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HomeMy WebLinkAboutMINUTES - 08061991 - MR.1 f MR. 1 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUN'T'Y, CALIFORNIA DATE: August 6, 1991 MATTER OF RECORD --------------------------------------------------------------------- --------------------------------------------------------------------- SUBJECT: Closure Cost Funding Program for Acme Fill Mr. Thomas M. Bruen, Bruen and Gordon, A Professional Corporation, 1990 North California Boulevard, Suite 1020, Walnut Creek, California 94596, appeared under the public comment section of the Board' s agenda and presented a letter on behalf of Acme Fill Corporation requesting the Board to immediately act to implement the closure cost funding program developed for the County by its rate review consultant, Deloitte Touche. THIS IS A MATTER OF RECORD. NO BOARD ACTION TAKEN. cc: Community Development - Sara Hoffman County Administrator County Counsel BRUEN & GORDON A PROFESSIONAL CORPORATION 1990 NORTH CALIFORNIA SOULEVARO SUITE 1020 WALNUT CREEK,CALIFORNIA 94996 (419)299-3131 FAx(419)299.3132 August 5, 1991 Chairman Thomas Powers and Members of the Board of Supervisors, Contra Costa County 651 Pine Street Martinez, CA 94553 Dear Chairman Powers & Members of the Board: We are writing directly to you and the other members of the Board of Supervisors on behalf of Acme Fill Corporation to request that the Board immediately act to implement the closure cost funding program developed for the County by its rate review consultant, Deloitte Touche. As you may recall, when the Acme Interim Transfer Station opened in December of 1989, there was no requirement either by way of franchise agreement or in the Interim Transfer Station land use permit which subjected the Interim Transfer Station to rate review and control by the County Board of Supervisors. However, the Land Use Permit for the Permanent Transfer Station (now under construction) did require that the Permanent Transfer Station be under County rate control. Members of the Board of Supervisors and County Staff, along with representatives of Deloitte Touche, approached Acme in 1989 and requested that Acme voluntarily submit its Interim Transfer Station rates to review and control by the County Board of Supervisors. Acme was told that the County was concerned about the impact on ratepayers of the substantial increases in Acme's rates during the preceding years in order to meet changing regulatory requirements mandating advance funding of closure and post closure for Acme's three parcels. Acme was told that if the Interim Transfer Station was under rate control by the County, that the County could then adopt a closure and post closure funding mechanism which would spread the cost of closure and post closure over a longer period of time than just the lifetime of the Interim Transfer Station (projected to be two to three years) and, moreover, could also consider surcharges at other disposal Chairman Thomas Powers and Members of the Board of Supervisors August 5, 1991 Page 2 facilities in the County to fund Acme's closure. In reliance on these representations, Acme agreed that the Interim Transfer Station would be subject to rate review and control by the County. Deloitte Touche (then known as the firm of Touche, Ross) performed several studies regarding closure cost funding for Acme. To answer critics of Acme who claimed that Acme's closure should not be funded by ratepayers because Acme had allegedly earned exorbitant profits, Deloitte Touche performed a study of Acme's profits for the preceding ten years. Deloitte Touche determined that Acme had earned below average profits compared to other companies in the solid waste industry and that Acme had made only minimal distributions to shareholders. Deloitte Touche also conducted studies on the issue of closure cost funding and determined, among other things, that: (1) Acme had responded in a reasonable fashion to changes in the regulatory environment in terms of raising money for closure and post closure, and that the changes in closure regulations had been unforeseeable by Acme's Board of Directors and others in the solid waste industry; (2) that the then estimated cost of closure and post closure of Acme (41 million dollars) was reasonable based on the closure and post closure requirements then known to Acme; (3) that the cost of closure and post closure at Acme should be amortised over a ten year period to reduce the impact on ratepayers; and (4) that cities should be assessed for closure based on their level of historic use of Acme. Acme voiced its concerns on several occasions about the last recommendation, since it precluded simply assessing a fixed amount per ton at Acme's gate in order to raise money for closure and post closure. However, Deloitte Touche, with concurrence of the County, proceeded to develop a schedule showing the required contribution from each city and service area that had used Acme in the past. County staff and Deloitte Touche met with the cities and sanitary districts to explain the program to them and obtained their agreement to the schedule. As of the writing of this letter, three jurisdictions (Walnut Creek, Pleasant Hill and the Mountain View Sanitary District) have all included components for Acme's closure and post closure in their rates. Nevertheless, the County Board of Supervisors has not acted on the Deloitte Touche recommendation and the majority of cities and sanitary districts have deferred acting because the Board has failed to act. In 1990, Acme was approached by what was ultimately to become the Central Contra Costa Solid Waste Authority (the Cities of Walnut Creek, San Ramon and the Central Contra Costa Sanitary Chairman Thomas Powers and Members of the Board of Supervisors August 5, 1991 Page 3 District) and asked if Acme would be interested in selling the land and permits for the Permanent Transfer Station to that group. Acme requested that the County be brought in as a participant in these negotiations and the Solid Waste Authority agreed to this request. Since then, Acme has been diligently negotiating with the County and the Solid Waste Authority towards agreement. However, although we have repeatedly requested that the County Staff and Board immediately implement the closure funding program developed by Deloitte Touche and the County Staff, we have been told by County Staff that the Board of Supervisors will refuse to implement this program until the conclusion of the negotiations regarding the Permanent Transfer Station. In short, the County is now using the closure/post closure funding mechanism as "leverage" in the negotiations with Acme, which implies that unless Acme agrees to sell the Permanent Transfer Station to the County, that the County will renege on its commitment to provide closure and post closure for Acme. We estimate that had Acme been able to continue its own closure cost funding through the Interim Transfer Station at the rate of $21.67 per ton from December 18, 1989 to the present, that Acme would have raised a total sum in excess of $11 million. This additional sum would have been more than sufficient to provide Acme with adequate cash flow to commence and complete closure of the north parcel. There is now a serious question as to whether there are sufficient funds currently on hand to close the North Parcel, which will be by far the most expensive of the three parcels to close. Thus, the County's continuing delay is creating an immense practical obstacle to the successful funding of Acme's closure. Therefore, Acme requests that, at a minimum, the County Board of Supervisors take immediate action to provide for funding at the rate of $5.92 per ton, the alternate per ton rate determined by Deloitte Touche as an interim funding measure, until the County implements the full Deloitte Touche funding program, including specific assessments for each jurisdiction that has historically used Acme. Acme further requests that the Board- implement the full funding program without further delay, regardless of whether the negotiations for sale of the Permanent Transfer Station to the County and Solid Waste Authority have concluded. Acme has been threatened with litigation by the Attorney General 's Office, representing the Department of Health Services, over Acme's inability to commence closure of its north parcel. Acme is not in a position at this point to provide financial assurances acceptable to Federal and State agencies because Acme Chairman Thomas Powers and Members of the Board of Supervisors August 5, 1991 Page 4 has been prevented by the County Board of Supervisors from raising money for closure and post closure since the Interim Transfer Station began operations. Therefore, Acme's Board of Directors believes that unless immediate funding for closure and post closure at Acme is allowed by the Board of Supervisors, that it will have no choice but to consider taking appropriate action against the County. Very truly yours, r,vl Thomas M. Bruen TMB:jcf