The John Smith Road Landfill operating agreement report to the San Benito County Board of Supervisors states there were disparities in negotiations with Waste Solutions Group of San Benito County. Supervisors called it a “bad agreement” from the county’s perspective.
The San Benito County Resource Management Agency gave a presentation on Sept. 27 to the supervisors on the agreement between the county and Waste Solutions Group of San Benito County LLC, and financial considerations of existing operations and the proposed expansion project.
After the scope of the proposed expansion project became clear and impacts were analyzed in the draft environmental impact report, the county requested amendments to the agreement, according to the report. It added that though discussions are ongoing, Waste Solutions has indicated it will not agree to amendments that would significantly alter the financial dynamics of the agreement negotiated in 2019 before the draft environmental impact report is completed.
The presentation resulted from a request by Supervisor Kollin Kosmicki, who wanted to know how the county would address the confusion about financial arrangements regarding rates and revenues, and possibly amend it, if needed.
After the presentation, Supervisors Peter Hernandez and Kosmicki said the county was at a disadvantage because of a lack of transparency on the part of Waste Solutions resulting in rates almost twice as high for county residents as out-of-county customers.
Hernandez said the 2019 agreement was a failed negotiation that sped up the consumption of the landfill because the profit margins were better for Waste Solutions, making out-of-county waste more profitable. Kosmicki said the county was at an inherent disadvantage in the negotiations because the county’s financials are all public record, and it is not clear what Waste Solutions’ financial picture is because it is not required to disclose it.
County staff told Kosmicki the county knows Waste Solutions’ net revenue but does not know the company’s operating costs. He was also told the out-of-county rate is just one component of additional fees charged to out-of-county residents for curbside pickup and fees on delivery to a transfer station and then to the John Smith Landfill, which in total, could be more than county residents are paying.
The current tipping fee for in-county waste is $58.67 per ton. This was set by Waste Solutions in 2019 based on the average tipping fees in Marina ($70 per ton) and Salinas Valley ($64.75 per ton). The county may set lower rates for in-county packer (Recology) curbside collection, which is $44.75, but the county must pay the difference to Waste Solutions.
According to county documents, the Board of Supervisors formed the landfill ad hoc committee on Feb. 8 to review the agreement and potentially engage in negotiations. The committee, consisting of Kosmicki and Supervisor Bea Gonzales, requested that staff initiate and engage in negotiations.
The county entered its first amendment to the agreement with Waste Solutions on December 21, 2010. There were three additional amendments of the agreement in 2013, 2019 and 2021. The presentation to the supervisors covered the terms of the agreement, estimated county revenue and costs—with and without expansion—and the status of the county’s request to negotiate amendments to the agreement.
An economic analysis of operations of the landfill from 2010 to 2022 determined there are three revenue sources to the county from the landfill:
- Landfill depletion fees, net of cost-of-living adjustment payment
- Road impact payments
- Disposal of county operations department’s waste
Since 2010, Waste Solutions has paid a Landfill Depletion Fee per ton that has increased from $2.81 (2010) to the current amount of $4.18. Fees will increase over next year and then decrease by 90 cents in December 2023, assuming the landfill expansion does not happen.
Additional benefits to the county under the current agreement according to the report include:
- 15 years of capacity reserved for in-county waste
- Free disposal of waste from county operations
- Waste Solutions is responsible for closure and post-closure obligations, including environmental monitoring and liability.
- $200,000 annual General Fund payments, totaling $600,000 to date. Waste Solutions, though, will likely seek credit for this amount against future payments to mitigate impacts to roads from an expansion.
Existing costs to the county according to the presentation include:
- $40,000 annual cost for litter removal
- Integrated Waste Management staff time
- Compensation to Waste Solutions for cost-of-living adjustments, which ranges from 2% to 6% each year (county can pay cost-of-living adjustments to Waste Solutions or pass the cost on to ratepayers)
According to the presentation, the county spent approximately $3.1 million between 2019 and 2022 to repair and maintain roads along the haul route (Shore Road from Hwy 25, then down Fairview Road and then John Smith Road) for trucks coming from outside the county. While Waste Solutions paid $845,500 ($1 per ton) between October 2019 and April 2022. The report stated the actual cost to repair the roads is approximately $1 million per mile.
According to the report, the $1-per-ton payments ceased when out-of-county waste ended in April 2022, and payments will not resume if the expansion project is approved.
During public comments, resident Elia Salinas asked if anyone has determined the damage to county roads caused by farmers’ tractors and trucks, as well as concrete, gravel, and lumber trucks. Her question went unanswered.
The draft environmental impact report mitigation measure stated in the report requires that the Waste Solutions pay a “fair share fee toward roadway maintenance and rehabilitation along the haul route for the life of the expansion project.”
According to the report, Pavement Engineering, Inc. is analyzing pavement along proposed and alternative haul routes to determine the fair share of repair and maintenance fees to assess for the damage to county roads from haul trucks. It adds Waste Solutions will likely seek approximately a $1.45 million credit against the fair share fee based on amounts previously paid to the county.
In addition to already spending $7 million on the land to expand the landfill, Waste Solutions will also be responsible for closure and post-closure obligations, including environmental monitoring and liability. It will also be responsible for all costs of an environmental review and preparation of the draft environmental impact report, including reimbursement for county staff time and the time of all county consultants and outside counsel costs.
The county will be required to contribute up to 70 acres of county-owned land for wildlife mitigation. It will also pay $40,000 annually for litter removal, Integrated Waste Management staff time (related to landfill), and compensation to Waste Solutions cost of living adjustments, which ranges from 2%-6% each year.
Additionally, the agreement requires payments to the county if the expansion is approved that will be credited toward Waste Solutions’ costs for California Environmental Quality Act mitigation, including a General Fund payment of approximately $1.2 million for the haul route and a $2 million payment for realignment of the intersection of John Smith and Fairview Roads, or other improvements along the haul route.
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