HomeMy WebLinkAboutStaff Report 421-10TO: HONORABLE CITY COUNCIL 7
FROM: CITY MANAGER DEPARTMENT: PUBLIC WORKS
,DATE: NOVEMBER 22, 2010 CMR:421:10
REPORT TYPE: CONSENT
SUBJECT: Recommendation from the Finance Committee for Adoption of Refuse
Enterprise Fund Budget Amendment Ordinance and Recommendation
from Finance Committee to Accept Landfill Operations Alternative No.
1 to Quickly Fill the Remaining Landfill Capacity While Retaining
Existing Composting Operations and, Thereafter, Convert the Area to
Parkland (Open Space) as Fast as Possible
EXECUTIVE SUMMARY
On October 19, 2010, the Finance Committee unanimously recommended a "Fast Fill" option
(Option 1) for the Palo Alto Landfill. Option 1 includes lifting the existing ban on commercial
refuse disposal and temporarily sending Palo Alto's curbside collected garbage to the landfill
instead of the Sunnyvale Materials Recovery and Transfer (SMaRT®) Station. The result of
these actions will exhaust the remaining capacity at the landfill as quickly as possible. The
primary purposes of the "Fast Fill" are to rapidly eliminate the ongoing cost burden oflandfill
operations on refuse collection rates and to allow the landfill to be converted to public park/open
space sooner.
Staff expects "Fast Fill" Option I to completely fill the remaining landfill capacity by the end of
2011.1 The issue of funding future park improvements on the closed landfill open space is no
being addressed in this report and will be discussed in a larger policy framework relating to the
overall General Fund infrastructure budget and funding backlog.
RECOMMENDATIONS
Staff recommends that Council approve the attached Budget Amendment Ordinance (BAO)
(Attachment C) for the Refuse Enterprise Fund and accept the Finance Committee's
recommendation to quickly fill the remaining landfill capacity and remove the current ban on
commercial refuse disposal, while retaining existing composting operations, and thereafter
convert the area to parkland/open space as fast as possible.
On July 20, 2010, the Finance Committee discussed and recommended approval of a reduction
of landfill operating days from 7 days per week to 5 days per week. This proposed schedule was
I Final Landfill airspace depletion is not a date-certain event. It is only estimated based on aerial surveys, previous
depletion rates, and expected tonnages from curbside collection.
CMR:421:10 Page 1 of4
estimated to reduce landfill operating expenses by approximately $250,000 per year by
elimination of two FTE's. Staff action on the proposed schedule change was placed on hold
following Council's August 5, 2010 directive to prepare comprehensive recommendations on
landfill and composting operations for October. However, the Refuse Fund BAD approved on
September 20, 2010 did include the expense reduction for the landfill schedule change. That
expense reduction, along with other adjustments, must now be reversed with a new BAD
included for approval as Attachment C.
DISCUSSION
Four options for landfill closure are presented in Attachment A (CMR.:38I:I0). Staff and the
Finance Committee recommended Option No.1, the "Fast Fill" option. "Fast Fill" has several
benefits. First, it most effectively advances current Council policy of expeditiously returning the
landfill to parkland as reflected in the Baylands Master Plan and the State-approved closure
grading plan. Further, it is most cost effective and does not require any modification to the
existing landfill rent and' amortization schedule. Finally, it has the least impact on current
operations, such as windrow composting, use of landfill by City crews and use of landfill by the
. public. The major downside associated with Option 1 is that by diverting the curbside g~bage
from the SMaRT® Station to the landfill, there will be a temporary drop in the City's overall
diversion rat~. This is due to the fact that SMaRT® Station is able to recover additional
recyclables from the curbside refuse stream that the City's landfill operations are unable to
recover. Notwithstanding this anticipated dip, the City's overall diversion rate is still expected to
be well above the 50% rate required by AB 939 for 2010 and 2011. However, it may fall below
the Zero Waste Operational Plan goal of 73% diversion by 2011. Last year, Palo Alto already
achieved that goal with a 74% diversion rate.
In order to implement the "Fast Fill" option, landfill operations must continue on a 7-day per
week schedule because curbside collection is operated 6 days per week, and because the goal of
this option is to fill the landfill as soon as possible. Therefore, the proposed expense reduction of
$250,000 will not be realized by eliminating two positions. However, it is offset by an equal
amount related to savings from not sending curbside waste to the SMaRT® Station.
A secondary way of achieving "Fast Fill" is to lift the current ban on receipt of commercial
refuse at the Palo Alto landfill. Staff estimates that lifting the ban on commercial refuse disposal
at the landfill will generate additional revenue of approximately $300,000 for fiscal year (FY)
2011. This additional revenue will allow the funding for construction of CIP RF -10003 (Drying
Beds, Material Storage and Transfer Area) to be reinstated for FY 2011. The attached BAD
therefore reverses the changes to CIP RF-10003 made on September 20,2010. The facility to be
created under CIP RF-I0003 will be needed as soon as the landfill ceases accepting all refuse for
disposal. Therefore, the new facility will be needed sooner than previously anticipated with the
"Fast Fill" option.
It is important to note that the 9-acre area for a potential Anaerobic Digestion (AD) Facility is
already very close to the permitted final grading plan. It is nearly already filled with garbage that
would need to be excavated and relocated to provide a level pad for the facility. Staff anticipates
that the fast fill option would not have a major impact on the amount of waste that would need to
be moved if Palo Alto elects to move ahead with a new AD Facility. Costs associated with
removal of the added waste would be a very small percentage of the overall project cost.
CMR:421:1O Page2of4
The existing composting facility will continue to operate using contracted grinding services and
the existing City-owned grinding machine. The existing City-owned grinder will not be
completely refurbished as previously planned (CMR 304: 10). Fleet Services will attempt to
make minimal in-house repairs to the existing grinder so that it may be operational again and
further reduce the need for contract grinding services. , Acceptance of compostable waste
materials will cease when the landfill stops accepting refuse for burial. The final windrows of
compost will require processing for approximately six months beyond that date.
At the September 20, 2010 Council meeting, Council approved reducing the Zero Waste
outreach budget by $246,000, to offset revenue that would not be realized by enacting the Hard
to-Serve rate, or the six percent rate increase for the 20-gallon minican. Upon review, the
remaining Zero Waste budget is already encumbered in contractual services for the remainder of
FY 2010 (a list of encumbered contracts is included as Attachment D). Therefore, staff is
t;ecommending an additional $100,000 reduction in the SMaRT® Station budget, and $146,000
in solid waste permitting contractual services. These changes are reflected in the attached BAO.
Finally, the Refuse Fund cost of service study is in its final stages of completion. Staff
anticipates returning to the Finance Committee in late January 2011 or early February 2011 to
begin a comprehensive discussion on the health of the fund, and stabilizing revenue and rates.
Changes to the Municipal Fee Schedule in the attached BAO are necessary to restore the
acceptance of commercial refuse disposal at the landfill. These fees are the first municipal fees
to be imposed since the passage of Proposition 26, which places additional requirements on
certain types of State and local fees and charges. Staff has reviewed the proposed fees and
charges and concluded that the updated fees do not constitute a tax as defined in Proposition 26.
A finding that these fees are in compliance with the newly passed Proposition 26 has been
included in the BAO.
RESOURCE IMPACT
The recommended actions reduce the operational costs of the landfill and minimize the cost of
processing curbside yard waste. The recommended actions also minimize the costs over a 5-year
budget forecast.
As a result of the proposed budget amendments, the Refuse Fund Rate Stabilization Reserve
(RSR) is expected to increase by $389,648. The Rate Stabilization Reserve is projected to
remain in a deficit position of $5,174,493. As previously reported,. the deficit position is
primarily due to the recognition of the landfill postclosure liability as required by accounting
rules, and operating losses incurred over the past two years. It is anticipated that the Rate
Stabilization Reserve will return to a positive balance in future years under a subsequent rate
structure to be determined after a cost of service study (currently in progress) is conducted and
an analysis of the refuse rate structure is completed.
State regulations require the Refuse Fund to provide financial assurance for landfill closure,
maintenance, and corrective action costs. Consequently, the Refuse Fund is required to maintain
a cash balance of $6.7 million. As of November 15,2010, the Refuse Fund cash balance is $9.2
million. Staff projects that the cash balance in FY 2011 will be sufficient to cover the State
CMR:421:10 Page 3 of4
landfill closure funding requirements. Staff will be seeking permission from the State to use a
portion of the cash reserve for the landfill closure CIP.
The Refuse Fund will receive $590,648 from the Vehicle Replacement and Maintenance Fund
for a refund of replacement charges previously paid from the Refuse Fund to the Vehicle
Replacement and Maintenance Fund for landftll and compo sting equipment that will not be
replaced. This figure is reflected in the RSR discussed above. As a result, the undesignated,
unreserved portion of fund balance of the Vehicle Replacethent and Maintenance Fund will
decrease by $590,648 to $2,616,352.
POLICY IMPLICATIONS
The recommended actions are consistent with existing Council policies set forth in the Baylands -
Master Plan. The recommended action may result in a temporary decrease in the City's waste
diversion goals, but the City is not expected to fall below the 50% goal required by AB 939.
ENVIRONMENTAL REVIEW
The recommended actions are related to the ongoing operation of existing facilities and do not
constitute a project under the California Environmental Quality Act (CEQA). Traffic impacts to
t4~ existing lan<l:til! were previously analyzed in the Mitigated Negative Declaration approved
for the new Green Waste contract.
ATTACHMENTS
Attachment A: CMR:381: 1 0
Attachment B: Finance Committee Meeting Minutes from October 19, 2010
Attachment C: Budget Amendment Ordinance
Attachment D: List of Existing Encumbered Zero Waste Outreach Contracts
PREPARED BY: .. ~ ~RASCHKE
Senior Engineer .
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
(;..(}A ENE
'~/ City Manager .
CMR:421:10 Page 4 of4
TO:
ATTN:
FROM:
DATE:
ATTACHMENT A
City of Palo Alto
'"
City Manager's Report
HONORABLE CITY COUNCIL
FINANCE COMMITTEE
CITY MANAGER
OCTOBER 19, 2010
DEI> ARfMENT: PUBLIC WORKS
CMR:381:10
REPORT TYPE: ACTION
SUBJECT: Report on Options. for the Future of Landfill and Composting
Operations in Palo Alto and Staff Recommendation to Accept Landfill
Operations Option No. Ito Quickly Fill the Remaining Landf'Ill
Capacity While Retaining Existing Composting Operations and,
Thereafter, Convert the Area to Parkland as Fast as Possible
EXECUTrvES~Y
On August 5, 2010, Council directed staff to return to Council with a comprehensive cost
analysis and timeframe for closing the Byxbee Park landfill and converting the area to parkland.
