Approve long-term agreements with the City and County of Sacramento for organic material diversion services and approve the fifth amendment to Agreement No. 20-198 with Northern Recycling LLC incorporating these long-term agreements into the scope of their services. (No general fund impact) (Lindbo/Juhler)

In 2019, the Board authorized the Division of Integrated Waste Management (Division), in partnership with Northern Recycling LLC (Northern) to respond to a Request for Proposals (RFP) issued by the City and County of Sacramento and City of Folsom (Jurisdictions) for organic material diversion services. As part of this original process, the County was selected by both the City and County of Sacramento to provide these services. The agreement with the City of Sacramento (Agreement 20-84) was approved by the Board on May 19, 2020 and the County of Sacramento agreement (Agreement 21-37) was approved by the Board on February 9, 2021. The County and Northern Recycling have successfully met the terms and conditions of these agreements and the revenue generated has helped fund the construction of the covered aerated static pile (CASP) composting facility at the landfill as well as helped fund the day-to-day operating cost of the landfill and its various programs.

As the original RFP was only for near-term services, the Jurisdictions followed this solicitation with a Request for Revised Proposals (RFRP) in 2022 seeking long-term agreements for organic material diversion services. The Division and Northern again prepared a proposal for these services and again were selected by both the City and County of Sacramento. The attached agreements represent the culmination of the proposal and contract negotiation process with both jurisdictions. Though both of these agreements represent "out-of-county" material, the recently approved out-of-county tip fee surcharge would not apply as organic waste is currently excluded since diversion of organic waste to facilities such as the CASP system is an obligation set by Senate Bill 1383 already intending to minimize greenhouse gas emissions. It will be explored in future years if the transportation impact of these organics loads will need to become subject to the tip fee surcharge as well.  

The City of Sacramento agreement (Att. A) has a base term of July 1, 2025, through June 30, 2035, with the option for an additional five one-year terms. The County of Sacramento (Att. B.) has a term of July 1, 2027, through June 30, 2042. Both agreements include provisions for early termination by either party. The general terms and conditions of both agreements are substantially identical to the existing near-term agreements with extended terms, slight changes to services, and material commitments and updated fees charged to the Jurisdictions.

The attached fifth amendment to agreement 20-198 with Northern is necessary to incorporate the terms and conditions of the City and County of Sacramento Agreements to ensure their organic material is processed correctly and also allow for compensating Northern for its services. Additionally, this directs Northern to secure this capacity for the contracted tonnage.

Approval of each of these agreements will allow the Division to continue to provide uninterrupted organic material diversion services to the City and County of Sacramento and provide net revenue to the Sanitation Enterprise Fund estimated at $475,000 annually. Based on the minimum tonnage commitments, and Consumer Price Index rate increase calculations year over year, this will continue to allow the Sanitation Enterprise Fund to grow. 

Lastly, on November 9, 2021, the Board certified the Environmental Impact Report (EIR) for the Yolo County Central Landfill Permit Revision Project. Analyzed in this EIR were a number of projects, including a daily tonnage increase at the landfill from non-disposal sources such as organic waste.  One of the measures identified to mitigate the increased vehicle traffic was a payment of approximately $322,000 to the Road Fund to help pay for increased maintenance needs. The revenue from these City and County of Sacramento agreements will be utilized for this purpose upon signing of these agreements.  

County Counsel has approved these agreements as to form.

The Yolo County Waste Advisory Committee was notified of the RFRP at their January 27, 2022, meeting and will again be updated at the scheduled meeting on January 23, 2024.

The Request for Proposal process initiated by Sacramento County, the city of Sacramento and City of Folsom and responded to by Yolo County was a competitive process. Yolo County was one of several vendors selected to manage organic materials from the Jurisdictions. The rates included in the agreements are slightly lower than the current gate rates for organics at the landfill but do include an increase in the share going to the Division relative to the existing City and County of Sacramento Agreements. With the current fiscal year 25-26 process underway, the Division will be incorporating this increase in revenue into fee calculations to minimize any necessary fee increases to other organic waste customers.

The original agreement with Northern Recycling was negotiated as a mutually beneficial agreement rather than employ a competitive bid process, given Northern’s willingness to fully finance the $40 million dollar project, transfer the YSAQMD permit from their Zamora Compost Facility and to cease compost operations at their Zamora Compost Facility, solving numerous constituent and regulatory issues for the County. Since the opening of the CASP facility, Northern has steadily improved their overall performance and operation of the facility and is currently performing satisfactorily.