HomeMy WebLinkAboutR-2002-061 RESOLUTION NO. 2002-061
A RESOLUTION OF THE CITY OF DANIA BEACH, FLORIDA
APPROVING THE INSTITUTION OF ARBITRATION
PROCEEDINGS BY DANIA BEACH, PEMBROKE PINES,
POMPANO BEACH AND HALLANDALE BEACH, REGARDING
THE MUNICIPALITIES' DISPUTE WITH WASTE
MANAGEMENT, INC. (AS SUCCESSOR TO THE
OWNERSHIP AND OPERATION OF THE REUTERS
RECYCLING FACILITY), PERTAINING TO WASTE DISPOSAL
FEES; PROVIDING FOR CONFLICTS; FURTHER,
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, on August 19, 1988, the cities of Dania (now, Dania Beach),
Pembroke Pines, Pompano Beach and Hallandale (now, Hallandale Beach) entered
into a long-term Solid Waste Disposal Agreement (the "Agreement") with Reuters
Recycling of Florida, Inc. ("Reuters")- and
WHEREAS, the intent and purpose of the Agreement were to provide for the
construction and operation of a composting and recycling facility by Reuters, to which
facility each of the four municipalities were to deliver their respective waste materials
and to provide for disposition of such materials in an environmentally sensitive manner,
as contrasted to incineration of such waste, as was then proposed for the remainder of
the cities located in Broward County; and
WHEREAS, in approximately 1994, Waste Management, Inc. ("WMI") acquired
full control of the facility; and
WHEREAS, due to failure of the composting technology, Reuters and WMI have
ceased composting activity, and instead have operated the facility merely as a garbage
and trash "transfer" facility, by which waste is transferred from the various collection
trucks that operate in the four cities and transported ultimately to landfills; and
WHEREAS, the four municipalities agreed to pay a per ton disposal fee to
Reuters/WMI for the composting activities, but the charge for the same is considerably
higher than the service now rendered for the cities i.e., the mere transfer and landfill
disposition of waste materials; and
WHEREAS, the four cities seek to compel the disposal company, WMI, to either
provide the service originally contracted for or to reduce the per ton price for the
services currently rendered, as well as the recovery of past overcharges; and
WHEREAS, it is necessary to institute arbitration proceedings as provided by the
1988 Agreement and obtain legal services in connection with such proceedings; and
F:/566001:/Reso1utions:/GSG Lawsuit 1 RESOLUTION NO.2002-061
WHEREAS, the four cities have proposed to join together to seek a solution and
remedy common to all, and to proportionately bear the expenses of enforcing their
respective rights, as proposed in a letter agreement attached to this resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY
OF DANIA BEACH, FLORIDA:
Section 1. That the City Commission of the City of Dania Beach, Florida
approves the institution of arbitration proceedings by the City, Pembroke Pines,
Pompano Beach and Hallandale Beach, regarding the municipalities' dispute with WMI
(as successor to the ownership and operation of the Reuters Recycling Facilitiy),
pertaining to waste disposal fees.
Section 2. That the Mayor and City Manager are authorized and directed to
execute an agreement on behalf of the City of Dania Beach, a copy of which is attached
and specifically made a part of this Resolution, to engage legal services in connection
with the arbitration proceedings.
Section 3. That all resolutions or parts of resolutions in conflict with this
resolution are repealed to the extent of such conflict.
Section 4. That this Resolution shall become effective immediately upon its
passage and adoption.
PASSED and ADOPTED this 14th day of May, 2002.
VED:
ROB RT H CH NN, JR. 1
MAY 'R-COMMISSIONER
ATTEST: ROLL CALL:
COMMISSIONER BERTINO - YES
COMMISSIONER MCELYEA - YES
CHARLENE J H SON COMMISSIONER MIKES - YES
CITY CLERK VICE-MAYOR FLURY - YES
MAYOR CHUNN - YES
APPROVED AS TO FORM AND CORRECTNESS:
BY: I -\, aA
TH M J. ANSBRO
CITY ATTORNEY
F:/566001:/Reso1utions:/GSG Lawsuit 2 RESOLUTION NO.2002-061
MAY-10-2002 FRI 12:24 PM WEISS SEROTA HELFMAN FAX NO. 954 764 7770 F. 02
41
WEISS , SEROTA HF- LFMAN a
• PASTORIZA & GUEAES, P.A.
ATTORNEYS AT LAW
BROWARD OFFICE DOUGLAS R.GONZALES
MITCHELL A. SIFAMAN JOHN R. HERIN,JR.