In addition, Council directed staff to report back on the financial viability of the current windrow
composting operation sited on the landfill. Lastly, this year the Refuse Fund has been
particularly impacted resulting in a projected Rate Stabilization Reserve deficit of approximately
$5.6 million This deficit is offset by the reserve for landfill closure but that reserve is required
by State law to be kept at a sufficient level to fund the landfill's eventual closure. While part of
this impact is due to the recession and reduces revenues due to increased waste stream diversion
rates, it is also largely driven by legacy costs associated with maintaining two parallel waste
disposal operations: the City's own landfill operations on the one hand, and the SMaRT Station
and Kirby Canyon landfill contractual commitments on the other hand. Given the complexity of
these issues, on October 4,2010, the Council voted to refer the matter to the Finance Committee
for initial discussion.
This report presents four options for closing the landfill and analyzes the associated cost impacts
to the Refuse Fund. Staff concludes that the most cost ~ffective manner of closing the landfill is
a "fast fill" option (Option 1) which would completely fill the remaining landfill capacity by the
end of 2011. This report also presents updated compost facility cost information that shows the
compo sting operation at our landfill, though not profitable, is less expensive than the option of
sending curbside collected yard trimmings to SMaRT. This report does not address the issue of
funding future park improvements to the closed landfill open space as that is best discussed in a
larger policy framework relating to the overall General Fund infrastructure budget and funding
backlog.
CMR:381:10 Page 1 of8
RECOMMENDATIONS
Staff recommends that the Finance Committee recommend to the full Council to accept "Landfill
Operations Option No.1 to quickly fill the remaining landfill capacity, while retaining existing
compo sting operations and thereafter convert the area to parkland as fast as possible.
BACKGROUND
At the meeting on August 5, 2010, Council passed the following motion:
Staff to return in October 2010 with all options on com pasting and include all options
until the close of the landfill in 2012 and to advise Council if selling compost is profitable
and to include Staff costs in the total costs
Later in the meeting on August 5, 2010 after awarding a contract to Alternative Resources, Inc.
for an Energy/Compost Feasibility Study, Council made the following related motion:
Staff to return in October 2010 with afirst cut analysis of Refuse Fund costs, closure and
rent, and a final cut by January 24, 2011 with a report on a timeframe for closing of the
landfill and rebuilding of the park with costs.
Background on Commercial Refuse Ban - A commercial garbage ban was implemented by
Council on January 12,2009 when a motion passed containing the following provision:
"The City shall suspend accepting commercial garbage at the Palo Alto dump while
awaiting City Council action on the recommendations of the Blue Ribbon Task Force on
Composting (BRTF). "
The landfill ban was implemented on March 1, 2009. The recommendations from the BRTF
were presented to Council on October 19, 2009 (CMR:402:09). Council did not lift the
commercial waste ban at that time. Staff returned to Council on AprilS, 2010 (CMR: 165: 10)
with a recommendation that included the resumption of commercial garbage acceptance at the
landfill. Council elected to keep the ban in place pending additional discussion regarding the
feasibility of an anaerobic digestion facility at the landfill.
Background on Landfill Closure Date -On September 20, 2010 Staff presented a landfill
capacity update report (CMR 349:10) that indicated that the landfill will reach capacity in mid
2015 assuming that the commercial ban remains in place during the life of the landfill and that
the landfill would also change operations to only 5 days per week. CMR 349: 1 0 ,further
discussed that because of the commerCial ban, meant to preserve options for a potential
anaerobic digestion facility, the rate of refuse filling has slowed considerably within the last year
and a half. Based on this slower rate of fill, the landfill capacity could last until mid-2015.
The landfill is currently entering a status commonly referred to as ''trickling closure". Trickling
closure is defined in California Code of Regulations (CCR) Title 27 with the following text.
If the average annual waste disposal rate to a solid waste landfill is reduced for two
consecutive years to a rate equal to or less than thirty (30) percent of the average annual
tonnqge rate during the previous ten years (exclusive of the minimum and maximum
CMR.:381:10 Page 2 of8
tonnage years), the operator shall begin closure activities in accordance with the time
frames specified in the closure plan unless granted an extension pursuant to {Title 27,
Section 21110} (b) (3).
The landfill's approved final closure plan estimated a refuse capacity depletion date of between
March 2011 and September 2011 (estimated before the commercial ban was implemented).
Therefore, in order to continue accepting refuse after 2011 the City would need to apply to the
County and State for an -extension to the 2011 closure plan date.
Background on Landfill Rent -In January 2007, followjng a recommendation from former City
Auditor Sharon Erickson, Council approved a landfill rent schedule through 2021 for Phases IIA,
, Band C (CMR 104:07).' The rent schedule contained the following components: back rent for
closed landfill Phases ITA and IIB from 2004-2007; reduced rent for Phases IIA and liB through
2011 (the projected landfill closure date); full market value rent for Phase IIC through 2011 and
a smoothing schedule that would minimize dramatic rate increases attributable solely to rent
charges. Staff is currently preparing the closed phases for public access under approved Capital
Improvement Program (CIP) project RF-llOOl (Landfill Closure). Additional rent beyond the
existing smoothing schedule for Phases IIA and IIB would not be appropriate once these portions
ofByxbee Park:. are opened to public access in summer 2011.
DISCUSSION
Composting -An updated cost analysis was prepared for the City's compo sting facility for fiscal
year 2010 and is included in Table 1 below. Table 1 compares the cost of maintaining the
compost option on site for a one year period with ,the costs of transporting the City's yard
trimmings to SMaRT where they are then shipped to the compo sting facility at Z-Best.
Remaining compost after landfill closure will be incorporated into to the landfill cap as
vegetative cover material. Land rent to the General Fund ,at $100,000 per acre was not
considered in the scenarios because the rent would be consistent with both scenarios (because the
landfill has not closed). It should also be noted that the rent is a fixed cost that would be charged
by the General Fund regardless if the Compo sting Facility were open or not. In addition, the cost
that SMaR T® charges the City to process yard trimmings is the current rate based on the
nominal amount of yard trimmings currently delivered by the City to SMaRT. This rate will
likely increase if the City were to substantially increase delivery of yard trimmings tonnages.
Therefore the costs in scenario 2 are subject to increase. Based on gate fees at Z-Best and
transportation the actual costs to SMaRT for processing this quantity of yard trimmings would be,
approximately $400,000 per year. '
CMR:381:10 Page 3 of8
T bl 1 C a e f F TtyC tC ompos mg aCII os ompanson
Yard Yard Trimmings Option: Trimmings Scenario 2 Scenario 1
Continue
Composting I
" (based on Close composting and
Description: actual FY 2010 send curbside yard
trimmings to SMaRT Palo Alto
Compost (current contract prices)
Facility Data)
Revenues
Compost Sales $ 88,531
Yard Trimmings Gate Fees $388,256
Total Revenue $476,787 $0
Expenses
Salaries and Benefits -(One full-time Heavy $ 110,000 Equipment Operator)
Disability / Workers Comp (per SAP report) $ 23,104
Vehicle Equipment Maintenance $ 201,774
Vehicle Equipment Replacement Allocation $ 176,750
Screener Rental (PO 4610000075) $ 28,560
Wood Grinder Rental (PO 4610000079) $ 72,150
Compost Testing $ 2,500
SMaRT Gate rate at $14 per ton (current $170,478 contract) *
Additional Transportation Costs to SMaRT $ 24,354 ($2.00/ton)
Total Expenses $ 614,838 $194,832
Net Annual Operating Profit/(Loss) ($138,051) ($194,832)
*This rate is the same rate charged to Mountain View and Sunnyvale and is a reduced
rate that is subsidized by credit for recyclables delivered to SMaRT. As Palo Alto does
not deliver recyclables there, it is expected that SMaRT would raise fees to Palo Alto in
order to balance revenues and expenses for processing the additional yard trimmings.
In the short term, considering that rent is fixed, the least expensive option to the City is to
continue operating the City's compo sting facility in conjunction with the ongoing landfill
operations. Overall, the operation does not generate a profit, but it minimizes cost to the Refuse
Fund.
CMR:381:1O Page 4 of8
Compost Grinder Engine Refurbish -On August 5, Council also deferred action on a contract
with Peterson Power Systems to refurbish the composting grinder engine (CMR:304: 1 0) to
permit a more thorough discussion on the economics of the existing compo sting operation on the
Palo Alto landfill. The table above indicates that closing the compo sting operation on the Palo
Alto landfill would result in greater costs to the Refuse Fund if the overall landfill rent is not
considered part of the compo sting operational cost. Assuming that grinding services will only be
required for 12 more months (the estimated landfill closure timeline under the "fast fill" option),
refurbishing the grinder engine does not appear to be the most ecorlomical option to maintain the
grinding operations for the compo sting program. Table 2 included as Attachment A illustrates
the costs of the options analyzed in CMR 304:10. The table includes an updated cost for contract
grinding services. Previous contract grinding service cost approximately $30,000 per month.
The monthly cost has now dropped to under $18,000 since a recent contract award with a
different vender and a more efficient grinder. Option 2 (contracting with a'private vendor) is
clearly the lowest cost even if it took only 3 months to complete the refurbishment. Therefore,
staff is no longer seeking approval of the Peterson Power Systems contract that was
recommended in CMR:304: 10.
Landfill Closure Timing Options .,.-Under current State regulations for landfills, staff has
identified three feasible options that can affect when the landfill would cease accepting waste
and close. A fourth option may also be viable, however, permits may be more difficult to obtain.
Additionally, the fourth option is also not compatible with the recent Council decision to defer
funding for ClP RF-10003 (Drying Beds, Material Storage and Transfer Area). The four options
are shown in the table below. A timeline with decision pathways for each of these options is
included as Attachment B, and a matrix of pros and cons for the four options is provided as
Attachment C.
CMR:381:10 Page 5 of8
Options
No. 1 -Close the
landfill ASAP.
No.2....:: Continue
current practices
with interim
decision points.
No.3-Close
Operations to the
Public with
interim decision
points.
No.4-
Temporarily
suspend all waste
acceptance until a
decision is made
on the AD
Facility.
Date When
Waste
Acceptance
would cease
Mid to late
2011
2012-2015
2012-2015
2012-2015
Description
Immediately lift commercial
ban and divert curbside
garbage from SMaRT to fill
the landfill ASAP. '¥ .
Continue current operations
including the coriunercial ban
until landfill capacity IS
reached, then fill rapidly using
diverted curbside garbage from
SMaRT to complete the
landfill if neede_4.
Cease waste acceptance from
all sources except internal City
operations (Utilities, CSD,
Public Works, etc.) then fill
rapidly using diverted curbside
garbage from SMaRT to
complete the landfill if needed.
Temporarily cease all waste
acceptance, then fill rapidly
usmg diverted curbside
garbage from SMaRT to
complete the landfill if needed.
Estimated Impact to
FY 2011 Refuse Fund
Budget
Savings of $750,000
Extra Cost of $250,0001.
/
Extra Cost of$100,000
Extra Cost of $300,000
1. Option 2 is the baseline FY 2011 landfill budget without the cost savings that were to
be realized by reducing operations to only 5 days per week. .
