TITLE
RESOLUTION APPROVING FIFTH AMENDED AND RESTATED OPERATIONS AND MANAGEMENT AGREEMENT BETWEEN MIAMI-DADE COUNTY AND COVANTA DADE RENEWABLE ENERGY, LLC; AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO EXECUTE THE AGREEMENT AND EXERCISE ALL OTHER RIGHTS CONTAINED THEREIN INCLUDING OPTIONS TO RENEW AND CANCELLATION PROVISIONS

BODY
WHEREAS, the Resources Recovery Facility (�RRF�), located at 6990 NW 66th Street, in the City of Doral, has provided countywide disposal needs for the citizens of Miami-Dade County (the �County), for 40 years since 1982; and

WHEREAS, the RRF is the cornerstone of the County�s Solid Waste System, which provides the necessary level of service waste disposal capacity required by the State of Florida�s Comprehensive Development Master Plan; and

WHEREAS, the RRF serves as countywide significance by serving the disposal needs for the residents of unincorporated Miami-Dade County and 10 municipalities where the County�s Department of Solid Waste Management provides waste collection services to include the City of Aventura, Town of Cutler Bay, City of Doral, City of Miami Gardens, Town of Miami Lakes, Village of Palmetto Bay, Village of Pinecrest, City of Sunny Isles, City of Opa-locka and City of Sweetwater; and

WHEREAS, the RRF serves the residents of 15 municipalities that have entered into long-term waste disposal interlocal agreements with the County, including Bal Harbour Village, Town of Bay Harbor Islands, City of Coral Gables, City of Homestead, City of Miami, City of Miami Beach, Village of Miami Shores, City of Miami Springs, City of North Bay Village, City of North Miami, City of North Miami Beach, City of South Miami, Town of Surfside, City of Sweetwater, and City of West Miami; and

WHEREAS, the Fifth Amended and Restated Operations and Management Agreement between the County and Covanta Dade Renewable Energy, LLC (the �Fifth Amendment�), attached hereto as Exhibit A in substantially final form, is necessary for the provision of providing a bridge agreement for the disposal and processing of waste in an environmentally safe manner and better alternative to landfilling until such time a replacement facility is available; and

WHEREAS, this bridge agreement considers the County�s desire for a Zero Waste program and includes provisions for Covanta to participate in County programs for anaerobic digestion, pharmaceutical collection and destruction, and composting; and

WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board (i) authorizes the County Mayor or County Mayor�s designee to execute the Fifth Amendment, and (ii) authorizes the County Mayor or County Mayor�s designee to exercise all other rights contained therein, including options to renew and cancellation provisions.

HEADER
Date: To: Honorable Chairman Jose �Pepe� Diaz
and Members, Board of County Commissioners From: Daniella Levine Cava
Mayor
Subject: Fifth Amended and Restated Operations & Management Agreement
Between Miami-Dade County and Covanta Dade Renewable Energy, LLC.

STAFF RECOMMENDATION
Executive Summary
On May 3, 2022, the Board of County Commissioners (�Board�) adopted Resolution No. R-432-22 directing the County Mayor to develop a solicitation for a new waste to energy plant (�WtE�) to replace the County�s existing, aging Resources Recovery Facility (�RRF�). The Department of Solid Waste Management (�DSWM�), in conjunction with the Internal Services Department (�ISD�), put out a solicitation for a Request for Information (�RFI�) and received three responses. We are in the process of scheduling interviews with these three respondents. �The information gathered from this RFI will help the Department in developing a solicitation for a subsequent Request to Advertise for that new WtE. The length of time required to plan and construct a new WtE was taken into consideration while establishing the timeline of this amended fifth agreement for the County�s existing RRF. The attached resolution provides a five-year, plus five-year option-to-renew (�OTR�) bridge agreement with Covanta Dade Renewable Energy, LLC (�Covanta�) for the continued operation and management of the existing RRF until a replacement WtE facility is constructed and fully operational. The current agreement will automatically renew on October 1, 2023, for an additional five years, and another potential three, five-year terms, if neither the County nor Covanta provide the other with a notice to terminate by October 31, 2022. However, Covanta has indicated that they do not wish to renew under the current terms and will only continue to operate the existing RRF under a restructured agreement until such time that a new facility is operational. Termination of this agreement would result in immediate impacts to our solid waste system and would necessitate the landfilling of over one million additional tons of solid waste every year beginning October 1, 2023. The five-year term in the bridge agreement reflects the commitment to use best efforts to complete the new WtE in five years, but given the complexity of these projects and the regulatory hurdles, the five-year extension gives us the extra time, if needed.

