At the Time Prepared for:

BOARD OF CHOSEN FREEHOLDERS

Edward A. Tamm
Director

James O'Brien

Deputy Director

Joan Bramhall

Frank J. Druetzler

Patric J. Hyland

Cecilia G. Laureys

Peter J. O'Hagan

COUNTY ADMINISTRATOR

James J. Rosenberg

MORRIS COUNTY MUNICIPAL UTILITIES AUTHORITY

Alex A. Slavin
Executive Director

Glenn W. Schweizer
Solid Waste Coordinator

Amendment Pertaining to Plan arising from the Acquisition of MCTS Transfer Station Facilities and Associated Real Property

November 1993

INTRODUCTION

The New Jersey Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.) established a comprehensive system for the management of solid waste in New Jersey. The Act designated all twenty-one (21) of the state's counties, and the Hackensack Meadowlands District, as Solid Waste Management Districts, and mandated the respective Boards of Chosen Freeholders and the Hackensack Meadowlands Development Commission develop comprehensive plans for waste management in their respective districts.

This Solid Waste Management Plan Amendment ("Amendment") has been prepared to amend the July 10, 1985 Morris County Solid Waste Management Plan ("Plan") approved with conditions by the New Jersey Department of Environmental Protection and Energy ("NJDEPE") on August 19, 1985 and as subsequently amended from time to time thereafter. This Amendment provides for the purchase of the Morris County Transfer Station, Inc.'s ("MCTS") transfer station facilities ("Transfer Station Facilities") and the transfer station properties ("Transfer Station Property") by the County of Morris ("County") or the Morris County Municipal Utilities Authority ("Authority"), as the case may be.

BACKGROUND

An amendment to the Plan was certified on July 28, 1987 by the NJDEPE Commissioner that included two MCTS solid waste transfer stations located in Parsippany-Troy Hills Township and Mount Olive Township. These transfer stations provided for the County's short term solid waste management by providing for the transfer and hauling of solid waste to out-of-State landfills.

On November 23, 1987 MCTS filed a petition with the New Jersey Board of Public Utilities ("BPU") seeking, among other things, approval of a tariff containing proposed rates for the five-year period from 1988 to 1992. At that time a five-year period was selected because that was the time frame the transfer stations were expected to be in operation while awaiting the development of the County's planned waste-to-energy facility.

Since the filing of MCTS' initial petition on November 23, 1987, through the execution of a Settlement Agreement on October 24, 1989, the County, the Authority and MCTS were engaged in litigation before the BPU and the New Jersey Office of Administrative Law ("OAL") concerning, among other things, the rates for solid waste disposal at the Transfer Station Facilities. The October 24, 1989 Settlement Agreement identified MCTS' rates at the Transfer Station Facilities for the period 1990 through 1994.

This Settlement Agreement resulted in a Plan Amendment dated November 29, 1989 that was certified by the NJDEPE Commissioner on May 10, 1990. This Plan Amendment was a consequence of the provisions of the 1989 Settlement Agreement which ended the litigation between the County, the Authority and MCTS.

The County and MCTS agreed to an Amendment to the Settlement Agreement dated February 27, 1991. This Amended Settlement Agreement provided for the continued operation of the Transfer Station Facilities through December 31, 1994. In addition, the County and MCTS agreed in this Amended Settlement Agreement that MCTS would not notice and implement the rate increases which were stipulated in the original Settlement Agreement. In effect, the Amended Settlement Agreement provided for the freezing of solid waste tipping fees for 1993 and 1994 at the rates established for 1992 in the original Settlement Agreement.

The implementation of the Amended Settlement Agreement required NJDEPE approval in the form of a Plan Amendment with respect to extending the Transfer Station Facilities' operating permits beyond January 1, 1993. A Plan Amendment incorporating the issues contained in the Amended Settlement Agreement was adopted by the County on April 24, 1991 and it was certified by the NJDEPE Commissioner on October 17, 1991. Additionally, implementation of the Amended Settlement Agreement required BPU approval with respect to extending MCTS' solid waste franchise from December 31, 1992 to December 31, 1994.

In consideration of the recommendations presented in the August 6, 1990 "Emergency Solid Waste Assessment Task Force Report" ("Task Force Report") Morris County adopted a Plan Amendment, dated March 10, 1993, which detailed its long-term solid waste management strategy. On August 25, 1993 the NJDEPE Commissioner certified this Plan Amendment. Among other issues, this Plan Amendment addressed the County's intentions with respect to the landfilling component of its Plan. Additionally, this Plan Amendment detailed the County's plan to develop various solid waste management facilities consisting of various components (individually referred to as "System Components"), including a bulky waste processing facility, solid waste processing facility, solid waste composting facility, and recycling facility. In conjunction with this March 10, 1993 Plan Amendment, the County is currently engaged in the procurement of these System Components.

