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Home My WebLink AboutStaff Report 385-08City Manager’s City of Palo Alto Summary Report TO:HONORABLE CITY COUNCIL 11 FROM:CITY MANAGER DEPARTMENT: PUBLIC WORKS DATE:OCTOBER 20, 2008 CMR:385:08 REPORT TYPE: CONSENT SUBJECT:Adoption of a Resolution Formally Establishing a Corrective Action Reserve Within the Refuse Fund in Accordance With the California Integrated Waste Management Board Financial Assurance Requirements RECOMMENDATION Staff recommends that Council: Adopt the attached resolution (Attachment A) approving the formal establishment of a Corrective Action Reserve within the Refuse Fund in the amount of $636,216 (plus annual inflation updates) in accordance with the California Integrated Waste Management Board (CIWMB) requirements that would provide for initiating and completing corrective action in the event of a potential groundwater release from the Palo Alto Landfill; and Authorize the City’s Director of Administrative Services to verify the establishment of the Corrective Action Reserve (Attachment B) and the Director of Public Works to certify the establishment of a financial mechanism for corrective action for the Palo Alto Landfill (Attachment C) in letters addressed to the CIWMB. BACKGROUND In 1990, the City Council passed a resolution formally establishing the landfill’s closure/postclosure maintenance refuse reserve (Resolution No. 6919). In 1992, the City’s landfill consultant, "EMCON", developed a cost estimate for potential corrective actions as part of the groundwater monitoring program for the Palo Alto Landfill. Subsequently, the City established a refuse reserve titled "Water Resources Board Reserve" in order to accommodate these potential corrective action costs. In.2003, another City consultant, "Conor Pacific", prepared a cost estimate update for a potential release to groundwater for the landfill. The City’s corrective action reserve was modified to reflect this updated cost forecast. Since 2003, the City has increased this reserve by an amount equal to inflation based on annual inflation factors provided by the CIWMB. The current amount contained in this account is now $636,216 accounting for the last update in May 2008. City staff believed that with the establishment of the corrective action reserve, the City was in full compliance with the CIWMB policies and regulatory requirements. However, CIWMB staff has recently contacted City staff to request a more formal establishment and committal of funds. CMR:385:08 Page 1 of 3 The CIWMB has promulgated regulations requiting that landfill operators have adequate financial assurances for closure activities and corrective actions. A financial assurance mechanism is an arrangement_whereby a party facing a potential or certain liability pledges or deposits funds so that 1) all anticipated costs will be covered; 2) all funds will be secure over time; and 3) all funds will be available when needed. PRC section 43501 mandates that landfill operators establish "a trust fund or equivalent financial arrangement" as evidence of financial ability to pay for the costs of closure/postclosure maintenance and corrective action for their respective facilities. The purpose of the financial assurance mechanism (for corrective action) is to directly obligate public entities, involved in environmentally hazardous activities, to commit funds in advance for the costs of protecting the environment. There are several mechanisms allowed for government entities to provide financial assurance. The City has chosen an enterprise reserve for both the landfill’s closure/postclosure maintenance and corrective action. To provide security over time and ensure funds are readily available, CIWMB regulations require that monies from the enterprise fund be dedicated to closure/ postclosure maintenance and/or corrective action, and deposited into a mechanism offering protection "equivalent to" a trust fund. The funds must be held by a public agency (or separate department) not directly connected with, nor responsible for operating the sfibject landfill or the waste management operations of the county or city, such as the auditor or treasurer. Pub!ie operators have the flexibility to make arrangements to suit their own needs as long as the CIWMB is satisfied that the funds are adequately protected. On each anniversary of the establishment of the fund, the balance must be increased in accordance with a formula specified by the regulations. DISCUSSION As mentioned above, the City has already established a corrective action reserve to cover potential costs associated with a reasonable foreseeable release from the landfill and has increased the fund annually based on inflation factor updates provided ,by the CIWMB. However, the City has not formally established this reserve by resolution, officially verified the establishment of