HomeMy WebLinkAboutRCC AGENDA PK 2002/04/15
Resource Conservation Commission
ITEM: Approving Decision Not to Extend the Agreement with Organic Recycling West
for Composting Services, and Authorizing a Franchise Implementation
Agreement for the Use of Green Waste as Alternative Daily CoveL
SUBMITTED BY: Michael T. Meacham, Special Operations ManagerC::S:-~~
"'-"'-
BACKGROUND: In 1993 Pacific Waste Services (Pacific) began to collect source separated green
waste from Chula Vista generators as part ofthe City's source reduction and recycling program, At
that time Pacific contracted directly with Organic Recycling West (ORW) to process and market the
material collected in Chula Vista. In 1997 Pacific approached the City with the intent of developing
more favorable tenns for all parties, As a result of that effort, in May of 1997 the City entered into a
60 month agreement with ORW for processing, marketing and composting of green waste that reduced
the per ton fee by approximately 18°/0- The Agreement includes two optional extension tenns of two
years each that may be exercised at the City's sole discretion. Pacific has continued to deliver the
City's green waste to ORW throughout the tenn of the agreement The change to "Alternative Daily
Cover," will stabilize the program for several years, produce modest increases in diversion and reduce
costs for Pacific and the City.
RECOMMENDATION: Recommend that Council approve the resolution executing a decision not to
extend the Agreement with Organic Recycling West for composting services, and authorizing a
Franchise Implementation Agreement for the use of green waste as Alternative Daily CoveL
DISCUSSION:
In the early 1990's waste haulers and South Bay jurisdictions worked together to develop compo sting
opportunities for the South Bay, Siting Organic Recycling West (ORW), a private for profit green
waste-composting company was one result of that effort, Since then ORW has processed green waste
from Chula Vista and other South Bay generators for almost a decade. When establishing the
relationship with OR W the City had a number of goals in mind, Among those goals was the
development of a sustainable business that would help the City meet its recycling goals by expanding
the processing and marketing of green waste to include other organic materials generated within the
City. The City also expected that the business would aggressively market a value added product that
could increasingly reduce the businesses dependence on tipping fees to make a profit The City also
worked with ORW to site a facility within the City limits to assure that a site would always be
available, encourage greater use by local generators, and reduce transportation costs. Unfortunately,
although ORW and the City have worked together to accomplish these goals those efforts have met
with little or no success, ORW has been unable to demonstrate progress in adding other organic
materials, the development oflong-tenn retail and wholesale markets for material or the development
of a Chula Vista site, Staff is not optimistic that material progress can be made in the near or medium
tenn.
Page 2
Meeting Date: April 15, 2002
If the City does not continue its compo sting program, Pacific has asked that it be allowed to direct the
City's green waste material for use as "Alternative Daily Cover," (ADC), ADC is the use of chipped
green waste to cover the trash area at the landfill at the end of each day. Trash is covered daily to
reduce vectors such as odors and scavenging by birds and rodents. Pacific has identified a number of
potential benefits for making the change.
· Pacific estimates that the landfill will continue to operate at least another twenty years,
providing the City with a viable long term option that meets the state requirements for diverting
green waste. The California Integrated Waste Management Board has recognized ADC as an
acceptable form of diversion for green waste generated from municipal recycling programs,
· According to Pacific the use of green waste instead of soil extends the life of the landfill and
promotes decomposition, The decomposition helps to generate the gas that allows the Otay
landfill to generate electricity
· Pacific reports that with the ADC program it will be able to offer modest expansion to the
City's recycling efforts. The use of green waste for ADC is less sensitive to contamination by
plastic and other materials than the composting process and therefore more of the green waste
material collected by Pacific will be diverted because less will be rejected.
