Loading...
HomeMy WebLinkAbout1996-11-12 - AGENDA REPORTS - REFUSE ROLL OFF BOXES TEMP BIN (2)AGENDA REPORT City Manager Approval Item to be presented by: Lynn M. Harris NEW BUSINESS DATE: November 12, 1996 SUBJECT: FRANCHISE OPTIONS FOR REFUSE ROLL -OFF BOXES AND TEMPORARY BIN SERVICES DEPARTMENT: Public Works BACKGROUND As one of the recommendations resulting from the report titled, BEYOND 50 PERCENT WASTE REDUCTION BY 2000, presented at the July 9, 1996 City Council meeting, staff was directed to develop franchising options for the City .Council's consideration. Currently, roll -off and temporary bin services are entirely. unregulated by the City. This means that numerous roll -off service companies are currently operating in the City without contracts, local operating permits, business licenses or any other means of monitoring quality of service, aesthetics, service charges or related safety issues. City data collected from 11 companies known to be operating locally during calendar year 1995 indicates that nearly 40,000 tons of material, which is about 19 percent of all local waste generated last year, was either disposed or diverted through roll- off and temporary bin services. A conservative estimate of the total market value of roll -off collection services for the haulers is approximated at between $1,470,623 and $1,864,977, based on the 1995 tonnage data and a sampling of roll -off bin rates from a City survey conducted in 1993. City records further indicate that over 90 percent of all material collected locally through roll -off and temporary bin service is attributable to four companies; Blue Barrel Disposal, Santa Clarita Disposal, Crown Disposal and Cal -Coast (see attached chart titled, Roll -Off Tonnage/Market Share for 1995 for complete breakdown of all recorded companies). This data is not exhaustive and that there may be several other companies operating locally that have not provided data to the City. Based on extensive research (see Attachment A), staff has developed two primary sets of options for franchising roll -off and temporary bin services. These options are predicated on the following goals: To establish service arrangements that minimize legal exposure; to achieve additional waste diversion; Agenda Itenf: /5" to ensure reasonable rates to local customers; to secure City's ability to set standards for service, aesthetics and safety; to establish arrangements that minimize staff costs related to monitoring and enforcement; and to enhance local revenue through franchise fees. The franchising options are summarized as follows in order of preference: Non -Competitive Granting Process A) Amending Existing Commercial Franchises to Include Roll -off Services and Issue Five -Year Notices to Those Haulers Entitled to Them Per State Law - PROS: Simplicity of implementation/enforcement through consolidation of all refuse services under existing franchises, allows for limited price and service competition, public agency precedent for this type of arrangement. CONS: Resistance from existing independent haulers including possible legal challenges, reduces competition for roll -off service.. ■ B) Grant Non -Exclusive Franchises to all Applicants that Meet Standard Criteria - PROS: Maximizes price and service competition, minimizes potential for legal challenge from existing independent haulers, public agency precedent for this type of arrangement. CONS: Moderate difficulty in implementation, monitoring and administration. Moderate resistance from independent hauler depending on steepness of franchise fees. Has potential to expand the number of haulers throughout the City. Competitive Granting Process/Request for Proposal (RFP) ■ C) Partially Exclusive Franchise - PROS: Simplicity of administration and enforcement, can allow for limited price and service competition, RFP process minimizes potential legal exposure. CONS: Lengthy, difficult implementation process, unaware of public agency precedent for this specific type of arrangement. ■ D) Exclusive Franchise - PROS: Maximizes simplicity of administration and enforcement, RFP process minimizes potential legal exposure. CONS: Eliminates price and service competition, difficult implementation process, unaware of public agency precedent for this specific type of arrangement. All of the options presented will require sonic modification of the municipal code. A detailed analysis of each of these options is included in the attached matrix labeled Attachment A. All of the proposed options are viable, as noted in the cells titled "Recommendation Based on Overall Analysis." At this time, staff's preferred franchising option is Option A. RECOMMENDATIONS City Council receive this report, discuss options, and direct staff to establish communication with all affected haulers, identify Option A as the preferred alternative at this time and report back. /:XNAXyOMM"10 Chart: Roll -Off Tonnage/Market Share 1995 Attachment A: Options for Franchising Roll -Off and Temporary Bin Services F:WOMWW\CCAGENOAWOLLOFF.BEB Roll -Off Tonnage/Market Share 1995 1995 Total Tonnage -38272.23 Blue Barrel 53.6% 5470.6 Atlas 6.2% All Others 2.5% 3871.4 5058 SCD Cal -Coast 14.3% 10.1% Crown 13.2% All Others*- A -Trojan, American, AWM, Golden State, Larry Rubbish, Lopez Rubbish, Rent -A -Bin ATTACHMENT A ANALYSIS OF OPTIONS FOR FRANCHISING ROLL -OFF AND