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HomeMy WebLinkAbout2017-08-22 - AGENDA REPORTS - TEMP BIN AND ROLL- OFF SERVICES FROM RECOLOGY LA T (2)Agenda Item: 14 CITY OF SANTA CLARITA Q:° AGENDA REPORT CONSENT CALENDAR 7, CITY MANAGER APPROVAL: 1 j4 _ " DATE: August 22, 2017 SUBJECT: RESOLUTION AUTHORIZING THE TRANSFER OF THE FRANCHISEE ASSIGNMENT OF TEMPORARY BIN AND ROLL- OFF SERVICES FROM RECOLOGY LOS ANGELES TO ARACO ENTERPRISES, LLC DEPARTMENT: Neighborhood Services PRESENTER: Darin Seegmiller RECOMMENDED ACTION City Council adopt a resolution authorizing the reassignment of a temporary bin and roll -off service franchise from Recology Los Angeles to Araco Enterprises LLC, an affiliate of Arakelian Enterprises, Inc., dba Athens Environmental Services (Athens Services) subject to City Attorney approval. BACKGROUND Pursuant to the California Integrated Waste Management Act of 1989, and in an effort to achieve the 50 percent diversion requirement of Assembly Bill 939 and the Construction and Demolition Materials Management Ordinance 15.46 of the City of Santa Clarita (City), the City Council awarded franchise agreements to ten waste haulers for the purpose of providing temporary bin and roll -off service within the City. The program has been successful in helping the City achieve the state -mandated 50 percent diversion. On April 24, 2017, the City received a letter from Recology Los Angeles, the City's current franchisee, informing the City of an agreement between Recology Los Angeles and Araco Enterprises LLC, for the sale of a substantial portion of its assets to Araco Enterprises LLC. In addition to the sale, Recology Los Angeles requested the transfer of the Non -Exclusive Temporary Bin and Roll -Off franchise to Araco Enterprises LLC. The sale of Recology Los Angeles to Araco Enterprises LLC was finalized on July 21, 2017. Araco Enterprises LLC is affiliated with Athens Services, and this new franchisee will use the name of Araco Enterprises LLC for the temporary bin and roll -off box operation. Page 1 Packet Pg. 129 Athens Services was established in 1957, with headquarters located in the City of Industry and is one of the largest independent waste and recycling companies in Los Angeles County. Athens Services currently provides service to 200,000 customers, operating out of seven facilities located in Los Angeles, Torrance, Riverside, City of Industry, San Fernando, Montebello, and Irwindale. They also provide exclusive residential and commercial solid waste service to 23 municipalities and non-exclusive commercial and roll -off service to ten municipalities and 16 school districts. Athens Services also provides street sweeping service to 28 of the municipalities they service. Athens Services owns Material Recovery Facilities in the City of Industry and Sun Valley, with another location scheduled to be built in Irwindale. Athens Services operates and manages the 11 landfills and transfer stations that make up the San Bernardino County Landfill System. Athens Services also owns American Organics, which processes organic material, including food waste and is located in Victorville. Athens Services reports that in 2015, the diversion rates for the agencies they serviced ranged from 50 to 84 percent, with an average diversion rate of 68 percent for all agencies. The existing franchise agreement requires the City Council to adopt a resolution authorizing the reassignment of the franchise to Araco Enterprises LLC, as an approved franchised hauler. Staff contacted several references to ensure that Araco Enterprises LLC, through its affiliation with Athens Services, can perform and meet the requirements of the temporary bin and roll -off franchise. The existing franchise agreement expires June 30, 2018. ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT None by this action. ATTACHMENTS Araco Enterprises LLC Resolution Notice of Sale Page 2 Packet Pg. 130 14.a RESOLUTION NO. 17- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING THE TRANSFER OF EXCLUSIVE FRANCHISEE RIGHTS FOR TEMPORARY BIN AND ROLL -OFF BOX SOLID WASTE MANAGEMENT SERVICE FROM RECOLOGY LOS ANGELES TO ARACO ENTERPRISES, LLC, AN AFFILIATE OF ARAKELIAN ENTERPRISES, INC., DBA ATHENS SERVICES DUE TO THE SALE OF BUSINESS WHEREAS, Article XI, Section 7 of the California Constitution authorizes cities to protect public health and safety by taking measures in furtherance of their authority over police and sanitary matters; and WHEREAS, the Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989, also known as AB 939 (Act), established a solid waste management process, which requires cities and other local jurisdictions to implement plans for source