· Eliminating the trip to ORW would reduce the number of Pacific truck miles by an estimated
40,000 miles per year. City tree trimming crews and sub-contractors will also reduce the
number of truck miles they generate to deliver green waste materials to a recycling site,
· Pacific has offered to accept green waste delivered by the City and City subcontractors as ADC
and not count it against the City's annual free disposal and recycling allotment. The City
exceeded its disposal and recycling privileges at the landfill last calendar year by
approximately $18,000, The City would not have exceeded its limits if green waste from City
crews and sub-contractors were not counted against the annual allotment.
· Pacific has also offered to accept "clean" dirt from City crews as ADC at no additional charge,
Staff does not prefer ADC to composting. When transportation, volume, and market factors are
favorable compo sting represents a higher and better use of source separated green waste materials.
However, the long-term stability of the ADC option and the City's need increase diversion suggests
that accepting Pacific Waste's offer is the correct step for the City at this time. The City has Pacific's
agreement to continue to work with them to develop alternative diversion programs such as
composting at the landfilL That commitment should insure diversion of the City's green waste in the
future,
Pacific Waste Services has also identified three items that it believes are "extraordinary" cost increases
this year- Those costs are a result of:
I. A new five-year labor contract that provides trash and recycling drivers with higher wages and
an improved benefits package,
2. Increased fuel from converting the fleet from diesel to an alternative fuel, bio-fuel as outlined
under the agreement for new vehicles,
3. AB 1220, a per ton surcharge increase by the California Integrated Waste Management Board,
Page 3
Meeting Date: April 15, 2002
Summary of Monthly Impact of "Extraordinary," Costs:
· Labor $ 8,555
· Bio-fuel Conversion $ 6,038
· Landfill Surcharge $ 322
· Total Monthly Impact $14,915
· Divided by 40,000 Residences = $ 0.37 per month increase
Pacific states that it would be asking for an increase of approximately 37 ¢ per household to offset these
costs if it cannot obtain the cost savings associated with the use of green waste as ADC.
Section 7.8 of the Solid Waste and Recycling Agreement states that Pacific may submit a request to the
City Council for additional rate relief at any time extraordinary expenses are incurred beyond Pacific's
reasonable control. The Section goes on to state that the City Council reserves the right to approve or
disapprove such a request at its sole discretion, Staff does not agree that the items listed all qualify as
extraordinary expenses however, the intent behind appropriately compensating service employees and
restoring the environment by reducing the impacts to air quality are concepts that staff supports.
Staff has consistently encouraged Pacific to concentrate on more efficient and effective operational
approaches to improve its rate of return rather than rate increases. This proposal by Pacific is
consistent with that request. In its letter of March 14, 2002 Pacific stated that it would not seek
increases to offset these costs if the adjustment to accept yard waste as ADC was approved.
The savings from truck miles by City crews, additional free tonnage for green waste from City crews
and subcontractors, and the free processing of clean dirt as ADC will provide the City with significant
value.
Also attached is a copy of the residential yard waste instructions. The instruction help illustrate how
the City involves residents in the program which collects and processes approximately 15,000 tons of
material per year.
FISCAL IMPACT:
There will be no cost impacts to the general fund as a result ofrecommending the proposed resolution,
Public Works may avoid some recycling and disposal costs due to the increase in free recycling
options at the landfill. City tree trimming crews will travel less distance to recycle the green waste
generated in the City and may have more time for tree trimming, Total avoided costs for the City are
estimated at approximately $150,000 per year to $300,000,
Alternative Daily Cover- Green Material Regulations
Subchapter 4. Criteria for Landfills and Disposal Sites
Article 2. CIWMB - Daily and Intermediate Cover
20690. CIWMB - Alternative Daily Cover. (TI4:Section 17682,
17258.21(b»
(3) Processed Green Material
(A) Processed green material shall be green material as defined in Title 14,
California Code of Regulations, section 17852(u) with the exclusion of
manure. Processed green material may include varying proportions of wood
waste from urban and other sources and shall be ground, shredded, screened
or otherwise processed in a manner to provide a compacted material free of
open voids when applied to meet the perfonnance requirements as
alternative daily cover.
(B) Processed green material shall be restricted to a minimum compacted
thickness of 6 inches and average compacted thickness of less than or equal
to 12 inches.