Recommendation
It is recommended that the Board approve the attached resolution, which provides a bridge agreement via this Fifth Amended and Restated Operations & Management Agreement (the �Fifth Amendment�) between Miami-Dade County and Covanta until a replacement WtE facility is operational.

Scope
The RRF processes over one million tons of solid waste per year. The RRF is of countywide significance by serving the disposal needs of the residents of unincorporated Miami-Dade County and ten (10) municipalities where the County�s DSWM provides waste collection services to include the City of Aventura, Town of Cutler Bay, City of Doral, City of Miami Gardens, Town of Miami Lakes, Village of Palmetto Bay, Village of Pinecrest, City of Sunny Isles, City of Opa-locka and City of Sweetwater.

The RRF also serves the residents of fifteen (15) municipalities that have entered into long-term waste disposal interlocal agreements with the County, including Bal Harbour Village, Town of Bay Harbor Islands, City of Coral Gables, City of Homestead, City of Miami, City of Miami Beach, Village of Miami Shores, City of Miami Springs, City of North Bay Village, City of North Miami, City of North Miami Beach, City of South Miami, Town of Surfside, City of Sweetwater, and City of West Miami.

The RRF currently serves as the centerpiece of the County�s solid waste management system (�System�). This System provides the necessary level of service waste disposal capacity required by the State of Florida�s Comprehensive Development Master Plan. The System provides committed long-term contractual and/or interlocal agreements waste flows with above municipalities and numerous private waste haulers that provide commercial waste collection services throughout the County, anticipated uncommitted waste flows, and to meet projected development growth. It should be noted that the purpose of the RRF and the new WtE is not ultimately the generation of electricity; it is the disposal of waste in lieu of transporting waste to a landfill. The generation of electricity is a byproduct that can be utilized to power electric vehicles or otherwise generate revenue to subsidize the cost of the facility.

The Administration is working on a plan that will put the County on a path to achieve Net Zero Waste for the waste within the County�s system by 2050. The goal is to enact methods, practices and new technologies that will enable us to divert waste from our landfills and, eventually, from the WtE facility. The 30-year goal coincides with the useful life of the new WtE facility to be constructed. We need a new WtE facility in the medium term, but the long-term goal should be to achieve Zero Waste (or at least as close as possible) through waste reduction and other waste management strategies, including composting and recycling. In the eventuality that the County implements an anaerobic digestion, pharmaceutical collection and destruction, and composting programs, this bridge agreement includes provisions for Covanta to participate in such programs at a location and on terms and conditions mutually acceptable to both the County and Covanta.

Fiscal Impact
The annual fiscal impact is paid from the DSWM Proprietary Funds.

Under the terms of this Fifth Amendment, the County would pay Covanta a service fee of $59.73 million and approximately $14 million in pass through costs for processing 972,000 tons per year. However, if the County implements Zero Waste programs which lead to methods of waste management more preferred than energy recovery, Covanta will offer discounted service fees on a per ton basis based on the tons diverted. In addition, any capital improvement that is more than $75,000 and has a three-year depreciation would be paid for by the County under this Fifth Amendment. All revenues associated with the sale of electricity would be credited to the County, approximately $13 million annually.

Under the existing agreement, the projected fees to be paid to Covanta in FY 2022-2023 will be $54.5 million, plus approximately $9.4 million in pass-through fees for processing 972,000 tons. The expected revenue for the sale of electricity to be paid to Covanta will be approximately $6.5 million annually.

Social Equity Statement
The proposed resolution will provide social equity benefits because the terms of this agreement provide for the County to fund critical capital improvements that will improve reliability and ameliorate issues with the existing plant, including odor control.

Delegation of Authority
This item authorizes the County Mayor or County Mayor�s designee to execute the Fifth Amended and Restated Operations & Management Agreement between Miami-Dade County and Covanta Dade Renewable Energy, LLC, and exercise all other rights contained therein including OTRs and cancellation provisions.

Background
The RRF has been operating and providing the disposal needs for Miami-Dade County since 1982 � almost 40 years. It has been operated and maintained by Covanta since February 2010. DSWM works closely with the contracted RRF operator, Covanta, to manage the processing of over one million waste tons under the terms of an Operations and Management agreement. The base term of the existing agreement runs through October 31, 2023, with up to four potential 5-year OTR terms. The agreement automatically renews unless either party gives notice at least one year prior to the expiration of the base term or renewal term. Therefore, either party will have to give notice no later than October 31, 2022, or the term will automatically renew for an additional five years under the first five-year OTR. However, Covanta has indicated that they do not wish to renew under the current terms and will only continue to operate the existing RRF under a restructured agreement until such time that a new facility is operational. Termination of this agreement would result in immediate impacts to our solid waste system and would necessitate the landfilling of over one million additional tons of solid waste every year beginning October 1, 2023.

