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HomeMy WebLinkAboutStaff Report 104-07City of PaJo TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES JANUARY 22, 2007 CMR: 104:07 FINANCE COMMITTEE FORWARDING WITHOUT RECOMMENDATION STAFF PROPOSAL TO ESTABLISH A POLICY ON RENT CHARGED BY THE GENERAL FUND TO THE REFUSE FUND ON UNOPENED PORTIONS OF LANDFILL RECOMMENDATION The Finance Committee is forwarding to Council without a recommendation, staff’s proposal to establish a policy on rent charged by the General Fund to the Refuse Fund on closed portions of the landfill whereby the Refuse Fund should pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use. The Finance Committee split 2-2 on the staff recommendation. Staff recommends that Council: 1.Establish a policy on rent charged by the General Fund to the Refuse Fund on closed portions of the landfill whereby the Refuse Fund would pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use. 2. Authorize .the City Manager to enter into a tolling agreement between the General Fund and the Refuse Fund whereby the statute of limitations in connection with the collection of back rent shal( be tolled and suspended during the period that the agreement is in effect. 3.Direct staff to prepare an agreement between the General Fund and the Refuse Fund regarding use of the City-owned landfill. COMMITTEE REVIEW AND RECOMMENDATIONS In the City Auditor’s review of the Environmental Services Center proposal, the City Auditor recommended that staff should determine whether the Refuse Fund should be responsible for paying rent on the closed, undeveloped areas of the landfill. Th~ Finance Committee reviewed staff’s original recommendations on December 6, 2005 (CMR:441:05), and recommended that Council adopt a policy whereby the Refuse Fund pay rent on closed portions of the landfill that had not yet been developed into parkland. On October 17, 2006, staff returned to the Finance Committee with a proposed payment plan whereby the Refuse Fund should pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use CMR:104:07 Page 1 of 2 (CMR:373:06). While a recommendation of the proposed payment plan was placed in abeyance pending further staff investigation per the Committee’ s direction, the Finance Committee moved to initiate a tolling agreement between the General Fund and the Refuse Fund. On December 12, 2006, the Finance Committee considered staff’s recommendation whereby the Refuse Fund should pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use (CMR:440:06). A motion to approve staff’s recommendation resulted in a split vote, 2-2. DALE WONG Senior Financial Analyst DEPARTMENT HEAD:~ ~ATS ~rec~r of/Administrative Services CITY MANAGER APPROVAL Q-~~’ E~IILY HARRISO"N Assistant City Manager ATTACHMENTS: Attachment A: CMR 440:06 "Recommendation to Establish a Policy on Rent Charged by the General Fund to the Refuse Fund on Unopened Portions of Landfill from Finance Committee Meeting of October 17, 2006" Attachment B: Tolling Agreement between the City of Palo Alto and the City of Palo Alto’s Refuse Fund CMR: 104:07 Page 2 of 2 ATTACHMENT A City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION:FINANCE COMMITTEE FROM: DATE: SUBJECT: CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DECEMBER 12, 2006 CMR: 440:06 RECOMMENDATION TO ESTABLISH. A POLICY ON RENT CHARGED BY THE GENERAL FUND TO THE REFUSE FUND ON UNOPENED PORTIONS OF LANDFILL FROM FINANCE COMMITTEE MEETING OF OCTOBER 17, 2006 RECOMMENDATION Staff recommends that the Finance Committee recommend that Council establish a policy on rent charged by the General Fund to the Refuse Fund on closed portions of the landfill whereby the Refuse Fund should pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use. BACKGROUND on October 17, 2006, the Finance Committee considered a policy whereby the Refuse Fund pays rent on unopened portions of the landfill. The Finance Committee directed staff to investigate a possible alternative valuation of the landfill based on the availability of any appraisals performed by the Army Co~s of Engineers as part of the San Francisquito Creek flood control feasibility study. Also, the Finance Committee moved to initiate a tolling agreement between the General Fund and the Refuse Fundl DISCUSSION As directed by the Finance Committee, staff explored a possible alternative valuation of the landfill and found that the Army Corps of.Engineers has not yet performed any detailed land appraisals in Palo Alto. During a past meeting of the San Francisquito Creek Joint Powers Authority Board, there was general discussion and agreement that dedicated parkland parcels should be valued at a lower rate than