N E C . C H A V E ZDeputy Direc torC O U N T Y O F L A K EPubl ic Serv ices Depar tm ent333 S econd St reetLakepor t, CA 954 53Te lephone (707) 262-16 18FAX ( 707 ) 262 -0973

MEMO RANDUMTo:onorable Board of SupervisorsFrom:im K . Clymire, DirectorCaroline C. Chavez, Deputy DirectorSubject:astlake Landfill Gate Fees and Proposal for Import of RefuseDate:pril 25, 2011Since the height of the building boom in Lake County in 2006, the Eastlake Landfill has experiencedmore than a 25 % decrease in annual landfill tonnage approximately 13,000 few er tons in 2009 andin 2010 than the 54,000 tons we received in 2006. This dramatic drop has precipitated a majorreduction in our revenues to the point that we hav e to take imme diate steps to address how we c overour on-going operational and increased com pliance costs.The following highlights our current financial condition:

Revenue s are down to $1.5 m illion from the high in 2005/06 o f $2.5 million and$500K down from the normal annual revenue of $2 million+. Closure of the Transfer Station in Decem ber 200 9 and elimination of staffing for thatfacility (due to the decreasing tonnage) allowed an annual savings of approximately$300K but those savings have been offset by decreasing revenues and increasingand unfunded mandated compliance costs. Undesignated (unrestricted) reserves for landfill expansion and eq uipment have beenlargely depleted to create a structurally balanced budget the past two years. Thereserves cannot be broug ht to necessary levels without additional revenues. Operational and regulatory com pliance costs are not tied to the amount of tonnagereceived. AB 32, the Green House Gas (GHG) reduction bill, could trigger theinstallation a landfil gas system costing $3 million in the next one to three years(assuming it ives current court challenges for CEQA compliance). Otherproposed w storm w ater monitoring and reporting requirements could cost another$30-50K annually. Planning and perm itting for landfill expansion into adjacent land already ow ned bythe County needs to occur in the next few years. Expansion, including design andpermitting costs, is estimated to cost $3-5 million dollars, and will need to be


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Page 2completed by approxim ately 2026-2030 when the current permitted lined landfillairspace is projected to be depleted. Dw indling tonnage m eans that the cost of operations and compliance will be spreadover few er tons resulting in an increased cost per ton to dispose. No rate increase at landfill was needed or im plemented in nearly 17 years becausethe revenues w ere sufficient to fund operations and increase and m aintain reservesup until the last three years. During this sam e period, franchise haulers were allowedCPI increases.

The current recession has been a major cause of revenue loss. Another significant factor in thedecline of our disposed tonnage (and the associated revenue) has been our success in divertingrecyclables from the landfill, which save s our natural resources and e xtends the life of the landfill.Currently the State mandates 50 % diversion, but new legislation is pending that w ould increase themandate from 50% diversion to 75% , and our ultimate "zero w aste" goal will add to the financialdilemma because diminished tonnage means diminished revenues. This problem is exacerbated bythe continuing increase in operational costs plus dramatically increasing com pliance costs. Landfillsmust adopt new models to survive, something that we have been a ddressing and transitioning to forthe past several years.It is a certain that new diversion programs will continue to be developed, and our tonnage willcontinue to decline. Our cost to dispose a ton of waste in 2006 was near $37. Today, spreadingoperation and manda ted costs over fewe r tons means the co st "to landfill" a ton of waste is $48. Inthe coming yea rs, those costs will be even higher unless we develop other sources of income.The focus of this discussion is on how our landfill can financially survive in a world of decliningtonnage and revenue . In the past, we have prom oted free recycling and green w aste service as partof our curbside collection program, having disposal costs subsidizes them. In light of the successof those programs and the recession, that is no longer feasible w ithin the current revenue stream. Asa result, rates need to be increased in order to continue to fund landfill operations, unfundedmandated capital improvements, recycling and green waste diversion programs, and reserves.Solid Waste staff met with mem bers of the Solid W aste Task Force Comm ittee (SW TF) in earlyOctober 2010 to highlight the financial problems facing the County's landfill operations. Thecomm ittee consists of two mem bers of the Board of Supervisors, two m embers from each of thecities, a representative from each of the three franchise haulers, a representative from theEnvironmental Health Departm ent, and a public mem ber. Although neither city sent representativesto that meeting, all members w ere provided a report on the issues that are driving the n eed for a rateincrease. A cop y of the staff report w hich discussed the financial situation and various options isattached. (Appendix A )Discussion centered on the viable me ans to cover operational and compliance costs. As pa rt of thediscussion, the SWTF was introduced to a proposal by Solid Waste Solutions (SWS), a sistercompany of LCWS and a contractor for the City of Ukiah, to bring tonnage from their UkiahTransfer Station operation beginning January 2012 when their export contract to Potrero Hillsexpires. The SW TF discussed the potential impact on the landfill lifespan if import w ere allowed


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Page 3and the impact on curbside rates for the citizens and businesses with or without import.Considerable concern was voiced over the impact any significant rate increase could have on thebusiness community whose comm ercial rates could be devastating in an already fragile economy.With SW TF direction, Solid Waste staff ag reed to continue exploration of the various options andto look at w ays to reallocate the imposition of any curbside fee increase so that comm ercial accountspaid a sm aller percentage share than the lowe r residential rates.Public Services staff has exam ined the limited options available to address our grow ing revenueshortfall. The options fall into three catego ries or a combina tion of them:IOptions to Reduce Expenses I

Closure of the Transfer Station comp leted: Lake C ounty already took significant steps to reducecosts by closing the Lakeport Transfer Station in Decembe r 2009, saving the division about $300Kannually in equipment, salaries, utilities, and fuel. This decision was made after the amou nt of w astedelivered to the Transfer Station dropped to about 10% of the total County waste. The cost ofprocessing and transporting that small amount of refuse was simply not cost-effective. The cha ngewas gradual, first reducing the number of days the facility was open, and then through prudentplanning, the County w as able to dovetail the timing of the closure w ith the expansion of the Lak eCounty W aste Solutions recycling yard nearby into a convenient one -stop disposal and recycling sitefor customers, at rates equivalent to those that had been in effect at the Lakeport Transfer Station.Reduce landfill hours: Shortening the landfill hours on any given day(s) would not produce asavings and wou ld not adequately serve the needs of the public. Closure of 1-2 days per w eek w ouldbe the only viable way to save money. H owe ver, contractors, businesses and franchise haulers w antMonday through F riday hours, and residents and those owning vacation homes need w eekend days.Further, reducing landfill hours does nothing to d ecrease the cost of com pliance issues, and theamount of tonnag e wou ld not be reduced. Any decrease in landfill hours would likely produce moreillegal dumping. The savings w ould do little to address the problem for the need of increased reven ueto cover the operational and comp liance costs required regardless of the hours of operation.Reduce or eliminate free or subsidized recycling program s funded by the County: Lake Countycurrently funds a number of subsidized program s, such as the Hazm obile, appliance disposal, andsharps disposal. Even if all of those programs w ere eliminated, there would only be a cost savingsof about $16 5K annually. The fallout of eliminating funding for those program s w ould certainlycause m ore illegal disposal of these items w hich wou ld harm the environment, endanger the citizensand landfill employees, and create enormous additional expense for illegal disposal cleanup andenforcement w hich is unavailable.Increase Gate Fees

The averag e rate in landfills and transfer stations surrounding Lak e County is nearly double our rate.Lake C ounty has not had a rate increase since 1995 and has m ade a concerted effort to keep rates low


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Page 4and affordable both at the g ate and at curbside in the un incorporated areas in order to encourageproper disposal and reduce personal accum ulations of trash and curb illegal dumping. Wh ile a rateincrease of som e kind is a necessity, staff is cognizant of the fact that a significant increase w ouldcreate numerous negative consequences, including more financial hardship on our citizens andbusinesses, further reduction in tonnage received, more personal accumulation of trash, and moreillegal dum ping.To cover our ongoing $5 00K annual operational expense deficit, we would need to raise our gatefees by 39% immediately. To cover the additional millions of dollars required for pendingcompliance requirements w e w ould need to increase them w ell beyond that figure. Residential self-haulers and the businesses who bring in refuse would immediately see the full impact of thisincrease. Those who subscribe to curbside service w ould see a sma ller passthru percentage increaseof roughly 4-7% , since the disposal cost is only a portion of the cost of cu rbside service.Figure 1 shows w hat the impact on gate fees w ould be if we w ere to raise our tonnage and cubicyard fees to cover the initial $500K shortfall beginning July 1, 2011. The rate increases proposedbelow also include raising the overall minimum fee for disposal and an increase on several individualitems that are significantly low given the size or special handling requ ired. Figure 2 (NO IMPOR T)wh ich follows show s the overall revenue projections of the 39% increase if tonnage rem ains static.FIGURE 1 (Year 1 without import)

Current rateates to cover $500K deficitANDFILL RATES (39% increase)Minimum fee $ 2.00 $ 5.0030-gal container or bag $ 1.00 $ 2.0055-gallon container $ 2.00 $ 4.00Mattresses/boxsprings $ 5.00Tw in mattress $10.00Full/queen/king $15.00Box springs (any size) $10.00Couch $ 4.00 $10.00Hide-a-bed (body) $15.00Overstuffed chair $ 2.00 $ 5.00Volume (up to 5 cubic yards) $ 5.25/yd $ 7.25/ydTonnage (over 5 cubic yards) $37.00/ton $51.43/tonFranchise Hauler tonnage $31.00/ton $43.09/ton


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R e v e n u eD i f f e r e n c eI 0.00% IN e w 2 0 1 3R e v e n u eD i f f e r e n c eI 0.00% IN e w 2 0 1 4R e v e n u eD i f f e r e n c e

L a k e C o u n t y L a n d f i ll O r i g inO I M P O R T - C o v e r s D e f ic it o n l y in Y r O n e , N O c a p i ta l im p r o v e m e n t s o r R e s e r v e S a v i n g sB a s e d o n 2 0 1 0 L a n d f il l to n n a g eL C W S - D L C W S - T S C W S L C T S B a l e s L P D - T S E s tL P D - D E s tS e l f H a u l E s tS . L a k e T O T A LT O N S1 , 2 5 5 . 3 0 1 , 1 3 2 . 8 0 1 , 2 2 5 . 9 0 8 5 3 . 0 4 5 8 8 . 8 5 6 1 3 . 0 8 5 ,668.971 , 2 8 2 . 6 1 1 , 0 7 5 . 6 1 1 , 2 8 0 . 6 2 1 , 1 1 2 . 5 4 6 7 2 . 8 8 5 2 2 . 9 5 5 ,947.211 , 3 1 0 . 0 2 1 , 0 2 3 . 5 6 1 , 2 5 2 . 2 5 1 , 2 0 2 . 7 3 6 2 5 . 3 0 3 2 0 . 1 8 5 ,734.041 , 1 6 0 . 2 8 1 , 0 8 0 . 2 3 1 , 2 3 4 . 2 3 9 9 4 . 6 4 5 4 5 . 6 8 8 5 . 0 0 5 , 1 0 0 . 0 61 , 9 5 8 . 7 9 5,500.00 1 0 , 5 4 0 . 9 3 1 7 , 9 9 9 . 7 25 ,008 .21 4 ,312 .20 4 ,993 .00 4 , 1 6 2 . 9 5 2 ,432 .71 1 , 5 4 1 . 2 1 1 , 9 5 8 . 7 9 5 ,500 .00 1 0 , 5 4 0 . 9 3 40 ,450 .00