This RRF is the centerpiece for sustainability of the County�s Solid Waste Management System by: (i) managing disposal in a manner that conserves County-owned landfill capacity; (ii) reducing reliance on distant third-party landfills and associated transportation costs and emissions; and (iii) enabling the County to meet State of Florida concurrency requirements, while reducing and converting waste into renewable energy which is then used to power the RRF, exported to the power grid, and will soon begin powering DSWM�s electric garbage trucks. In addition to an average annual production of more than 311 million kilowatt hours of electricity, the RRF also facilitates recovery of approximately 20,500 tons of recyclable ferrous and non-ferrous metals.

The RRF has an electric generating capacity of approximately 77 megawatts (�MW�) gross (77 MWs per hour) and net export capability of max 55 MWs. It currently sells 15 MWs to the City of Homestead. DSWM plans sending an additional 10 MWs of renewable energy to the City of Homestead beginning in November 2022. Any remaining power is then sold through power marketer, Rainbow Energy, at spot market prices.

Miami-Dade DSWM and Covanta have made several improvements to the RRF throughout the years to include:

* Upgrades to the RRF to comply with the Federal Clean Air Act (1999)

* Construction of a wastewater pre-treatment plant (2005)

* Improvements/upgrades to the Fire Protection System (2008)

* Boiler modifications to reduce ash build-up (2010)

* Attenuation tank replacement and lift station modification (2013)

* Odor control enhancements (2017)

Based on a preliminary RRF assessment report by Miami-Dade DSWM consultant, HDR Engineering Inc. (�HDR�), much of the major equipment and components have reached or are nearing the end of their expected service lifespan at the aging 40-year-old facility. To allow the RRF to continue to operate reliably, a major front-end-loaded capital refurbishment plan, as well as increased capital expenditures and major capital repairs during subsequent operating periods, will be required. Based on HDR�s site observations and their experience in the WtE and solid waste industries, some major refurbishments include conveyor belts, overhaul of trommels, electrical system components, instrumentation, and control system components, and building repairs (i.e., replacements of structural steel, roofing, siding, and floors). The total capital investment for the term of this agreement is projected to be approximately $178 million. The major capital upgrades currently needed are not unusual based on HDR�s recent experience for such an aging facility. Most WtE facilities, particularly with HDR�s recent experience at similar plants in Honolulu, HI and Hartford, CT, have required the infusion of significant capital after 25 years of operation to maintain the facility�s reliability for an extended operating period. In HDR�s opinion, the RRF will need this capital investment in order to operate at the necessary performance level for the 10-year operating �bridge� period.

Major changes in this Fifth Amendment (see red-lined Attachment A):

1. Annual On-Site Waste Processing Guarantee
The current contract includes a 240,000 Annual Recyclable Trash Guarantee with the 732,000 Annual On-Site Waste Processing Guarantee. On December 31, 2018, Wheelabrator terminated operations at its Wheelabrator Ridge waste fuel facility in Auburndale, Florida that had been accepting the biomass fuel supply. That agreement with Covanta ended and since the RRF no longer produces biomass fuel for off-site use, the Annual Recyclable Trash Guarantee and any references to it are deleted in the Fifth Amendment.

2. Capital Maintenance Costs
In this Fifth Amendment, all improvements, equipment, parts and supplies that have a cost of more than $75,000 and a useful life of three or more years will now be funded by the County. The capital replacement plan submitted by Covanta will be reviewed and approved in consultation with the bond engineer.

The current agreement requires that beginning October 1, 2018, and on October 1st of each year thereafter during the term of the agreement, Covanta is required to provide the County with a five-year capital replacement plan. The plan shall include a list of capital items in excess of $250,000, Covanta proposes to replace at its expense at the RRF over the subsequent five years, the proposed dates for the replacement of each such capital item and the useful life of each such capital item for purposes of depreciation and amortization.

3. Term of the Agreement
The term of this Fifth Amendment will begin on October 1, 2022, and expire on midnight on September 30, 2027. The term shall be automatically extended for a five-year renewal term (until September 30, 2032) unless either the County or Covanta delivers notice to the other party at least one year prior to the expiration of the then current term (must receive notice by September 30, 2026, that it elects to terminate the agreement).