unencumbered parcels due to the considerable constraints on such land. However, the Army Corps has not yet performed an appraisal nor provided any detailed land valuation as part of the San Francisquito Creek feasibility study. CMR:440:06 Page 1 of 2 PREPARED BY: DALE WONG ~-~ Senior Financial Analyst DEPARTMENT HEAD: CARL Director Administrative Services CITY MANAGER APPROVAL: Assistant City Manager ATTACHMENTS: Attachment A: CMR 373:06, Recommendation Regarding Rent Charged by the General Fund to the, Refuse Fund on Unopened Portions of Landfill CMR:440:06 Page 2 of 2 ATTACHMENT A City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL " ATTENTION:FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE: SUBJECT: OCTOBER 17, 2006 CMR:373:06 RECOMMENDATION REGARDING RENT CHARGED BY THE GENERAL FUND TO THE REFUSE FUND ON UNOPENED ¯ PORTIONS OF LANDFILL RECOMMENDATIONS Staff recommends that the Finance Committee recommend that Council establish a policy on rent charged by the General Fund to the Refuse Fund on closed portions of the landfill whereby the Refuse Fund should pay rent at less than full market value in consideration of the fact that the landfill area cannot be readily converted to the land’s highest and best use. BACKGROUND In the City Auditor’s review of the Environmental Services Center proposal, the City Auditor recommended that staff should determine whether the Refuse Fund should be .responsible for paying rent on the closed, undeveloped areas of the landfill. The Finance Committee reviewed staff’s original recommendations on. December 6, 2005 (CMR:441:05), and recommended that Council adopt a policy whereby the Refuse Fund pay rent on closed portions of the landfill that had not yet been developed into parkland. Staff was also directed to return with a proposed payment plan to recover unpaid rent for past periods and to provide funding for-post-closure park development. Staff was also directed to examine the legal issues relating to the recovery of rent in past periods and to review the appraised value of the landfill area. This report provides a proposed rental amount and payment plan. DISCUSSION The City retained an independent appraiser to appraise the land, and that appraisal determined that the highest and best use of the land was Industria!- Research & Development. After review of the appraised value, staff considered the possibility that the landfill area cannot be readily developed into usable space in keeping With its highest and best use designation as Industrial- Research & Development. Accordingly; staff has referred this matter back to the Finance Committee to review this new consideration before submitting a proposed payment plan to the full City Council. The proposed payment plan sets the rent at less than full market value (see Attachment A). The plan also accounts for the recovery of back rent on closed portions of the landfill since 2004-05, CMR:373:06 Page I of 3 which is consistent with the applicable two-year statute of limitation for collection of back payment. The statute of limitations applies from the .date of the forthcoming written lease agreement which will be completed once Council considers the payment plan. In her review of the Envirorm~ental Services Center proposal, the City Auditor noted several complicated land use issues with regard to locating a facility on the landfill site. The report states: "The landfill site is dedicated parkland with flat, natural wetlands on three sides. Identification and discussion of all California Environmental Quality Act (CEQA) issues, regulatory agency permit .and approval processes, and land use approval processes add complexities and costs to the proposed project. Use of dedicated parkland requires voter approval." Given the complexities of locating a facility on the landfill site, staff has considered that it may be difficult to readily convert the landfill area to the land’s highest and best use designation. Therefore, staff presents a payment plan whereby the rent charged on the closed portions of the landfill is based on a return on the land value of five percent, which is less than full market value, but which accounts for some possibility that the land could be converted to non-park use at a later time. As such, based on the square footage of the landfill, the amount charged would be $7,420,925, which is less than the full market rental return often percent as determined by the independent appraiser. To avoid the need for customer rate increases due to increases.in the amount of rent owed, the annual rental payments would follow the current payment schedule previously adopted by Council, which calls for annual payments of $4,288,747 through 201!