NINA L.BONISKE 3107 STIRLING ROAD. SUITE 300
QHRISTOPHER F.KURTz
JAMIE ALAN COLE FORT LAUDERDALE, FLORIDA 33312 PETER A. LICHTMAN
EDWARD G.GUEOL'S KAREN LIEBERMAN'
3TEPHEN J.HELFMAN MATTHEW H. MANDEL
GILBERTO PASTORIZA JAMIE ALAN DOLE BERNARO S. MANDLER-
JOSEPH H. SCROTA MANAGING SHAREH'OLOER'BROWARO OFFICE ALEYANDCR L. PALE NZUELA-MAURI
NANCY C.STROUD MICHACL S. POPOK'
RICHARD JAY WEISS ANTHONY L• RECIO
DAVID M.WOLPIN TELEPHONE (954) 763-4242 GARY I. RE5NICK*
STEVEN W.ZELKOWITZ TELECOPIER (954) 764-7770 SCOTT A. ROSIN
WWW.W 5H-FLALAW.COM DANA J.5CHINDLER
MIAMII-OADE OFFICE GAIL O.SCROTA'
YNOMAS.;.AN Sn RO'
2(365 SOUTH SAYSHORE DRIVE • SUITE 420 ARI C.SHAPIRO
,JEFFRCY P.SHEFFEL
LILLIAN ARANGO DE LA HQZ' MIAMII FLORIDA 33133 JEFFR NE P.
5HEFFHOMAS SYCELMAN
AL1$ON S.81ELER TELCPFiONE(305)QS4-0800 YeL.ECOPIER (305)H54-2323 SUSAN L.TREVARTHEN
MITCHELL J.BURNSTEIN OF COUNSEL CARMEN I.TUQEN13ER
"
ELAINE M. COHEN
April 12; 2002
ATTORNEY CLIENT/WORK PRODUCT PRIVILEGE
NOT SU13JEC_T TO PUBLIC DISCLOSURE
Via Facsimile
City Manager of Dania Beach
City Manager and City Attorney of Hallandale Beach
City Manager and City Attorney of Pembroke Pine
City Manager and City Attorney of Pompano Beach
Re: Potential Litigation Regarding Stolid Waste Disposal Agreement
dated August 19, 1988,With Reuter Recycling of Florida, Tile.
Ge.ntlemur):
We have now had the opportunity to analyze Government Services Group. Inc.'s ("GSG") Review of
Solid Waste Collection Services and Related Costs for the Citics of Dania Beach, Hallandale Beach,
Pembroke Pines, and Pompano Beach, Florida Phase 1 (the "Phase I Review") which confines that the Cities
have been collectively overcharged millions of dollars by Reuters Recycling of Florida, Inc, ("Reuters")
and/or Waste Management, Inc. ("WMI:'). BelovA, is our analysis (if the potential litigation and the expected
costs of coll,cti'vely pursuing GSG's recomniciidations.
OVERVIEW
The intent and purpose of the August 19, 1988 Solid Waste Disposal Agreement (the "Agreement")
were for Reuters to build and operate a composting facility in f3roward County and for each of the four Cities
to deliver all of their respective waste to that facility. In approximately 1994., WM1 acquired control of the
facility.
Due to various problems, composting activities ceased soon after ibis facility began operations.
Instead, it has bucn acid now is merely operated as a "waste transfer" station. Nevertheless, pursuant to the
Agreement, the Cities have been paying Renters/WMI a premium per ton disposal charge that i5 estimated by
GSG to be approxunately $17 per ton higher than the cost to sirnply transfer and dispose of waste at a
MAY-10-2002 FRI 12:25 PM WEISS SEROTA HELFMAN FAX NO, 954 764 7770 P. 03
• April 12, 2002
Page 2 of 4
landfill. Thus, the Cities have not received the benefit of the bargain; and may seek to compel Rcuters/WMI
to operate a composting facility in Broward County or rcduce the charges to the Cities, as well as recover
past overcharges.
THE DISPUTE;
The primary dispute between Rcuters/WNTI and the Cities lies within the meaning of the Agreement.
Reuters/WMI argue that the Agreement merely obligates Reuters/WMI to provide a -facility capable of
receiving the waste and to receive, process and dispose of the waste. They contend that there are no
obligations in the Agreement as to amounts or specifications for composting.
We disagree:, In at least four sections, the Agreement refers to composting. Most importantly, the
"Facilitv"is defined to mean
The resource recovery and crnn ost facilit , structures, machinery; equipment;
improvernents and ancillary facilities, to be constmcted and operated by the
Corporation in Broward County. (Agreement, pg. 2; emphasis added).