The Authority also entered into an agreement, dated January 6, 1993, with Waste Management of Pennsylvania, Inc. to acquire the right to dispose of solid waste at the Tullytown landfill ("Landfill") starting January 1, 1995 (the Landfill and the System Components hereinafter collectively being referred to as the "System").

The County currently anticipates the System will be fully operational in the fourth quarter of 1996 and that continued use of the Transfer Station Facilities for the processing and disposal of the County's solid waste will be required after December 31, 1994. With one year remaining on the existing Settlement Agreement, MCTS approached the County offering to substantially reduce the 1994 tipping rate, convey the transfer station properties and facilities to the County, and extend interim operation and disposal services for an additional period.

THE AGREEMENT

Following extensive substantive negotiations involving the analysis of solid waste policy, financing, taxation, real estate and utility rate making considerations, an agreement was reached. This agreement ("Agreement"), dated September 21, 1993, which is an amendment to the original Settlement Agreement, dated October 24, 1989, as amended on February 27, 1991 is annexed hereto and made a part hereof.

The principal features of the September 21, 1993 Agreement are:

• the Authority will purchase the Parsippany and Mount Olive Transfer Stations and properties by December 31, 1993 for $9.5 million;

• MCTS will operate the Transfer Station Facilities following closing of title and until termination. Termination will occur upon the earlier of December 31, 1996 or the date upon which the new System is capable of accepting all Morris County solid waste;

• the 1994 per ton rates will be reduced to $110.00 for solid waste types 10, 13, 23, 25 and $147.00 for solid waste type 27 from the previous rates of $131.75 and $172.00 respectively. The new proposed rates have been filed with NJDEPE for review and approval;

• after January 1, 1995, MCTS will haul solid waste to the Tullytown Landfill and the rates for transfer operations and transportation to the landfill will be $30.00 and $17.00 per ton respectively;

• there will be a full franchise shift to the Authority through the approval of tariffs by NJDEPE, and;

• the Authority will assume administrative and billing responsibilities as of January 1, 1995.

PLAN AMENDMENT

Pursuant to N.J.S.A. 13:1E-1 et. seq. Morris County proposes to make the provisions of the September 21, 1993 amendment to the October 24, 1989 Settlement Agreement between the County, the Authority and MCTS, as amended on February 27, 1991, attached hereto a part of the Morris County Solid Waste Management Plan. This proposed Plan Amendment includes the acquisition of the MCTS transfer station facilities and associated real properties (see Figures 1 and 2). Properties included in the acquisition are:

• Parsippany-Troy Hills Township
  Block 768, Lot 2.01

• Mt. Olive Township
  Block 4500, Lots 4 and 5

Figure 1
Figure 2

Until termination of MCTS' status as operator of the transfer station facilities and transporter of Morris County's solid waste, MCTS shall utilize the property which is currently leased by MCTS from Parsippany-Troy Hills Township (Block 769, Lot 1) for operation of the scalehouse. Subsequent to MCTS' status as operator, the Authority may utilize the leased property in connection with the operation of the transfer station and/or the Authority's System. A complete description of the transfer station facilities is provided in the attached Agreement.

This proposed Plan Amendment will provide for:

• orderly transition from the County's short-term solid waste management strategy, which utilizes the MCTS transfer station facilities, to the County's long-term solid waste strategy;

• orderly near-term assumption by the Authority of the operations responsibility for the System and for MCTS' continued solid waste services responsibilities;

• substantial rate relief in 1994 and continuing until termination of MCTS' activities;

• enhanced flexibility in solid waste planning and operations through the ownership of Transfer Station Facilities;

• financial stability and sufficiency for the Authority through Authority rate making implementation of a full franchise, and;

• cost avoidance of transfer station condemnation/acquisition litigation and contested franchise/rate proceedings.

This proposed Plan Amendment is in conformance with the approved SWMP by providing for the management of solid wastes generated in Morris County. To insure the broadest possible participation by the general public in this plan amendment process, the Morris County Board of Chosen Freeholders will conduct a public hearing. All County residents, public officials or organizations interested in this action are encouraged to attend the public meeting and offer testimony.

Inquiries and written comments or questions concerning this proposed plan amendment may be addressed to:

Morris County Board of Chosen Freeholders
Courthouse
P.O. Box 900
Morristown, New Jersey 07963-0900

or

Morris County Municipal Utilities Authority
P.O. Box 370
Mendham, New Jersey 07945