-12, and payments of $2,094,332 in 2012-13 and $2,094,331 in 2013-14 (CMR:238:0.4). At the end of 2010-11, or when the landfill is scheduled to close and be developed as a park, the cumulative difference between the amount charged and the ren~ payments made would grow to $21,925,247. This plan would add $13,447,837 to the current payment schedule. Annual rent payments of $2,094,331 would continue from 2013.: 14 through 2019-20 with a final payment of $ 881,851 due in 2020-21 (see Attachment A). RESOURCE IMPACT The current Long Range Financial Plan reflects projected net operating deficits for the General Fund in 2014-15 and beyond, due in part to the elimination of renta! payments according to the existing smoothing schedule. These projected net operating deficits could be reduced or eliminated entirely under the proposed payment plan. The plan could have an impact on Refuse Fund rates and charges to the ratepayers over the long term. POLICY IMPACT This change to the Refuse Fund rent responds to an audit recommendation and will not impact the rent charges of other utility funds. In addition, a policy question still needs to be addressed related to how much Refuse Fund rent shall be set aside for park development. Staff will return at a later time with a recommendation addressing this policy question. CMR:373:06 Page 2 of 3 ENVIRONMENTAL REVIEW This matter is not a project for the purposes of the California Environmental Quality Act. PREPARED BY: DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: DALE WONG Senior Financial Analyst _ GLENN S. ROBERTS Director of Public Works Assistant City Manager ATTACHMENTS Attachment A: Schedule of Landfill Rent Attachment B: CMR:441:05 "Response to the Audit Recommendation Regarding Rent Charged by the General Fund to the Refuse Fund on Unop.ened Portions of Landfill" Attachment A City .of Palo Alto Landfill Rent Schedule 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Current Rent Charged .4,700,821 4,700,821 4,700,821 4,700,821 4,700,821 4,700,821 4,700,821 0 0 0. 0 0 0 0 0 0 0 Rent Payment 4,288,747 4,288,747 4,2.88,747 4,288,747 4,288,747 4,288,747 4,288,747 4,288,747 2,094,332 2,094,331 0 0 0 0 0 0 0 Proposed Rent Charged 7,42O,925 7,420,925 7,420,925 7,420,925 7,420,925 7,420,925 7,420,925 0 0 0 0 0 0 0 0 0 0 Rent Payment 4,288,747 4,288,747 4,288,747 ¯ 4,288,747 4,288,747 4,288,747 4,288,747 4,288,747 2,094,332 2,094,331 2,094,331 2,094,331 2,094,331 2,094,331 2,094,331 2,094,331 881,851 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 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 0 0 0 Proposed rent payments beyond current schedule 13,447,837 ATTACHMENT B City of Palo Alto CityManager’s Report. TO: ATTENTION: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL FINANCE COMMITTEE CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DECEMBER 6, 2005 C!tIR:441:05 RESPONSE TO THE AUDIT RECOMMENDATION REGARDING RENT CHARGED BY THE GENERAL FUND TO THE REFUSE FUND ON UNOPENED PORTIONS OF LANDFILL RECOMMENDATIONS Staff recommends that the Finance Committee recommend that Cohncil establish the City’s policy on rent charged by the General Fund to the Refuse Fund on cl0sed but unopened portions of the landfill by choosing one of the.following alternatives: ]) The Refuse Fund should pay rent on unopened portions of the landfill and staff is directed to update the appraised, value of the landfill area, review legal iss.u.es, and return with a proposed payment plan. 2) Th.e Refuse Fund should not pay rent on ihe unopened portions of the landfill. BACKGROUND Landfill rent is Charged to the Refuse Fund by the General Fund based on an independent annual appraisal which determines the market value rental amount according to the landfill’s highes~ and best use (Industrial- Research & Development). For 2005-06, appraised rent for the landfill is $4,700,821. This appraised amount has remained unchanged, since 2001-02. The actual annua! rent paid by the Refuse Fund is $4,288,747. Annual rental payments have remained at this level since 1995-96. The policy to not pay the full-appraised value was instituted by Council in 1995-96 to avoid steep rate increases that wo~ld have been necessary to cover the increases in appraised rent (CMR:181:95). Council has extended this policy twice (CMR:266:99 and CMR:238:04). To compensate for the difference between the appraised amount and the payments made, Council approved a smoo{hing schedule in which the Refuse Fund is required to make payments until 20t3-14, beyond the anticipated time of landfill closure in 2010-11 (CMR:-238:04). The By×bee Park Master Plan outlines the sequence of phases of landfill closure adopted by the City