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6.C. - Page 10 of 57
<br />Article 15.1.c. Atherton's withdrawal will become effective December 31, 2020, provided 10 Equity Members have
<br />approved the withdrawal and the liquidation amount has been paid by Atherton to the SBWMA.
<br />Background
<br />The original JPA for SBWMA was adopted effective December 9, 1999. It was established by a number of San
<br />Mateo County entities to provide a regional approach to the collection and disposition of solid waste, recyclable
<br />materials, and organic materials. Initially, SBWMA issued bonds in 2000 to acquire and reconstruct the Shoreway
<br />Environmental Center Facility, to be operated by SBWMA to meet the regulatory requirements for solid waste and
<br />recyclables for its Member Agencies. The original bonds were defeased and new bonds issued in 2009. In 2019,
<br />SBWMA took action to refund the 2009 bonds, thereby saving SBWMA money and, at the same time, raising new
<br />funds for certain capital improvements. The JPA has been amended and restated several times over the years; the
<br />current governing JPA document dated June 19, 2013, is entitled the "Second Amended and Restated Joint
<br />Exercise of Powers Agreement South Bayside Waste Management Authority".2
<br />Atherton is one of the original founding members of SBWMA, and as such, is an "Equity Member."3 Expressing
<br />concern that SBWMA's work no longer aligns with the needs and demands of its residents, Atherton has been
<br />considering withdrawing from SBWMA for some time, and has been exploring alternative options for waste
<br />management. It has now reached a tentative agreement with GreenWaste to provide those services, contingent
<br />upon its withdrawal from SBWMA. Atherton and SBWMA exchanged letters related to the withdrawal process on
<br />March 18th and April 27th (Attachment 1), and Atherton sent a formal Notice of Intent to Withdraw on June 29, 2020,
<br />specifying December 31, 2020 as the exit date. (Attachment 2.) Assuming it goes forward, Atherton will be the first
<br />entity to withdraw from SBWMA since it was formed. The City of Burlingame considered withdrawal in 2009, but
<br />ultimately decided to remain a member. Thus, there is no institutional precedent on how the conditions specified in
<br />Article 15 are to be met.
<br />Calculation of Liquidation Amount
<br />A. Bond Costs
<br />ON Public Finance Analysis: In preparation for responding to Atherton's anticipated notice to withdraw, KNN Public
<br />Finance ("KNN"), SBWMA's financial advisor, was asked late last fall to calculate the portion of SBWMA's
<br />outstanding bond obligations attributable to Atherton, and to describe a method for retiring Atherton's proportional
<br />share of the bond obligations through a legal defeasance. In a letter dated December 6, 2019, ON provided its
<br />Bond Allocation and Defeasance Analysis, which was shared with Atherton. (Attachment 3.) ON concluded that
<br />because the outstanding bond obligations are for capital and equipment improvements at the Shoreway facility, a
<br />reasonable means for allocating a Member Agency's proportionate share is to measure their historic use of the
<br />facility, based on franchise tonnage. ON looked at Atherton's share of overall franchise tonnage for years 2016,
<br />2017, and 2018, and proposed three scenarios for determining Atherton's proportional share of bond obligations:
<br />2 A proposed Third Amended and Restated JPA is currently being circulated for consideration among member agencies, making a number
<br />of clerical and administrative updates to the JPA document; none of the proposed changes impact Article 15, Withdrawal, of the
<br />Agreement.
<br />3 Under the SBWMA, JPA membership is divided into "equity members" and "non -equity members'; there are no non -equity members at
<br />this time, nor have there ever been. The primary difference between an Equity Member and Non Equity Member is described in Section 6.3
<br />of the JPA: basically, non -equity members are not entitled to vote on any matter before the board, and do not have the rights and liabilities
<br />of equity members, particularly under Section 15, Withdrawal, or Section 16, Termination of the JPA.
<br />SBWMA BOD PACKET 8/20/2020 AGENDA ITEM: 5A - p2
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