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Home My WebLink AboutAGENDA BACKUP 01-27-98 ~ \,E~ntral Contra Costa Sanitar y District BOARD OF DIRECTORS ::::::iB..::I.:...I:.::.:.:II:~:iB::I1::.I:.:;:;:.:::::I.:.:::::::::.~:::I:~:::: BOARD MEETING OF ::::::m:.Il::):::!:::::::::.~!I:::::::m.::/:::::::::::::;:;:;:;g:m:::r January 27, 1998 Page 1 of 11 NO. 3. SOLID WASTE a. DATE TYPE OF ACTION January 23, 1998 APPROVE DISPERSAL OPTION SUBJ EeT CONSIDER ISSUES AND DECIDE ON DISPERSAL OPTION FOR REMAINDER OF ACME LITIGATION FUNDS SUBMITTED BY Paul Morsen, Director of Administration INITIATING DEPTIDIV Administrative Department ISSUE: After settlement of the Acme Litigation, $1,265,405 in surplus funds were available for distribution. At the January 20, 1998 Board Meeting, the Board directed that $639,288 be returned through Central Contra Costa Solid Waste Authority (CCCSWA) to the garbage ratepayers within the areas the District formerly franchised. Therefore, $626,117 now remains for further distribution. At the last Board Meeting, the Board asked staff to provide information on a variety of topics which are included in this position paper and its attachments. BACKGROUND: BREAKDOWN OF ACME SETTLEMENT The Board requested information on the amount of contributions made by other communities both within and outside the District's service area to the settlement of the Acme Landfill Litigation. That information has been provided on Attachment 1. To the best of our knowledge, most of the money provided by communities other than the Central San franchised communities was collected by solid waste surcharges implemented by those communities through their franchise fees. If those communities had insurance coverage for their liability, we expect that insurance payments were forthcoming. We are aware that the City of Walnut Creek received insurance coverage. Moreover, both Walnut Creek and Pleasant Hill created impound accounts in anticipation of having to pay settlement costs. The District's share of the settlement cost was $800,350 for municipal solid waste. ALLOCATION BETWEEN BIOSOLlDS AND MUNICIPAL SOLID WASTE Early in the management of the Acme closure and Acme Superfund lawsuit, the District's Engineering Department was tasked with finding a rational basis for allocation of expenses and incomes between biosolids disposal and municipal solid waste disposal. Through their efforts, we were able to determine that biosolids constituted approximately 15 percent of the Acme Litigation expense while the municipal solid waste (msw) constituted approximately 85 percent. In lieu of payments to Acme to cover the District's biosolids disposal exposure, the District is expected to REVEWED AND RECOIIII/VENDED FOR BOARD A C710N S :\ADMIN\POSP APER\acmemoney.pp. wpd 9116/96 DATE January 23, 1998 Page 2 of 11 SUBJECT CONSIDER ISSUES AND DECIDE ON DISPERSAL OPTION FOR REMAINDER OF ACME LITIGATION FUNDS continue to purchase landfill gas generated by the closed landfill. The District has also agreed to provide treatment services for leachate produced by the landfill at Acme's expense. Attachment 2 shows the calculation of the $1,560,005 figure that represents the allocation of expenses between biosolids and msw. ALLOCATION OF INSURANCE PREMIUMS An interesting feature of the District's overhead charges to the solid waste customers that were included in our franchise fees, is that no allowance was ever made for insurance costs. This was based on the logic that the function of solid waste rate regulation entailed a minimal insurable risk. Unfortunately due to the Federal Superfund law, the District was exposed to a substantial unanticipated liability which was covered in part by our past insurance policies. During the course of handling the Acme litigation, the District's attorneys processed claims against all appropriate insurance policies. The insurance recoveries were analyzed and correlated to premiums paid for the policies. Those policies often covered more than liability insurance; in most cases, the policies also covered property and automobile insurance. The total insurance premium cost has been analyzed and an estimate was made of the approximate cost of the liability portion of the premium. (See Attachment 3.) INSURANCE PREMIUMS (Q) CURRENT DOLLARS At the January 8, 1998 Board Meeting, the Board considered the allocation of premiums and decided