ADMINISTRATIVE REPORT

Date: October 20, 1997

Dept. File No. 4603-6

CC File No. 3757

TO: Vancouver City Council

FROM: General Manager of Engineering Services

SUBJECT: Vancouver Landfill - Agreement with Delta

RECOMMENDATION

A.THAT Council approve entering into an agreement with the Corporation of Delta on the general terms outlined in this report for the operation of the Vancouver Landfill in Delta, subject to final language satisfactory to the General Manager of Engineering Services and Director of Legal Services.

B.THAT the retroactive Landfill royalties for commercial and demolition wastes for the period November 3, 1996 to December 31, 1997, estimated at $400,000, be funded from the Solid Waste Capital Reserve.

CTHAT the retroactive Landfill royalties for residential wastes for the period November 3, 1996 to December 31, 1997, estimated at $200,000, be accounted for in the Operating Budget, with the additional funding being provided from Contingency Reserve.

D.THAT the retroactive soil deposit fees for the period November 3, 1996 to December 31, 1997, estimated at $120,000, be funded from the 1997 Landfill Operating Budget.

COUNCIL POLICY

Vancouver has historically entered into operating agreements with Delta, the host municipality for our landfill, providing them royalties and other benefits.

Council authorization is required for the Director of Legal Services to sign the agreement on behalf of the City.

PURPOSE

This report provides Council with the principles of a proposed agreement with Delta for a new host municipality agreement, as negotiated by subcommittees of the respective Councils, and seeks Vancouver Council’s approval to complete the final agreement.

BACKGROUND

The last landfill operating agreement with the Corporation of Delta, also referred to as a host municipality agreement, expired in November 1996, having run 20 years. Negotiations at the staff level failed to yield a solution satisfactory to the parties.

Therefore, in May of 1997, negotiations between subcommittees of the respective Councils were commenced. Vancouver was represented by Mayor Owen and Councillors Clarke and Puil.

In addition to this agreement, the operation and finances of the landfill are also subject to the Tripartite Agreement between Vancouver, Delta and the GVRD, signed in 1989 and valid until 2037.

DISCUSSION

The aforementioned discussions are now completed and a proposed agreement has been reached, as summarized below:

Royalty

a)$1.98 per tonne royalty and green tax on municipal solid waste including demolition material

b)$0.50 per cubic metre fee on free fill

c)inflation at CPI annually

Other Revenues

a)access to compost facilities on the same financial basis as all other users. Due to limited available capacity, we may limit input originating in Delta to 20% of annual capacity

b)free dump voucher allowance increased to $75,000

c)all outstanding invoices for prior free dump voucher, sewer use claims and composting are waived

Transfer of Capacity

Transfer of approximately 10 million tonnes of capacity from the northern parcel to the original site with the details subject to an end use plan and the need for environmental contouring. Ownership of the northern parcel (230 hectares) to Deltaat Delta’s request.

End Use Plan

We will jointly direct the consulting team in the preparation of an end use plan. While we have an open ended commitment to the MoE to produce an acceptable plan, after $500,000, Delta cannot request further alternatives or induce the Ministry to require further work.

Highway Access

Vancouver’s contribution toward new highway access will be $1 million, inflated at CPI from 1991. The offer is conditional on Vancouver achieving an Operating Certificate without an arbitrary closure, such as 2010, and the construction must be completed by 2010 so that we achieve fair value for our investment.

Disposal Privileges

Delta retains its free disposal privileges related to residential and public works waste.

Term of Agreement

November 3, 1996 until 2037, the expiry of the 1989 Tripartite Agreement, or until such time as the Landfill is no longer approved by MoE, not part of the SWMP or we elect to close it. We agree to give Delta three years notice of our intent if we elect to close.

Financial Re-opener

The financial terms of the Agreement to be renegotiated every nine years.

It should be expected that, as the above principles of the agreement are put into formal, legal language that there may be minor adjustments to the terms.

This agreement represents a significant increase in royalty revenues to Delta but is still reasonably reflective of the interests of the parties. Of particular importance for Vancouver is that we have secured Delta’s agreement to re-allocate the distribution of waste on the site, transferring capacity from the northern 230 ha. parcel and placing it deeper, basically on the existing fill area. Approximately 10 million tonnes will be transferred which, when combined with capacity on the existing site, should allow us to use the site for another 40 years, coinciding with the expiry of the Tripartite Agreement in 2037. This agreement on capacity removes a major hurdle in achieving Ministry of Environment approval for longterm operation of the Landfill.

The GVRD, while not a direct party to this agreement, is affected. Pursuant to the 1989 Tripartite Agreement they pay the royalties as prescribed in the Vancouver-Delta Agreement. In addition, they have certain rights to the northern parcel, which must be waived to allow its transfer to Delta. GVRD staff were periodically consulted as negotiations proceeded and have been advised of the concluding principles of this arrangement. They will be seeking Board approval of the agreement on October 31, 1997.

Delta Council is expected to endorse the deal October 28, 1997.

FINANCIAL IMPLICATIONS

The annual value to Delta of the proposed agreement is estimated at $3.3 million. This amount is comprised of $1.8 million in avoided disposal fees, $0.9 million in royalties and soil deposit fees and $0.6 million in surplus commercial tipping fees.

The total annual cost to Vancouver of the proposed agreement is estimated at $1.2 million, an increase of approximately $600,000. The residential sector’s share of this total is about $270,000, which translates into a $3 cost per house. The remaining $930,000 will be funded from the commercial tipping fee.

The proposed agreement is retroactive to November 3, 1996 and Vancouver will have to pay retroactive royalties and soil deposit fees as of that date. The retroactive royalties, which apply to commercial garbage and demolition material ,estimated at $400,000, should be paid from the accumulated surplus fees, i.e. the Solid Waste Capital Reserve.

The residential royalties are funded from the City’s Annual Operating Budget. Because the retroactive royalties were not known when the budget was established, no funding was provided. Therefore, it is recommended that the retroactive residential royalty, estimated at $200,000, be accounted for within the 1997 Operating Budget, with the additional funding necessary provided out of Contingency Reserve.

Last, the retroactive soil deposit fees of about $120,000 can be funded from the 1997 Landfill Operating Budget, offset by a savings in the Cover Material Budget, and shared with all users of the Landfill via the Burns Bog Rate.

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(c) 1997 City of Vancouver