Conclusion on Landfill Options:
As shown on Attachment B, all options keep the landfill site open long enough to complete the
AD Feasibility Study scheduled for September 2011. Option No.1, staffs recommendation, has
several benefits. First, it most effectively advances current Council policy of expeditiously
returning the landfill to parkland as reflected in the Baylands Master Plan and the State-approved
closure grading plan. Further, it is most cost effective and does not require any modification to
the existing landfill rent and amortization schedule. Finally, it has the least impact on current
operations, such as windrow compo sting, use of landfill by city crews and use of landfill by the
pUblic. Additionally, in the short term, over the next year, this option both reduces expenses and
provides some additional revenue to the refuse fund. The major downside associated with
Option 1 is that by diverting the curbside garbage from SMaRT to the landfill, there will be a
temporary drop in the City's overall diversion rate. This is due to the fact that SMaRT is able to
recover additional recyclables from the curbside refuse stream that the City's landfill operations
are unable to recover. Notwithstanding this anticipated dip, the City's overall diversion rate is
CMR:381:10 Page 6 of8
still expected to be well above the rate required by AB 939 for 2010 and 2011. However, it may
fall below the Zero Waste Operational Plan goalof73% diversion by 2011. Last year, Palo Alto
already achieved that goal with a 74% diversion rate.
It is important to note that the 9-acre area for a potential AD Facility is already very close to the
permitted final grading plan. It is nearly already filled with garbage that would need to be
excavated and relocated to provide a level pad for the facility. Staff anticipates that the fast fill
option would not have a significant impact on the amount of waste that would need to be moved
if Palo Alto elects to move ahead with a new Anaerobic Digestion Facility.
OPTIONS TO STAFF RECOMMENDATION
If the staff recommendation is not approved and disposal tonnages remain low through the end of
2010, then the Local Enforcement Agency (LEA) would likely issue a stipulated order to the
City to either apply for a closure extension or follow the existing closure schedule contained
within the approved Final Closure Plan. This could require the City to implement closure
activities regardless of the grading plan status if a closure timeline extension is not obtained.
Closing the landfill before the grading plan is completely filled will result in a deviation from the
Landscape Architect's design (Hargreaves Associates) of Byxbee Park and will not be in
.cQmpliance with the Baylands Master Plan. To properly allow any of the options that do not fill
the remaining landfill capacity by the end of 20 11, Council would need to approve an application
to extend the landfill closure date and reevaluate the land rent payments from the Refuse Fund to
the General Fund.
If closure date is not extended before the landfill has been fully filled then the City would need to
contract with a consultant to redesign the landfill's final grading plan and verify that the new
design would be seismically stable and could accommodate drainage to regulatory standards.
The environmental control systems (gas and leachate collection systems) would also need to be
reconfigured to accommodate the modifications. These changes would need to be incorporated
in a revised closure plan that would need approvals from the County and State. A landscape
architect would also need to review and approve the suitability of the altered plan for the
parkland design and the Baylands Master Plan would also need to be amended. A CEQA
analyses would also probably be needed.
Close compo sting facility early -Closing the compo sting facility early is also an option for the
City. Staff does not recommend this action because diverting the curbside collected yard
trimmings would cost the City an additional $56,781 based on 2010 revenues, costs and tonnages
(see Table 1 above). Closing the compo sting facility early may require a permit revision and
would also require the purchase and importation of 15,000 to 20,000 cubic yards of compost for
closure at an estimated one time cost of $200,000.
RESOURCE IMPACT
The recommended actions reduce the operational costs of the landfill and minimize the cost of
processing curbside yard waste. The recommended actions also minimize the costs over a 5-year
budget forecast
CMR:381:10 Page 7 of8
POLICY IMPLICATIONS
The recommended actions are consistent with existing Council policies. set forth in the Baylands
Master Plan. The recommended action may result in a temporary decrease in the City's waste
diversion goals, but the City is not expected to fall below the 50% goal required by AB 939.
ENVIRONMENTAL REVIEW
The recommended actions are related to the ongoing operation of existing facilities and do not
constitute a project under the California Environmental Quality Act (CEQA).
ATTACHMENTS
Attachment A: Financial Analysis of Options for Continued Grinding Operations
Timeline and Decision Pathways for the Four Landfill Options
Matrix Showing Pros and Cons of the Four Landfill Options
Attachment B:
Attachment C:
Ji[);;e~ PREPARED BY:
MATTHEW A. RASCHKE
Senior Engineer
DEPARTMENT HEAD: ~CI
CITY MANAGER APPROVAL:
CMR:XXX:lO Page 8 of8
Grinder Option:
Contract Costs
Repair Cost
Purchase Cost
Lease Cost
In-house maintenance Cost
subtotal
Estimated Salvage Value
Total Cost
Table 2
Financial Analysis of Options
for Continued Grinding Ope~ations
1a 1b 2 3
Refurbish Refurbish
Grinder Grinder Continue to New Engine
Best Case: Worst Case: Contract Out 6 months to
3 months to fix 6 months to fix until Closure fix and permit
$54,000 $108,000 $216,000 $108,000
$201,853 $201',853 $0 $237,179
$0 $0 $0 $0
$0 $0 $0 $0
$78,000 $78,000 $0 $78,000
$333,853 $387,853 $216,000 $423,179
($150,000) ($150,000) ($40,000) ($150,000)
$183,853 $237,853 $176,000 $273,179
4
New Grinder
6 months to
obtain permit
$108,000
$0
$400,000
$0
$36,000
$544,000
($250,000)
$294,000
Current Monthly Contract Cost:
$18,000
Months needed for Contract Grinder Services
3 6 12 6 6
1. Assumes that grinding operations end when landfill ceases accepting waste.
2. Assumes that landfill life is shortened by diverting curbside collecte waste into the landfill.
10/19/2010
5
Used Grinder
6 months to
obtain permit
$108,000
$0
$250,000
$0
$36,000
$394,000
($150,000)
$244,000.
6
:iir
Attachment A
6
Lease Grinder
6 months to
obtain permit
$108,000
$0
$0
$234,000
$36,000
$342,000
($40,000)
$302,000
6
Page 1 of 1
~
~
~
>
Landfill Operations Options ATTACHMENT B
Timeline
October
2010
May
2011
* Sept.
2011
Mid
2012
NO
Immediately Divert
waste from SMaRT ®
Station lowering the
overall AS 939 waste
diversion rate slightly
by 4to 5%
r--....L_-." Mid to
Lale
,-_-,-_-,2011
~s
lnitiale Grading
Plan Revision.
balot measure,
CECA & permilling
Develop plans for AD
Fadlity. Project EIR.
. amend Baylallds
Master Plan, amend
Comprehensive Plan,
obtain revised landfill
closure p'Jan approval
, , r ' 2~\~ l I
rl !,
l.a1e !
I 1
:rl ~~I
Mid 1 !
2015 , ,
j 1 , .!
! :.' ~, ; ;
\. }
\" ........ _---------------------_ .. /./
Closure Extension
Approved
Initiale Grading
Plan Revision,
ballot measure,
CECA & permilling
Develop plans for AD
Facilily. Projact EIR,
amend Baylands
Master Plan, amend
Comprehensive Plan.
obtain revised landfill
closure plan approval
Landfill dosur,
construction
inhograted with NJ
Fadlity
Development
Option 3 Option 4
.. /'-"'-'-'D-;~~iof!;;;;-"'--'--'., //._. ___ .:§~~~;9.~"""'_'_<. .. ,
,: Accepting Self-haul \ ;' Suspend \
Waste from 1he Public. \ ; Landfimng and \
Accept City ; ; lenninale City !
Operations Waste & 1 I Operations f
=~ 'I ~-=-1
,
;
i
i ,
I
1 ,
; , i ..----1_-, ,
! , i L---,-_.....l
i
!
1
1 ,
;
~ ..
Initiate Gracing I Plan Revision,
ballot measure,
CEQA & permilling
! i
1 I
1 i
! I. i
t !
t i i "
I ! j
I 1 j
! i i
Develop plans for NJ
Facility. Project EIR.
amend Baytands
Hire contract
setvicesto
complete landfill
using curbside
garbage diverted
fromSMaRTe
1
Inhiate Grading
Plan Revision,
bdot measure,
CECA & permilling
Develop plans for PJ:J
Facility, Project ElR,
amend Baylands i
I, '.!. :.:. l
I
Master Plan, amend
Comprehensive Plan,
o obtait revised landfiU
cIosw-e plan approval
Master Plan, amend
Comprehensive Plan,
obtain revised landfill
closure plan approval
i,i II i ,
! !
l, '
1 l ! 1 i t
i ! 1 1
! ! ! f
1 !
1 !
1 1
! ~ ! !
!, : 1 l
" I,
Lan~ ctosure
construction
integra"'" willi NJ
F8cility
Development
Landfin closure
consInrotion
integrated with NJ
Facility
Development
,1 II ! ThiSi~:~~:~:::n~:s an .... ,1 i .. ", ThiSi~:i!~~:;:~~:n~S an i,; I. ThiSi~~!~~:;::::=S an .1.1
\.. ' additional landfill rent additional landfill rent additional landfill rent
....... _ .. _._ .... _ ..... _ ..... __ ._./ , ........ ______ ... _. __ ._ ..... _ ... _ .... ___ /i \ .. ,. _____ ..... __ .... _. _________ //
Footnotes
* Fmal N:J Facility
Feasibility Study and
DrattCECA
Workplan Released
Abbreviations
AD -Anaerobic Digestion
CEOA -California Environmental Quality Act
EIR -Environmental Impact Report
GHG -Greenhouse Gases
LEA -Local Enforcement Agency
LANDFILL OPERATIONS ALTERNATIVES
for October 19,2010
Option: 1 2 I 3 4
Description: I Fast Fill (divert SMaRT waste)
A Closure Extension NO
1 Request Needed 1--------------------------------------------
B Landfill Rent Schedule No change required
I-;::FYu-:2~01 .. 1~E::-:s-;;tl~m:-:'a-:-:te-:;d-::C;-:o':"st=-+l· -------------------------------------------
C to Refuse Fund (only
Landfill related revenues $3.6M
1 and costs) 1 ___________________________________________ _
D Aff t City 0 ti Provides only minimal time for transfer
ec on pera ons facility development
1--::-----,--,-----:----:----1---------------------------------------------
E Regulatory Approval No permit revision required Time ___________________________________________ _
Continue As-Is (7-days per
week) until Cllpilclty Is reached.