that it would be appropriate to discount the insurance distributions to the solid waste customers by the present worth of the total premium costs which were paid for by all of the Sewer Service Charge customers. (See Attachment 3A.) It was decided that the present worth value of $294,600 would be retained by the District for the benefit of the Sewer Service Charge ratepayers. LEGAL IMPOUND ACCOUNT When the Acme lawsuit was filed, the solid waste haulers, franchisers, industrial and commercial customers, municipalities, and others were named in the lawsuit. In the District franchised Pleasant Hill Bayshore Disposal service area (Pacheco, Clyde, and northern unincorporated areas), the Pleasant Hill Bayshore Disposal company represented themselves in the Acme Litigation and never requested a rate increase to cover their legal expenses. Furthermore, the franchise for the northern unincorporated area was turned over to Contra Costa County prior to the County's completing a comprehensive settlement with Acme which included that area. The franchise for the unincorporated areas in the southern and central county (Alamo, Blackhawk, Round Hill, Saranap, and unincorporated DATE January 23, 1998 Page 3 of 11 SUBJECT CONSIDER ISSUES AND DECIDE ON DISPERSAL OPTION FOR REMAINDER OF ACME LITIGATION FUNDS areas in and around Walnut Creek) was transferred to the Central Contra Costa Solid Waste Authority along with the franchises for the four cities (Danville, Lafayette, Moraga, Orinda) franchised by the District. The District offered to continue to defend those cities in the Acme lawsuit provided that they did not contest the collection of franchise fees sufficient to pay legal expenses and settlementfJudgment expenses. Soon after the lawsuit was filed, Valley Waste Management and Orinda-Moraga Disposal Service approached the District in the rate setting process and asked for a rate increment to be added to cover their legal expenses. After much deliberation, the Board agreed to include an increment but identified the following policy issues: . The question of whether the defense of the Acme lawsuit was a business expense or an expense that could become a burden on the ratepayers? . The unknown magnitude of the actual legal expenses. . The question of whether some or all of those legal expenses might be covered by the haulers' insurance coverage. The Board agreed to include the incremental expense; however, the Board ordered that the money would be paid to the District and retained in an impound account from which distributions would be made after the policy issues were further clarified. On December 15, 1994, the Board decided to refund 75 percent of the haulers' actual reasonable legal expenses not reimbursed by their insurance. As indicated on Attachment 4, the net balance of the legal impound account is $419,488. SUMMARY OF REVENUE AND EXPENSE LEAVING NET BALANCE A summary of the revenues, expenses, and net balance relating to the Acme Litigation is set forth on Attachment 5 and indicates that $626,117 remains for a Board decision of its disposition. OPTIONS At the Board Meeting of January 20, 1998, the Board identified a series of options which have been itemized and for which further financial information is provided on Attachment 6: 1 . The remaining balance could be provided to the CCCSW A in the same manner as the Board directed for the $639,288 they disbursed at the January 20, 1998 Board Meeting. District staff would work with the Authority staff to ensure this remaining balance be distributed for DATE January 23, 1998 Page 4 of 11 SUBJECT CONSIDER ISSUES AND DECIDE ON DISPERSAL OPTION FOR REMAINDER OF ACME LITIGATION FUNDS the benefit of the garbage customers in the communities Central San once franchised and that the District gets recognition for its action. 2. The remaining balance could be used to lower the 1998-1999 Sewer Service Charge (SSC) for all District sewer service customers and would result in a lowering of the current $188 per household per year SSC by approximately $6 for each customer for one year. To ensure that our ratepayers understood the reason for this decrease in their Sewer Service Charge, an article in the District's newsletter, In Progress, and a letter to ratepayers could be developed. 