Council. Each phase of the plm~ consists of closing a cei-tain area of the landfill, developing that area into park space, and eventua!ly opening th~ area to the public. Phase I (28.86 acres) was.completed in ].990. Phase II is further divided into three sub-phases. Phase IIA (22,47 acres) wasdosed in 1992, and Phase IIB (23..19 acres) was closed in 2001. Phase IIC consists of the remaining 51.24 acres of active landfill area. According to the Byxbee Park Master Plan, the park development stage for Phase II will not commence until all Phase II landfill areas are closed completely. Upon c]osure of each ]andfill area, rent charges cease. The closure of Phase I was immediate]],. followed by park development and the area was opened to the public shortly thereafter. In contrast, closure for Phases IIA and lib has occurred, but park development has not started and these areas remain closed to the public.. Upon comp]etion of all landfill disposal operations, estimated in 2011, construction would begin for the final closure of Phase IIC and then be followed by park development for the entire Phase II area. Final closure involves install.tug collection piping and wells underground in Phase similar to the piping and wetls which have already been installed in Phases EA and IIB. These phases have already received final clo~ure certification reports from California Integrated Waste Management Board (CIWMB). A layer of low-permeability soil will then be put in place to cap the site and a drainage system will be installed, including a system for gronndwater monitoring. Finally, a vegetative layer will be put in place. The estimated completion for final closure is summer 20 ] 2. Upon approva] of final closui’e certification from the CIWMB, park development could begin in summer 2013, if GeneralFund monies become available for park development. The Byxbee .Park Master Plan recommends park devel0pmeni following landfill closure of the entire Phase II area, (Phases IIA, IIB and IIC); park development preliminary costs were estimated at $2,067,700. A funding plan for park development has not been determined. However, final closure costs and post closure maintenance costs are fully funded for 30 years in the Refuse Fund, - In the City Audilor’s review of the Environmental Services Center proposal, the City Auditor recommended that staff should determine whether the Refuse Fund should be responsible-for paying rent on these closed, undeveloped areas. This report provides’ a response to the City Auditor recommendation. DISCUSSION The Byxbee Park. Master Plan does notspecify whether, the Refuse Fund should be resp0nsible for paying rent on the closed, undeveloped potions of the landfill. Furthermore, c~rrent City policy regarding rent paid for General. Fund properties used by Enterprise Fund operations does not address this issue (CMR: 181:95). Past Council discussion has not focused on this question either. This leaves the determination of this matter as a policy decision for the City ’Council. Therefore, staff has provided two alternatives for Council’s consideration. Alternative 1: The Refuse Fundshoutd pay rent on unopened portions of the landfill. Staff should be .directed to update the appraised value of the landfill area and return with a recommended payment plan. Even though the closed areas of the landfill are not being used by the Refuse Fund, these areas are still not available for public use as parkland. It could be argued thai the Refuse Fund should therefore, pay rent on those areas. Should Council direct staff to conduct an appraisal of the land, staff would ascertain whether alternative cumulative-rent amounts couJ-d be derived. The. appraisal process is intended to develop options for establishing a value for the land and the rent amount owed by the Refuse Fund so that refuse rates are. not overJy burdened as a result of charging rent on the unopened portions of land. Staff will also review legal issues related to the impact of rent costs on Refuse ra~es. Alternative 2: The Refuse Fund should not pay rent on the nnopened portions of the landfill. This option essentially endorses the status quo. The stoppage of rent on closed areas is based on the premise that the closed, undeveloped portions of the landfill are not utilized by the Refuse Fund. There is no operational or technical reason from the Refuse Fund activity, why the area could not be utilized as park land immediately. The only constraints fo such use are the Byxbee Park Master Plan staging recormnendations and the lack of General Fund resou[ces for park development. Hence, the Refuse Fund should not be liable for rent on these areas. RESOURCE IMPACT " The implications for each