TEMPORARY BIN SERVICES November 12, 1996 Franchise Granting Process 1 b 1 t {� PRC Section 49300 allows cities to develop their own This option is consistent with PRC Section 49300 and This option is consistent with PRC Section 49300 and This option is consistent with PRC Section Legal Supports granting processes. Section 15.44.3 10 of the SCMC SCMC 15.44.310. SCMC 15.44.310. This option is also consistent with 49300 and SCMC 15.44.310. This option is outlines local granting process for state and local guidelines for the procurement of goods also consistent with state and local guidelines commerciallindustrial refuse franchises. and services. for the procurement of goods and services. Legal Barriers Federal case law resulting from Clarkstown and other Due to the inclusivity of this option , legal challenges Because a open and competitive process would be used Because a open and competitive process related decisions could be interpreted to be based on existing federal case law would be very unlikely. to select multiple franchisees this option is unlikely to would be used to select a single franchisee inconsistent with this option. PRC Section 49520 & PRC Section 49520 & 49521( 5 -year notice) which be challenged through existing federal case law. PRC this option is unlikely to be challenged 49521 which provides for "Grandfather Rights"( 5- provides for "Grandfather Rights" ( 5 -year notice) may be Section 49520 & 49521 which provides for through existing federal case law. PRC year notice) may be invoked by existing haulers. invoked by existing haulers. "Grandfather Rights" (5 -Year Notice) may be invoked Section 49520 & 49521 which provides for by existing haulers. "Grandfather Rights" ( 5 -year notice) may be invoked by existing haulers. Economic Issues This option could 1) maintain limited economic This option could 1)provide relatively open economic This option could 1)maintain limited economic This option would require the City to competition among existing franchisees based on competition which could be managed through a rate band competition among selected franchisees based on determine fixed rates for service. Economic service and rates, provided that the "rate band" concept, or left to market forces, or 2) fixed rates could be service and rates, provided that the "rate band" concept competition based on service or rates would concept is applied, or 2) fixed rates could be determined by the City eliminating price competition but is applied, or 2) fixed rates could be determined by the be eliminated. determined by the City eliminating price competition maintaining service competition. City eliminating price competition but maintaining but maintaining service competition. service competition. External Support or Existing franchisees would he strongly supportive of This option allows greatest level of economic competition Because some level of competition could be Customers would be very resistant to this Resistance this option. Customers would be moderately and would be strongly supported by customers. maintained, customers would be moderately supportive. option because all competition would be supportive of an arrangement that allows at least Independent haulers would be supportive of this option Independent haulers would be supportive of the eliminated. Customers will extremely limited rate and service competition. Independent depending on steepness of franchise fee and provided that opportunity to compete for new market. Existing resistant if rates fixed by the City are not haulers would be extremely resistant to this option. the arrangement is accompanied by strict franchise franchise may be resistant due to fear of losing market below, or comparable to lowest rates enforcement. Existing franchisees would be moderately share or losing franchise rights completely for this currently available. Existing franchisees resistant to this option due to future loss of market share. service. would be resistant due to fear of losing franchise rights completely for this service. Independent haulers would be supportive of the opportunity to compete for new market Public Agency Several cities in Los Angeles County have franchises The City of Pasadena has a non-exclusive franchise Numerous cities have partially exclusive franchises for Numerous cities have exclusive franchises Precedent that include roll -off and temporary bin services as part system that applies to all refuse collection services. This refuse collection services. However, staff research was for refuse collection services. However, staff of the commercial agreements. However, in nearly all award winning system has been operational since 1992. unable to find any cases of cities that have granted a research was unable to find any cases of cases these services were included in the original Santa Clarita's original roll -off system developed in 1994 separate franchise that just covers roll -off and cities that have granted a separate franchise agreements, not added at a later point.. The City of was loosely based on this model. The final version of the temporary bin service. that just covers roll -off and temporary bin Bakersfield is in the process of adding these services to Santa Clarita system only granted a fixed number of service. their commercial franchise. franchises rather than allowing all qualifying applicants to be