3. The remaining balance could be retained by the District in reserves to be used to defray future Sewer Service Charges increases. Since there would be no postage and mailing costs for this option, the amount returned would be equal to $6.44 per household, slightly more than Option 2. This course of action could be explained in the District's newsletter. 4. The remaining balance could be split to benefit both the garbage customers and the Sewer Service Charge customers. The legal impound monies ($419,488) retained by the District were contributed by the solid waste customers for the defense of the collectors in the Acme Litigation, but were not needed. Accordingly, returning this amount to the solid waste ratepayers through their current franchiser, the CCCSWA, could be accomplished as described in Option 1. The present worth of the insurance premium costs, $294,600, could be added to what remains after the legal impound fees were dispersed through the CCCSW A; this would leave the District with $501,229 which is approximately the same amount as the estimated excess costs of operating the Household Hazardous Waste (HHW) Drop-off Facility. These excess costs are being experienced due to three times as many customers using the facility than estimated and their disposing of more wastes than expected. RECOMMENDATION: Discuss dispersal options and provide direction to staff. Attachment 1 BREAKDOWN OF ACME SETTLEMENT eeese $800,350 CONCORD 435,000 WALNUT CREEK 382,512 PLEASANT HILL 249,780 ANTIOCH 171,927 MARTINEZ 158,951 BENICIA 139,486 SAN RAMON 107,054 MT. VIEW SANITARY 94,073 RODEO 77,853 CLA YTON 32,439 $2,649,425 Attachment 2 ...- ...- ...- - 0> 0 0 CD CD CONCO co co COLOO M CD CO COCO II) ""'" co ('I) 0 N 'llI:t NNV 0 M - - - .. .. - - - .. .. ...I co 0 0 ...... 'llI:t O>NO> ""'" co <C t"---ON CD 'llI:t ('I) 0> ~ II) CD ~ 0> co -- ...... co COLOV co co f:I7 -- .. .. .. .. 0 -- ""'" ""'" ""'" ""'" W ~ - ~ .... en ~ ...- ...- ...- - t"---OO ...... 'llI:t CONCO co II) C NLOO ...... N co co co II) 0 - LO('I)O co co NNV 0 0 ..J OW - - - .. .. - - - .. .. COOO co ...... 0> NO> ""'" 0 0 -~ ('I) 0 N II) co ('I) 0> ~ II) co en ...It/) co co -- co II) COLOV co II) O<C f:I7 f:I7 .. .. .. .. ---- ""'" ""'" ""'" ""'" ..J t/)~ - ~ <C a.. - 0 tf - ...- ~ e - Z t/) N 8c N II) 0 M ::) 0 <0.- 0 co ...... ""'" - ('I) ~ (,) M co t/) M :E ...I -c7J:: .. .. Z .. 0 co .!! Cl co co co ....... 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W 0>0>0>0> >- .,.... .,.... .,.... .,.... l- I- I- Attachment 3 __H_.__~_~_______._.._._...._.~.__~.__._._.~~.."_~..._.__.__.._.__.....H_____._.__.,..._.___....."._____ . Attachment 3A INSURANCE PREMIUMS @ CURRENT DOLLARS Present Worth of $114,366 @ 6% = $294,600 Note: 6% based on ten year average interest earned on temporary investments ..-. C) N co "lit r-- ~ It) 0) M en ~ " 0) CI) - ... ... ... " ~ ~ en = iii C) CO ~ U - r-- N ~ c a- U) .- CI) >- ; f;R- "-' f;R- c ~ ~ CI) E " - CI) CI) f C'G ~ CJ .c CI) CI) - " c > ~ C'G 0 .c c CJ CI) .c 0 - E .!:! 0 .s .c ~ c U) en ~ CI) = W .!! U) CJ U) = c S .... " C'G CI) c :I: c. U) <( ~ >< ; ..... CI) ~ S 0 J!J C'G :2 W .!!! U) C) '0 = 0 .!! .... E CJ U) en = CI) CI) CJ C'G :c .c ~ CJ C) C'G - C'G .!! c E .s " 0 0 U) a- M CI) C'G ..... C - .... 0) C'G f " - 0) c. 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LON N Z -- "' T""" or- - fh ~ Z - <C ""C ~.- :E 0> m W >0.. o en 0::: u E > 0> ~ C) c::: .- 0:: 0> E Z w U 0> - > e "- ~ 0 mo.. 0 "- en ~ en W W en 0> ..J 0:: E....J - - W NI'- II) CO ..... en co I'- 0 CO or- NCO ~"' N or- Z "' - "' 'IlItCO II) 0) CD W NLO CD ('I) N 0)<D N <.0 CD a.. "' - "' - ~ N T""" or- >< ~- W ~ CONCO co CO CO CO II) W NN~ 0 - - - "' tn O)NO) 0r- e ~ Z ('I)O)T""" II) ..00 W .2 Z <DLO~ CD .! 0 fh "' WWO CJ W - 0r- a) I- ~ :::>OOZ "C > ::) ZZ::s co w m +-' ww (7) - 0::: - e >0..<( 0 0:: ::J N 0 WXaJ - Q) or- U- I- u c:::W ... 0 Z u ....J....JOO a) c: 0 wO <( <(<(00 c. ftS ..........0 ~ - ~ ~O Q)"C CO tnO:: 0> e 000::: en m u. ~ 1--1--(9 u <C <(w 0 u C) ~~ <(0)00 0 c: :E $ .en E .- cO 0 c: .c - - .