The Agreement clearly requires ReutersfWMl to operate the "Facility." Under Section 3.1, Reuters/W1V1i
"agrees to provide a Fac� capable of receiving all Acceptable; Waste and Scction 6.2 (a) provides
that "the persistent or repeated failure or refusal by the Corporation to operate, rc;pair or maintain the
ilit• Fac " constitutes an "Event of Default" (emphasis added). These provisions', read in conJunction with the
definition of "Facility." clearly create an obligation upon Reuters/WNII to operate a composting facility in
Broward County. It is an obligation it does not perform.
In addition, the definition of"Trocessablc Waste" refers to "that portion of the Waste Stream that is
capable of being processed in the Corporation's resource recovery and compost facility, including all
Acceptable Waste other than Non-Processable Waste," (Agreement, pg. 3, emphasis added). The definition
of"Transfer Station" also refers to the "processing and composting facility" (pg. 3), and Section 9.3 of the
Agreement gives the cities the right to purchase excess "compost produced at the Facility" (pg. 31). Thus,
the language of the Agreement clearly envisioned a composting facility, not rrrerely a transfer station,
Finally, to the extent there is any clairn of ambiguity, the intent of the Agreement was to require
composting. There is substantial evidence showing that this was the uitcnt of the Agreement. As part of its
report, GSG reviewed and described much of this evidence. (See Phase I Review, pg. 1.) In addition, a letter
from Pembroke Pines' City Manager Charles Dodge to Reuters/WMI dated July 18, 1995,described the
following evidence of intent:
+ The "Facility" cost in excess of $70,000,000, while a simple transfer
station would have cost less than $25,000,000.
m The Facility was equipped with machinery to prepare waste for
composting.
• A multi-million dollar extensive hangar was built to cure the compost,
and several million dollars were spent to modify the system to better
facilitate composting and to solve the odor problem.
•
WEISS SEVOTA Z� EiFM.'�1�T
PA13T0T?T Z A & GUEDEs, P.A.
MAY-10-2002 FRI 12:25 PM WEISS SEROTA HELFMAN FAX N0, 954 764 7770 P. 04
• April 12, 2002
Page 3 of 4
All financial scelrarios produced by .Reuters during the negotiations
showed an income item for sale of compost.
Reuters entered into a marketing ahreenncnt: with Earth Life Company for
sale of compost.
During negotiations, the Facility was represented as a recycling facility
that utilized composting to inset its goals.
Thus, even if a Court or arbitrator found that the Agreement is ambiguous as to whether composting was
required at the facility, we believe that the Cities have a strong argument that this was the clear intent of the
Agreement.
THE PHASE I REVIEW AND DAMAGE ANALYSIS
GSG's recent Phase i Review supports the conclusion that this case potentially has tremendous
value to the Cities. The Phase I Review concludes that: (a) consistent with.the goals of Florida's Solid Waste
ReeoverN Act,the Agreement requires tliat Reuters/WM1 provide corposting and recycling rather than
landfill disposal for each City's solid waste-, (b)the Cities paid tipping;fees which were higher than ordinary
transfer station disposal fees to obtain resource recovery through composting and recycling, (e) Reuters/WMI
did not provide the Cities with composting and recycling services; and (d) based on the transfer station
disposal services actually provided by Rcuters,fWNH rather than the agreed-to composting/recycling services,
the Cities have been overcharged approximately $17.00 tipping fee per ton from 1992 through 2001. As a
result,the total collective overcharges owed the Cities could be as much as $34,000,000, over half of which
relates to the past five years.
POSSTBLE LITIGATION/ARBITRATION
Section 11.1 of the Agreement provides that all disputes are; to he decided by arbitration under the
rules of the American Arbitration Association- However, Section 6.4 of the Agrecrnent states that upon the
occurrence of an Event of Default, the non-defauh:ing party may pursue any available remedy including
judicial proceedings. These provisions clearly conflict. For several reasons (including cost, timing and
strategic considerations), if the four Cities choose to proceed witl+ this matter, arbitration is the recommended
route.
Through arbitration, we would seok to either compel Reuters/WMI to utilize composting at the
facility (ui a manner that does not constitute a nuisance) or to accept an equitable reduction in the charges to
the Cities. We would also seek to recover past overcharges. We would propose representing all four Cities
in the arbitration and would charge an hourly rate of $1 R3 per hour, to be divided between the four Cities
based upon the tonnage delivered to the Facility by each City and the amount of the estimated overcharge to
each City, as set forth by GSG in Table 7 of the Phasc I Review at pale X. Accordingly, the fees and costs
would be divided as follows.