YES
Close Operations to the Public
(City operations waste and
curbside yardwaste onM
YES
Temporary Suspension of
landfill Operations
YES
------Needs-eiideiisiori-&-new------]-------Need's-eideiiision&-iiew------r------NeedseXiensioii-&:-riew------
_____________ !i..9!~~!!!~n!. ___________________________ ~.gE~!!_'!!.~!l_L _________________________ ~9!~~!!'~!:'L __________ _
$4.1 M
Provides time for transfer facility
development
$4.4M $4.6M
Provides time for transfer facility I Transfer facility for City operations
development will not be ready in time
~i~~;~~:J.~;:.;.~:~~;.~:i~~I~~~~~~~~~~~~~~~~~~~t~~~~~~~~~I~-~~~~~~~~~~~~~~~~~~~~~~~~~~~
F Layoffs after regulatory None untit filling is complete None untit filling is complete 11/3rd layoff untit filling is complete I All except post-closure staff
approval
: !::::l~~~o~p~~~~g ~~~~~~~~~~~~~~~~~~;~~~~~~;~;r::~~~~!~:.;l~~~~~~~~~~:~~:::I:::~~~~~:~~~~:!~i:~:~~~~~:l~~~~~~~~~!~~~f!.~~~~~~~~
Grinder. Refurbishment Not recommended Recommended Recommended Not recommended Contract -CMR 304:10 ___________________________________________ _
J Estimated ti~eframe to Capacity filled by mid-late 2011 reach ca aCI ___________________________________________ _
---2012-2(i1-5-depeiiding-OnA5---]----2(i12:261-5~de-pe-ridiiig-Oii-AO---r---201-2:2015deperidirig-Ori-AD--"
_______________ ~!!.<2Lt!.ip.!.) ______________________________ .!!~P.!!!l!?n ______________________________ ~_E!!?l~~Q!l _____ " ________ _
Estimated timeframe
K when parkland
construction could begin
Relative Impact on
L potential 9 acre AD
2013
Highest Impact
1 Facility Site 1 ___________________________________________ _
Oplion-speclfic
Comments:
More landfill operational constraints
due·10 more tonnage and more
vehicles in last remaining (more
limited) fill area.
Mid 2013 at the earliest
Medium Impact
Variations: 1) Lift Commercial
Ban or 2) apply for permit revision
to reduce operations to 5 days per
week that was approved by
Finance Committee on 7/20/2010
Mid 2013 at the earliest
Low Impact
Mid 2013 at the earliest
Lowest Impact
Jt~
Regulatory approval may be
difficult to obtain
L-____________ ...L' ..... ________ ....... _ ... __ ...... ____ ........... ____ .. ___ ....... _ ...... .L. _______ ........... ---------.. --...... --...... --.... --...... ---.. --...... -----............ -........... ---.. -.. ----------.. --------... --.. -.. -.. -........... -..... ----~------.. ---
Assumptions: .
1. All options assume that landfill would be filled to capacity as planned in the current Baylands Master Plan if an AD Facility is not feasible.
2. Options 3 and 4 would eventually require the diversion of SMaRT waste to complete grading plan per the current Baytands Master Plan.
3. Option 4 requires a contracted labor force and equipment to complete grading plan per the current Baylands Master Plan.
4. Operational changes that require a permit revision cannot be made until regulatory approval is obtained. Option 1 can be implemented at any time.
5. Option 2 uses a 7-day operation schedule to allow for an easier transition into a fast fill scenario with SMaRT waste if desired.
6. As of May 2010, approximately 100,000 cubic yards of waste would need to be excavated and relocated to prepare a 9 acre pad for an AD Facility
7. Based on the approved final landfill grading plan, if an AD facility is approved after closure then 122,000 cubic yards of waste would need to be excavated and relocated.
Attachment C
8. Costs to prepare a site for a potential AD Facility are not included in any of the cost estimates shown (i.e. the cost to excavate and relocate covered and compacted garbage.
10/19/2010 Page 1 of 1
~
~
~
~ n
FINANCE COMMITTEE
ATTACHMENT B
Regular Meeting
October 19, 2010
Chairperson Chair Schmid called the meeting to order at 7:04 p.m. in the Council
Conference Room, 250 Hamilton Avenue, Palo Alto, California ..
Present: Schmid (Chair), Espinosa, Klein, Scharff
Absent: none
1. Oral Communications
None.
2. Presentation and Discussion of R.A. Mr. Wiedemann & Associates City of Palo
Alto Airport Business Plan Options and Community Valuation Analysis; Request for
Council Input and Direction on Options; and Formation of an Airport Advisory
Committee.
Deputy City Manager, Steve Emslie said the Council directed Staff to explore and
develop a business plan to take over the Santa Clara County (SCCo) airport lease
prior to its termination in 2017. The first step was to review different business
plan models and the economics of the plans. He introduced Randal Wiedemann of
R.A Wiedemann & Associates, City Staff members Lalo Perez and Joe Saccio, and
noted that members of the Joint Community Relations Committee (JCRC) who
were involved in issues of the airport (PAO) were present.
Randal Wiedemann qf R.A. Wiedemann & Associates gave a presentation on the
City of P~lo Alto Business Plan Options and Community Valuation Analysis. He
said the plan started in late 2008 and into 2009. 2008 was the base year used in
the study that included a review of the SCCo management structure, the current
facilities and services at the PAO, a baseline financial analysis, and different
operating structures th,at were narrowed down to two options. He said a lease
agreement would expire in 2017 between the City and scto along with two Fixed
Based Operators' (FBO) leases that handled the operations and selling of fuel at
10119110 FIN 1
/
selling of fuel at the PAD. All improvements made at the PAD in the past 50 years
would be acquired by the City when the leases expired. The question was whether
or not to accelerate the lease expiration prior to 2017 due to capital expenditures.
The report included financial feasibility options and environment-sensitivity issues
with the Baylands, National Wild Life Refuge issues, Byxbee Park and endangered
species. The viewshed was important to the community in keeping the Bayland's
view. There was a construction prohibition that stated "no additional fqcilities that
would intensify the use of the PAD or significantly intrude into the open space."
The City and users needed to consider whether to continue reinvesting in the
facilities when repayments on investments would likely not happen. Leaseholders
would make fewer improvements as 2017 drew closer. SCCo's tie-down rates and
fuel flowage fees were higher than other airports which contributed to vacancies.
The City did not have the expertise to run an airport and needed to examine
different management structures used at other airports. There were economic
impacts related to jobs, income, output, taxes, and the PAD's assets. The City had
concerns of taking on a financial drain and needed a feasibility analysis to see if
the PAD would have a financial impact on City resources. Airports generated
strong reactions and the City wanted to foster good community relations with
neighboring jurisdictions.
Council Member Klein asked what changes had had transpired in the last year
since the report was finalized.
Mr. Wiedemann said there was a change in the projected inflation rate. The report
used 4 percent that was projected over revenues and expenses and was closer to
2.5 percent, at this pOint. The increase in vacancy rate was consistent across the
country whkh had SCCo concerned. He said aviation was first to get hit and the
last to recover during economic crises. The deterioration of the facilities was also
a concern. SCCo had planned to do an overlay on the runway in 2012 but was
unsure if that was still on track.
Chair Schmid asked if usage rates in activities had changed due to airport
accidents and the recession.
Mr. Wiedemann said airport accidents had no affect but there was a 30 percent
drop in 2008-09 due to the economic climate. The FAA reported an 8.3 percent
drop in aviation operations throughout certain airports Nationwide.
Chair Schmid asked Mr. Wiedemann if he had rates for 2009-10.
Mr. Wiedemann said 2009-10 rates were available but did not have them with him
this evening. There was a decrease in 2008 from 2007. He said a single runway
generally had an operation capacity of 200,000. PAD was in the 190's and
10119110 FIN2
(
and declined to 160's when the study was done. The PAO was opened 74 hours
per week and operated by 2.5 people.
Council Member Klein asked what SCCo annual overhead cost was versus the
City's.
Mr. Wiedemann said from a conservative side there was no difference and felt it
could be done cheaper.
Council Member Klein asked for figures.
Mr. Wiedemann said the survey used lower numbers but the City Staff felt it would
cost more. He said private operators had indicated the operating cost could be
done cheaper than SCCo and would have greater savings in the labor.
Council Member Klein asked if it was 5 percent or 95 percent cheaper.
Mr. Wiedemann said it was closer to 35 to 40 percent due to not having a
redundancy in private operations versus the public arena. sceo controlled 355
tie-downs and the FBO's controlled 85 hangers and 86 tie-downs. He said the PAO
was at full capacity.
Vice. Mayor Espinosa asked what the market would call for if changes were made in
the construction prohibition.
Mr. Wiedemann said hangers were in great demand and neighboring airports had a
2-year waiting list.
Chair Schmid asked if it was possible to store half the amount of airplanes in
hangers than in an equivalent area for tie-downs. .
Mr. Wiedemann said yes, it was a compromise.
Council Member Scharff asked where the new hangers would be placed.
Mr. Wiedemann referred to the presentation's overhead map and pOinted to the
lower area of where current hangers existed.
Council Member Scharff asked if there would be a loss in tie-downs.
Mr. Wiedemann said there would be.
Administrative Services Division Deputy Director Joe Saccio asked how many
additional hangers would fit in the area.
10119110 FIN3
Mr. Wiedemann said he thought 20 hangers but would need to verify the number.
Council Member Scharff asked if tie-downs or hangers made more financial sense.
Mr. Wiedemann said hangers were higher producers per square foot. He said in
addition to the two master leases there were spaces subleased to other
companies, flight schools, and flight clubs. The Capital Improvement Program
(CIP) identified at the time was $3.5 million through 2013 for the FAA funding
portion and $200,000 from local funding. Other related expenses were runway
overlay, pavement maintenance, location of te'rminal building issues and taxiway
modifications ..
Council Member Klein said it was crucial to have a good runway and asked what
the status of its repairs in 2012.
~
Mr. Wiedemann said it was being planned at the time of the report but did not
know if that was still the case.
Assistant Public Works Director Mike Sartor said SCCo's .5-year CIP anticipated
starting the runway in 2012 but had indicated -in the last two-months they were
unsuccessful in obtaining an FAA Grant and would be detained for another year.
The earliest start date would be in 2013.
Council Member Klein asked Mr. Wiedemann if he was aware of how FAA Grants
were distributed.
Mr. Wiedemann said the FAA had a certain amount of monies and grants were
distributed according to a facility's priority needs.
Council Member Klein asked if there would be an issue with the PAD getting a
grant. .
Mr. Wiedemann said he did not foresee a problem and it was a matter of the FAA
coming up with the funds. The FAA paid 95 percent of the cost and responsible for
safety issues. The PAD had an FAA tower with FAA people directly involved in the
operations and knowledgeable of safety issues.
SCCo Airports Assistant Director, Eric Petersen said an FFA Grant was moving
forward for pavement management and repairs. He anticipated getting the grant
next fall or early spring and construction would be underway by 2012 and would
continue throughout the remainder of SCCo running the PAD.
10/19/10 FIN4
Mr. Wiedemann said aircraft storage was the largest revenue generator and the
$506,728 was from tie-down space. FBO's had the least revenues. He said due
to an upcoming reappraisal, an increase could begin in 2014-15. The study did not
anticipate an increase in activities and kept the fuel flowage the same. SCCo
currently charged 20 cent per gallon on fuel flowage. No change in transient
revenue. A rental car agency terminated its services at the PAO causing a drop in
other facility revenues. The total operating expense was $1,030,052 through
201.7, with a slight net operating income instituted a local share capital cost of
$50,000. There was a negative total in net revenues of
-$25,524.