(C) Processed green material placed as cover shall not be exposed for greater
than 21 days.
BENEFITS OF CITY OF CHULA VISTA CONTRACT RENEWAL
WITH ORGANIC RECYCLING WEST, INC.
Historical Overview of Organic Recycling West, Inc. Relationship with City of Chula Vista
Organic Recycling West, Inc. (ORW) opened it's Otay Mesa composting facility in May of 1994, after two
years of permitting. Chula Vista (City) was ORW's first choice for a siting location, as the facility was
designed with consideration of and preference to processing Chula Vista's organic waste stream. With the
assistance of Chula Vista staff, ORW sited in Otay Mesa at a location considered feasible both economically
and logistically to the City. ORW expressed interest in contracting directly with the City, but was advised
by City staff to contract with its hauler, Laidlaw Waste (now Pacific). Since Chula Vista's organic waste
stream was central to ORW's busi.ness~ and a consistent supply of feedstock was necessary to meet growing
market demand for soil amendments and mulches produced at the facility, ORW approached the City in 1996
for a direct contract. In May of 1997, a 5-year contract was awarded to ORW.
Overview of Importance of Composting to California Jurisdictions and Environmental
Quality
"Organic materials make up approximately forty percent of the total wastestream going to landfills. To
divert organic materials from landfills and comply with AB939 waste reduction mandates, many local
jurisdictions have developed an infrastructure that collects, segregates, and processes these materials into
value-added products at composting facilities or at chipping and grinding operations. If these facilities and
operations close, the organic materials they currently process will be returned to the wastestream and be
landfilled. In landfills, it is primarily this organic fraction of the wastestream that increases the amounts
of leachate and emissions that can contaminate groundwater and the atmosphere. This makes the need to
maintain and increase the diversion of organics even more imperative. Thus, closure of organics processing
facilities would have detrimental impacts on local jurisdictions, AB939 attainment, statewide diversion
levels, landfill capacities, and air and water emissions. I!
Quote from Agenda Item 31, Board meeting on April 16-17, 2002, "Discussion Of Threats To The Organic
Materials Recycling Industry In California," California Integrated Waste Management Board.
ADC (Alternate Daily Cover) Impacts on Environment and Public Perception
When exploring potential recycling options for the City's green waste, prior to and during contract
negotiations with ORW, Chula Vista staff was strongly opposed to sending its material for use as ADC, and
for good reason: ADC is the lowest value use for green material, and rates seventh out of a possible seven on
the United States Composting Council and National Recycling Coalition's resource recovery hierarchy. The
reason for this low rating is that green waste, even though it'll be collected separately from other
recyclables and trash in Chula Vista, will be landfilled like the rest of its garbage. Rate payers will be
disappointed to learn that the care they take to separate their recyclable green waste will not be coming
back to them in the form of free, nutritious compost, but rather disposed of in the landfill.
Although California Assembly Bill 939 presently awards diversion credit to cities sending green waste to
landfills for use as ADC, its use is highly controversial and has been the subject of considerable debate. The
Otay Landfill may have 20 years or more of capacity, but ADC's life as an allowable activity for diversion
credit may be shorter. Misreporting and potential overuse of ADC by nine or more California landfills, and
heavy lobbying from concerned environmental groups and business interests has prompted the California
Integrated Waste Management Board to reassess legislation and current policies addressing ADC.
From an environmental and public perception standpoint, the reasons ADC is unpopular are obvious: an
easily recyclable waste material carefully sorted and collected separately is being ground and put into the
landfill, taking up valuable landfill airspace, creating methane gas which leaks into the atmosphere (even at
sites which attempt to recover it), and adding to the potential for groundwater contamination through
leachate, while the city receives credit for "landfill diversion" efforts. If Chula Vista chooses the ADC
option, it will transform its recycling program overnight from one of the most progressive in the county to
one of the least.