R e v e n u e$31.00 $ 3 1 . 0 0 $ 3 1 . 0 0 $ 3 1 .0 0 $ 3 1 . 0 0 $ 3 7 . 0 0 $ 3 7 . 0 0 $ 3 7 . 0 0 $31.00$155 ,254.51 $133 ,678.20 $154 ,783.00 $ 1 2 9 , 0 5 1 .4 5 $ 7 5 ,4 1 4 .0 1 $ 5 7 , 0 2 4 . 7 7 $ 7 2 , 4 7 5 . 2 3 $ 2 03 ,5 00 .0 0 $ 32 6,7 68 .8 3 $1 ,307 ,950.00$ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 . 0 9 $ 5 1 . 4 3 $ 5 1 . 4 3 $ 5 1 .4 3 $ 4 3 . 0 9$ 2 1 5 , 8 0 3 . 7 7 $185 ,812.70 $215 ,148.37 $ 1 7 9 , 3 8 1 . 5 2 $ 1 0 4 , 8 2 5 . 4 7 $ 7 9 , 2 6 4 . 4 3 $100 ,740.57 $282 ,865.00 $454 ,208.67 $1 ,818 ,050.50$60,549.26 $ 5 2 , 1 3 4 . 5 0 $60 ,365.37 $ 5 0 , 3 3 0 . 0 7 $29 ,411.46 $22 ,239.66 $2 8 ,2 65 .3 4 $7 9 ,3 65 .00 $ 12 7 ,4 39 .84 $510 ,100 .50$ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 .0 9 $ 4 3 . 0 9 $ 5 1 . 4 3 $ 5 1 . 4 3 $ 5 1 . 4 3 $ 4 3 .0 9$215 ,803.77 $185 ,812.70 $ 2 1 5 , 1 4 8 . 3 7 $ 1 7 9 , 3 8 1 . 5 2 $ 1 0 4 , 8 2 5 . 4 7 $ 7 9 , 2 6 4 . 4 3 $ 10 0,7 40 .5 7 $ 28 2,8 65 .0 0 $ 45 4,2 08 .6 7 $1 ,818 ,050.50$ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 .0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 .0 0 $0 .00$ 4 3 . 0 9

$215 ,803.77$ 4 3 . 0 9

$185 ,812.70$ 4 3 . 0 9

$215 ,148.37$ 4 3 . 0 9

$ 1 7 9 , 3 8 1 . 5 2$ 4 3 . 0 9

$104 ,825.47$ 5 1 . 4 3

$79 ,264.43$ 5 1 . 4 3 ,

$100 ,740.57$ 5 1 . 4 3

$282 ,865.00$ 4 3 . 0 9

$ 45 4,2 08 .6 7 $ 1,8 18 ,0 50 .5 0$ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 .0 0 $ 0 . 0 0 $0 .00$ 4 3 . 0 9 $ 4 3 . 0 9 $ 4 3 .0 9 $ 4 3 . 0 9 $ 4 3 . 0 9 $ 5 1 . 4 3 $ 5 1 . 4 3 $ 5 1 . 4 3 $ 4 3 . 0 9$215 ,803.77 $ 18 5,8 12 .7 0 $ 21 5,1 48 .3 7 $ 1 7 9 , 3 8 1 .5 2 $ 1 04 ,8 2 5 .4 7 $ 7 9 , 2 6 4 . 4 3 $100 ,740.57 $ 28 2,8 65 .0 0 $ 45 4,2 08 .6 7 $1 ,818 ,050.50$ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 . 0 0 $ 0 .0 0 $ 0 . 0 0 $0 .00

$ 5 1 0 , 1 0 0 . 5 04 y r D e f i c i t R e d u c t i o n


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Page 6The possibility of applying a parcel fee to raise revenue was n ot exam ined in light of the fact that thisoption was rejected in the late 1990s after Proposition 218 passed by the voters, making it arequirement to have 2 /3 voter approval for such a fee. The parcel fee in place up until that time w asin fact eliminated by the Bo ard of Supervisors, on staff's recom m endation, because the gate feerevenue at that time w as mo re than sufficient to m eet operational, capital improvem ents, and reserveneeds.

Another Short-Term Option: Combine Wastestreams Com petition for waste is being pursued by m any landfill operators who are facing the same revenueshortfalls as L ake C ounty. With fewe r landfills in the state, many jurisdictions have no other optionbut to expo rt their refuse. The price of gate fees is becom ing fiercely comp etitive as landfills struggleto cover their costs through accepting increased tonnage instead of increasing rates and pricingthemse lves out of the compe titive mark et. Howe ver, even with this competition to attract tonnage,the cost of fuel and transportation is a significant factor in determining what is viable for theexporting jurisdictions.Although Lake County has been fiercely protective of our landfill space, in light of the seriousproblem w e are facing w ith revenue loses, staff evaluated the request and proposal w e receivedunsolicited from Solid W aste Solutions, Inc. (SWS), w ho operates the Ukiah Transfer Station forthe City of Ukiah. As mentioned earlier in this backup, this proposal was shared with the SolidWaste Task Force.The long term g oal of SWS and the City of Ukiah is to develop a 20-year export disposal contract.How ever, County staff made it clear that the County w ould not be interested in a long-term contractand instead would consider a short-term contract of five years w ith a five-year extension option."Short-term" in the landfill business is five years. D uring the initial 5-year period, Lake C ountycould use the revenue from the imported w aste to offset large gate fee increases, replenish depletedreserves, evaluate an d fund future landfill expansion that is scheduled to beg in in the nex t year orso even w ithout import, and track the future state of the econo my, the w aste industry and regulatoryenvironment. During that same time period, SWS w ould explore the possibility of reopening theinactive U kiah landfill to which they hope to eventually take the Ukiah w aste. Depending on theevaluation of all of these factors, the two parties could decide w hether or not it would be mutuallybeneficial to extend the term of the contract another five years.SWS estimates that up to 21,500 tons annually would need to be exported from their Ukiah TransferStation to a landfill in another county as M endocino C ounty currently has no ac tive landfill. Thistonnage am ount equates to three transfer trucks per day of pre-sorted m aterials for up to six d ays perwe ek. Refuse leaving the Ukiah Tra nsfer Station has already been floor sorted and large am ount ofrecyclables removed.Staff has negotiated a tonnage fee for import of $38.25 per ton that is expected to generateapproximately $850K annually for Lake County beginning in 2012. While our proposed fee is


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Page 7significantly higher than quotes SW S received from other landfills located in the North B ay area,they recognize that our proximity represents a significant fuel and time savings for them intransportation co sts. Other landfills ' rates are at least 50 % less than our rates (specific rates areproprietary), but the cost of fuel, staff and equipment to transport the loads makes our pricecompetitive. The County's proposed fee is designed to be static the first three years, then increaseeach year by the Consumer Price Index (CPI) or 4% , whichever is higher.The Cou nty ordinance bans the import of refuse excep t by contract with the Lake County Bo ard ofSupervisors. In addition, if your Board w ere to approve this import proposa l, it wou ld also have tobe accepted by the C ity of Ukiah. The City has provided a signed letter supporting the terms uponwh ich we have agreed (Attached Appendix B).The timing of the end of the first 5-year importation agreem ent would roughly coincide w ith the endof the current collection contract period w ith LCW S, as our franchise hauler, for a large portion ofthe unincorporated area. W hile this is not directly related to the sister company SW S, it is relevantthat a w ide variety of solid waste issues w ill be reviewed at the same time as they affect our overallsolid waste decisions in 2017.How wou ld import affect our local gate fees and revenues? Import w ould not begin until January 2012, but we have an im mediate need for additionalincome, and w e will continue to have a need after import ceases. There is no guarantee that Lake C ounty or SWS w ill wa nt to exercise the 5-year extensionoption. A variety of ch anging factors w ill determine that decision. Therefore it is imperativethat we d o not rely on im port to erase our need for a rate increase to make us self-sustaining.Without a local increase, the C ounty could return to its same preca rious financial situation

it faces today of not having enough local revenue to cover the operational costs, and a largeincrease would then have to be imposed at that time if further import w as not desired orfeasible at that time. A 5-yea r contract would allow us time to gradually increase gate fees over a 4-yea r periodinstead of imposing an im mediate large increase in July 2011. In order to ac hieve this, staffw ould recomm end a 16% increase in the first year (July 2011) with approxim ately a 6%annual increase in each of the nex t 3 years. (See F igure 2) Cum ulatively this would achievea slighter lowe r overall gate fee rate but produce the same local $500K gate fee revenue bythe fourth year making the landfill operation self-sustaining by the time the initial 5-yearcontract period ends. This would place the C ounty in a m ore stable financial situation todecide if further import is desired by either party.

The bulk of the revenue from the contract wou ld be applied to replenishing our reserve fundsfor expansion, LFG systems, required closure funding and other compliance or capitalimprovement projects w ithout placing that additional burden on our ratepayers. If import isnot allowed, gate fees w ill necessarily need to be even higher to cover these costs. After theinitial 39% gate fee increase (without import) in July 201 1, staff would return to your Boardwith a schedule of future gate fees that would be necessary to cover the capital costs. It islikely those increases could mirror the initial increase of 30-40% in the second and thirdyears to raise those required compliance funds. Figure 3 shows how the gate fees would be raised over a 4-year period if import wasaccepted for an initial period of five years. Figure 4 is a spreadsheet showing how the


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Page 8revenues from import will replenish and augment our required reserve funding whileallowing a slowe r and lower public rate increase over a 5-year sched ule.

