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HomeMy WebLinkAboutItem No.35CITY OF LAKE ELSINORE REPORT TO THE CITY COUNCIL TO: Mayor and City Council FROM: Ron Molendyk, City Manager DATE: June 8, 1993 SUBJECT: Resolution Adopting MRF Fees BACKGROUND On June 9, 1992, the City entered into a contract with CR & R Inc. to collect and dispose of refuse within the City of Lake Elsinore: The contract requires CR & R to implement a recycling program within the City that meets the goals of State Law AB 939. This law says that 25 percent of all refuse collected within the City must be diverted from the landfill by 1995, and that 50 percent must be diverted by the year 2000. CR & R has already begun a recycling program to divert recyclables collected from residential dwellings in Lake Elsinore. These recyclables are separated at the-source. "However, the goals of AB 939 cannot be met without also separating recyclables from commercial and industrial waste streams. These waste streams are co- mingled and recyclables must be .separated by mechanical means. CR & R has negotiated a funding program with the City of Perris which provides for building a 17 million dollar Material Recovery Facility (MRF). In 1994, the MRF will open and all refuse from Lake Elsinore and other cities, will be directed to the MRF for separation. Wastes will be transferred onto the County landfill, and all recyclables will be marketed. Our costs will be reduced by the amount of recyclables diverted from the landfill, in accordance with the percentage of reduced County landfill fees. The cost of retiring the bonds which fund construction of the MRF must be shared by all the Cities using the MRF. In order to secure the bonds at this time. every city is sponsoring a resolution to guarantee payment upon opening and using the MRF. The rate is equal for all participating cities at this time. Attached is a copy of a letter prepared by John E. Brown of Best, Best & Krieger, who is the City Attorney for Perris, as well as the person responsible for the MRF bond issuance. His letter illustrates the need for adopting the rate schedule at this time. He would be happy to discuss this matter at greater length with any officers of the City who may require additional information. FISCAL IMPACT There is no fiscal impact at this time. The rate increase in July of 1994 will increase every customer's bill in accordance with the attached "Addendum to Exhibit C" of the contract. Revenues to the City will continue to increase by 10.1 percent of the gross revenues collected. Report to the City Council June Or 1993 Page 2 RECOMMENDATION• Approve the attached Resolution No. 93 -�3 which adds a special fee increment to the cost of refuse collection to pay for the Material Recovery Facility. This will take effect July 1, 1994. Prepared By: rank Tecca P.E., Director of Public Services Approved By: Ph-VILYis Rogers, Assistant City Manager Approved For Agenda Listing: AGENDA ITEM NO.. — \` PAGE OF RESOLUTION NO. 93 - 33 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE ADOPTING AN ADDENDUM TO EXHIBIT uCn OF THE AGREEMENT BETWEEN THE CITY OF LAKE ELSINORE AND CR &R INCORPORATED FOR THE PURPOSE OF ESTABLISHING RATES TO BE CHARGED FOR SERVICES PROVIDED BY THE PERRIS MATERIAL RECOVERY FACILITY (MRF) WHEREAS, pursuant to Government Code Section 41780 of the California Integrated Waste Management Act of 1989, the City of Lake Elsinore is required to divert 25% of all it's solid'waste'from landfill or transformation facility by January 1, 1995 through source reduction, recycling and composting activities; and WHEREAS, in an 'effort to reach this statutory goal, the City Council of the City of Lake'Elsinore entered into an agreement dated June 9, 1992 with 'CR &R Incorporated, DBA `Lake Elsinore Environmental, for the collection, transportation, recycling; composting, and disposal of solid waste, recyclables, compostables, yard waste, construction debris, temporary bins, and roll -off bin services ( "Franchise Agreement "); and WHEREAS; the City Council of the City of Lake Elsinore has determined that, in order to reach the source reduction' and recycling goal of 25% by 1995, it is necessary and desirable to utilize the services of the Perris Material Recovery Facility ("MRF") when such facility is constructed and operational; and