Chula Vista Contract with ORW
ORW's contractual duties to Chula Vista include providing "...the lowest rate offered by the Consultant
[ORW] to any municipality or hauler collecting on behalf of a municipality, that delivers material to a
facility located within a 20 mile radius of the City limits...", provide finished compost or mulch for
distribution to residents, expand green waste feedstock to include other organic materials, and "Make a good
faith effort to pursue relocation within the city limits of the City, and cooperate with the City to identify a
site that will maximize the benefits and minimize the costs to City rate payers."
ORW has adequately performed all of its duties as specified in the contract, and has had no indication nor
has any correspondence from Chula Vista staff on file to suggest otherwise. In addition to the lowest rates,
Chula Vista and its contracted hauler have been given preferential service since the beginning of the
contract. Hours of operation and staff hours have been lengthened to receive trucks delivering City green
material, CPI increases in 1998 and 1999 were waived, and contaminated load fees have been waived as well.
Although contract language addressing relocating the facility to Chula Vista is "soft," ORW has made
substantial efforts to move its operation to within city limits, and identified three excellent sites with
strong potential for composting or transferring green waste to the existing ORW facility (with the entire
savings going to the City). A property on Maxwell Road was already zoned and permitted as a transfer
station, and would have been an ideal location to reduce travel required by Pacific trucks delivering green
waste and serve as a retail outlet and distribution point for compost giveaway events for Chula Vista
residents. This potential location was rejected as a possibility by City staff. Two other viable locations
adjacent to Pacific Waste's landfill operations and owned by the same company were identified, but turned
down by Pacific for non-specified reasons.
ORW efforts at increasing organics volume from Chula Vista has resulted in quadrupling construction
lumber recycling. The facility will soon be accepting drywall (most of which will come from Chuia Vista),
and has informed City staff that dirt may be delivered to ORW for free. Several meetings and scouting trips
have occurred in attempt to increase food waste recovery, but Pacific Waste was unwilling to perform the
collection necessary. Although ORW's contract requests the expansion of organics recovery, and ORW has
made a good faith effort to do so, citing the lack of expanded feedstocks as one of the reasons to deny renewal
of the contract is unfair and without base. Increased organics recovery requires cooperation between the
City's franchised hauler, Pacific Waste, and this has not occurred. Further, Pacific owns the landfill as well,
and any material diverted from the landfill to the ORW facility represents a conflict to their own business
interests and loss of income.
ORW has been at its present location for nearly a decade, was the first fully-permitted compost facility in
the County of San Diego, and the largest. Its soil amendment and mulch customers include the largest and
most well-established landscaping firms in the county, as well as growers, theme parks and cities.
Currently in the process of finalizing a facility expansion, ORW remains a viable and sustainable business.
Request for Fair Notice or Opportunity to Re-negotiate
Despite great success at its current location, ORW remains open to relocating its facility to Chula Vista,
would like to remain a partner with the City, and is willing to sit down and negotiate terms. ORW soil
amendments and mulches are purchased by a multitude of Chula Vista and San Diego County companies, and
can't be produced without a consistent supply of feedstock. If Chula Vista chooses not to renew its contract
with ORW, we ask for 90 days to source more material and keep our customer base. After five years of
service to Chula Vista, we have been informed less than 30 days prior to the end of our contract that staff
will recommend not to renew it, in a meeting we called ourselves. With Chula Vista representing 65% of our
current revenue, we would appreciate the courtesy of 90 days notice, if not the opportunity to re-negotiate
terms to the City's benefit.
Attachments:
US Composting Council and National Recycling Coalition resource conservation
hierarchy
Proposed compost site locations in Chula Vista
Aerial photo of Organic Recycling West,lnc,
US Composting Council and National Recycling
Coalition Resource Recovery Hierarchy:
1. Waste reduction, which includes grasscycling and low-output
landscape designs
2. Recycling, which includes home composting, mulching, and
on-site composting where feasible
3. Source separated organics composting
4. Mixed waste composting
5. Refuse to energy
6, Incineration
7. Landfills
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