reduction, reuse, and recycling as integrated waste management practices for solid waste attributed to sources within their respective jurisdictions; and WHEREAS, California Public Resources Code Section 40059 provides that aspects of solid waste handling of local concern include, but are not limited to, frequency of collection, means of collection and transportation, level of services, charges and fees, and nature, location and extent of providing solid waste services, and whether the services are to be provided by means of nonexclusive, partially exclusive, or wholly exclusive franchise, contract, license or otherwise, which may be granted by local government under terms and conditions prescribed by the governing body of the local agency; and WHEREAS, the Santa Clarita Municipal Code implements Article XI, Section 7 of the California Constitution and California Public Resources Code Section 40059 in the City of Santa Clarita (City); and WHEREAS, the City is obligated to protect the public health and safety of the residents of the City and arrangements made by solid waste enterprises and recyclers for the collection of temporary bin and roll -off solid waste should be made in a manner consistent with the exercise of the City's police power for the protection of public health and safety; and WHEREAS, on February 17, 2006, the City entered into a Temporary Bin and Roll -Off Box Solid Waste Agreement (Agreement), Contract 06-00025, such Agreement, as amended by the First and Second Amendments referred to in the last recital hereof, the Agreement with Crown Disposal Co., Inc.; and WHEREAS, Crown Disposal Co., Inc., sold substantially all of its assets to Recology Los Angeles or an affiliate thereof, and Packet Pg. 131 WHEREAS, on March 10, 2015, the City approved the transfer of the Agreement and franchise to Recology Los Angeles and entered into a Temporary Bin and Roll -Off Box Solid Waste Agreement, Contract 06-00025, such Agreement, as amended by the Third Amendment referred to in the last recital hereof, the Agreement with Recology Los Angeles; and WHEREAS, Recology Los Angeles sold a substantial portion of its assets to Araco Enterprises, LLC, affiliates of Arakelian Enterprises, Inc., dba Athens Services, requires in Section 23, a resolution of the City Council approving any transfer by Recology Los Angeles; and WHEREAS, the City and Araco Enterprises, LLC are mindful of the provisions of the laws governing the safe collection, transport, recycling, and disposal of temporary bin and roll- off solid waste, including the Act, the Resource Conservation and Recovery Act, 42 U. S.C. Sections 6901, and what follows, and the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections 9601, and what follows; and WHEREAS, the City and Araco Enterprises, LLC desire to leave no doubts as to their respective roles and to make it clear that by allowing the transfer from Recology Los Angeles to Araco Enterprises, LLC, the City is not thereby becoming a generator or an arranger, as those terms are used in the context of CERCLA Section 107(a)(3), and that it is Araco Enterprises, LLC, an independent entity, not the City, which will arrange to collect temporary bin and roll -off solid waste from premises in the City, and to transport for recycling and disposal, and dispose of temporary bin and roll -off solid waste, which may contain small amounts of household products with the characteristics of hazardous waste, collect and compost green waste, and collect and recycle recyclable solid waste from premises in the City, and collect and recycle or dispose of construction and demolition materials; and WHEREAS, Araco Enterprises, LLC agrees to abide by the Agreement and by those Amendments to Contract 06-00025, set forth in the First Amendment approved by the Santa Clarita City Council on June 9, 2009, Resolution 09-41, the Second Amendment approved by the Santa Clarita City Council on December 9, 2010, Resolution 10-89, and the Third Amendment approved by the Santa Clarita City Council on March 10, 2015, Resolution 15-08, and the Fourth Amendment approved by the Santa Clarita City Council on October 27, 2015, Resolution 15-72. NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve as follows: SECTION 1. Transfer Franchise: City hereby consents to the assignment of the Agreement, and the franchise provided for therein, from Recology Los Angeles to Araco Enterprises, LLC, effective as of the date hereof. Upon the date hereof, Araco Enterprises, LLC shall be successor in interest to the Recology Los Angeles franchise and shall with those other solid waste enterprises granted similar franchises, have an exclusive duty, right, and privilege to