FIGU RE 3 - 4-Year Gate Rate Structure With ImportLANDFILL RAT ES Current rate Rates to cover $500K deficitMinimum fee $ 2.00 $ 5.0030-gal container or bag $ 1.00 $ 2.0055-gallon container $ 2.00 $ 4.00Mattresses/boxsprings $ 5.00Tw in mattress $10.00Full/queen/king $15.00Box springs (any size) $10.00Couch $ 4.00 $10.00Hide-a-bed (body) $15.00Overstuffed chair $ 2.00 $ 5.00Volume (up to 5 cubic yards) $ 5.25/ydYear 1 (16% ) $ 6.10/ydYear 2 (6% ) $ 6.50/ydYear 3 (6%) $ 6.85/ydYear 4 (6% ) $ 7.25/ydTonnag e (over 5 cubic yards) $37.00/tonYear 1 (16% ) $42.92Year 2 (6% ) $45.50

Year 3 (6%) $48.22Year 4 (6% ) $51.12Franchise Hauler tonnage $31.00/tonYear 1 (16%) $35.96Year 2 (6%) $38.12Year 3 (6% ) $40.40Year 4 (6%) $42.83


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L a k e C o u n t y L a n d f i ll O r i g inB a s e d o n 2 0 1 0 L a n d f i ll to n a g e 4 Y r d e f ic i t R e d u c t io n w i th I m p o r t R e v e n u e - S a m e % a l l o c a t i o nE st E s t E st T O T A LQ tr L C W S - D L C W S - T S Ma ka5 EaIn L P D -T S -D L P D - D S e l f H a u l 5_,W e T O N S1 1 , 2 5 5 . 3 0 1 , 1 3 2 . 8 0 1 , 2 2 5 . 9 0 8 5 3 . 0 4 5 8 8 . 8 5 6 1 3 . 0 8 5 , 6 6 8 . 9 72 1 ,2 8 2 .6 1 1 ,0 7 5 .6 1 1 , 2 8 0 . 6 2 1 , 1 1 2 . 5 4 6 7 2 . 8 8 5 2 2 . 9 5 5 , 9 4 7 . 2 13 1 , 3 1 0 . 0 2 1 , 0 2 3 . 5 6 1 , 2 5 2 . 2 5 1 , 2 0 2 . 7 3 6 2 5 . 3 0 3 2 0 . 1 8 5 , 7 3 4 . 0 4

4 1 , 1 6 0 . 2 8 1 , 0 8 0 . 2 3 1 , 2 3 4 . 2 3 9 9 4 . 6 4 5 4 5 . 6 8 8 5 . 0 0 5 , 1 0 0 . 0 6Y e a r 1 , 9 5 8 . 7 9 5 , 5 0 0 . 0 0 1 0 , 5 4 0 . 9 3 1 7 , 9 9 9 . 7 2T O T A L 5 , 0 0 8 . 2 1 4 , 3 1 2 . 2 0 4 , 9 9 3 . 0 0 4 , 1 6 2 . 9 5 2 , 4 3 2 . 7 1 1 , 5 4 1 . 2 1 1 , 9 5 8 . 7 9 5 , 5 0 0 . 0 0 1 0 , 5 4 0 . 9 3 4 0 , 4 5 0 . 0 0 Import T o t a l L a n d f i l lL F R a t e R e v e n u e R e v e n u e R e v e n u e p e r Y rC u r r e n t $ 3 1 . 0 0 $ 3 1 . 0 0 $ 3 1 . 0 0 $ 3 1 . 0 0 $ 3 1 . 0 0 $ 3 7 .0 0 $ 3 7 . 0 0 $ 3 7 . 0 0 $ 3 1 . 0 0 $ 3 8 . 2 5R e v e n u e $ 1 5 5 , 2 5 4 . 5 1 $ 1 3 3 , 6 7 8 . 2 0 $ 1 5 4 , 7 8 3 . 0 0 $ 1 2 9 , 0 5 1 . 4 5 $ 7 5 , 4 1 4 . 0 1 $ 5 7 , 0 2 4 . 7 7 $ 7 2 , 4 7 5 . 2 3 $ 2 0 3 , 5 0 0 . 0 0 $ 3 2 6 , 7 6 8 . 8 3 $ 1 , 3 0 7 , 9 5 0 . 0 0 2 0 , 0 0 0 tons/yr1 6 . 0 0 %N e w 2 0 1 1 $ 3 5 . 9 6 $ 3 5 . 9 6 $ 3 5 . 9 6 $ 3 5 . 9 6 $ 3 5 .9 6 $ 4 2 .9 2 $ 4 2 . 9 2 $ 4 2 . 9 2 $ 3 5 .9 6R e v e n u e $ 1 8 0 , 0 9 5 . 2 3 $ 1 5 5 , 0 6 6 . 7 1 $ 1 7 9 , 5 4 8 . 2 8 $ 14 9,6 9 9 .6 8 $ 87 ,4 80 .2 5 $ 6 6 , 1 4 8 . 7 3 $ 8 4 , 0 7 1 . 2 7 $236,060.00 $ 3 7 9 , 0 5 1 . 8 4 $ 1 , 5 1 7 , 2 2 2 . 0 0D i f f e r e n c e $ 2 4 , 8 4 0 . 7 2 $ 2 1 , 3 8 8 . 5 1 $ 2 4 , 7 6 5 . 2 8 $ 2 0 , 6 4 8 . 2 3 $ 12 ,0 66 .2 4 $ 9, 1 23 .9 6 $ 1 1 , 5 9 6 . 0 4 $ 3 2 , 5 6 0 . 0 0 $ 5 2 , 2 8 3 . 0 1 $ 2 0 9 , 2 7 2 . 0 0 $ 3 8 2 , 5 0 0 . 0 0 J a n - J u n $ 1 , 8 9 9 , 7 2 2 . 0 0I. 0 0 %N e w 2 0 1 2 $ 3 8 . 1 2 $ 3 8 . 1 2 $ 3 8 . 1 2 $ 3 8 .1 2 $ 3 8 . 1 2 $ 4 5 .5 0 $ 4 5 .5 0 $ 4 5 . 5 0 $ 3 8 . 1 2R e v e n u e $ 1 9 0 , 9 0 0 . 9 5 $ 1 64 ,3 7 0.7 1 $ 1 90 ,3 2 1.1 8 $ 15 8,6 81 .6 6 $ 92 ,7 29 .0 7 $ 70 ,1 17 .6 6 $ 89 ,1 15 .5 4 $ 2 5 0 , 2 2 3 . 6 0 $ 4 0 1 , 7 9 4 . 9 5 $ 1 , 6 0 8 , 2 5 5 . 3 2D i f f e r e n c e $ 1 0 , 8 0 5 . 7 1 $ 9 , 3 0 4 . 0 0 $ 1 0 , 7 7 2 . 9 0 $ 8 , 9 8 1 . 9 8 $ 5 , 2 4 8 . 8 2 $ 3 ,9 6 8.9 2 $ 5, 0 4 4.2 8 $ 14 ,1 63 .6 0 $ 22 ,7 43 .1 1 $ 9 1 , 0 3 3 . 3 2 $ 7 6 5 , 0 0 0 . 0 0 J u l - J u n $ 2 , 3 7 3 , 2 5 5 . 3 2I. 0 0 %N e w 2 0 1 3 $ 4 0 .4 0 $ 4 0 .4 0 $ 4 0 .4 0 $ 4 0 . 4 0 $ 4 0 .4 0 $ 4 8 . 2 2 $ 4 8 .2 2 $ 4 8 . 2 2 $ 4 0 . 4 0R e v e n u e $ 2 0 2 , 3 5 5 . 0 0 $ 1 7 4 , 2 3 2 . 9 6 $ 2 0 1 , 7 4 0 . 4 5 $ 1 6 8 , 2 0 2 . 5 6 $ 9 8 , 2 9 2 . 8 1 $ 7 4 , 3 2 4 . 7 2 $ 94 ,4 62 .4 8 $ 26 5, 2 37 .0 2 $ 42 5,9 02 .6 5 $ 1 , 7 0 4 , 7 5 0 . 6 4D i f f e r e n c e $ 1 1 , 4 5 4 . 0 6 $ 9, 8 62 .2 4 $ 11 ,4 19 .2 7 $ 9 ,5 2 0. 9 0 $ 5, 5 6 3.7 4 $ 4 , 2 0 7 . 0 6 $ 5 , 3 4 6 . 9 3 $ 1 5 , 0 1 3 . 4 2 $ 2 4 , 1 0 7 . 7 0 $ 9 6 , 4 9 5 . 3 2 $ 7 6 5 , 0 0 0 . 0 0 J u l - J u n $ 2 , 4 6 9 , 7 5 0 . 6 4I. 0 0 %

N e w 2 0 1 4 $ 4 2 .8 3 $ 4 2 .8 3 $ 4 2 . 8 3 $ 4 2 . 8 3 $ 4 2 . 8 3 $ 5 1 . 1 2 $ 5 1 . 1 2 $ 5 1 .1 2 $ 4 2 . 8 3R e v e n u e $ 2 14 ,4 9 6. 30 $ 1 84 ,6 86 .9 4 $ 2 13 ,8 4 4.8 7 $ 1 78 ,2 9 4.7 2 $ 10 4, 1 90 .3 8 $ 78 ,7 84 .2 0 $ 1 0 0 , 1 3 0 . 2 2 $ 2 8 1 , 1 5 1 . 2 4 $ 4 51 ,4 56 .8 1 $ 1 ,8 0 7,0 3 5.6 8D i f f e r e n c e $ 1 2 , 1 4 1 . 3 0 $ 1 0 , 4 5 3 . 9 8 $ 12 ,1 04 .4 3 $ 10 ,0 92 .1 5 $ 5 ,8 9 7 . 5 7 $ 4 , 4 5 9 .4 8 $ 5 ,6 6 7 .7 5 $ 1 5 , 9 1 4 . 2 2 $ 25 ,5 54 .1 6 $ 10 2, 2 85 .0 4 $ 7 8 0 ,3 00 .0 0 J ul- ju n $ 2 ,5 8 7 ,3 35 . 6 8Yrs 1 -44 9 9 , 0 8 5 . 6 8 $ 2 , 6 9 2 , 8 0 0 . 0 0 $ 9 , 3 3 0 , 0 6 3 . 6 4

4 y r D ef i c i t Redu ct i on


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Page 10How wou ld import affect our landfill l ifespan? In 2005 the County updated its Preliminary Closure Post Closure Plan w hich was a pprovedby the Waste and W ater Boards in 2006-20 07. At that pre-recession time, projections werethat the landfill would reach its site life capac ity by 2025-26 . With that in mind, staff was

expecting to begin to plan for expansion of the ex isting landfill in about 2011-12 . How ever,the dramatic fall of 13,000 tons per year over the last few years a nd our reliance on tarps inlieu of using dirt for daily cover ha s extended the site life by at least five years. The projected 21,500 tons of import annual tonnage would return us back to our 2006tonnage levels plus an additional 8,000 tons. The import tonnage w ould backfill the tonnagereduction w e've seen as a result of the recession, and therefore it is expected that duringproposed initial 5-year import period, our landfill sitelife would return to 2025-2030projections, not including expansion. The next five-year optional period could be affected by the likely continued reduction intonnage caused by increased diversions programs. How ever, the possibility of this new flowof refuse could support a RRF tha t is currently on the drawing boards for LCW S. Withoutimport, there would not likely be enoug h local feedstock to support this type of facility, butwith imp ort, that opportunity would increase and so w ould the amo unt of diversion theycould achieve by running both streams of tonnage through the RR F. The estimated diversionof an additional 30% removed from the Ukiah refuse would return us to 2006 tonnage rates.Removing 30% from local tonnage w ill reduce our overall tonnage even more. The am ount of revenue generated by im port during the first five years w ill provide the fundsneeded for expansion over the next 15 years instead of tapping local residents for theadditional expense.