the reserve, or certified this financial assurance mechanism in accordance with CIWMB requirements. The resolution is necessary to demonstrate the commitment of this reserve for the sole purpose of providing corrective action and gives the CIWMB the authority to direct the Director of Administrative Services to use the funds for corrective action if the City fails to perform corrective action as required by law. Once the attached resolution has been adopted, the City will need to provide a letter signed by the Director of Administrative Services verifying the formal establishment of the reserve (Attachment B) and another letter signed by the Director of Public Works certifying the establishment of a fmancial mechanism for corrective action for the Palo Alto Landfill (Attachment C). RESOURCE IMPACT Sufficient funds have already been budgeted for the corrective action in the amount of $636,216 and are available in the Refuse Fund. POLICY IMPLICATIONS The recommendation does not represent changes to existing City policies. CMR:385:08 Page 2 of 3 ENV][RONMENTAL REVIEW Adoption of this resolution and formally establishing this reserve is not a project under the California Environmental Quality. Act (CEQA) because the activity .wili not cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment. ATTACHMENTS Attachment A:Resolution Attachment B:Letter Verification of Establishment of Reserve Attachment C:Letter Certification for the Establishment of a Financial Mechanism for Corrective Action of the Palo Alto Landfill PREPARED BY: DEPARTMENT HEAD: RON ARP Manager~ol’~ Programs LALO Director of Administrative Services GLENN S. ROBERTS Director of Public Works CITY MANAGER APPROVAL: CMR:385:08 Page 3 of 3 ATTACHMENT A RESOLUTION NO RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO FORMALLY ESTABLISHING A CORRECTIVE ACTION RESERVE WITHIN THE REFUSE FUND IN ACCORDANCE WITH THE CALIFORNIA INTEGRATED WASTE MANAGEMENT BOARD FINANCIAL ASSURANCE REQUIREMENTS WHEREAS, Public Resources Code sections 43500 through 43610.1 and sections of Title 27, California Code of Regulations (Regulations), Division 2, Subdivision 1, Chapter 6, require operators of solid waste landfi!ls to demonstrate the availability of financial resources to conduct corrective action activities; and WHEREAS sections 22228 and 22241 of the Regulations specify an Enterprise Fund and related f’mancial assurance mechanisms as acceptable mechanisms to demonstrate financial responsibility for financing the corrective action of a solid waste landfill; WHEREAS the City currently has a reserve fund entitled the Refuse Water Resources Board Reserve and desires to change the name of this reserve to the Corrective _ Action Reserve and to establish procedures relating to such reserve. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The Director of Administrative Services of the City of Palo Alto (Treasurer) is authorized and directed in connection with the year end budget closing to change the name of the Refuse Water Resources Board reserve within the Refuse Fund to the Corrective Action Reserve.. SECTION 2. The Treasurer is further directed to withdraw funds from the Refuse Fund, for deposit into the Corrective Action Reserve sufficient to meet the requirements of sections 22225 and 22241 of the Regulations on a timely basis. SECTION 3. The funds referred to in Section 2 above shall be deposited and retained by the Treasurer in the Corrective Action Reserve and shall be used to pay only for corrective action of the Palo Alto Landfill. SECTION 4. The Corrective Action Reserve shall be and remain inviolate against all other claims, including claims of the City of Palo Alto or its City Council or the creditors thereof, it being the intent of this Resolution that the mechanism established will provide equivalent protection to a trust fund by ensuring: (1)that the assured amounts of funds will be available in a timely manner for corrective action of the Palo Alto Landfill; and (2)that payments from the Reserve shall be made by the Treasurer, as directed by the California Integrated Waste Management Board (CIWMB), in writing, for the payment of the costs of corrective 080815jb 0130354 action of the landfill(s) covered by this resolution. SECTION 5. Disbursement of funds for corrective action shall be in accordance with section 22234 of the Regulations and as prescribed in section 4(2) above. SECTION 6. The Corrective Action Reserve shall be invested by the Treasurer in the manner provided by law. sEcTION 7. In the event the CIWMB determines that the City of Palo Alto has failed, or is failing, to perform corrective action as required by law, the CIWMB may direct the Treasurer to pay from the Corrective Action Reserve sufficient funds to ensure corrective action and the Public Works Director (Chief Engineer) shall be obligated to direct use of such funds for corrective action in accordance with the directives of the CIWMB. SECTION 8. The Chief Engineer is directed to produce an annual report for transmittal to the CIWMB, containing the following information concerning the Palo Alto Landfill: (1)Stares, including current balance of the Palo Alto Landfill Corrective Action Fund. SECTION 9. When, pursuant to section 22235 of the Regulations, the CIWMB releases the City of Palo Alto from the requirement of maintaining this Corrective Action Reserve, the Chief Engineer and Treasurer are authorized to disburse any remaining funds in accordance with established reserve policies in effect at the time. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Cle~ APPROVED AS TO FORM: Mayor City Manager Senior Asst City Attorney 080815 jb 0130354 2 Director of Administrative Services City of Palo Alto Administrative Services Department October 20, 2008 ATTACHMENTB California Integrated Waste Management Board Financial Assurances Section P.O. Box 4025 Sacramento, California 95812-4025 To Whom It May Concern: Administration 650.329.2692 650323.1741 fax Budget 650.329.2260 650.323.1741 fax InformationTechnology 650.329.2182 650.617.3109 fax Real~sm~e 650.329.2264 650.323.1741 fax Finance 650.329.2182 650.323.1741 fax Accounting 650.329.2264 650323.1741 ~ Purchasing 650.329.2271 650329.2468. Lax 65032922362 650.323.8356 Lax Revenue Collections Verification of Establishment of Reserve The following reserve established within the refuse enterprise fund has been established pursuant to Resolution(s) No., adopted on October 20, 2008 by the Council of the City of Palo Alto: ¯Palo Alto Landfill Corrective Action Reserve This reserve shall be used by the City Engineer (or his designee)of the City of Palo Alto only for corrective action at the Palo Alto Landfill, and is intended to meet applicable requirements of state law. These monies are being held in these funds to preserve their integrity and inviolacy. I will perform my duties and responsibilities in accordance with the terms and conditions of Title 27, California Code of Regulations, Division 2, Subdivision 1, Chapter 6. t This letter shall serve as verification that the Director of Administrative Services of the City of Palo Alto has established this reserve in accordance with the resolution referenced above. The Director of Administrative Services serves as an officer of the City of Palo Alto. 650.320.2317 650.617.3122 Lax Parking Citations 650.329.2252 Direcfor of Administrative Services City of Palo Alto ActionReserve102008.doc printed with soy-based inks on 100% ~ecycled paper processed without chlorine October 20, 2008 Public Works Department ATTACHMENT C California Integrated Waste Management Board Financial Assurances Section P.O. Box 4025 Sacramento, California 95812-4025 Divisions Administration 650.329.2373 650.329.2299 fax Engineering 650.329.2151 650.329.2299 fax Environmental Compliance 650.329.2598 650.494.3531 fax Equipment Management 650.496.6922 650,496.6958 fax Facilities Management 650.496.6900 650.496.6958 fax Operations 650.496.6974 650.852.9289 fax Regional Water Quality Control 650.329.2598 650.494.3531 fax To Whom It May Concern: Certification for the Establishment of a Financial Mechanism for Corrective Action of the PaloAlto Landfill The Public Works Department is submitting the subject certification for the Palo Alto Landfill, Solid Waste Facilities Permit No. 43-AM-0001. The Public Works Department is the operator of the Palo Alto Landfill and retains responsibility for corrective action. Submittal of the enclosed financial mechanism for corrective action of the Pain Alto Landfill completes all required documentation for this landfill related to financial assurances. On October 20, 2008; the Council of the City of Palo Alto, the governing administrative authority for the Publie Works Department, established the Palo Alto Landfill Corrective Action Reserve to be used exclusively for corrective action of the subject landfill. Annual increases to the fund based on inflation factor updates as required by Title 27, California Code of Regulations, Division 2, Subdivision 1, Chapter 6, will be made to the fun!t so that the fund contains an amount equal to 100% of the corrective action updated cost estimate for the Palo Alto Landfill at all times. Official documentation of the establishment of this Fund is enclosed/will be mailed within 10 days of this letter. If you have any questions concerning this submittal or related matters, please contact Ran Arp, Manager, Environmental Control Programsat (650) 496-5930. Sincerely, Glenn Roberts Director, Department of Public Works City of Palo Alto S.’lPYIDIAOA!ltllKnrenlCustomnr gesponsn Loo1FIHALI2OO’SICIWAIB Cerlib?alion PA Landfill Corrective At#on Ros~rvo 102008.doc P.O.Box 10250 Palo Alto, CA 94303 Printed with soy-based inks on 100% recycled paper processed without chlorine