WHEREAS, Section XVIII of the Franchise - Agreement provides that the schedule of rates to be paid for refuse and recycling services are set forth in Exhibit "C" of the 'Franchise Agreement; and WHEREAS', the schedule of rates set forth•in Exhibit "C" of the Franchise Agreement does not include `rates for the utilization of Perris MRF servicesi AGENDA ITEM NO. 35 ' PAOE� �. RESOLUTION NO. 93 WHEREAS, the City Council has determined that the rates set forth in this Resolution for the Perris MRF services are reasonable and necessary to defray the costs of providing such services; and WHEREAS, the City Council .is,,authorized to prescribe, revise and collect such rates, by adopting a Resolution approved by a majority.vote of its members, WHEREAS, the rates set forth in this Resolution shall be effective, on July 1, 1994 or. at the time, the Perris MRF is constructed and operational,, whichever is later, and shall be in - addition to the then current rates -which are prescribed in Exhibit "C" of the Franchise Agreement. NOW, THEREFORE,, THE CITY - COUNCIL OF THE CITY OF LAKE - ELSINORE DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The following shall constitute an addendum to Exhibit "C" of the Franchise Agreement dated June 9, 1992 between the City of Lake Elsinore and CR &R Incorporated, DBA Lake Elsinore Environmental: Addendum to Exhibit.11C11 As of July.1,!1994, or at the time the Perris Material Recovery Facility ( "MRF ") is constructed and operational, whichever is later, the following incremental rates will be added to the then current rates prescribed in Exhibit "C" of the Franchise Agreement,. Residential* Fully automated single family residential collection, recycling, transfer and disposal. . $2.36 per month, AGENDA ITEM b - pAGE U OJ_ RESOLUTION 93 - Commercial* Commercial, industrial and multi - family residential refuse monthly bin rates (three cubic yard bins) with the following pickups per week. Services include solid waste processing at the Perris MRF with a 25% recovery rate. 1 x week $ 22.75 per month 2 x week $ 45.50 per month 3 x week $ 68.25 per.month 4 x week $ 91.00 per month 5 x week $ 113.75 per month 6 x week $ 136:50 per month *The rates set forth in this addendum reflect only.the incremental adjustment necessary to support the new service fees at the Perris MRF. Landfill and CPI Adjustments will be passed through as delineated in the existing Franchise Agreement.. SECTION 2. This Resolution is passed by a majority vote of the City Council of the City of Lake Elsinore. ADOPTED this day of , 1993, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ABSTAIN: COUNCILMEMEERS: GARY M. WASHBURN, MAYOR CITY OF LAKE EISINORE ATTEST: VICKI KASAD, CITY CLERK CITY OF LAKE ELSINORE APPROVED AS TO FORM AND LEGALITY: JOHN R.,_HARPER, CITY ATTORNEY CITY OF LAKE ELSINORE AGENDA ITEM NO. _ PAGE 5 OF S� .Y: BEST. BEST & KRIEGER • x[RYw[4[x11 MC[VMwO MO.[[w,Owu COINCxwNOxt LAWYERS 'A RRM[53KIM4 MIMOR[T10M GREGORY K. WILKINSON ERICLGARNER WYNNES.NRTM DENNIS M. COTA DAVID BARON JULIE HAYWARD BIGGS GENETANA"A RACMELLE J. NICOLLE BA51LT, CHAPMAN ROBERTW.MARGREAVES TIMOTHY M. CONNOR JANICE L WEIS VICTOR LWOLI SMARYLWALKER OANIELEOLMER PATRICK M.W.F: PEARCE OANIEW.MCHUGM KIRK W. SMITH NOWARDB.GOLOS JASON D. DABAREINER STEPHEN P. DEITSCM RY LEA. SHOW MARC E. EMPEY MARK A. EASTER JOHN R. ROTTSCHAEPER OIANEL.FINLEY MARTIN MUELLER MICHELLE OUELLEITE J. MICHAELSUMMEROUR PETER.. BARMACK VICTORIAN. KING DAVID P. PMIPPEN JEFFRRY J. CRANDALL SUSANC NAUSS SCOTT C. SMITH CHRISTOPHER DOOSOM JACK B. CNRKE. JR, SERNMI- WILUAMSON BRIAN M. LEWIS EUINEE. MILL JEANNETTE A PETERSON KEVIN". RANDOLPH BRADLEY E.NEUTELD JAMES S. GILPIN ELISE K. TRAYNUM MARSMALLS. RUDOLPH WILLIAM D. DAMLINO, JR. KIM A. BYRENS MATT M. MORRIS CYNTMIAM.GERMANO JEFFREY V. DUNN MARY E. GILSTRAP STEVEN C. D[BAUN OANIELC. PARKER.JR. GRANT M. OVEIRIN OINEVRA C. MARUM David E. Fahrion Vice President CR &R Incorporated 11292 Western Avenue P. O. Box 125 Stanton, CA 90680 Dear David: GLENN . SABINE CHRISTINE L RICHARDSON JOANE GARCIA'COLSON PHILIP J. KOEHLER DIANE O WIESE REBECCA MARES GURNEY ALLISON C. MARGRAVE DOROTHY I. ANDERSON G. HENRY WELLES JAMES R. HARPER DINA O. HARRIS BARBARA R. BARON RICMAROT EGGER PATRICK D. GOLAN DEAN R. DERLETN HELENE P. DREYER EMILY P HEMPHILL SONIA RUBIO SMARMA JOHN O. MNNNCY PAY MOND