How wou ld import affect curbside rates? A slowd own in the increase in gate fees that would be feasible if import w ere allowed wou ldalso cause a slowdow n in the increase of curbside rates. Attached Tables 5, 6, and 7 are several scenarios for each of the three franchise zones in theunincorporated area. Following the suggestion of the SWTF, the scenarios show how rateswould be spread among residential and comm ercial customers evenly or if instead residentspicked up 75% of the impact. Each scenario is analyzed with import and without import. Each zone rate sheet also shows the additional costs (add ons) that would be allowedannually for the franchise haulers.

Annual 4% increase0-60 cen ts/month/residential customer The potential fuel surcharge (a separate item under consideration by your Board today thatwould be calculated on a quarterly basis and listed separately on the customer's bill. That

surcharge would fluctuate quarterly with the price of fuel and appear as an addition ordeduction depending how the rate compare d to the last high fuel period in 2008. How ever,using the averag e fuel costs for the most current 3-mo nth period available,Current fuel surcharge 4%0-60 cents/month/ residential customer Therefore, a net base increase of about 8% is likely before the im port and cost split issue


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Page 11is determined. Those percentage increases for the different landfill rates and splits w ould beas follows:39% gate increase 50/50 split 75/25 splitLCWS

Residential 7% 10.4%Commercial 7% 3.4%South Lake Zones 3 &4Residential 4 0 / 0 6.2%Commercial 4% 2.1%

16% gate increase (Year 1)

4

50/50 split 75/25 splitLCWS ResidentialCommercialSouth Lake Zones 3 &ResidentialCommercial

3%3%

1.7%1.7%

4.0 %1.4%

2.5%


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S c e n a r i o 3 - W i t h i m p o r t (5 0 /5 0 s p l it b e t w e e n r e s i d e n t i a I a n d c o m m e r c ia l )L CW SCu rre n t ra teY e a r # 1 ( 7 / 1 / 11 )6 %11.69 $12.02 $ 157.03161.40.96 $ 52.4423.5225 .2027 .00Y e a r #2 6 % $ 12.17 $ 163 .36 1.80 $Y e a r #3 6 % $ 12.33 $ 165.46 1.92 $Y e a r #4 6 % $ 12.50 $ 167.71 2.04 $S c e n a r i o 4 - W i t h i m p o r t (7 5 /2 5 s p l it b e t w e e n r e s i d e n t i aL C W SCu r re n t ra te1.6957 .03Y e a r # 1 ( 7 / 1 / 11 )6 %2.1959 .22Y e a r # 2%2.4260 .18Y e a r # 3%2.6661.21Y e a r # 4%2.9262.31 I a n d c o m m e r c ia l )$.00 $6.28$.76 $1.52$.88 $2.36$.12 $3.20 Page 12FIGURE 5Lake C ounty Waste SolutionsR ate Scenar ios ( to m ake up $5 00K ann ual def ic it )Lan df il l Ra te - No im port% i nc reaseC ur ren t r a te7.001-Jul -119% $1.43 Lan dfil l Rate - With im port% i nc reaseCurren t ra te7.00Ju l 1 20116 % $2 .93J u l 1 2012% $5.50J u l 1 2013% $8.22J u l 1 2014% $1.12M onthly Rate*nnua l Inc rease*Resident ia lom m er c ia l Res i den t ia lo mme r c ia l32 g a l 1x /wkc y 1x /wkS c e n a r io 1 - N o i m p o r t ( 5 0 / 5 0 s p l it b e t w e e n r e s i d e n t i a l a n d c o m m e r c i a l )LCW S increaseCu r re n t ra teY e a r # 1 ( 7 / 1 / 11 )9 %11.69 $57 .0312.50 $67.69 $.72 $27.92S c e n a r i o 2 - N o i m p o r t (7 5 /2 5 s p l it b e t w e e n r e s i de n t i a l a n d c o m m e r c i a l)LCW SCu r re n t ra te1.6957 .03Y e a r # 1 ( 7 / 1 / 11 )9 %2.916 2 . 3 6 $4.64 $3.96*Add-ons to m onthly chargeFu e l i n de x e xa m p l e.4 4.8 9(using M arch info)4 % or CP I a n n u a l in c re a s e.4 7.1 9(7 / 1 / 11 )T O T A L A D D - O N S.9 1.0 8


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1 2 . 8 3 $7 4 . 6 439% $ 13 .36 $ 181 .82 $ 6 . 3 3 $6 . 1 2Sc e na r io :2 - No import (75 12 5 s pl i t between residential and com m ercial)S L A r e a # 3C u r r e n t r a t eY e a r # 1 ( 7 / 1 / 1 1 )9 %3 . 6 2 $78 .23 $.49 $3 . 0 6$2 . 8 3 $ 1 7 4 . 6 40 . 5 3 1 $. 2 4 1 $. 3 9 1 $6.920 . 5 1 1 $. 9 9 1 $. 1 6 1 $3.83 11 .0 5 $4.23 $2.54 $7 0 . 7 5 Page 13FIGURE 6So u t h L a k e R e f u s eZ o n e 3Rate Scenar ios (to make u p $ 50 0K annual defic it )L a n d f i l l R a t e - N o i m p o r t% i n c r e a s eC u r r e n t r a te 1 - J u l - 1 19 % $ 3 7 . 0 05 1 . 4 3 L a n d f i ll R a t e - W i t h im p o r t% i n c r e a s eC u r r e n t ra t e7 . 0 0J u l 1 2 0 1 16% $2 . 9 3J u l 1 2 0 1 2% $5 . 5 0J u l 1 2 0 1 3% $8 . 2 2J u l 1 2 0 1 4% $1 . 1 2Monthly Rate *Annu al Increase* 1R e s i d e n t i a l3 2 g a l 1 x / w k C o m m e r c i a l R e s i d e n t ia l C o m m e r c ia l2 c y 1 x / w kScen ario 1 - No im port (50 /50 spl i t between residentia l and c o mme r c i a l )S L A r e a # 3 i n c r e a s eC u r r e n t r a teY e a r # 1 ( 7 1 1 / 1 1 )Sce nario 3 - With imp ort (601 50 split between residential and commercial)S L A r e a # 3C u r r e n t r a te2 . 8 3 $7464Y e a r # 1 ( 7 / 1 / 1 1 )6 %3 . 0 5 $7 7 . 5 8 $.6 0 $5 . 3 3Y e a r # 2%3 . 1 3 $7 8 . 7 1 $.9 9 $3 . 4 7Y e a r # 3%3 . 2 1 $7 9 . 8 4 $.0 0 $3 . 5 6Y e a r # 4%3 .30 $80.97 $.00 $3 . 6 4Scen ario 4 - With im port (75 /25 spl i t between residentia l and commercial)S L A r e a # 3C u r r e n t r a t e2 . 8 3 $7464Y e a r # 1 ( 7 / 1 / 1 1 )6 %3 . 1 5 $7 6 . 1 1 $.8 9 $7 . 6 7Y e a r # 2%3 . 2 8 $7 6 . 6 7 $.5 0 $. 6 8Y e a r # 3%3 . 4 1 $7 7 . 2 3 $.5 1 $. 7 0Y e a r # 4%3 .53 $77.79 $.53 $.7 2A d d - o n s t o m o n t h ly c h a r g eF u e l i n d e x e x a m p l e%( u s in g M a r c h in f o )4 % o r C P I a n n u a l i n c r e a s e( 7 / 1 / 1 1 )T O T A L A D D -O N S


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$.63 I $.73 I $. 6 0 I $0 4 . 7 2 I0 . 6 1 1 $.42 I $.32 1 $0 0 . 9 9 I1 .2 4 $7 . 1 4 $4 .9 2 $0 5 . 7 1 Page 14FIGURE 7South Lake R efuseZone 4Rate Scen ar ios (to make u p $ 500 K annual defic it )Lan dfill Rate - No import% i n c r e a s eCurrent rate 1 - J u l - 1 19 % $ 3 7 . 0 05 1 . 4 3 L a n d f i l l R a t e - W i t h i m p o r t% i n c r e a s eCurrent rate7 . 0 0J u l 1 2 0 1 16 % $2 . 9 3J u l 1 2 0 1 2% $5 . 5 0J u l 1 2 0 1 3% $8 . 2 2J u l 1 2 0 1 4% $1 . 1 2Ionthly Rate*A n n u a l In c r e a s e * IR e s i d e n t i a lommercial Residential Commerc ia l3 2 g a l 1 x / w kc y 1 x J w kSce nar io 1 - No imp or t (50 /50 sp l i t be tween res ident ia l and commerc ia l )SL Area #4increaseCurrent rate5 . 2 6 $10.40Year #1 (7 /1 /11)9 %5 . 8 9 $1 9 . 0 5 $.5 2 $0 3 . 7 5Sce nar io 2 - No imp or t (75 /25 sp l i t be tween res ident ia l and c omme r c ia l )SL Area #4Current rate5 . 2 6 $1 0 . 4 0Year #1 (7 /1 /11)9 %6 . 2 0 $1 4 . 7 2 $1 .2 9 $1 . 8 8Sce nar io 3 - With imp or t (50 /50 sp l i t be tween res ident ia l and commercial)SL Area #4Current rate5 . 2 6 $1040Year #1 (7 /1 /11)6 %5 . 5 2 $1 3 . 9 5 $.0 9 $2 . 5 6Year #2%5 . 6 2 $1 5 . 3 0 $.1 8 $6 . 2 3Year #3%5 .7 1 $1 6 . 6 6 $.1 8 $6 . 3 3Year #4%5 . 8 1 $1 8 . 0 3 $.1 9 $6 . 4 4Scen ar io 4 - Wi th imp or t (75 12 5 s pl i t be tween res ident ia l and commercial)SL Area #4Current rate5 . 2 6 $1040Year #1 (7/1/11)6 %5 .6 5 $1 2 . 1 7 $.6 3 $1 . 2 8Year #2%5 . 7 9 $1 2 . 8 4 $.7 8 $. 0 5Year #3%5 . 9 4 $1 3 . 5 2 $.8 0 $.0 7Year #4%6 . 1 0 $1 4 . 1 9 $.8 1 $. 1 0Add-ons to mon thly chargeFuel index example%(using March in fo)4% or CPI annua l increase(7/1/11)TOTAL ADD-ONS


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Page 15What other impacts wou ld import have? The Ea stlake La ndfill is allowed under its permit to accept an average of 200 tons per dayof refuse. Currently winter tons are running about 100 -110 tons per day and sum mer tons

are running about 120-130 tons per day. Staff does not want to or intend to ask for anincrease in the daily tonnage allowanc e. Under the terms negotiated, SWS would be allowed to bring three transfer trucks a day(Mond ay through Saturday) to the landfill up to a max imum of 65 tons per day. Each truckweighs about 2 0 tons each. If they have a need for additional disposal and if our tonnagelimit allows, they c an request app roval from the landfill supervisor to bring a fourth load. Transfer trucks would generally be arriving five days a w eek (M ondays through Fridays)unless our landfill daily tonnage limits requires us to turn away a load during the week.Saturday deliveries would only be necessary if they have not been able to dispose of theirhauled refuse between Monday and Friday. The trucks w ould travel from U kiah to our landfill using Hw y 29, as the connecting route,instead of Hw y 20. LCW S has been planning for some time to build and operate an RRF (Resource RecoveryFacility) at its Soda B ay yard at no cost to the Co unty, but funded from the ir curbside andtransfer station revenues. The building m aterials are already on site, and the permits and padare in place. However, plans were delayed due to the economic dow nturn and associatedreduction in tonnage that preven ted such a fac ility to be financially feasible. The imp ort ofthe waste could provide the required wastestream to support the RR F. With an RR F facility,LCW S anticipates it could remove an additional 30% of the waste com ing in from its loadsin the County and from U kiah before transporting the rest to the E astlake Landfill. They arealso considering sending more of their loads from their franchise area in Lake Countythrough the sam e RRF including the loads from the City of Clearlake, further reducing thewa ste that would end up at our landfill, which in turn increases diversion and extends ourlandfill life. It is anticipated the end result would be that w e w ould return to approximately the sametonnage and revenue that we w ere receiving in 2005/06, m eaning that we w ould recaptureour lost revenue of $5-600,000 a nnually and realize an additional $250,000 an nually. This,along w ith our current revenues wou ld provide sufficient funding to cover the costs of ourmandated capital improvement projects of landfill gas extraction and remediation, air andgroundwater monitoring, landfill expansion, and operations without placing the entire burdenon the residents of Lake County through significant rate increases of approximately 39% ormore as mentioned earlier in this report.

