The city had stopped paying the fees since filing for bankruptcy Aug. 1, but agreed last week to a repayment schedule and submitted its first payment this week, city officials said.
"We've entered into a gentlemen's agreement with the county over the unpaid invoices," City Attorney James F. Penman said.
Penman said the repayment money would not come from the city's general fund - which, even after extensive cuts, was balanced only by deferring about $34 million in payments - but from the integrated waste fund.
Money in that fund comes from residents paying their trash bills, and by law can be used only on trash-related services.
The waste fund was one of several so-called "restricted funds" the city borrowed from in order to pay other bills, which is legal as long as the loan is repaid within a year. The city had borrowed too much from the fund to repay, and therefore also had too little to pay the county to use its landfill, Penman said.
Penman has said he informed the Sheriff's Department that the money wasn't repaid and that the City Council wasn't informed of that.
"I'm not aware of any other restricted funds that we can use to repay other creditors, but in this case this is the fund that should be used," Penman said.
Among others the city has stopped paying after its bankruptcy filing is the California Public Employee Retirement System, which had asked bankruptcy Judge Meredith Jury to lift a stay preventing CalPERS from suing the city over more than $6million it had stopped paying the pension system.
Jury refused to lift the stay in that case. She had been scheduled to review the county's request to lift the stay at a hearing Jan. 22, which now will be devoted to other bankruptcy-related arguments.
The county landfill fee issue is one burden lifted from the city's back, said Mayor Pat Morris.
"That's good news," Morris said. "We want to fully cooperate with the county."
Neither Penman nor Morris knew the exact repayment timetable, and the city manager's office did not provide that information Tuesday. But county spokesman David Wert said he understood the debt would be repaid by this summer.
In a legal brief, county attorneys had charged, "Apparently, the city believes that the taxpayers of the county should be shouldering the costs of the city's ongoing Chapter 9 case." Penman called the lawsuit "below the belt."
But now, all sides say there are no hard feelings.
"Basically, what happened is the city approached the county and said they would pay the county the post-filing amount that they owe, which is what the county really wants," Wert said. "With that, there is no reason to go ahead with the court action."
The city stopped using the county landfill in December, and is finalizing agreements with Burrtec and Republic for dump sites.
Officials from the city manager's office and city attorney's office negotiated the agreement after receiving authority from the City Council to negotiate with creditors over the city's debts, Penman said.
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