collect, transport, process, recycle, compost, retain, and dispose of all temporary bin and roll -off solid waste, as defined in the Agreement, produced, generated and/or accumulated at premises in the City, except as provided below or elsewhere in the Agreement. The collection and disposal of residential solid waste from single-family and multi -family residences or other similar places is 2 14.a Packet Pg. 132 not within the scope of the Agreement, but is within the scope of a separate residential agreement. The collection and disposal of construction and demolition materials from residential and commercial premises through the use of roll -off or other bins is within the scope of the Agreement. However, accumulation, collection, and recycling or disposal of construction and demolition materials by a licensed contractor, such as a roofing contractor performing work within the scope of the contractor's license, and removing a roof and installing a new roof, using equipment owned or leased by the contractor, is not within the scope of the Agreement. SECTION 2. Term of Franchise: Araco Enterprises, LLC accepts and acknowledges that collection services under the aforementioned franchise and the Agreement shall be provided for a period terminating at midnight on June 30, 2018, unless sooner terminated. SECTION 3. Cash Bond: The City has on file a cash bond from Recology Los Angeles, as required by Section 18 of the Agreement. That bond shall remain with the City until Araco Enterprises, LLC deposits with the City a cash bond meeting the requirements of Section 18. After the deposit of Araco Enterprises, LLC's bond, the City shall within a reasonable period return Recology Los Angeles' bond, or Recology Los Angeles may terminate same. SECTION 4. Bin Labeling: Notwithstanding anything to the contrary in Section 22.E of the Agreement, Araco Enterprises, LLC will not be obligated to pay the City liquidated damages if a bin is out of compliance with Section 7 of the Agreement at any time within the 90 -day period following the effective date of assignment of the Agreement. SECTION 5. Remainder of Agreement Intact: Except as specifically identified in this Resolution, terms of the Agreement, including the First, Second, Third, and Fourth Amendments remain in full force and effect. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED this 22nd day of August 2017. MAYOR ATTEST: CITY CLERK DATE: 14.a Packet Pg. 133 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Mary Cusick, City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 22nd day of August 2017, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: 4 CITY CLERK 14.a Packet Pg. 134 14.b R 01 Recology_ WASTE ZERO City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355 Attn: City Manager April 24, 2017 Re: Request for Consent to Assignment Temporary Bin and Roll -Off Box Solid Waste Franchise Agreement, dated February 17, 2006, between the City of Santa Clarita and Recology Los Angeles, as amended (the "Agreement") Dear Mr. Striplin, We wish to inform you that Recology Los Angeles ("Recology ") has entered into an agreement dated as of April 12, 2017, to sell substantially all of its assets to Araco Enterprises LLC ("Araco") and Crown Recycling Services LLC ("Crown"), affiliates of Arakelian Enterprises, Inc. dba Athens Services ("Athens"), who will continue Recology's operations (the "Transaction"). The purpose of this letter is to request that the City of Santa Clarita provide its consent for Recology to assign the Agreement to Araco. Upon the assignment of the Agreement, Araco will be subject to the applicable terms and conditions of the Agreement and will continue to perform the obligations thereunder. At your earliest convenience, please countersign this letter agreement to indicate your consent of the assignment of the Agreement and send a copy of the signed document to Jana Glock at Morrison & Foerster LLP via e-mail at jglock@mofo.com or via mail at Morrison & Foerster LLP, 425 Market Street, San Francisco, CA 94105, Attn: Jana Glock. Your consent will become effective as of the closing of the Transaction and will have no effect unless the closing of the Transaction occurs. We expect the Transaction to close in May 2017. Time is of the essence in obtaining a response to this request, accordingly, please do not hesitate to contact me at 415-875- 1000 regarding this matter. Packet Pg. 135 We appreciate your prompt consideration of this request. Best Regards, George P. McGrath Executive Vice President and COO cc: Dale Sargent, Solid Waste Administrator, City of Santa Clarita Greg Loughnane, President, Athens Services ACKNOWLEDGED AND AGREED: CITY OF SANTA CLARITA NAME: TITLE: 14.b Packet Pg. 136