COUNTY OPTIONSOption 1 (No Import): The C ounty could continue to ban the import of any refuse and place theresponsibility of covering the deficit on the County residents through increased landfill and curbsidefees. The increase w ould include a 39% increase of landfill gate fees to cover the current deficit.Staff recomm ends that increase become effective July 1, 20 11, to allow the franchise haulers to passthrough the rate at curbside at the normal time of their annual increase. The increase on curbsiderates would rang e from 7-10 % increase for residential customers. This option does not address thefunding for ma jor capital impro veme nt or equipme nt costs, and staff would return at a later date withrecommendations for further increases to accommodate capital improvement programs on the


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Page 16horizon. As part of Option 1, your Board m ay choose from two scen arios to split the curbside rateimpact: Scenario A. 50/50 split between residential and comm ercial curbside custome rsScenario B. 75/25 split between residential and commerc ial curbside customersOption 2 (With Import): This option includes importation of Ukiah-area refuse beginning January2012 after the LCW S contract w ith Potrero Hills expires. Under this option, staff has calculated thata 16% local increase would begin July 1, 2011, followed up by three years of a 6% increase. Thecurbside passthrough is estimated to be about 3-4% in the first year, depending on w hich cost-splitoption. This option funds major capital improvem ent/equipment costs w ithout further projected gatefee increases.Your Boa rd may choo se from two sce narios to split the curbside rate impact:

Scenario A. 50/50 split between residential and comme rcial curbside customersScenario B. 75/25 split between residential and comme rcial curbside customersSTAFF RECOMMENDATION: Staff recommends Option 2.

To implem ent Option 2, the following actions are necessary:1) Approval of the attached contract with LCW S to import waste beginning January 1,2012, w ith an option for a five-year extension2) Approva l of a gate fee increase schedule over a pe riod of four years beginning July1, 2011, w hich includes new m inimums for a variety of materials and a tonnage andvolume rate increase of 16% the first year and 6% on July 1 s t of each of the followingthree years.3) Selection and approval of the preferred curbside rate split for curbside rates betweencommercial and residential customers.

To impleme nt Option 1 which allows no import, the follow ing actions are necessary:1) Approval of the attached gate fee increase schedule which includes new m inimumsfor a variety of materials and a tonnage and volume rate increase of 39% effective

July 1, 2011 .2) Selection and approval of the preferred curbside rate split for curbside rates betweencommercial and residential customers.Attachments: Import contractGate Fee O rdinance with tw o options for Exhibit A for import/no importAppendix A - SW TF itemAppendix B - City of Ukiah lettercc: Franchise H aulers, Cities of Lakeport and C learlakeSA2011 solid waste rate increase.wpd


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BOARD OF SUPE RVISORS, COUNTY OF LAKE, STATE OF CALIFORNIAORDINANCE NO.

AN ORDINANCE AMEN DING GATE FEES TO BE CHARGED AT THE EASTLAKELANDFILL FOR COUNTY SOLID WASTE SERVICES

THE BOARD O F SUPERVISORS OF THE COUNTY OF LA KE, STATE OFALIFORNIA ORDAINS AS FOLLOWS:ection 1:he purpose of this ordinance is to establish a schedule of ga te fees and specialandling fees to recover the costs of solid waste services provided by the County of La ke.ection 2:he am ounts set forth in the Disposal Fee Schedule attached hereto as Ex hibit`A" are hereb y established as the gate and special handling fees for acceptanc e of refuse at theounty's Eastlake Sanitary Landfill.ection 3.ll ordinances or parts of ordinanc es or resolutions or parts of resolution inonflict herewith are hereby repe aled to the extent of such conflict and no further..ection 4.his ordinance shall take effect on the 1st day of July, 2011, and before thexpiration of fifteen days after its passage, is shall be published at least once in a newsp aper ofeneral circulation in the County of La ke.

The foregoing ordinance w as introduced before the Board of Supervisors on theys of2011, and passed by the following vote on theay of11. AYES:NOES:ABSENT OR NOT VOTING:

Chairman, Board of SupervisorsTTEST: KELLY F. COXPPROVED AS TO FORM:Clerk of the BoardNITA L. GR ANT , County Counsel23456789101 11213141516171819202122232425262728


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Exhibit A - One-year ScheduleCOUNTY OF LAKEEASTLAKE LANDFILL DISPOSAL FEE SCHE DULE

Effective July 1, 2011

Franchise Hauler FeesNote: Lake port Disposal Fees fall under Public Tipping Fees

Tonnage Rate (per ton)43.09Volume Rate (holidays)Loose loads6.81Compacted loads20.43Public Tipping Fees

Minimum fee30-gallon container or bag55-gallon container

Mattresses/box springsTw in mattressFull/queen/king mattressBox springs (any size)

CouchHide-a-bed

Stuffed ChairVolume (up to 5 cubic yards)Tonnage (over 5 cubic yards)Non-recycling SurchargeLoads with m ore than 25% recylables or 4 cu yds,wh ichever is lessUnsecured Load SurchargeVehicles w hich arrive at facility with unsecured loads

$5.00$2.00$4.00

$10.00$15.00$10.00$10.00$15.00$4.00$7.25

$51.43Fee Doubles

$15 minimum

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


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Exhibit A - 4-year scheduleCOUNTY OF LAKEEASTLAKE LANDFILL DISPOSAL FEE SCHE DULEEffective July 1,

2011Effective July 1,



2014Franchise Hauler FeesNote: Lakepo rt Disposal Feesfall under Public Tipping FeesTonnage RateLoose loads (holidays)Com pacted loads (holidays)

$35.96$5.68/cy

$17.05/cy$38.12

$6.03/cy$18.08/cy

$40.40$6.39/cy

$19.16/cy$42.83

$6.77/cy$20.31/cy

Public Tipping FeesMinimum fee

30-gallon container or bag55-gallon container

Mattresses/box springsTw in mattressFull/queen/kingBox springs (any size)

CouchHideabedStuffed Chair

Volume (up to 5 cubic yards)Tonn age (over 5 cubic yards)Non-recycling SurchargeLoads with more than 25% recylables or4 cu yds, whichever is lessUnsecured Load SurchargeVehicles which arrive at facility withunsecured loads

$5.00$2.00$4.00

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

$6.10$42.92

Fee Doubles$15 minimum

$10 pickups/trlrs$100 vehicles with

25,000 lbs gvw

$5.00$2.00

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

$6.50$45.50



25,000 lbs gvw

$5.00$2.00

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

$6.85$48.22


$10 pickups/irks$100 vehicles with

25,000 lbs gvw

$5.00$2.00

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

$7.25$51.12



25,000 lbs gvw


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A P P E N D IX AKIM KEVIN CLYMIRED i r e c t o rCAROLINE C. CHAVEZDeputy Director

C O U N T Y O F L A K EPublic Services Department3 3 3 S e c o n d S t r ee tL a k e p o rt , C A 9 5 4 5 3T e l e p h o n e ( 7 0 7 ) 2 6 2 - 1 6 1 8FA X ( 7 0 7 ) 2 6 2 - 0 9 7 3

STAFF REPORTTo:olid Waste Task Force Mem bersFrom:aroline C. Ch avez, Deputy D irectorSubject:astlake Landfill Revenues/Fees andDiscussion of Lake C ounty Waste Solutions (LCWS) Request to Import Refusefrom Mendocino County.Date:ctober 6, 2010BACKGROUND - DECLINING TONNAGE, REVENUE AND ECONOMYThe Eastlake Landfill's revenues have been significantly impacted by the downturn in the econom yand by our recycling program success driven by voluntary recycling and the state's A.B. 939 bill thatrequires a 50% recycling diversion. The annual cost of solid waste operations has historicallyhovered near the $2.3 million mark, and up until fiscal year 2006/07, our revenues ranged between$2.4-2.5m illion and covered the costs of salaries, equipment, and regulatory requ irements. It alsoallowed us to set aside money in our reserve accounts for equipm ent replacement, eventualexpansion, and mandated funds for closure and thirty years of post closure maintenance. However,beginning in fiscal year 2007/08 our revenues dropped by approximately $500,000 from its $2.5million revenue high due to the significant decline in the construction industry that had helped fuelthe economy.As we have continued to successfully promote curbside service with single-stream recycling plus avariety of low-cost and no-cost recycling programs, our customer num bers and tonnage are stilldropping. In 2003 Q uackenbush Material Recovery Facility (MRF) opened and began taking greenwaste, dirt, concrete, asphalt and rock to divert those m aterials from our landfill. The transfer stationrepresented 50% of all customers in 2002, but increases in curbside custome rs and recycling, causedthe customer share there to drop by 20 ,000 customers to 35% in 2004. Lakeport's implementationof mandatory service further reduced transfer station customers and tonnag e, and by 2009 the transferstation customer share dropped to 20 % of the total customers betwe en the landfill and transferstation, and only represented 10% of the total tonnage being delivered to the landfill. Ourprogressive programs helped increase our diversion and extend the life of our landfill, but it alsomade us a victim of our success by reducing our revenues.The reduction in transfer station tonnage and customers allowed the County to reduce the numberof operational days of the transfer station in 2004 from 7 days to 5 days and then to closepermanently in December 2 009. LCW S' Transfer Station on Soda Bay Road was able to pick up