alternative are presented below. Alternative 1 The Refuse Fund should pay rent on unopened portibns of the landfill. Staff should be directed to hpdate the appraised value of the landfill area and return with a r~com_mended payment plan. ’ " " _. The c~rrent Long Range Financial Plan reflects projected, net operating deficits for lhe General Fund in 2013-14, and beyond, due in large part to the decrease of rental payments according to the existing smoothing schedule. These projected net operating deficits could be reduced or eliminated entirely under Alternative 1. This alternative could have animpact on Refuse Fund rates and charges to the ratepayers over the long term. Alternative 2: The Refuse Fund should not pay rent on the unopened portions of the landfill] This option provides the General Fund.with a steady revenue stream until 2013-14. Compared to Alternati\,e 1, the General Fund would lose this revenue stream much sooner under this scenario. Conversely, the Refuse Fund would be free of its rental commitment much sooner. Resources within the Refuse Fund couJd then be allocated for other capital or operating needs. Projected net operating deficits would persist from 2012-13 and beyond due primarily to the elimination of the rental payments. New revenue or expense reductions would be needed at that time to balance the General Fund. PREPARED BY. Senior Financial Analyst DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: CARL Drector of ~inistrative Serv,~ces GLENN S. ROBERTS Director of Public Works EMIL{SLHARR~S ON Assistant City Manager ATTACHMENTS Attachmem l: Map of Landfill Area Attachment 2: Correspondence from the Santa Clara .County and California Integrflted Waste Management Board Regarding Acceptance of Closure Certification Attachment 3: Byxbee Park Pa]o Alto Baylands Update- June .1991 NIS{¢8 (]OOqJ OI--IV O]Vd /- ~ 0 bJ ~ Z 0 0k- C) 0 ] County of Sania Clara Heal{l] Depar]ment 2220 tvloorpark Avgnue San JOSe, California 95128 ATTACHMENT 2 P, obert Le Ci.ty ofPalo Alto P~bljc Works De])arrmanl P.O. Box 10250 Pa!o Ai!o, CA 9430.t RE:Pa}o Alro LandFill - F;:l(:ilily No_ 4:t-AM-000 Phase ].]A Close,re- Final ]3ocumenlatiO~] Report Dear Tlqis ¢lepartmenl has reviewed and approved the above re.fete.need que.~tions, ple;~se ca!l ~l~e- at (408) 299-6930. report.If yotl ]~a\,e any Board of Supervisors: Michael M. Plorida. Zoe Lo~’greo. Ron Gon2ales. Rod DiriOon. Dianme lvlCl<.e qna Com’~rv Ex,e:culive: Sally R. Reed Winston H. H]ckox ~m, ironmenta] ¯ Protection April 13, 2001 Calif0miaIntegrated Waste Management Board Linch Moulton-Patterson, Chair 1001 1 Street ¯ Sacramento, California 95814 o (916) 341-6000 Mailing Address: 2. O. Box 4025, Sabrcrmento, CA f!5812-4025 www.ciwmb.ca.gov Gray Davis City of Palo Alto Public Works Department Attn: Mr. Phung Hoang, Senior Engineer P.O. Box 10250 Palo Alto, California 94303 AccePtance of ClosureCertification for Partial Final Closure Activities ai PaloAIto Landfill, Phase lib ’43-AM-0001) Santa Clara County. Dear Mr. Cummins, Staff of the California Integrated .Waste ManagementBoacd (C!WMB) RCTSB staff has reviewed the Partial Final Closure Certification Reports forthe subject disposal site received December 26, 2000, and ygur request for disbursal of closure funds. CIWMB g~aff ha~ f0.L~ndtbat thece_rtitJqation m~~is tbei-e.qui~-emef~li~set forth in Title 27, California Cdde 6f RegulationS (14 CCR)I DMS]0n i, Ch~l~te’r 5~’Af:ticle 3.4, section 2t880 and is .here..by accepted. . Accoi-ding to 27 CCR, Division 2, Subdivision 1, Chapter 6, Subchapter 3, Article 1 Section 22235 (a), City of Paio Alto (City) is released from. the requirements of demoristratingfinancial assurances for closure of this portion of Palo Air0 Landfill. The City, however, is required to maintain financial assurances for po~tclosuremaintenance until the ClVVMB determines that the City has completed postclosure maintenance according to the applicable postclosure plans and permit requirements. If you have any questions, please contact Mr. Jacques Graber at (916) 341-6353. For questions regarding the financial assurances mechanism, please contact Ms. Diana Vaughn-Tfiomas at (916) 341-6323. Sincerely, ~auman Deputy Director" . Pefrnitting and Enforcement Division CC.’M[.’ Stan Chau, SanN Clara ~.0#n!.y Environmental R~esource.s Agcy. (L.EA) Mr, CecilFelix, San Francisco Ba~, Regional Water Q"uality Control B0ard Mr. Jacques Graber ClWMB ATTACHMENT,. 3 o8>co ~ 0 .© ,£ o o .~ 0 0 ~ Z 0 00 0 0 o oo oo oo o oo z z.