Council Member Klein said if expenditures remained the same, what would the
difference be in cost to sign up the FBO operators for a 20 to 30-year lease instead
of the estimated $134,000.
Mr. Wiedemann said the hangers would be owned by the City in 2017. Leasing to
FBQs would essentially be putting a middle mar) at the PAO, when the City could
do all the leasing. The difference relative to the $134,000 was an estimate accrual
.of $1.2 million in revenues from leases.
Mr. Saccio said it was news to some Staff members that the FBO leases terminated
along with the County leases earlier than 2017. The City, County, or FBO's could
not merely walk away if early termination occurred. There could be a request to
explore the FBO's outstanding depreciations or investments.
Council Member Klein asked the City Attorney what could legally transpire with
early termination of the leases.
Senior Assistant City Attorney Grant KOlling said the FBOs could seek consideration
from the County for the value in capital investments on premature opportunities in
earning prophets earlier than 2017. The FBOs would take the issue up with the
County and the County with the City which would fit into the equation.
Chair Schmid needed clarification on base operating revenues regarding lease
revenues from FBO's.
Mr. Wiedemann said it was a ground lease or square footage lease for the acreage
required for operation and not for the hangers.
Chair Schmid asked what the difference was between lease revenue and aircraft
storage.
10/19/10 FINS
-
Mr. Wiedemann said aircraft storage revenues were from aircraft owners that
rented tie-down spi;3ces .
. Chair Schmid said the PAO map was divided by a portion leased by FBOs and a
portion by SCCo.
Mr. Wiedemann said there would be no division when the leases expired. The City
would own the PAO and its operation.
Council Member Scharff needed clarification from legal and asked if the junior
leases would expire upon termination of the lease.
Mr. Kolling said yes, in terms of real estate bill. He said the 50-year contract did
not have an interment provision and would have an affect on how the City
negotiated options with the County. The FBO's had expectations of having
investments through 2017 and early termination would affect their ground lease.
FBOs would need to take up financial implications with the County.
Council Member Scharff asked what legal rights would they have and the outcome.
Mr. Kolling said it would affect all parties concern and would affect how the City
managed the transition.
Council Member Klein said the worse case scenario would be to allow the FBOs to
stay until 2017 and the City may have to pay FBOs for the value of their
improvements for the remainder of their stay until the takeover date in 2017.
Mr. Wiedemann said the Long Term Baseline Forecasts results into 2018 reflected
the operating revenues of $2.2million, expenses $1.2 million with total net
revenues in the $700,000 range for the City. He said the capital expenses were
matched by federal funds. The hangers would not be matched when the City took
over because they were revenue producing and their maintenance would need to
come from City funds.
Council Member Klein asked about the FAA regulations and how the City could only
use the profits for the PAO. The optimistic side plows the money back into the
PAO. He asked if there were other ways the owners of the PAO was able to extract
portions of the profits and stay on the good side of the FAA.
Mr. Wiedemann said in keeping with the policy and revenue diversion, only costs
could be extracted. A City employee could be working on airport things and
charge it to the PAO and be paid back out of that.
10119110 FIN6
Chair Schmid asked if rental fees could be included.
Mr. Wiedemann said typically not, unless every city-owned property paid rental
fees. The FAA would need to' weigh in 'on that. He also stated that heis aware of
one airport in Texas that was a franchise pays a franchise fee to the General Fund.
Council Member Klein said one of the downside was Municipal airports could not go
out of business.
Mr. Wiedemann said that was dictated by FAA.
Council Member Klein asked what would happen if the City started to lose money.
Mr. Wiedemann said the City was committed. It was a legal issue and communities
have tried to make that change.
Council Member Klein asked if the FAA would require a city to continue running an
airport that was losing $1 million a year from their general fund.
Mr. Wiedemann said yes. It resulted from signing a grant assurance and a
guarantee to fulfill an obligation. There was no end date for land purchases and
20-years for anything else. '
Council Member Klein questioned taking land out of the PAO for other uses.
Mr. Wiedemann said it would require the FAA's approval. He said the PAO was full
and did not see any revenue producing possibility.
Council Member Klein asked about the 7.5 acres along Embarcadero Road.
Mr. Wiedemann said the FAA would only grant permission if the City could show it
would not be used for aeronautical purposes.
Council Member Klein said he understood the theory, was not proposing anything,
but questioned placing soccer fields on that land.
Mr. Wiedemann said if there was any possibility for aeronautical use it would not
be allowed.
Administrative Services Department Director Lalo Perez said the FAA had a
restriction reimbursement timetable of 6 years. If the City fronted monies from
10119110 FIN7
the General Fund, the monies would need to be recovered from the airport's
operating profits within a 6-year period.
Mr. Wiedemann said that was a relatively new proposition. He said every FAA
regionoperated differently and everything needed to be verified with the FFA. He
said there was a 691-page guide book, entitled: "Airport Compliance Manual," that
covered the requirements for the FAA Grant.
Mr. Wiedemann said the study included four different options regarding the
financial production. He said they ran the figures on what the City would be giving
up if the hangers were not developed. It was to look at cost only and not as a
viable option. There would be a savings in labor in the City plus FBO management
option. The 3rd Party Management Option was a hands-off option where the City
did not want to be bothered in running the airport.
Chair Schmid asked to project the City plus FBO management option.
Mr. Wiedemann said there was not an option between 2012 and 2017 because
there were two contracted FBOs through 2017.
Chair Schmid questioned the $22 million in 2018.
Mr. Wiedemann said it was due to the City's takeover and gaining ownership of the
entire PAO. The City would be getting revenues from the facilities plus an FBO
managing the facility.
Council Member Scharff needed clarification on the $20 million.
Mr. Wiedemann said the net for 2018 to 2037 was $20 million which included debt
service.
Mr. Saccio said the existing operations plus additional hangers was reflected in the
net result of $20 million over time.
Mr. Wiedemann said that was correct and the construction of cost of the hangers
would be paid off.
Council Member Scharff asked where was the additional money reflected in the
construction of new hangers.
Mr. Wiedemann said it was in post 2037 when the City no longer paid for the debt
service.
10119110 FIN8
Council Member Klein said he could not see where that was an incentive for the
City. It could be a benefit to the airport but not cover the downside for the City. ,
Mr. Wiedemann reviewed the Pros and Cons for each option. None of the options
would benefit the General Fund because of the FAA policy. The City would absorb
all the pros and cons, income and losses, if they were running it. There would be
limited liability in FBO's options. SCCo woutdaccrue all the money if they were
running it.
Council Member Klein wanted to know how many airports across the country used
the various options.
'I
Mr. Wiedemann said there were several. The 3rd Party Option was limited. It would
fulfill the management portion but not operate the entire airport. Some airports
were run by a' company with investments provisions. The City had a no build
policy and most likely be under a management contract. The 3rd Party Option was
rare because airports generally do not make money.
Council Member Klein said the PAO was an exception.
Mr. Wiedemann concurred and said 90 percent of airports were not.
/
Council Member Klein asked what the bases were for that.
Mr. Wiedemann said it was due to the higher fees plus the demand. The most
common option was Municipal airport either owned by a city or county and with an
airport director. Smaller airports tend to go with the FBO management to avoid
redundancy of employee use. The FBO wou1d be at the airport during business
hours and would report back to the agency. Staffing would be required to manage
compliance, funding, and marketing issues as an airport became more complex.
The options were narrowed down to the City Management Option and the 3rd Party
Option. The FBO option would be where the City took control, accrued all the
revenues, and FBOs earned their own. Once the decision was made and
negotiations completed, the City option would require a manager, staffing, office
space and furniture. The 3 rd Party Option required negotiations, all parties
, satisfied, and early termination of the lease would occur. The estimate used
without getting into issues was for the City to keep the same FBOs through 2017,
have a third party run the airport, which would be a cost-savings to the City since
City employees would not have to run the airport and the FBO's leases would
terminate in 2017.
Council Member Chair Schmid said to move forward with discussions on issues
regarding the Budget Amendment Ordinance and Airport Commissions.
10119110 FIN9
Administrative Services Department Director Lalo Perez said Staff was comfortable
with the "Palo Alto Airport Business Plan." The City lacked in-house airport
operation skills and needed the resources and expertise in staffing in order to
move forward quicker. There were concerns on maintenance and oversight of the
transfer, issues with the environment assessment, FBO's subleases, the City's
capital expenditures to put up front regarding safety concerns, the need for
outside expertise, the 6-year reimbursement timetable, and the formation of an
advisory group which needed dedicated resources along with pOints of contact.
The Council had directed Staff to bring the airport's operations under the City's
control and part of that was a business plan. Staff needed the Finance
Committee's confirmation that this was the right course of direction.
Council Member Klein said the report was written as if the City had an option and
did not see where the City had a choice. The City would own the airport either in
2017 or sooner and would need a business plan for 2013-14 or 2017.
,
Chair Schmid said do we recommend immediate action or first recommend the
formation of committees to make decisions.
Council Member Klein said timing could be discussed but if the decision was to not
move forward, the Council would not have any options in a few years. There was
the need to start doing something in taking over the airport because there was not
a choice to not take over the airport.
Council Member Scharff said his understanding was that the City would assume the
airport in 2017 and would not be allowed to go out of business.
Mr. Wiedemann said that was a fair statement.
Council Member Scharff said the choice would be to takeover the airport now and
start the process in managing the airport correctly or be stuck with the airport in
2017. The City would need to use monies from the General Fund on losses
incurred.
JCRC Chair David Creemer, said the group wanted to help with the Council's
decision on the airport. He said the PAO was the least favorable airport to keep
aircrafts in the area. Operations had decreased by 5 percent. Half was due to
economy and others were taking their aircrafts elsewhere due to higher fuel rate.
JCRC received about 12 complaints a year. The group outreached to the
community to let them know that they were volunteering to help the City run the
airport and to help with issues. He expressed a desire to offer his time and efforts
toward the betterment of the airport. West Valley Flying Club should not be
1011911 0 FINIO
be discounted. They are the largest non~profit flying club in the country and based
atPAO and responsible for half of the flight operations. They trained airline
captains to astronauts at the PAD and that the City should take advantage of the
vibrancy of the club.
Council Member Klein said Staff report CMR: 379: 1.0 stated Staff was looking to
hire experts at $500,000 and would take a minimum of 2-3 years, assuming the
Council worked out a deal with County Board of Supervisors with' 60 to 90 days.
Mr. Wiedemann said environmental issues and staff resources pushed the time
line.
Vice Mayor Espinosa asked Mr. Wiedemann if the timeline sound unreasonable.
Mr. Wiedemann said it was not unrealistic and could be done in a year with
resources put into it and the process moved quickly. It could have an affect on
people's comfort zone with the amount of expertise required to run the airport.