This differs from the current agreement�s term which commenced on October 1, 2009, and expires on October 31, 2023, and automatically extends for up to four additional five-year renewal terms (through October 1, 2043) unless either the County or Covanta delivers notice to the other party at least one year prior to the expiration of the then current term or renewal term that it wants to terminate the agreement.

4. Tipping Fee
The current tipping fee is replaced with two components in the Fifth Amendment, (i) an annual Service Fee and (ii) a variable Pass-Through fee. The proposed annual service fee of $59,731,200, subject to the Consumer Price Index (�CPI�), is based on an annual waste delivery of 972,000 tons and equates to $61.45/ton. In addition, the proposed annual variable pass-through fee of about $14,000,000 plus an administrative fee, includes reimbursable expenses to be incurred by Covanta for services such as chemicals and reagents, hauling of non-processable waste/residue/ash/rejects/unders/shredded tires, fuel, utilities, insurance, permits, and certain taxes.

On October 1, 2027, the annual Service Fee shall be reduced by $2,000,000.

The annual tipping fees outlined in the existing agreement provides a different pricing structure based on certain tiers of waste delivered to the RRF. The tipping fees for FY 2022-2023 are stated below and are subject to annual adjustments based on CPI.

Delivery of garbage and trash up to 732,000 tons $56.93/ton
Delivery of garbage and trash above 732,000 tons up to 966,000 tons $48.22/ton
Delivery of garbage in excess of 966,000 $35.18/ton
5. Waste Management Hierarchy Tonnages and Service Fees
As the County strives to reach Zero Waste goals, Covanta agrees that at such time the County utilizes methods of managing its waste stream that are more preferred than energy recovery, according to the United States Environmental Protection Agency Waste Management Hierarchy, Covanta will provide a 75% discounted Service Fee on each ton diverted utilizing those more preferred methods of waste management.

At no time shall the AOSWPG be reduced to an amount less than the amount of On-Site Waste required to meet the County�s obligations under then-existing contracts for the sale of electricity generated by the Facility.

6. Electric Revenues
One hundred percent (100%) of electric revenues stemming from the production of electricity from the RRF will go to the County in the Fifth Amendment (approximately $13,000,000).

The existing agreement allows the County and Covanta to share the sale of all electric revenues equally. The total County net revenues realized were $4,833,310 (FY2018); $5,014,097 (FY2019); and $3,945,260 (FY2020). Projected net revenues to be realized for the County will be $6,500,000 (FY2021).

7. Liquidated Penalties
Liquidated damages for AOSWPG are included with this amendment:

Covanta must pay the County an Incentive Fee ($25) for any tons they fail to accept for processing below 972,000 annual tons, up to ten percent (10%) of 972,000, and if Covanta fails to process less than ninety percent (90%) of the AOSWPG, Covanta shall pay the County the applicable Service Fee divided by 972,000 for each ton it failed to accept for processing;

Combined Residue/Rejects Guarantee � if in any annual period the aggregate amount of residues and rejects returned to the County exceeds the combined residue/rejects guarantee of 35.7%, Covanta shall pay the County the applicable disposal charge for each excess ton;

Annual Energy Guarantee - Once the annual on-site waste guarantee is met, if in any annual period, the annual energy produced is less than the annual energy guarantee, Covanta shall pay the County liquidated damages measured in $/kWh.

Damages Due to Violations of Environmental Laws � if Covanta fails to cure any environmental law violations, the County may withhold applicable fees incurred by the County in taking corrective action.

The existing agreement did not have monetary provisions for liquidated damages.

The Administration is working on a plan that will put the County on a path to achieve Net Zero Waste for the waste within the County�s system by 2050. The goal is to enact methods, practices and new technologies that will enable us to divert waste from our landfills and the WtE facility. This bridge agreement includes provisions for Covanta to participate in programs such as anaerobic digestion, pharmaceutical collection and destruction, and composting programs when implemented by the County, at a location and on terms and conditions mutually acceptable to both the County and Covanta, Additionally, Covanta will continue to assist the County with its outreach efforts including promoting anaerobic digestion, pharmaceutical collection and destruction, and composting programs.

The 30-year goal coincides with the useful life of the new WtE facility to be constructed. We need a new WtE facility in the medium term, but the long-term goal should be to achieve Zero Waste (or at least as close as possible) through waste reduction and other waste management strategies, including composting and recycling.

If you have any questions or concerns on this Fifth Amendment, please contact DSWM Director Michael J. Fernandez, 305-514-6628.

_____________________________
Jimmy Morales
Chief Operations Officer