Title
Approval of the Solid Waste Collection Agreement Between LeMay Enterprises and the City of Olympia regarding Annexation Transition
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve and authorize the City Manager to sign the the Solid Waste Collection Agreement with LeMay Enterprises regarding annexation transition.
Report
Issue:
Whether to accept a 10-year period for LeMay Enterprises (LeMay) to continue providing Municipal Solid Waste (MSW) collection from residential and commercial customers within annexed areas before transitioning responsibility to the City.
Staff Contact:
Dan Daniels, Director of Waste ReSources, Public Works Department, 360.753.8780
Darren Nienaber, Deputy City Attorney, 360.753.8044
Presenter(s):
Dan Daniels, Director of Waste ReSources, Public Works Department, 360.753.8780
Background and Analysis:
Collecting and hauling MSW within unincorporated parts of Thurston County are regulated and certificated through the Washington Utilities and Transportation Commission (WUTC). A certificate (called a G-permit) identifies a specified area within the County that allows exclusive authority to a private collection company to collect and transport MSW within that area. LeMay currently holds a G-permit to collect within the City's newly annexed areas because they are the MSW provider for Thurston County.
When Olympia annexes new areas, the City is required to notify the WUTC and LeMay. Under state regulations, the City must grant LeMay a transition period or franchise agreement for collecting MSW in the annexed territory for a term of no less than 7 years. The transition period is intended to allow LeMay time to recover any damages they may suffer from a loss of business.
Due to a Washington Supreme Court case, the 7-year transition period outlined by the statute is only a minimum and a City could still be required to compensate a G-permit holder for loss of its franchise and consequent measurable damages. Therefore, outside counsel has advised the City that 10 years should be used as a general guideline. This will minimize legal risk to the City and give LeMay sufficient time to adjust to the loss of customers. The City's legal staff and Waste ReSources staff supports this recommendation.
LeMay is, and in all likelihood will continue to be, the G-permit holder for any present and future annexations. City staff and representatives from LeMay agree that a 10-year transition period is an appropriate time for planned annexations.
Neighborhood/Community Interests (if known):
N/A
Options:
1. Approve the agreement.
2. The City could purchase the collection rights to the annexation territory at an agreed or negotiated price for measurable damages. This could result in a large expense for the Solid Waste Utility without a measurable benefit to the customers.
3. The City could attempt to assert rights to collect after 7 years, but before 10 years through the courts. This could result in a large expense for the Solid Waste Utility without a measurable benefit to the customers.
Financial Impact:
None at this time, as rates are designed to cover expenses. However, some annexations include bare land that, when built on, will require the City to purchase additional resources, in order to service these areas. Staff is of the opinion that the proposed franchise is the more financially conservative approach and best enables strategic financial planning.
Attachment(s):
Solid Waste Collection Agreement