Mr. Perez said the two areas of concern were environmental issues and FBO
negotiation. He recommended moving quickly in adding staff because there was
the need for dedicated 'resource." The City Manager had agreed to place the
leadership under another department and not with the Administrative Services
Director due to other pressing obligations such as the budget. A Budget
Amendment Ordinance (BAD) was needed for the staffing.
Council Member Klein said the 2-3 year minimum could likely be four years taking
the process into 2014-15. He asked what advantage the City would have with two
years remaining on the lease
Mr. Wiedemann said if you wanted to add maintenance to a deteriorating facility,
you could and save a few years. He/said pavement management index increased
over time and the payoff on leases would be less.
Vice Mayor Espinosa asked if there was ever a situation where an airport changed
models under the 3 rd Party Option.
Mr. Wiedemann said Stewart Airport in New York was under the 3rd Party Option.
The Port Authority of New York took it over due to a decrease in the airport's
activity and was losing money. No tax base was drawn during that time and
services suffered. He said the PAD was a successful "cash cow" airport with lots of
'working principals that made the grade of a good investment.
10/19/10 FIN 1 1
Vice Mayor Espinosa asked Mr. Wiedemann if there were any foreseen factures to
help the Council decide on an option to take.
Mr. Perez recommended getting the stakeholders involved early on. There was the
option of running the PAO in-house and would require a cost-benefit analysis in
moving forward. Staff would need to work jointly with a formed committee in
reporting the findings back to Finance Committee.
Mr. Emslie said he felt the City was off to a good start with the framework but
there were uncertainties Mr. Wiedemann could not predict such as the uncertainty
on the age of the airport, its activity and how to deal with the environmental
issues in negotiating with SCCo. A subsurface test needed to be done on the
pollution and the responsibility on its clean up.
Vice Mayor Espinosa raised concern regarding the timing. The community had
concerns if the airport would have other uses. PAO was a resource the City was
committed to and made sense to improve in a couple of scenarios that the City
runs the airport profitably. He felt the need to move forward quickly in staffing
and to come to some decision-making because 2017 was right around the corner.
Council Member Scharff agreed on moving forward quickly in hiring staff. He was
unclear if the Staff was looking for direction at this evening's meeting on which
option to choose. He said there were three and was unclear on why the
Committee needed to narrow it down to two.
Mr. Perez said Staff was looking for input or additional direction to pursue and he
wanted to review all three options.
Council Member Scharff asked which two options it was being narrowed down to.
Mr. Wiedemann said the complete City Operations Option and the 3 rd Party Option.
Mr. Perez said to focus on the two but not lose track on the FBO option.
Council Member Scharff said we need to also look at the City Plus FBO option.
Mr. Wiedemann said the FBO option could also be looked at once the FBO
entanglement was resolved.
Council Member Scharff needed clarification on the Pros & Cons listed in Staff
report CMR:379:10, page 6 of 11. He was confused between the City Plus FBO
1011911 0 FIN12
Management option with "higher net revenues relative to 3rd Party Management
and Baseline Projections" and the 3 rd Party Option with "Airport operates as a
profit center, providing periodic payment to City." He asked if under the 3 rd Party
Option if it implied taking money from the General Fund where as in the City plus
FBO, you could not. He said there was no indication of that.
Mr. Weidemann said no.
Council Member Scharff said both could operate under the profit center.
Mr. Weidemann said it could if it was an Enterprise Fund.
Council Member Klein raised concerns regarding a statement in Staff report,
CMR:379:10, page 1 where it stated, "to begin the complex process of pursuing
any of the airport options in the Report, there will be a need for expertise to
evaluate each -option further and to chart a prudent course of action." He agreed
with Mr. Emslie regarding the environmental issue because the City would need to
negotiate environmental harm with SCCo, but did not see the need for a
consultant on the three issues which could cause a 6 months to a year delay.
Council Member Scharff concurred.
Council Member Klein said it would be the City's responsibility to negotiate with
SCCo on environmental matters.
Mr. Emslie said FBOs would need to get involved since they could have contributed
to the environmental issues.
Mr. Sartor said Phase I of the environmental site investigation was done by a
consultant and would require a Request for Proposal (RFP) to bring the person
back to do a soil and gravel sampling. It would take six months to get the
preliminary results on a sampling plan. .
Council Member Klein suggested not to wait and to move forward on the other
issues while the environmental issue was taking place.
Mr. Perez said it was scheduled for December 6, 2010, to bring back to the full
Council to request for a BAD for staffing resources and monies for Phase II of an
environmental site investigation.
Chair Schmid said he was not clear regarding the staffing and asked who would be
running the experts and responsible for the commission.
10119110 FIN13
Mr. Perez said it still needed to be worked out internally.
Mr. ,Emslie said the City Manager would have the ability to make that assignment.
Mr. Perez said we can get it started and Mr. Sartor could move forward on the
Phase II processing.
Chair SChmid for clarification said we have a deadline of 2017 and the sooner we
get started the better it would be. The FBO option seemed to be the preferable
option and was unclear to why it was and was dropped off.
Mr. Wiedemann said it was not a near-term option and not available between 2012
-2017 and would happen starting in 2018.
Chair Schmid said in-summary, voting of the money and the layout would begin
immediately to be accomplished in six years. Revenues would be small and would
be taking a risk on the General Fund. Franchise or rental fees needed to be looked
-at.-Building the Reserve Fund was critical on the investment risk and a critical
point the Council would be looking at in assuming the investment. The City had a
vested interest in controlling the tie-downs and cost and cost-comparison would
need to be reviewed which could be an argument against a 3 rd Party contract.
Experience with FBOs might also indicate the 3rd Party Option may not be an
interest to the City given its location in the midst of the Baylands.
MOTION: Council Member Klein moved, seconded by Vice Mayor Espinosa to 1)
to accept the Palo Alto Business Plan and Airport Community Value reports by R.A.
Wiedermann & Associates, 2) (which was #3 in Staff Report) direct Staff to return to
Council with a Budget Amendment Ordinance that establishes a new Airport
Enterprise Fund and the resources necessary to progress with finalizing a business
plan and a takeover of the Palo Alto airport. The BAO would reflect a loan from
the General Fund to the New Enterprise Fund, 3) direct Staff to return on
December 6, 2010 meeting with precise timetable of events with a schedule as
accelerated as reasonably as pOSSible, 4) to provide the Council with the means of
creating an Airport Commission, 5) to advice the City on these matters including
which of the 3 models to move forward with, 6) direct Staff to explore the
methodology for the maximum charges the City's General Fund may legally make
to the Airport Enterprise Fund, 7) direct Staff to provide -an organizational chart as
to who will be doing the Staff work and reporting to whom, and 8) to authorize
moving forward expeditiously with Phase II on the Environmental Report on the
airport. (1:54)
10119110 FIN14
Council Member Scharff asked if it was possible to have a timeline on the Phase II .
Environmental Report by December 6, 2010. ..
Council Member Klein said it would require the Council's authorization.
INCORPO.RATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER to get a preliminary timeline on Phase II of an
Environmental Report by December 6, 2010.
Mr. Sartor said he would need to check on the RFP for Phase I to see if follow-up
services were included. The City would need to go out for another RFP to do Phase
II if follow-up services were not included.
MOTION PASSED 4-0.
3. Report on Alternatives for the Future of Landfill and Composting
Operations in Palo Alto and Staff Recommendation to Accept Landfill
Operations Alternative No. 1 to Quickly Fill the Remaining Landfill
Capacity While Retaining Existing Composting Operations and, Thereafter,
Convert Area to Parkland as Fast as Possible.
Assistant Public Works Director Mike Sartor said the presentation would consist of
the Landfill and Composting Operations options, Staff recommendation,
alternatives to a recoLmmendation, the economics of composting in Palo Alto, and
on to the next steps. He said Staff wanted to achieve a balance between Zero
Waste, the Refuse Fund, and Parkland Goals in the future operations and
composting. Staff looked at the least impacts on the Refuse Fund, options
consistent with the Baylands Master Plan, and Byxbee Park's open access into the
landfill area, and options compatible with the future Energy/Compost Facility.
Senior Engineer Matthew Raschke said the following would be addressed during
the presentati.on: 1) operational changes needed at the landfill, 2) should the
existing composting program continue at the landfill until closure, and 3) if
composting continues, what would be the best option for continued green material
grinding operations. The four options that were analyzed to continue the landfill
operations were: 1) "Fast Fill" with curbside waste, 2) Continue "As-Is", 3) "Slow
Fill", for City operations only, and 4) Temporarily Halt Operations. The
recommendation was to go with the "Fast Fill" option and have a savings of $750K
during Fiscal Year (FY) 2011, the operations costs would be reduced in FY 2012
and beyond. This option was within the City's permit compliance and could be
implemented immediately. It would close the landfill on schedule and provide the
quickest public access to the parkland, consistent with the BaylandsMaster Plan,
and it would not have significant impact on the potential future of future
10119110 FIN1S
future Energy/Compost Site.
Council Member Scharff asked if the commercial refuse disposal ban could be lifted
and how quickly could the landfill be closed and if more money would be made.
Initially, he was told that if the commercial ban was lifted, theCity would recover .
$1 million.
Mr. Raschke said the Fast Fill option would lift the commercial ban. If it was lifted
in the current year the City would recoup $300,000 to $500,000 of revenues.
Council Member Scharff said it was being filled with non-commercial waste that is
not being charged for and asked if this was the optimal way to maximize the
revenue.
Public Works Solid Waste Manager Rene Eyerly said it was and included lifting the
ban and maximized the commercial revenue at the landfilL It was filling the
landfill quickly and adhered to all the benefits at the same time.
Mr. Raschke referred to an overhead map which contained the Plan View of the 9-
Acre, Energy/Compost Feasibility Study area and noted that the yellow outlined
area was designated for the proposed Anaerobic Digestion Facility (AD). In the
cross-section view, there was a considerable amount of refuse under the green line
that would need to be relocated if the AD project moved forward. The blue
hatched area above the green line had 90,000 cubic yards and would increase up
to 122,000 cubic yards of refuse that would be in the way of the proposed AD
facility. We would need to request an extension from the State and County for the
2011 closure plan. The approved schedule calls for cap installation in 2012 and it
would be bumped to 2013 or beyond if curbside garbage was not diverted. Just
lifting the commercial ban would probably extend the life of the landfill to 2014 or
later. Another downside would be to require a decision on additional land rent for
the landfill. The agreement between the General Fund and the Refuse Fund was
the landfill operations would end in 2011. Other concerns would be a delay and
availability of the future parkland and would add operations cost to the Refuse
Fund beyond 2011. The economics of the current composting operation were
better than sending the curbside yard waste to the SMaRT Station. While the
landfill is still operating, there would be a savings of $56K a year, and it will
provide the soil amendment needed to create the final vegetative cover over the
finished landfill. This would save $200,000 that would otherwise be needed to
import compost to make a suitable planting base. Option 1 would also allow
dropping the requirement to refurbish the existing grinder due to the shortened
timeline.