awarded franchises. ATTACHMENT A (Cont.) Franchise Granting Process Simplicity of Implementation From an administrative perspective this option is the Because most of the groundwork has already The competitive options will prove most The competitive options will prove simplest and requires minimal staff time. It would been completed for this option through the difficult and time consuming to implement most difficult and time consuming to supply require preparation of amendments to existing original temporary bin service system it would from an administrative perspective. It will implement from an administrative agreement provisions and rate band. This option will require some additional staff time , but not require preparation, announcement and wide perspective. It will require preparation, require modifications to the SCMC. It is anticipated much. Primary time concerns would be distribution of a detailed RFP, careful review announcement and wide distribution this option could be completed and ready for adoption reviewing franchise applications, updating and of all submitted proposals, selection of of a detailed RFP, careful review of by the City Council in 30-45 days. preparing additional agreements, collection of franchisees, and drafting of new agreements. all submitted proposals, selection of granting and franchise fees. Granting process This option will require modifications to the franchisees, and drafting of new would be ongoing. This option will require SCMC. It is anticipated that this option can be agreements. This option will require modifications to the SCMC. It is anticipated completed and ready for adoption by the City modifications to the SCMC. It is that this option can be completed and ready for Council in 90 to 120 days. anticipated that this option can be adoption by the City Council in 45-60 days. completed and ready for adoption by the City Council in 90 to 120 days. Simplicity of Enforcement and Enforcement and diversion monitoring would be Diversion monitoring and reporting is Enforcement and diversion monitoring would Enforcement and diversion monitoring Diversion Monitoring relatively easy with this option. The existing haulers are somewhat complicated by having to track be relatively easy with this option, particularly would be easiest with this option. already familiar with the diversion reporting process and numerous franchisees.. Also ensuring if the number of franchises granted is limited Only one set of reports would be would assist in the franchise enforcement process by compliance with service standards and payment to five haulers or less. Most haulers are already required and any unauthorized haulers identifying and reporting any unauthorized roll -off of franchise fees is increasingly tune- familiar with some type of diversion reporting could be easily identified. Franchisee containers located in the City. consuming each time new franchisees are process and would be willing to actively assist would actively assist in the franchise added. However, staff has been maintaining in the franchise enforcement process by enforcement process by identifying diversion records for the 11 haulers that were identifying and reporting any unauthorized and reporting any unauthorized roll - granted temporary bin franchises in 1994. roll -off containers located in the City. off containers located in the City. Franchisee's would actively assist in the franchise enforcement process by identifying and reporting any unauthorized roll -off containers located in the City. Potential for Revenue Enhancement SCMC provides for a minimum franchise fee of 5 SCMC provides for a minimum franchise fee SCMC provides for a minimum franchise fee SCMC provides for a minimum percent of gross revenues, the existing commercial of 5 percent of gross revenues. Granting fees of 5 percent of gross revenues. Granting fees franchise fee of 5 percent of gross agreements require 10 percent. Granting fees to to recover administrative costs associated with to recover administrative costs associated with revenues. Granting fees to recover recover administrative costs associated with processing processing franchise would be consistent with processing franchise would be consistent with administrative costs associated with franchise is also provided for in the existing agreements. Other types of fee collection mechanisms the City's cost recovery policy.. Granting fees would be generated from each new franchisee. the City's cost recovery policy. Granting fees would be generated from each franchisee. processing franchise would be consistent with the City's cost that are not based on gross revenues would require Other types of fee collection mechanisms that Other types of fee collection mechanisms that recovery policy. Other types of fee modification of existing municipal code. are not based on gross revenues would require are not based on gross revenues would require collection mechanisms that are not modification of existing municipal code. modification of existing municipal code. based on gross revenues would require modification of existing municipal code. Recommendation Based on Overall This is a preferred option. This is an acceptable option. This is an acceptable option. This is an acceptable option. Analysis Preference Rating - 1 Preference Rating - 2 Preference Rating -3 Preference Rating - 4