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Page 2what w as left of self-haul loads as well as accept refuse from Lakep ort Disposal that was previouslygoing to the transfer station. Closing the transfer station allowed the County to save about $250Kannually in salaries and operational costs including the exp ensive repairs and annual maintenanceto the Am fab comp actor, transfer trucks and trailers, as well as eliminating fuel and utilities costs.The failure of the econom y to rebound, also know n as the recession, is reflected in the furtheringdecline in refuse and revenue. The decline in refuse is in part a result of the increased recyclingLCW S is able to do on their transfer station tipping floor and also in part is a result of residents andbusinesses doing their part to recycle in order to reduce their refuse and disposal costs. The effectwas that even though we reduce d our operation expenses down to $2 m illion resulting from thetransfer station closure, total gate fees in 2009/10 were dow n from approx imately $2.0 M to $1.5M,leaving a $500,000 deficit. Since the high point in the construction boom five years ago, ourrevenues have dropped from a high of $2.5 m illion to $1.5 million last year, but we h ave only beenable to reduce our expenses to $2 m illion based on the Transfer Station closure.RATE HISTORY AND CALCULATIONThe last rate increase for the landfill was implemen ted in 1994 as staff evaluated the cost to expandthe landfill into Area II, the canyon w here refuse is currently being disposed and to meet newenvironmental regulations and recycling diversion requirements of 50% by 2000. The rate increasewas reviewed by a committee w ho w as provided information regarding construction requirementsand costs. The committee's recommendations were forwarded to the Board of Supervisors foradoption with new revenue projections estimated at approximately $1 million. At the same time,the parcel tax fee (that has since been eliminated) was raised to $37 per single family dwelling whichwas ex pected to generate $1.1 million in annual revenue. However, the passage of Proposition 218in November 1 996 lead staff to recommend the eventual elimination of the parcel fee for FY 97/98because the new legislation categorized the fee as a tax and w ould have required a two-thirds voterapproval. This decision was determined to be feasible because revenues were deemed sufficient,without the parcel fee, to cover the operational costs at that time. In 2 002 rate adjustments werema de to convert to scale opera tions at the landfill for large loads, and in 200 3 a rate increaseadjustment was made at the Transfer Station to a reflect the extra processing and transporting costassociated with the refuse received there.FILLING THE DEFICIT GAPThe shortfall in FY 09/10 bud get w as partially covered by a half-year operational savings from thetransfer station closure in Decem ber 2009 and sale of the transfer trucks and trailers and loader fromthe transfer station. In addition, in order to have a structurally balanced budge t, for FY 09-10 a ndFY 10-11 staff had to adjust reserves downward by moving reserve funds into the operating budget.Franchise haulers proposed a large rate increase to staff this year based on the loss in revenues fromrecycling com modities and the State's decision to reduce recy cling subsidies to the franchise haulersfrom California Redemption Funds (CRV) revenues. The State used those fees to help balance theState budget shortfall instead. Staff negotiated with the franchise haulers to lower their increaserequest of 20% for a single year to 4% per year for the next five years (see attached staff report). Atthe same time, staff informed the Board of Supervisors that a proposal would likely be brought to


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Page 3the Board this year for a co rresponding landfill rate increase, effective for four years, beginning July1, 2011.How ever, since that time w e have further evaluated the deficit gap that, despite the savings from thetransfer station closure, is currently still in the $500K rang e and w e have also evaluated the cost ofupcoming cap ital improvement requireme nts. Upcoming capital improvements include:

1) Installation of a sm all landfill gas (LFG ) extraction system to reduce the level ofLFG in one perimeter LFG probe. Completion Deadline: Aug 2011Estimated Cost $100 -125,0002) Installation of a full landfill gas system around the entire perimeter of the

landfill is a new requirement under AB 32 unless Proposition 23* on the Novemberballot defers it until the unem ployment rate drops to 5 .5%. S taff has performed aLFGT E (landfill gas to energy project) feasibility study and determ ined there may bean opportunity to produce some energy to sell back to PG &E , but the cost of theconstruction means w e may try to find an investor to build the system, but w e wou ldstill incur design and perm itting costs in the next 12-18 m onths.

Completion Deadline: 18-24 months*Estimated Cost $3 -5 m illionPlanning for future landfill expansion is a regulatory requirement that is triggeredwhen our remaining capacity is only enough to accommodate 15 years of refuse. Theintent is to expand south from our current tipping area, to other county-ownedproperty adjacent to the current tipping area, but the tim e to develop the plan, seekpermit approval by the W aste and W ater Boards, and to construct the project isestimated at about $3-5 m illion dollars. The planning proce ss would need to be ginnext year because w e are currently in the 16-year range. Planning and permittingand the associated costs will begin in 2011 and is expected to take an estimated fiveyears. Construction could begin in about 7-10 y ears depending o n fill rate.

Planning Start Date: 2011/12Required completion date:2025Estimated Total Cost $3-5 millionOther upcom ing or significant on-going costs include:

4) Additional regulatory tracking/monitoring requirements are constantlyincreasing. We spent over $6 2,000 on th ese services last fiscal year for ground andsurface water monitoring. When the new Air Q uality and Landfill Gas (LFG )monitoring and reporting requirements become effective in the next 12 or so months,we ca n expect to spend at least an equal am ount annually for those services for theforeseeable future unless AB 32 is.deferred or delayed.

5) Waiver or subsidy of d isposal costs for many materials banned from the landfill.


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Page 4In an effort to encourage proper disposal and discourage illegal dum ping andpersonal accum ulation, the Solid Waste D ivision pays for the bulk of the disposalcosts of tires, Hazmobile Events co sts, used oil, sharps, appliances, illegal dum ping,roadside litter, and the Rev italization Program for disposal of old trailers and mobilehome s. Last year those costs amounted to $193,000, and only about $30,000 iscovered by grant funds.

6) Equipment fuel, maintenance, repair and replacement. Our current heavyequipme nt fleet consists of several very large scrapers, compactors, and loaders. Webudget and spend nearly $100,000 annually for maintenance and repair of thisequipmen t and another $100,000 in diesel fuel. Most recently we bough t a newcompactor that cost $450 ,000, but w e also just sent its backup for repair and thatrepair could cost up to $60,000. The good news is that all of our heavy equipmenthas been replaced over the last several years and should last for several years tocome.7) Sales tax. The County pays the B oard of Equalization $60-70K annually in what isequivalent sales tax for the tonnage w e accept. At $1.40/ton that amount w illincrease if we return to higher tonnage amounts.8) Closure/Postclosure F unding: We c urrently have over $4.5 m illion in restrictedreserves for closure/po stclo sure costs and generally have to increase it by $100-200Kannually depending on the rate of fill and the am ount of remaining landfill space.

FUNDING OPTIONSInitial Concept: Initially we had planned to propose a rate increase of 4% annually for the next fouryears beginning July 1, 20 11. This was design ed to dovetail into the 4% rate increase for our twofranchise haulers (who requested 20% for FY 2010-2011 but agreed to a 5-year phased increase) thatwas approved by the B oard of Supervisors in July 2010 to begin July 1, 2010. The board agendaitem is attached for your reference about the franch ise hauler increase and includes a discussion ofthe possible gate increase with its impact on future curbside rates. The 4% rate increase we originallyconsidered would have be the equivalent to 25 cents increase per cubic yard per year or a $1 increaseover the next four years beginning July 201 1. The public tonnage fee of $37 w as originallyanticipated to increase the same 4% ($1.50 per year), and our franchise hauler fee of $31 wouldincrease $1.25/year.How ever, utilizing for calculation purposes the low tonnage numbers from refuse received in placefrom 200 9, this would only translate to an additional $61,000 in revenue the first year, $122,00 thesecond year, $186,000 in the third year, and $247,000 in the fourth year. By itself, this increasewould not cover our current deficit, unless the economy and tonnage rebounds.Unfortunately there seems to be no near-future improvement in the econom y, and the data we h avecollected since that time on the co sts of required capital impro veme nts could necessitate a muchhigher increase. To cover the current $500K annual deficit if there is no significant improvem entin the economy, the increase would need to be approxim ately 33% , a rate that would causesignificant hardship, illegal dumping and/or personal accumulation of trash am ong our residents andbusinesses. That does not begin to cover the cost of the impending capital improvement


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Page 5requirements over the next five years.LCWS P roposal:C and S Waste Solutions, the parent comp any of LCW S, operates the Ukiah Transfer Station for theCity of Ukiah. Currently, the refuse they receive there from the city and surrounding unincorporatedareas of M endocino County is h auled to Potrero H ills Landfill in Fairfield, but their contract expiresat the end of 2011. Consequently, the California Integrated Waste Management Board is requiringthe City of Ukiah to develop a 1 5-year plan for the disposal of their refuse, and LC WS is seekingviable proposals to dispose the Mendocino refuse at anothe r facility, other than Potrero H ills. Theirgoal is to develop a 20-year contract, but they recognize that we do not have sufficient informationon the impact, so they are w illing to propose a 2-5 year proposal with an option to extend theproposal for the remaining 15-18 years. They are estimating that up to 22,500 tons annually wouldneed to be exported from their U kiah Transfer Station, that equates to three transfer trucks per day,and disposed of in another county. This includes the reduction of tonnag e by the floor sorting theyare currently doing a the Ukiah Transfer which they estimates reduced the tonnage by 30 % . Otherpossibilities they are proposing include the construction of a R esource Recovery Facility (RR F)adjacent to their Lakepo rt transfer station facility. The facility could potentially reduce the re fusedelivered to it from U kiah destined for our landfill by an estimated add itional 30% . They are alsoconsidering sending all of their loads from their franchise area in Lake County through the same RRFincluding the loads from the City of Clearlake, further reducing the waste that would end up at ourlandfill, that would in turn reduce our revenues for tipping fees. As a result of this proposal webelieve the end result would be that we would return to approximately the same tonnage and revenuethat we w ere receiving in 2005 /06, meaning that we w ould recapture our lost revenue of $500,000annually and then some. This, along with our current revenues would provide sufficient funding tocover the costs of our mandated capital improvement projects of landfill gas extraction andremediation, air and groundwater m onitoring, landfill expansion, and operations without placing theentire burden on the residents of Lake C ounty through significant rate increases of approxim ately33% as m entioned earlier in this report.Discussion Points1) Our Co unty Code does no t allow the im port of refuse. The intent of the code is to preservethe landfill space for Lake C ounty's use. If this concept/contract is approved by the Bo ard

of Supervisors, the code will need to be m odified to reflect the specific exception.2) Under this proposal, LCW S proposes to bring to our landfill, by importation from out of

County and from within the County, tonnages at a level that would generally equate to thetonnage w e we re receiving from them prior to 2008. This will allow us to recapture our$500,000 revenue loss and return to pre-recession revenue levels after they reduce the totaltonnage by 3 0% by floor sorting or m ore if they decide it is economically feasible toconstruct an RFF at their Lakeport facility to further reduce the tonnage.3) W e have a max imum allowable amount of daily tonnage of 200 tons that we can acceptunder our current permit with the Waste Board. W e do not want to am end our permit to

accept LCWS loads beyond an amount that would require amending our permit. We have


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Page 6discussed only accepting deliveries from LCWS with their representatives on days when ourdaily tonnage rates are historically low. Otherwise, LCW S w ould have to transport theirloads to another landfill when our limits wo uld be exceeded by acceptance of their loads. Wew ill reserve first rights to our landfill space. Therefo re, any likely daily exc eedenc e intonnage would mean that w e would refuse the LCWS loads. This is a common practice forlandfills, and LCWS is aware of the possibility and would need to plan accordingly.