1011911 0 FIN16
Mr. Sartor said the next steps were with this evening's Finance Committee's review
and recommendations. Staff was prepared to go back to the Council in November
2010 to present the recommendations on the Landfill and Compost operations. In
January 2011, cost of service study and rate structure recommendation will be
brought to the Finance Committee. In March 2011, the preliminary AD Facility
study and financial analysis would be presented to the Council and in September
2011, the final AD Feasibility study would be presented to the Council.
Vice Mayor Espinosa asked 'why the grinder was not included in the additional
savings.
Mr. Sartor said it was a soft cost and not included in any of the options. It was
part of the Vehicle Replacement Fund and funded by the Refuse Fund through the
years.
Vice Mayor Espinosa said it was a significant savings when you are looking at
options and cost savings.
Mr. Sartor said he agreed and that was the reason for not recommending the
refurbishment. It made more sense to refurbish if the landfill time were extended
rather than contracting out or to lease.
Council Member Scharff said the yard trimming gate fees were $388,256 and
asked who paid those fees.
Mr. Raschke said aside from the curbside yard trimmings, self-haul landscaping
waste was accepted and was charged a per-yard fee.
Council Mem'ber Scharff asked where yard trimmings would be taken if composting
operations stopped.
Mr. Sartor said there was free GreenWaste curbside pickup with the use of the 96-
gallon containers for Palo Alto residents. The gate fee came from outside
landscape contractors or truckloads of excess yard trimmings from local residents.
Council Member Scharff asked what the sensitivity on the $388,000 was.
Mr. Raschke said that was the actual revenue in 2010.
Council Member Scharff asked if there was any reason to believe that wquld fall.
10119110 FIN17
Mr. Raschke said he did not foresee that number dropping in the near future due
to other options opening up for yard waste.
Council Member Scharff said there was the issue of opening Byxbee Park and the
Windrow composting blowing into the park. He asked if.it was an issue and did it
degrade the experience of the park.
Mr. Raschke said with the timing in Option 1, the grinding operations would be
done by next September and hoped to open up Phases 2a and 2b in July. There
would be very little' overlap.
Mr. Sartor said stock piling would be done for future use and only would be to mix
with the last layer of soi I.
Council Member Scharff asked if the grinder would stop in July.
Mr. Raschke said probably in September with a 3~month overlap where Phase 2a
and 2b would open up to the public and still have grinder operations.
Vice Mayor Espinosa referred to Staff report CMR:381: 10, page 7. He said the two
most important sentences in the report stated: "The 9-acre area for a potential AD .
Facility is already very close to the permitted final grading plan. It is nearly
already filled with garbage that would need\ to be excavated and relocated to
provide a level pad for the facility. Staff anticipates that the fast fill option would
not have a significant impact on the amount of waste that would need to be moved
if Palo Alto elects to move ahead with a new Anaerobic Digestion Facility." He said
he needed a clear understanding that Staff was finding the Fast Fill option would
not have a significant impact on the amount of waste that needed to be moved if
we went forward with the AD facility and there would not be a cost that would
outweigh that minimal amount of moving.
Public Works Environmental Compliance Manager Phil Bobel referred to the
overhead presentation and noted the area that contained the material to be placed
on the 9-acre site. He said a rough estimate showed an increase in the overall
cost to the AD Facility of 1 to 3 percent. Staff concluded that it was not significant
compared to all the other variabilities in the data for costing out the AD Facility.
Following up on Vice Mayor Espinosa's statement, Council Member Klein
questioned why the option changed since July.
Mr. Sartor said after the September 20 th Council Meeting when Staff got into the
Refuse Fund and into costs associated with the rates, they realized the landfill
operations had a great impact on the Refuse Fund and refuse rates. After a
10119110 FINI8
After a reevaluation and with the balancing of the Zero Waste, Refuse Fund, and
Parkland Goals, Option 1 was better than the "As-Is" option to continue.
Council Member Klein said it was his understanding that the idea of filling the 9-
acres would preclude the AD option.
Mr. Bobel said Council's direction was to study the 9-acres and felt it was
inconsistent to add more waste to an area to be studied making it more difficult to
do. It was clear aftercosting out that it did not have the material impact that Staff
initially thought it would.
Council Member Scharff said to following up on Council Member Klein's comments,
it was probably a $600,000 error and that if we had continued to collect
commercial waste we would have the $600,000.
Chair Schmid referred to Attachment B, under 2013 landfill cap and close, and
asked if that was the official time when the Refuse Fund would turn the landfill
over or when rental payments expired.
Mr. Raschke said for Option 1, the cap and close would be in mid 2012 but landfill
operations would cease in mid to late 2011.
Chair Schmid asked if that would be the expiration of rental payments due under
the City's contract.
Mr. Sartor said the rent was tied to the landfill being opened. The landfill activities
of installing the cap and the closure infrastructure maintenance would go on for
years.
Mr. Raschke said when the landfill ceases to take in new waste it would no longer
be a profit center or a potential profit center.
Mr. Perez asked if Chair Schmid was asking to modify the rent schedule approved
by the Council. Chair Schmid said that it seems it would be required for Options 2,
3 or 4.
Mr. Bobel said it was not required in Option 1 and was one of the benefits.
Chair Schmid referred to Table 1 on page 4 and said there was not a difference in
rental fees between Composting Scenario 1 and 2.
10119110 FIN19
Mr. Raschke said that was correct because the composting operation is currently
located top of the active landfill area. The rent would paid even if local composting
was terminated. Chair Schmid then asked for public comment.
Bob Wenzlaw said he was a proponent for the AD Facility and asked that
composting continue in Palo Alto. Composting was part of Palo Alto and good
revenue.
Emily Renzel said she was in favor of Option 1. It was the best option for
economical alternative and best for the rate payers and can join the Cities of
Mountain View and Menlo Park with completed parks fashioned from old landfills
and connected by the Trail Around the Bay. She asked the Committee to approve
Staff's recommendations.
MOTION: Vice Mayor Espinosa moved, seconded by Council Member Scharff that
the Finance Committee recommends to the City Council to accept Landfill
Operations Option No. 1 to quickly fill the remaining landfill capacity, while
retaining existing composting operations and thereafter convert the area to
parkland as fast as possible.
Council Member Scharff asked it was necessary to move the item forward to the
Council for discussion. He suggested placing it on Consent.
Council Member Klein said it was his understanding that unanimous
recommendations go on Consent.
Senior Assistant City Attorney Cara Silver said you would be reversing prior
Council's direction on the commercial ban that would need to go to Council on that
issue, but Consent would be fine.
MOTION PASSED 4-0.
4. Follow-up to Finance Committee Discussion of Long Range Finance Forecast
on October 5,2010.
Administrative Services Department Director Lalo Perez said there was good
feedback from the Finance Committee on the first go-around of the report. He
asked which percentage scenario should Staff be working on when the item
returns in December 2010.
Chair Schmid said the goal was not to have further discussion but to get input from
each of the Council Members.
10119110 FIN20
Mr. Perez said that was correct. The two scenarios were restricting salary growth
to the growth of revenue, and the restricted salaries to a 2 percent flat line.
Vice Mayor Espinosa said another scenario was the infrastructure modeling.
Mr. Perez said that could be included.
Council Member Klein said he would like the public to know about the information.
Council Member Scharff said he had given the information to the Chamber/of
Commerce.
Mr. Perez said Staff would work on meetings to help the business community,
residents, and the Infrastructure Blue Ribbon Task Force (IBRTF.) He said the
IBRTF was given briefing material that included the original Long Range Financial
Forecast (LRFF) and the supple!l1ent from the second round.
Chair Schmid said the revenue had set a cap on expenses and ended up with a
deficit in the some year. Larger portions of monies were put into benefits instead
of salaries and focused on the rapid increase in benefit-cost. He felt Scenario 1
was a good tool in working with the community to show the consequences of the
rapid increase in benefit cost. It was an effective way in dealing with all groups.
There was a G~neral Fund transfer to infrastructure that was not equivalent to
what was being spent on infrastructure. Large sums of monies were included in
Staff's salaries and contractors' cost which was independent of that. He said it
. would be good to have an estimate on what was currently being spent on
infrastructure.
Mr. Perez suggested including actual expenditure and what was expected in the
future.
Chair Schmid he suggested doing a definition of what was being included such as
Cubberley, airport issues and golf course'changes, and other critical decision the
City was facing prior to showing it to the IBRTF.
Mr. Perez said it would be important to include the Kitchell Report in the event of
moving forward to a bonding scenario;
Council Member Klein felt it would be important to review all scenarios. The
airport issued did not change the balance sheet or the profit and loss statement.
10/19/10 FIN21
5. Discussion for Future Meeting Schedules and Agendas
Mr. Perez said the November 2 nd meeting will begin at 6 P.M. All items will be
Utilities Department related. November 16th agenda will have the First Quarter
Fiscal 2011 financial results and a presentation of the Library Bond Oversight
Committee Quarterly Report. The December 7th agenda will consist of the Final
Financial Report and Year-end Capital Program and Utilities items regarding the
Long Range Term Acquisition Plan and the G-10 and G-3 Rate adjustments. He
asked to consider a Special meeting on December 21 st if December 7th was not
doable.
Council Member Scharff requested starting at 7:30 p.m. for the December 7
meeting.
Chair Schmid ask if 6 p. m. was a good time to start the November 16th meeting.
Mr. Perez said he would need to check the City Manager's schedule.
ADJOURNMENT: Meeting adjourned at 9:59 p.m.
10119/10 FIN22
4\ttachment C
ORDINANCE NO. XXXX
ADOPTION OF A REFUSE ENTERPRISE FUND BUDGET
AMENDMENT ORDINANCE AND RECOMMENDATION FROM
FINANCE COMMITTEE TO ACCEPT LANDFILL OPERATIONS
ALTERNATIVE NO. 1 TO QUICKLY FILL THE REMAINING
LANDFILL . CAPACITY WHILE RETAINING EXISTING
COMPOSTING OPERATIONS AND, THEREAFTER, CONVERT
THE AREA TO PARKLAND (OPEN SPACE) AS FAST AS
POSSIBLE
The City Council of the City of Palo Al to does ordain as
follows:
SECTION 1. The City Council of the City of Palo Alto finds
and determines as follows:
A. Pursuant to the provisions of Section 12 of Article III
of the Charter of the City of Palo Alto, the Council on June 28,
2010 did adopt a budget for fiscal year 2011, including a Table
of Organization describing the staffing for each department and
a Municipal Fee Schedule; and
B. On August 5, 2010, Council directed staff to return to
Council with a comprehensive cost analysis and timeframe for
closing the Palo Alto landfill and converting the area to
parkland; and
C. On October 19, 2010, the Finance Committee recommended
that Council approve staff's recommendation to quickly fill the
remaining landfill capacity, while retaining existing composting
operations and' thereafter ,converting the area to parkland as
fast as possible; and
D. Council's decision to lift the suspension of the
commercial garbage ban at the landfill is required to quickly
fill the remaining landfill capacity; and
E. Additional revenue and expenditure changes are needed to
facilitate the quick filling of the remaining landfill capacity
as described in Exhibit Ai and
F. The fiscal year 2011 Adopted Municipal Fee Schedule
requires amendment to reinstate and change· certain commercial
refuse disposal fees related to the Palo Alto landfill as
reflected in Exhibit C; and
G. City Council authorization is needed to amend the fiscal
year 2011 budget as hereinafter set forth.