Dania Beach %
Hallandale Beach 150,j0
Pernbroke Pines 33
• Pompano Beach 44
WEISC+ SEROT k H "fl, LF'MAN
P�STOxIA & UUj:�DES, P.A.
MAY-10-2002 FRI 12:25 PM WEISS SEROTA HELFMAN FAX NO. 954 764 7770 P. 05
April 12, 2002
Page 4 of 4
A detailed prior proposal for litigating this matter had been previously submitted by other attorneys,
estimating a total cost of $349,000 for litigation plus an additional "success tee" if they prevailed. We
believe that we can arbitrate this matter For substantially less. It is our estimate that the total cost of the
arbitration would he between $175,000 and $200,000, depending upon the defenses raised and the amount of
discovery that is necessary, and that the arbitration would take between one and two years. if we prevailed,
the total recovery to the cities could be in excess of$17,000,000 (for the past five years), plus an additional
total savings of approximately$3.,800,000 per year for the remainder of the Agreement.
In light of GSG's Phase I Review, vve believe that the time is ripe to bring this suit and seek the
substantial recovery to which each City is entitled. We have scheduled a lunch with each City Attorney on
Tuesday April 2.) to discuss our analysis and reconuumdations concerning this suit. In advance of our
meetings, I have enclosed for your review a proposed Resolution authorizing the initiation of the
recommended arbitration proceeding and the retention of the Firm.
Following your review of this letter, pease contact mc; pit your earliest convenience to discuss this
matter further, I look forward to speaking witli each of you soon.
Since�ly, !/
Ja�tiie Alan
l•
Cc: Michacl S. Popok ,
Tom J. Ansbro �
FJ556008/Letter,00/ReutcrsArbilsatioiEctter2.0
•
WEIS S SEROTA. HE .Y.� MAN
PAST0-F-fZA & GUEDES,
MAY-10-2002 FRI 12:24 PM WEISS SEROTA HELFMAN FAX NO. 954 764 7770 P. 01
• WEISS SEROTA HELFMAN
PASTORIZA & GUEDES, P.A.
3107 Stirling Rd, Suite 300
Fort Lauderdale, FL 33312
Telephone (954) 763-4242
Telecopier (954) 764-7770
CONFIDENTIAL
To: Charlene Fax: 954-921-2604
From: Suzie
Comments: Please see attached letter re Solid Waste ]Disposal.
The information contained in this transmission is attorney privileged and confidential. II is intended only for the use of the
• individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that
any dissemination, distribution or copy of this communication is strictly prohibited. If you have reccived this
communication in error, please notify us immediately by telephone collect and return the original message to us at the
above address via the U. S. Postal Service. we will reimburse you for postage. Thank you.
FILE NO.: 566,001
DATE: May 10, 2002
NUMBER OF PAGES INCLUDING COVER SHEET: 5
PLEASE NOTIFY US IMMEDIATELY IF NOT RECEIVED PROPERLY
CITY OF DANIA BEACH �
MEMORANDUM
TO: Mayor and City Commission
cc: Ivan Pato, City Manager
FROM: Tom Ansbro, City Attorney
DATE: May 9, 2002
RE: Solid Waste Disposal Agreement of 1988 with Reuters Recycling of Florida,
Inc.; Disposal Fee Overcharges
Attached are copies of an April 12, 2002 letter and a corresponding proposed
• Resolution regarding the referenced matter. The City Commissions of each of the other
municipal parties to the 1988 Agreement (the cities of Pompano Beach, Hallandale Beach and
Pembroke Pines) are scheduled to consider and adopt corresponding Resolutions at their
respective meetings this month, to authorize the joint institution of arbitration proceedings to
address the waste disposal overcharges' issues. The April 12 letter sent to our City Manager
and the City Attorneys of each of the cities and the "Whereas" clauses of the Resolution
outline the factual background and present status of the matter. From a study conducted by
Government Services Group on behalf of all four cities, the estimated overcharges to the City
of Dania Beach alone appear to be in the range of $2,900,000.00 (calculated from 1992 to
2001). The projected future overcharges for the remaining seven (7) years of the contract may
be in the range of$150,000.00 to $300,00.00 per year. Based on the total projected legal fees,
it is expected that the share for the City will not exceed $16,000.00 (over a two year period;
this is 8% of the maximum total projected legal fees). The hourly cost to the City legal
services is also eight percent (8%) which equates to $19.80 per hour, as the City's
proportionate share, with the balance being paid by the other participating cities.
This is now ready for Commission consideration.
TJA:slw
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