4) The County would propose an out-of-county tipping fee that is higher than the current publictipping fee. Currently we are considering a fee of $40 per ton, which is $3.00 per ton morethan our public rate for in County refuse and $7 m ore than the current franchise hauler rate,which equates to a $157,500 annual non residence refuse fee. At that rate, 22,500 tons wouldbe $900,000 in revenue annually to Lake Coun ty but that may be adjusted down w ithincreased diversion through better recycling. This fee m ay rise as other tipping fee increasesgo into effect, or be set to an average that w ould cover the first trial period rate increases.

5) We want to explore ways to regain any lost landfill space. LCWS is considering the optionto reactivate the Mendocino Landfill that is currently inactive. If they are successful, wew ant to discuss the potential option of utilizing an equivalent am ount of their space toreclaim the space w e w ill lose if this proposal is approved by the Lake C ounty Board ofSupervisors. The cost of that space would need to be negotiated and would have to includetransportation . export costs. The ap proval of the import proposal is not contingent on alandfill space exchange and stands alone.

6) Even though the import of refuse w ould accelerate our current, recession driven, reduced rateof fill, it would only bring the fill rate back to the same ra te as a few y ears ago be fore therecession occurred. Landfill expansion planning will need to begin this year because wehave less than 15 yea rs of capacity left which is projected to be 2025 . After discussing theconcept w ith our consultants, we have a reasonable level of comfort that we cou ld obtain anexpansion permit since w e ow n the adjacent property and have an existing facility, but itwo uld likely take 2-5 years to confirm the W aste and Wa ter Board support/appro val. It isanticipated the expansion would provide us with at least another 25 years of capacity to 2060.7) Acceptance of the LC WS proposal may provide an opportunity to replace the bulk of ourdeficit in a viable timefram e as well as fund capital improvem ents needed in the near futureand fund the planning an d construction of the next phase of the current landfill to allow usmany m ore years of disposal. However, the decision and implementation of this importproposal depends on a fairly quick timefram e of 3-12 months. Doing so could prevent a

significant need for an increase in our tipping fees for our residences be ginning som etime inmid 2011 and w ould allow us to keep the increase to only 4% for four years instead of tryingto cover all of our costs alone. (See attach ed table of rates and projected reven ues)8) Any significant increase above 4% for L ake County citizens would certainly cause a hardshipfor our residents and businesses and w ould likely increase illegal dumping and personalaccum ulations of trash significantly.9) Whateve r increase we apply to our landfill will be passed through to curbside custom ers and


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Page 7by the LCW S transfer station. Each franchise hauler and jurisdiction will need to assess whatthat increase would me an to them and their residents. LCWS an d Southlake Refuse havealready calculated the impact of the 4% landfill rate.

10) LCW S also has parameters of what is an acceptable rate which is based on the cost oftransport plus the landfill fee. That fee also need s the approval of the U kiah City Councilwho is looking for a solution for a minimum o f 2-5 years plus a viable opportunity to extendthe agreem ent over the next 15-year period to mee t the required 15-year disposal planrequired by the Waste Board

11) Other - The re are clearly other issues that will be identified and w ill need to be consideredas this proposal is evaluated. SWT F mem bers can help develop those add itional issues.Solid Waste staff is seeking the recomm endation of the SWTF for the Bo ard of Supervisorsconsideration on w hether or not to pursue negotiations with LC WS for the import of refuse for alimited or extended period of time. Our revenue need s and their space needs may create a "w in/win"that would allow us to m eet our disposal and regulatory costs requirements. If the SWTF ag rees thatthis option is preferable to a significant gate fee increase, we w ill continue to explore the option andbring the results to the Board of Supervisors as qu ickly as possible.cc: Kim K. Clym ire, Public Services DirectorAttachm ents: Franchise Hauler 2010 Rate Increase Agenda ItemIncome/Reverthe HistoryRevenue C alculation SpreadsheetS:\Solid Waste\FINANCE\Rate Increases\SWTF agenda for gate fee and import discussion.WpdOctober 6, 2010 (2:49pm)


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KIM KEVIN CLYMIRED i r e c t o rCAROLINE C. CHAVEZDeputy D irectorCO U NTY O F LAKEPublic Services Department333 Second S t ree tLak epo r t, CA 95453Te lephone (707 ) 262 -1618F A X ( 7 0 7 ) 2 6 2 -0 9 7 3

MEMORANDUMTo:onorable Board of SupervisorsFrom:im K . Clymire, DirectorCaroline C. Chavez, Deputy D irectorSubject:ranchise H aulers Contract Am endmentsDate:une 29, 2010Background .The local, State and national economy has had an en ormous im pact on the revenues of both of LakeCounty's franchise haulm's. Similar to what our Eastlake Land fill experienced in the last two years,total revenue and refuse collected has dropped significantly even thoug h the cost of operations hasnot seen a similar reduction. The landfill and the franchise haulers provide a service sim ilar to otherutilities such as w ater, power, and sew er, and ensuring their financial ability to continue providingrefuse services is a necessary aspect and cost of residing and doing business in Lak e County. Theloss of refuse from franchise haulers customers like Kono cti Harbor Inn, reduction in refuse fromother comm ercial customers, and the near absence of refuse from the construction industry haslowered revenue for both the County's Waste Management Division and the two franchise haulerscontracted for curbside collection and recycling. For many ye ars, the comm ercial base of a refusecollection company h as supported the residential base to keep residential rates low and attractive.The loss and/or reduction in commercial refuse has had a major impact on revenues and thereforecomm ercial collections can no longer subsidize residential collection as much as it has in the past.On a regional and State level, the State has withdraw n man y of its recycling subsidies previouslypaid to franchise haulers for collecting recyclables. Funds for these su bsidies are generated fromCalifornia Redem ption fees charged to consumers for beverage containers. Payments to therecycling center operators were designed to reimburse the operators for the redemption fees they payout to residents and to cover other recycling programs. O ver the past year the State h as been usingthose funds for its other budg etary shortfalls. Therefore, those funds are significantly reduced andcan no longer be considered a reliable way to subsidize local no-cost recycling program s. As a resultof the State taking away those funds, Lake County Waste Solutions (LCWS) has lost approximately$50K in State reimbursements for recyclables and Southlake Refuse (SLR) has lost approximately$30 annually.While well-meaning and responsible residents try to recycle more to save our natural resources,extend the life of our landfill and save on disposal costs, the commo dities market which buy s therecycled materials from our franchise haulers has experienced a significant revenue reduction in the


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Page 2last two yea rs for scrap me tal, plastic, cardboard, paper, etc. As a result, our franchise haulersexperienced deep cuts into the recycling revenues that helped k eep refuse rates low. SLR estimateda loss of nearly $200K a year from the com modities highs. To com pound the problem, somecustomers, in order to save on disposal costs or from lack of proper recycling know ledge, arethrowing m ore non-recyclables in their recycling bin resulting in contam inated loads and in turnadding additional operational expense to separate contaminants from recyclables.Despite these financial dow nturns, the franchise haulers are still under contract to provide serviceto all customers in the unincorporated area, and the current Consum er Price Index (C PI), that is partof their contract to cover increased o perating costs, is so low that the haulers are only entitled to a1.98% increase, an amount that w ould not allow them to sustain their current operations. Last year'sCPI w as also so low that they opted not to ask for the increase hoping the economy w ould rebound,wh ich as we all know, has not.County's Waste M anagement Division Revenue D iscussionThe Coun ty's Waste Man agem ent Division staff is also examining its landfill rates to determine ifthere w ill be sufficient funds to pay for operations, the upcoming reg ulatory requirements thatinclude a landfill gas system, and the cost ofplanning and impleme nting landfill expansion. Planningfor the landfill's expansion or relocation or exportation is a regulatory requireme nt that is triggeredto begin once w e have fifteen years or less capacity left in the current perm itted area. We are onlyone to three years from that trigger point. Staff supports landfill expansion becau se we are fortunatein that we ow n over 40 ac res south of our current tipping area a nd plan to apply for approval toexpand. If approved, that expansion w ould extend the life of the landfill to approximately 206 0making us the envy of every county in the state.Preliminary estimates show we will need to raise the landfill rates to cover these costs. To avoidimpacting the citizens and businesses in the current econom y, staff proposes to initiate landfill gatefee increases beginning nex t year instead of this year (which is not to be confused w ith hauler rateincreases). The proposal will be brought to the Solid Waste Task Force to review the ne eds andcosts. The last landfill increase was before 1995, and in the interim, the parcel tax that helpedsupport operations was eliminated because the passage of Proposition 218 would have required avote to continue the parcel fee.Currently we are considering an increase of about 4% per year to gradually raise the landfill rates.This translates to a 250 increase per cubic yard each year beg inning next year and continuing for atleast four years. For tonnage charges, the rate wo uld increase $1.50 per ton for the general publicand $1.25 per ton for our franchise haulers. Even w ith our proposed increases, our landfill ratesw ould still be significantly low er than disposal sites in surrounding areas (see attached charts).However, whatever rate we adopt would necessarily be passed through by the franchise haulers totheir customers.Universal Collection ConsiderationA m ajority of households already have voluntarily signed up for curbside service. Staff estimatesapproximately 85% of households are already customers. Most of the remaining residents andbusinesses self-haul their refuse responsibly. Only a small percentage create the illegal dumping andpersonal accumulation problem.


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Page 3Given the high level of participation that already exists, universal or mandatory co llection would bedifficult or unwarranted in many areas w here the non-publicly m aintained roads are not accessibleor safe for collection vehicles. Those custom ers would hav e to bring or leave their carts out on anaccessible road. Most of the residents who have this problem cho ose to directly haul to the disposalsites. Other residents and part-time residents do not h ave sufficient refuse to warrant year-roundservice. There would be a significant amount of work to determ ine who could opt out and for w hatreasons and when. Changes in occupancy and owne rship would need to be tracked by someone,which w ould be particularly difficult with the high va cancy rate in buildings and the high transiencyrate of renters. Currently the franchise haulers have no m echanism to collect accounts payable otherthan cutting off service.These are som e of the reasons that thirty of the State's fifty-eight counties do not have m andatoryresidential or com mercial service in their unincorporated area except in some densely populatedareas. According to a survey recently conducted by R3 consulting Group on the behalf of one of theirclients, seventeen counties have mandatory service in som e but not all unincorporated areas. SantaClara County is currently the only county w ith both m andatory comm ercial and residential servicerequired throughout their unincorporated areas, and Monterey County is planning to implement itcounty-wide in October 20 IO. .Contra C osta has manda tory collection throughout its unincorporatedresidential areas, but they h ad to have legislation carried by their S tate representative to allow theirfranchise hauler(s) to bring unpaid accoun ts to the County to be placed on the property tax rolls.Lake County h as the same option to seek legislation to allow this mechanism, but the repaym ent ofthe accounts receivable is not a guarantee of paymen t and w ould still cause a significant delay in anypayment of a delinquent payment.County-wide implem entation of mandatory service is not warranted at this time from the perspectiveof the current voluntary participation and econom ic climate. This additional expense could be anunnecessary and unwelcomed ma ndate when we have so m any seniors, unemployed, and low-incomehouseholds. Targeting densely populated areas may be an option, but most of those already have ahigh percentage of voluntary customers. Therefore, we propose to continue to attract voluntarycustomers with convenient and low-cost curbside services and not add additional government to ourresidents unnecessarily.Franchise Hauler NegotiationsThe franchise hauler contract specifies an annual allowable rate increase of 90 % of the CPI plusextraordinary costs. Low CPI's and mounting regulatory requirements over the past several yearshave lead us to other creative w ays to fund the operational revenue needs of the franchise hau lers.In an effort to keep the custom er rates low during the last tw elve years of the current contract, wehave reduce d and/or eliminated som e of the payments w e required from the haulers includingpayme nts for marketing, the Hazm obile program, and tire disposal cost sharing. The franchisehaulers also completed their 10-year payback of the improvements made to Davis and Moss Streetswh ich serve as access roads to the landfill. Finally we reduce d their disposal tonnage rates to helpavoid higher customer rates. Most of these cuts were funded out of the W aste Managem entoperations and/or grants w e receive. Whe n fuel costs skyrocketed, the County allowed a rateincrease to offset those increased costs for the previous year. When the State mandated new airquality standards for garbage trucks and required each jurisdiction to ensure the funding for franchisehaulers to meet these requirements by purchasing new trucks, we extended their contract from 2013to 2018 in lieu of recommending a significant customer rate increase.