Page 1 of3
SECTION 2. The Rate Stabilization Reserve in the Refuse
Fund is hereby increased by the sum of Three Hundred Eighty-Nine
Thousand Six Hundred Forty-Eight Dollars ($389,648) as described
in Exhibit A. As a result of this change, the Rate
Stabilization Reserve in the Refuse Fund will increase to a
deficit of ($5,174,493).
SECTION 3. The Rate Stabilization Reserve in the Wastewater
Collection Fund is hereby decreased by the sum of Three Hundred
Seventy-Five Thousand Dollars ($375,000) as described in Exhibit
A. As a result of this crange, the Rate Stabilization Reserve
in the wastewater Collection Fund will decrease to $6,395,947.
SSCTION 4. The fund balance of the Vehicle Replacement and
Maintenance Fund is hereby decreased by the sum of Five Hundred
Ninety Thousand Six Hundred Forty-Eight Dollars ($590,648) as
described in Exhibit A. As a result of this change, the
undesignated, unreserved portion of fund balance will decrease
to $2,616,352.
SECTION 5. Adjustments to move expenditures from fiscal
year 2012 to fiscal year 2011 for· Capital Improvement Project
-RF-10003 -Drying Beds, Material Storage and Transfer Area are
made as shown in Exhibit B. The increase in fiscal year 2011 is
reflected in the adjustments as shown in Exhibit A.
SECTION 6. The Municipal Fee Schedule is hereby amended to
reflect the changes shown in Exhibit C, which is attached hereto
and incorporated herein by reference. To the extent these fees
are subject to Proposition 26, the amount of the fee is no more
than necessary to cover the reasonable costs of the governmental
activity and the manner in which the costs are allocated to a
payer bear a fair or reasonable relationship to the payer's
burdens on, or benefits received from, the governmental
activity.
SECTION 7. As specified in Section 2.28.080(a) of the Palo
Alto Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
SECTION 8. The Council of the City of Palo Al to hereby
finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental
impact assessment is necessary.
SECTION 9. As provided in Section 2.04.330 of the Palo Alto
Municipal Code, this Ordinance shall become effective upon
adoption.
Page 2 of3
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Sr. Asst. City Attorney
Mayor
APPROVED:
City Manager
Director of Admin. Services
Page 3 of3
FY 2011 Category Amount Description
ENTERPRISE FUNDS
REFUSE FUND
Revenue $ 300,000 Increase in disposal fee revenue from lifting commercial
refuse ban at the Palo Alto landfill
Revenue 590,648 Payment from Vehicle Fund for refund of replacement
charges previously paid from the Refuse Fund to the Vehicle
Fund for landfill and composting equipment that will not be
replaced
Revenue Changes 890,648
Salary and Benefits $ 250,000 Reinstate salary and benefits- landfill operations; this
reverses Council action of 9/20/2010 when it was proposed
that the landfill would close two days per week
Non-salary (250,000) Decrease contract services- Smart Station contract; due to
diversion of waste from Smart Station to Palo Alto landfill
Non-salary 375,000 Reinstate CIP RF-10003 Drying Beds, Material Storage and
Transfer Area (CIP RF-10003 totaling $750,000 has
$375,000 in funding from the Wastewater Collection Fund;
for SAP financial entries, a reinstatement of the transfer
between funds will be reflected)
Non-salary 246,000 Reinstate Zero Waste outreach expense; offset by $100,000
decrease in Smart Station contract and $146,000 in solid
waste permitting
Non-salary (146,000) Decrease contract services- solid waste permitting
Non-salary (100,000) Decrease additional contract services- Smart Station
contract
Non-salary 126,000 Increase equipment rental for compost grinder (December
2010 to June 2011)
Use Changes 501,000
Net Changes To (From) Reserves $ 389,648
Fund Balancing Entries
389,648 Change in Fund Balance
Total Refuse Fund $ 389,648
CITY OF PALO ALTO
AMENDMENTS TO THE FY 2011 ADOPTED BUDGET
Exhibit A
Page 1 of 2
FY 2011 Category Amount Description
CITY OF PALO ALTO
AMENDMENTS TO THE FY 2011 ADOPTED BUDGET
Exhibit A
WASTEWATER COLLECTION FUND
Non-salary $ 375,000 Reinstate reimbursement to Refuse Fund for CIP RF-10003
Drying Beds, Material Storage and Transfer Area (project
reinstated for FY 2011)
Use Changes 375,000
Net Changes To (From) Reserves $ (375,000)
Fund Balancing Entries
$ (375,000) Change in Fund Balance
Total Wastewater Collection Fund $ (375,000)
INTERNAL SERVICE FUNDS
Non-salary $ 590,648 Payment to Refuse Fund for refund of replacement charges
previously paid from the Refuse Fund to the Vehicle Fund
for landfill and composting equipment that will not be
replaced
Use Changes 590,648
Net Changes To (From) Reserves $ (590,648)
Fund Balancing Entries
(590,648) Change in Fund Balance
Total Vehicle Replacement &
Maintenance Fund
$ (590,648)
VEHICLE REPLACEMENT & MAINTENANCE FUND
Page 2 of 2
Capital Budget FY 2011 City of Palo Alto 245
RF-10003Drying Beds, Material Storage and Transfer Area
DRYING BEDS, MATERIAL STORAGE AND TRANSFER
AREA (RF-10003)
CIP FACTS:
• Continuing
• Project Status: Construction
• Timeline: FY 2010-2011
• Overall Project Completion: 0%
• Percent Spent: 31.27%
• Managing Department: Public Works
• Comprehensive Plan: Policy N-37
• Potential Board/Commission Review: ARB
IMPACT ANALYSIS:
• Environmental: Possible exemption.
• Design Elements: This project may be subject
to ARB review.
• Operating: None
• Telecommunications: None
Description: This project includes designing and implementing two
bunker storage-transfer systems for dry and wet materials. The project
will also evaluate potential non-park land sites for these activities. The
dry system will be used to store inert solids and leaves from municipal
operation construction projects and street sweeping. The wet system
will be used for storm drain and sanitary sewer debris from Vac-con
trucks.
Justification: This project will be developed in anticipation of the
landfill closure in 2012.
Supplemental Information: Feasibility of processing other wet
construction materials and allowing contractors to use the systems will
be considered during the design phase.
Refuse and Wastewater Collection Funds will share equally the
construction costs.
PRIOR YEARS
PY Budget $125,000
PY Actuals as of 12/31/2009 $39,087
FUTURE FINANCIAL REQUIREMENTS
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Total Funding
Pre-Design Costs
Design Costs
Construction Costs $750,000 $750,000
Other
Total Budget Request $750,000 $750,000
Revenues: $375,000 $375,000
Source of Funds:Refuse Fund with the following reimbursements: Wastewater Collection Fund($375,000)
Exhibit C
Refuse Disposal Area Resident Commercial Resident Commercial
Classification of Vehicles
Passenger Car or Station Wagon $15.00 (Less than one
cubic yard)
SUSPENDED-
$25.00 (less than
one cubic yard)
$20.00 (Less than one
cubic yard)
$20.00 (less than one
cubic yard)
(minimum charge) (minimum charge) (minimum charge) (minimum charge)
$25.00/cy (one cubic
yard or more)
SUSPENDED-
$25.00/cubic yard
(1 cubic yard or
more)
$30.00/cy (one cubic
yard or more)
$30.00/cubic yard (1
cubic yard or more)
Other Two-Axle Vehicle or Trailer
Load less than 0.5 cubic yard $15.00
SUSPENDED-
$15.00
$20.00 (minimun
charge)
$20.00 (minimun
charge)
Load 1 cubic yard $25.00
SUSPENDED-
$25.00 $30.00/cubic yard $30.00/cubic yard
Load 1 cubic yard or more $25.00 each cubic
yard plus $10.00 for
fractions greater than
0.5 cubic yard
SUSPENDED-
$25.00 each cubic
yard plus $15.00
for fractions
greater than 0.5
cubic yard
$30.00/cubic yard
plus $15.00 for
fractions greater than
0.5 cubic yard
$30.00 each cubic
yard plus $15.00 for
fractions greater than
0.5 cubic yard
Three or More Axle Vehicles
Load less than 1 cubic yard $30.00
SUSPENDED-
$35.00 $30.00 $30.00
Load 1 cubic yard or more $30.00 each cubic
yard plus $15.00 for
fractions greater than
0.5 cubic yard
SUSPENDED-
$35.00 each cubic
yard plus $18.00
for fractions
greater than 0.5
cubic yard
$30.00/cubic yard
plus $15.00 for
fractions greater than
0.5 cubic yard
$30.00/cubic yard
plus $15.00 for
fractions greater than
0.5 cubic yard
Materials Resident Commercial Resident Commercial
Compostable Materials (per landfill
acceptance list)
$15.00/cubic yard $25.00/cubic yard
(non-residents only
allowed to bring
compostable
materials)
$20.00/cubic yard
plus $10.00 for
fractions greater than
0.5 cubic yard
$20.00/cubic yard
plus $10.00 for
fractions greater than
0.5 cubic yard
Finished compost (bagged)$2.00 $2.00
Finished compost (yard)
<10 yards
>10 yards
$13.00/yard
$11.00/yard
$13.00/yard
$11.00/yard
2010 FEE 2011 FEE
2010 FEE 2011 FEE
PUBLIC WORKS DEPARTMENT
Refuse
City of Palo Alto 2011 Adopted Municipal Fee Schedule 21-3
ZeRO WASTE BUDGET FY 2011
Contractual Services -Encumbered
RHDG -Consultant providing design services and marketing strategy for
$41,258 all print material, ads, and web content.
SEI -Consultant providing assistance to school Green Teams and
$13,590 facilitating Green Teams Conference November 2011.
Cascadia -Consultant providing technical assistance for Green Businesses,
school waste audits, and City facility waste diversion program, so we may
$55,695 continue these services even with vacant ZW Coordinator position.
C-Way -Additional contract for janitorial services to collect food waste at
$7,562 City Facilities. ,
Advertising -Weekly, Daily News ads to promote zero waste activities,
$45,423 compost and Bay Friendly classes.
Office remodel-General Contractor to create work space at MSC for staff
$25,232 currendy located at landfill.
$3,267 Office remodel-Wiring
$2,500 Office remodel-Contingency
$194,527 SubTotal
Supplies and Materials
$4,746 Encumbered for office supplies, compost bins, and outreach materials
$11,049· Unencumbered ~ intended for City Facility public area waste stations
$15,795 SubTotal
$210,322 Total Zero Waste Budget FY 2011
ATIACHMENTD