Butte County Board of Supervisors Agenda Transmittal

Transcription

1 Butte County Board of Supervisors Agenda Transmittal Clerk of the Board Use Only Agenda Item: 3.28 Subject: Almond Avenue Mine Lease Department: Public Works Meeting Date Requested: 5/10/2016 Contact: M. Crump/S. O'Brien Phone: Regular Agenda Consent Agenda Department Summary: (Information provided in this section will be included on the agenda. Attach explanatory memorandum and other background information as necessary). The Almond Avenue Mine (Mine), located at the easterly end of Almond Avenue is made up of three parcels owned by Butte County and consists mainly of old dredger tailings left over from the turn of the century gold mining operations. Beginning in the 1950s and continuing into the 1970s, Butte County Public Works would operate a portable crusher and screen at the mine to obtain materials for use on County roads. The Mine is currently under lease to Granite Construction Company (Granite). Proceeds from this lease are deposited into the County's Road Fund. Granite no longer actively uses the mine due to changes in the market and their business plan. They sent a letter to the County requesting early termination of the lease. Public Works evaluated the potential costs and benefits of continuing the lease or soliciting for a new contractor to operate the mine and terminating the lease with Granite. Public Works recommends soliciting for a new contractor to operate the mine in order keep the mine active and maintain revenue for the Road Fund. Fiscal Impact: The lease provides revenue to the Road Fund from lease payments and royalties based on the sales of aggreate. The Road Fund receives no royalty revenue when the mine is inactive. Personnel Impact: Does not apply Action Requested: Direct the Department of Public Works to bring a Resolution of Intent and Conditions to Lease the Almond Avenue Gravel Mine to the Board for consideration. Casey Hatcher, Management Analyst, Principal-C Administrative Office Review:

2 Director Department of Public Works Mike Crump, Director Shawn H. O Brien, Assistant 7 County Center Drive T: Oroville, California F: buttecounty.net/publicworks MEMORANDUM DATE: April 26, 2016 TO: FROM: RE: Board of Supervisors Mike Crump, Director, Department of Public Works Almond Avenue Mine Lease Background The Almond Avenue Mine (Mine), located at the easterly end of Almond Avenue is made up of three parcels owned by Butte County and consists mainly of old dredger tailings left over from the turn of the century gold mining operations. Beginning in the 1950s and continuing into the 1970s Butte County Public Works would operate a portable crusher and screen at the mine to obtain materials for use on County roads. In the late 1990s, the State, through the Surface Mining and Reclamation Act (SMARA), began enforcing regulations that required all existing mines to have an approved Reclamation Plan and Financial Assurance for their surface mining operations. In order to comply with the SMARA regulations, Public Works developed a Reclamation Plan for the Mine and had it approved by both the Board of Supervisors and the State of California. The Mine did not need a County Use/Mining Permit since it was operational before the County began to regulate mines, and thus the use was grandfathered. The Reclamation Plan required Public Works to propose an Operation Plan for the County s use of this Mine. As proposed, Public Works would have contracted with a portable rock crusher on an annual or semi-annual basis to produce road base products for use on County roads. It was proposed to be able to extract approximately 20,000 tons per year. The site could yield approximately 1,000,000 tons. At this rate, it would take fifty (50) years to extract all the available material and reclaim the site. During the Reclamation Plan review and approval process, several local mines expressed concern on the County s ability to effectively mine the site and the potential competition with existing private quarries.

3 In December of 1999, both the Planning Commission and the Board of Supervisors approved the Reclamation Plan; however, the Board also directed Public Works to place the Mine into an idle status. Idle status is a SMARA term that restricts the County from removing more than 200 tons per year from the site in exchange for less restrictive regulations during this period. In 2007, the Butte County Board of Supervisors authorized the lease of this Mine site to Granite Construction who submitted the winning bid. A lease was executed in February of 2008, which granted Granite the right to mine and sell the aggregates from the site for ten years including the potential for multiple 5 year extensions. The County Road Fund benefited from the proceeds of the monthly lease payment ($2000 per month) as well as from a royalty paid based upon the amount of material sold or removed from the site. Royalties Received 2008 $ 3, $107, $ 4, $166, $ 54, $ $ $ 13,275 Total $ 350,650 Due to changes in the market, Granite has not actively mined this site for several years and would now like to terminate the lease. They considered assigning the lease, which is allowed under the agreement, to another company, however, a suitable fit could not be found. Granite sent a letter to the County in December of 2015 requesting early termination of the lease and continues to evaluate options that could lead to this outcome. The County can continue with the existing lease or solicit for a new contractor to lease and operate the mine and then negotiate early termination of the lease with Granite. Some of the benefits and costs of each action are discussed below. Continue Existing Lease This option requires no action by the County. The lease will stay in place until February 2018 and Granite will have an obligation to the monthly lease payment of $2000 per month. Granite will also have an obligation to reclaim the site by contouring the area and establishing some basic vegetation at the end of the lease. At this point in time, there are stockpiles of processed material on site that will be disturbed by any reclamation as well as a truck scale that will need to be removed. Granite has estimated the value of the aggregate products and scale at just over $500,000. The aggregate material would be

4 dispersed in order to meet the reclamation in the lease and the site would no longer function as an active mine. At the conclusion of the lease, the County will need to decide whether to solicit for a contractor to lease the site or let it be idle. Allowing the property to remain idle carries the risk of losing the ability to mine the site at a future date as the State Mining and Geology Board could classify the mine as inactive. Solicit for New Mine Operator Granite supports the County soliciting for a new operator during the existing term of the lease. Granite has expressed interest in granting the new operator ownership of the existing stockpiled gravel products and scale in exchange for agreeing to the reclamation responsibilities in the current lease. Granite s request for early termination could be negotiated at the same time as the new lease. The existing lease will remain if the County does not select a new operator. Recommendation Direct Public Works to bring a Resolution of Intent and Conditions to Lease the Almond Avenue Gravel Pit to the Board for consideration.

5

6 Almond Avenue Mine Almond Ave Ê Document Path: Y:\BOS Agenda\Mike's Review\2016\ \PW Almond Ave Mine Ex 1.mxd

7 Exhibit 2 Almond Avenue Mine