BEST (1666-1907) JAMES M. KRIEGER (191'!'1973) EUGENE BEST (1693.196Q May 14, 1993 , Re: City of Perris Material Recovery Facility 400 MISSION SOUARE 9750 UNIVERSITY AVENUE POST OFFICE BOX 1028 RIVERSIDE. CALIFORNIA 92502 TELEPHONE (909) 6861450 TELECOPIERS (909) 686.3080 •682 +612 1909) 662.0704 • 652.4631 OPCOUNSEL JAMES S. MAI SON OFFICES IN PALM SPRINGS IBM 325'7234 RANCHO MIRAGE IOIR) 366[611 ONTARIO (909) 959'3364 You have requested some additional background information as to the need for the Cities of Canyon Lake, Lake Elsinore, Perris and Temecula, as well as the County of Riverside, to formally adopt rates to be charged for services to be provided by the City of Perris Material Recovery Facility (the "MRF'). On April 13, 1992, the Redevelopment Agency of the City of Perris and ARC Associates, a California general partnership, entered into an Owner Participation Agreement for the purpose of developing the_ MRF, a ,solid. waste transfer and recycling station, to assist the above - referenced Cities and the County in meeting the mandate of California Assembly Bill 939 and California Senate Bill'1322. As you know, the MRF is to be constructed by the City and operated and maintained by a private refuse collector presently under franchise to the above - referenced Cities. For well over a year now, the Redevelopment Agency of.the City of Perris (the "Agency") and the City of Perris (the "City "), and their financial consultant; Rod Gunn & Associates, have been working with the principals of ARC Associates, Clifford R. Ronnenberg and Warren H. Kelsey, to develop a method of financing construction of the d A ' th t ff rt in our role as bond MRF. We have been asked to assist the City an gency in a e o ,1 counsel. 7 J ApENDA ITEM NO..��. PAGE —�—OF /-- s, ez LAW OFFICES OF BEST, BEST & KRIEGER David E. Fahrion Vice President May 14, 1993 Page 2 Generally speaking, CR &R and the above - referenced Cities have entered into agreements generally providing for the collection and the transportation, recycling, composting, and disposal of solid waste, recycleables, compostables, and yard waste (the "Refuse Agreements"). Our review of the Refuse Agreements indicates that schedules of rates were generally set forth in Exhibit C for each of the Cities. We also determined that generally speaking the rates set forth in Exhibit C would not in and of themselves be sufficient evidence of a revenue stream from the operations of the MRF which would permit the City and the Agency to authorize the issuance and sale of revenue bonds to finance construction of the MRF. The City and the Agency have been advised by their financial consultant and bond underwriters that in order to market revenue bonds it would be necessary for the participating Cities and the County to implement rates for refuse services, including solid waste processing at the MRF, which would become effective at the time the MRF is constructed and operational. Adoption of legislation implementing these rate schedules is considered critical to the successful issuance and sale of revenue bonds by the City and the Agency to finance construction of the MRF. Repayment of the revenue bonds would be secured by the revenues accruing to CR &R through its operation and maintenance of the MRF. Although a slightly different financing structure is contemplated in Perris, by way of illustration I an enclosing an Official Statement from the $7,980,000 Certificates of Participation (1992 Solid Waste Capital Improvement Projects), a City of Redlands bond issue, which illustrates the critical importance of covenants indicating the intention to establish and maintain similar rates and charges. My partner, Francis Baum here in Riverside (extension 2300), who is acting as the principal bond counsel in this matter, or I would be happy to discuss this matter at greater length with any officers or employees of the Cities or the County who may require additional information. As you know, we expect the City of Perris to act favorably on an ordinance implementing a new schedule of MRF rates as set forth in Exhibit C of its Franchise Agreement in the near future, and we are hopeful that the other Cities and the County will take similar actions within the next few weeks. Yours dYlY1 John E. Brown of Best, Best & Krieger AQENQA ITEM No. 35 FADE '7 OF �, j