< ~ 0 ATTACHMENT B TOLLING AGREEMENT This Tolling Agreement ("Agreement"), dated January , 2007 ("effective date") is entered into between the CITY OF PALO ALTO, a chartered California Corporation ("City"), on the one hand, and the CITY OF PALO ALTO’S REFUSE FUND ("Refuse Fund"), on the other hand. RECITALS A. WHEREAS, the City charges the Refuse Fund rent for the use of the Byxbee Park landfill owned and operated by the City of Palo Alto; B. WHEREAS, as portions of the landfill reach capacity and are closed, the City intends to convert those closed portions of the landfill to parkland; C. WHEREAS, prior to park conversion, property will be limited; the use of the D. WHEREAS, on December 6, 2005, the Finance Committee recommended that the City Council adopt a policy whereby the Refuse Fund pay rent on such closed portions of the landfill that have not yet been developed into parkland; E. WHEREAS, the City Council is in the process of determining what rental amount should be charged for use of the closed portions of the landfill that have not yet been developed into parkland F. WHEREASI the City wishes to recover back rent on portions of the landfill that have been closed since 2004, but has not yet determined the appropriate rate; G. WHEREAS, section 339 of the California Code of Civil Procedure provides that actions upon a contract, obligation or liability not founded upon an instrument of writing must be commenced within two years of the discovery of the loss suffered; H. WHEREAS, the parties wish to retain the status quo existing as of~the effective date of this Agreement in order to allow the City time to determine the appropriate rate for back rent due on closed portions of the landfill; 1 070117 ab 6050064 NOW, THEREFORE, in consideration of the covenants, conditions and promises described in this Agreement, the parties to this Agreement agree as follows: i. Each party agrees that the statute of limitations and any other applicable equitable, statutory, or common law time limitations or defenses with respect to any rights, claims, damages, actions, causes of action, and suits at law or in equity that the City may have in connection with the collection of back rent from the Refuse Fund are tolled beginning on the effective date of this Agreement until the date that the City Council or its designee determines the appropriate rate of the back rental payments due. 2. Either the City or the Refuse Fund may terminate this Agreement on ninety (90) days written notice to the other party, in the manner set forth in paragraph 12 of this Agreement. 3. This Tolling Agreement refers to any and all claims or. causes of action arising out of or relating to the Refuse Fund and the City’s involvement in the collection of rent on closed portions of the landfill. 4. Both the Refuse Fund and the City agree that the terms, extent and duration of this Agreement are reasonable and that they will not challenge or contest the authority of the parties to agree to suspend the running of, the waiver of, or the agreement not to assert, the defense of any applicable statute of limitations relating to the timing of the assertion of claims as set forth herein. 5. This Agreement is not intended as, and shall not be construed as, an admission by ~either party that the other party has valid claims or defenses. 6.This Agreement shall be interpreted,construed and enforced in accordance with the laws of the State of California. 7.This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and any prior oral or written statements concerning this subject are merged herein for all purposes and are of no further force and effect. 8. This Agreement may be amended only by written agreements signed by all of the parties to this Agreement. 070117 ab 6050064 9. Any notice to be provided in connection with this Agreement shall be addressed as follows and delivered by messenger, facsimile, overnight delivery service, or first-class United States Mail, certified mail, return receipt requested, addressed as follows: To City:City Manager .City of Palo Alto 250 Hamilton Avenue, 7th Floor Palo Alto, CA 94303 To Refuse Fund:City Manager City of Palo Alto 250 Hamilton Avenue, 4th Floor Palo Alto, CA 94303 Any such notice shall be deemed delivered on the date of delivery, if delivered personally or by facsimile, or on the date shown on the return receipt or the delivery confirmation as the date of delivery or the date on which it was determined that delivery to the above address was actually made, whichever is applicable. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above. CITY OF PALO ALTO By FRANK BENEST City Manager City of Palo Alto Approval as to form: By GARY M. BAUM City Attorney City of Palo Alto 3 070117 ab 6050064 REFUSE FUND By FRANK BENEST City Manager City of Palo Alto Approval as to form: By GARY M. BAUM City Attorney City of Palo Alto 070117 ab 6050064