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Page 4We have been successful in keeping customer rates very low to encourage voluntary participationfor customer service and to discourage illegal dumping and personal accumulation of trash. Ouroptions to help reduce the h aulers' costs have been exhausted, but we still want to m aintain ourattractive, award-winning, and exemplary curbside service and extensive recycling programs. Weestimate 85% of households in the unincorporated area have curbside service and the vast m ajorityof those households h ave increased their recycling dramatically.The Waste Management staff has been in negotiations with the County's two franchise haulers aboutcustomer rates for approximately six m onths. The initial requests approached 17% and includedfunding for a replacement program for aging carts, backfilling the loss of State revenues and otherlosses resulting from the econom ic downturn and com modity prices that more than offset the morestable fuel costs we currently have. Staff rejected that proposal, in part because there is norequirement for us to cover all revenue losses from reduced recycling comm odity markets. However,we rec ognize that our successes in recycling, low rates and the recession have lowe red overallrevenue, and, as mentioned above, the allowable percentage for this year's CPI which w ould be1.98% is not sufficient to sustain franchise hauler operations as ou tlined in their contract with us.Based on recog nizing the low CP I and the need to generate revenue that will sustain continuedoperations, the haulers were asked to con sider a gradual increase in the 4% ran ge annua lly for thenext five years instead of any large increase now . As part of that proposal, we proposed to d elay alandfill rate increase until at least next year to prev ent additional impact to o ur citizens in the currenteconomy. This 4% increase is similar to the precedent set in the rate the County has beenincorporating in licenses for antenna space on our courthouse and on Bu ckingham Peak. The antennaleases use the annual increase of 4% as a minimum or 100% of the CPI, whichever is greater.The haulers' initial counterproposal w as to spread the increase over a three-year period, but staff alsorejected that proposal as the annual increase to customers was still too high. Their secondcounterproposal was to use the 4% minimum increase (or CPI w hichever is greater) over theremaining life of the contract which m ay end or be extended in 201 8. The rationale is that an on-going guaranteed m inimum increase w ould be necessary to sustain operations. Other air qualityregulations or increased fuel standards for refuse collection vehicles are being considered b y the AirQuality Board as a future unfunded mandate and these may be addressed separately as extraordinaryexpen ses. Additionally, the overall increase wo uld bring the curbside rates closer to, but stillsignificantly lower than, surrounding County's rates. Com parative rate information is attached. Thisplan avoids a large increase in rates. When M endocino Coun ty went out to bid a few yea rs ago, theyinitially received no bids on the first attempt, then received very high bids, and eventually ended upwith rates in the $30/m onth range for residential curbside collection, in some cases ove r 100% higherthan our rates. We do not want to im pact our ratepayers with an imm ediate significant rate increasebut instead prefer a more gradual increase.The following tables show a m inimum 4% rate increase for the balance of the contract for each ofthe haulers. If the CPI is higher the rates would be increased accordingly. The tables alsoincorporate an anticipated annual increase of landfill rates beginning nex t year and continuing fora m inimum of four years. At the current proposed rate, the increase in the landfill rate representsonly a 5-70 increase per month per residential customer on top of the hauler increase to the customerfor the standard 32-ga llon weekly service in the first year of implem entation. The landfill rates aresubject to review by the Solid Waste Task Force and approval of your Board. The tablesdemonstrate that even with the proposed increases over the next eight-year life of the contract, our


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Page 5franchise hauler rates and our landfill rates w ill generally be lower than today's rates for surroundingjurisdictions.Rate Tables

LCWS COMMERCIAL RESIDENTIALInc/Mo % Inc Rate/Mo w/ gateincrease Inc/Mo % Inc Rate/M o w / gateincrease

Current $150.99 $11.24Year 1 $6.04 4.00% $157.03 $157.03 $ .45 4.00% $11.69 $11.69Year 2 $6.28 4.00% $163.31 $164.24 $ .47 4.00% $12.16 $12.23Year 3 $6.53 4.00% $169.84 $171.71 $ .49 4.00% $12.64 $12.78Year 4 $6.79 4.00% $176.64 $179.44 $ .51 4.00% $13.15 $13.36Year 5 $7.07 4.00% . $183.70 $187.44 $ .53 4.00% $13.68 $13.95Year 6 $7.35 4.00% $191.05 $194.79 $ .55 4.00% $14.22 $14.50Year 7 $7.64 4.00% $198.69 $202.43 $ .57 4.00% $14.79 $15.07Year 8 $7.95 4.00% $206.64 $210.38 $ .59 4.00% $15.38 $15.66

SLR COMMERCIAL RESIDENTIALArea 3 Inc/Mo % Inc Rate/Mo w/ gateincrease Inc/Mo % Inc Rate/Mo w/ gateincreaseCurrent $167.92 $12.34Year 1 $6.72 4.00% $174.64 $ .49 4.00% $12.83Year 2 $6.99 4.00% $181.62 $182.3 5 $ .51 4.00% $13.35 $13.40Year 3 $7.26 4.00% $188.89 $190.41 $ .53 4.00% $13.88 $13.99Year 4 $7.56 4.00% $19 6.44 $198.82 $ .56 4.00% $14.44 $14.61Year 5 $7.86 4.00% $204.30 $207.60 $ .58 4.00% $15.01 $15.26Year 6 $8.17 4.00% $212.47 $215.78 $ .60 4.00% $15.61 $15.86Year 7 $8.50 4.00% $220.97 $224.28 $ .62 4.00% $16.24 $16.48Year 8 $8.84 4.00% $229.81 $233.11 $ .65 4.00% $16.89 $17.13


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Page 7Clearlake is currently under direction of the State to increase their efforts or face fines. Some of thepossible service cuts (Items 3 and 4) outlined by the franchise haulers w ould likely adversely affectboth cities' diversion rates as we ll to cause them similar problem s with increased illegal dum pingand personal accum ulation of trash.Staff RecommendationIn light of all of the operational and regulatory costs of doing business, the current recession, and thefact that our rates are w ell below any county in the state and have becom e unsustainable, staffsupports a contract amendment that allows an annual rate increase of 100% of the CPI or 4% ,wh ichever is higher, for the rema ining balance of the contract that is set to expire or be extended,for an additional five years, in 2018.This discussion was not held with the Solid Waste Task Force members because it affects our twofranchise haulers that are on the committee and can not vote on it, does not affect the cityrepresentatives directly, and does not affect Lakeport Disposal who also sits on the comm ittee. Theother mem bers are a County Env ironmental Health representative, a citizen at large, and SupervisorsSmith and Farrington. Since Supervisors Smith and Farrington are part of this discussion and yourBoard's decision, staff did not believe a review by the Task F orce would be n ecessary, appropriateor objective. This is a contractual decision for the Board of S upervisors.Staff also recommends your Board . support a continued review of landfill rates by staff and theSWTF for possible implementation of an increase beginning July 1, 2011. The contract languagealready includes the ability of our franchise haulers to pass through any landfill rate increases to theircustom ers. Any landfill gate fee increase w ill affect Lakep ort Disposal rates, Lake C ounty W asteSolutions, Clearlake Waste Solutions, South Lake R efuse , and self-haul customers.AlternativesYour Board may choose to:

1) Reject staffs proposal and authorize the 1.98% C PI only and allow franchise haulersto propose service cuts to allow them to operate within their revenue limits. Directstaff to work w ith the haulers to define service cuts or other price increases at therecycling yards to operate w ithin their revenue levels.2) Approve staffs recommendation to approve the attached amendment to allow 100%of the CPI or 4%, whichever is higher, for the balance of the contract term. DirectWaste Managem ent staff to meet w ith the Solid Waste Task Force to examine andrecommend rate increases at the Eastlake Landfill for implementation on July 1, 2011including rates the Board sets at the recycling yards for the franchise haulers.Allow the CP I and a dollar amount for the loss of State subsidies they've recentlyexperienced. The spread of those dollars would be the subject to further negotiations.

Staff appreciates your support of the Waste M anagem ent operations and its administration over thefranchise haulers' contracts. If you have any questions regarding this m atter, please feel free tocontact either of us.


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Page 8Attachments:

Com parative rates for other disposal facilities and curbside service in neighboring a reasAm endment for Lake County Waste Solutions and corresponding revised "Exhibit B"Am endment for Southlake Refuse and corresponding revised "Exhibit B"cc:outh Lake Refuse

Lake C ounty Waste Solutions

S:\Solid Waste\FRANCHISE HAULE RS\2010 Rate N egotiations\2010 B OS rate increase mem o.wpd


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00$1 6 , 7 5 0 ) 1 $2 9 , 5 0 0 ) 1 $3 7 , 0 0 0 ) 1 $4 4 , 5 0 0 ) 1 $5 4 , 5 0 0 ) 1 $ ( 5 4 , 4 4 0 ) 1$ 2 ,336,475 I $ 2 , 393 , 710 I $ 2 , 235 , 179 I $ 2 ,134 ,662 I $ 2 ,519,920 j $2 ,046,61 4 1$ 2 , 5 6 1 , 7 8 12 , 3 9 6 ,2 4 9 $ 1 , 7 7 1 , 5 8 61 , 6 6 7 , 6 9 21 ,498 , 682 $ 1 , 544 , 600$ 2 2 5 , 3 0 62 , 5 3 9$ 4 6 3 , 5 9 3 )$ 4 6 6 , 9 7 0 ) ( $ 1 , 0 2 1 , 2 3 8 ) ( $ 5 0 2 , 0 1 4 )H : \ S O L I D W A S T E \ A d m in \ S W F I N A N C E \ E x p e n d

Documents

051011 Public Services Memo to Board of Supervisors