- :E -I- OOu- "C CO ~tn Oem e E :J 0::) OmC> ~ """ Q) en 0"-0> a) tnO u.....J 0:: 0:: OPTIONS Attachment 6 1. Return remaining balance to solid waste customers via JPA rate setting Remaining Balance 2. Retain for sse refund on 98-99 Tax Roll Remaining Balance Liability Insurance Premiums paid by sse customers less cost to process Net Refund Equates to: 3. Retain to stabilize sse rates in the future Remaining Balance Liability insurance premiums paid by sse customers Net Refund Equates to: $626,117 $626,117 $294,600 (50,000) $870,717 $6.09 per household $626,117 294,600 $920,717 $6.44 per household 4. Legal Impound Refund via JPA/Balance to pay for excess HHW cost Remaining Balance Impound returned via JPA Net Balance Remaining Liability insurance premiums paid by sse customers Funds available to defray HHW cost overruns <a> <a> Due to the success of the HHW program, three times as many customers are using the site and depositing more HHW than estimated. Associated expenses are projected to be approximately one-half million dollars more than expected. $626,117 (419,488) $206,629 294,600 $501,229 AGREEMENT AND RELEASE This agreement and release of claims, made and entered into this 30th day of January, 1998 by and between the Central Contra Costa Sanitary District (District) and the Central Contra Costa Solid Waste Authority (Authority). Whereas, on January 27, 1998, the District Board met in open session to consider the disbursement of the funds remaining in the ACME litigation impound fund; and Whereas, the District Board determined that solid waste customers had contributed the sum of$419,458 to the ACME litigation impound fund and the District has no pending claims for this money; and Whereas, the District Board unanimously agreed that the sum of $419,458 should be disbursed to the Authority for the purpose of offsetting garbage rates; and Whereas, the Authority Board approved this Agreement and Release on this 29th day of January, 1998 thereby authorizing the acceptance of these funds. Now, therefore, it is mutually agreed between the District and the Authority as follows: 1. Subject to the provisions hereof, the District Board shall pay the sum of$419,458 (Four Hundred Nineteen Thousand, Four Hundred Fifty Eight Dollars) to the Authority for the purpose of offsetting garbage rates. This payment shall be made by March 9, 1998. 2. The Authority agrees that in consideration of the payment set forth in Paragraph 1, the Authority hereby releases and forever discharges the District, its Board, its officers and employees from any and all liability, claims, demands, actions or causes, or action of whatever kind or nature arising out of or in any way concerned with the District's collection of money deposited into the ACME litigation impound fund and payment to the Authority of ACME litigation impound funds in the amount of$419,458 and the Authority's use of said funds. 3. To the fullest extent permitted by law, the Authority shall indemnify and save harmless the District, its Board, its officers, agents and employees from and against any and all claims, loss, cost, damage, injury or death, expense and liability of every kind, nature and description, including without limitation incidental and consequential damages, court costs, attorneys' fees, litigation expenses and fees of expert consultants or expert witnesses incurred in connection therewith and costs of investigation that arise directly or indirectly, in whole or in part from the District's collection and payment of ACME litigation impound funds in the amount of $419,458 to the Authority and the Authority's use of said funds. Upon request of the Authority, the District will allow the Authority to handle and conduct such claims, suits, actions, or litigation (threatened or actual) on behalf of the District and the Authority with legal counsel of Authority's choice. - 1- C:IDA TAl WPDOCICONrRAC1\CCCSDHOL.D ------..--.--.-.--.--.---.---.-'""-------.------.--....-..-----.----- 4. The provisions of the Agreement and Release are contractual in nature and not mere recitals and shall be considered independent and severable, and if any such provision or any part thereof shall be at any time held invalid in whole or in part under any federal, state, county, municipal or other law, ruling or regulation, then such provision, or part thereof shall remain in full force and effect to the extent permitted by law, and the remaining provisions of this Agreement and Release shall remain in force and effect to the extent permitted by law, and the remaining provisions of this Agreement and Release shall remain in full force and effect, and shall be enforceable. CENTRAL CONTRA COSTA SANITARY DISTRICT CENTRAL CONTRA COSTA SOLID WASTE AUTHORITY B. By: ATTEST: ~~L.~/ Dis ct e etary ATTEST: ~~0D~ Authority Secretary - 2- C:IDA TAl WPDOCICONTRAC1\CCCSDHOL.D