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HomeMy WebLinkAbout1997-02-25 - AGENDA REPORTS - REFUSE FRANCHISE AGMT (2)11004 #M SUBJECT: DEPARTMENT: 019117.1 Ili Da] t71 Y February 25, 1997 Item to be presented by: _ Lynn M. Harris RESIDENTIAL REFUSE FRANCHISES: REQUIREMENT OF PUBLIC HEARING FOR ANNUAL TERM EXTENSION OF AGREEMENTS Public Works City of Santa Clarita Resolution 96-43 requires a public hearing be held annually prior to the activation of the automatic 12 -month term extension of the City's refuse franchise agreements. The intent of the public hearing is to provide residents with an opportunity to publicly express their level of satisfaction with the service performance and other issues related to the refuse franchisees. In addition to the Notice of Public Hearing, staff placed a large ad regarding this meeting in the Daily News and The Signal. After taking public testimony, the City Council may choose to take action on one of the three options below. 1. Termination of 12 month extension and give notice to bid for new franchise. 2. Termination of 12 month extension only. Extension of agreement for 12 month period, The residential agreements have a six (6) year term which began on April 15,1991. The agreements provide for an automatic twelve (12) month extension which is activated each April on the anniversary of the adoption of the agreements. This provision ensures that the agreements always have a remaining term of six (6) years. In April of this year, the agreements will be extended to April 14, 2003 due to the automatic annual extension. The agreement extension can be terminated by either party, providing that notice. of the desired termination is provided at least 30 days prior to the April 15 activation date. The Waste Management Division is responsible for administering, managing and monitoring the refuse franchise agreements to ensure compliance with established performance and service standards. This annual public hearing process allows for the staff, the City Council, and residents to evaluate the franchisees' performance. Coe ssn '°gid To: -3 - 9 7 / Agenda Item: OPTION I - TERMINATION OF TWELVE MONTH EXTENSION AND NOTICE OF INTENT TO BID FOR SERVICES A) PROS Termination of the annual extension of the franchise agreements and notice to initiate bid for residential refuse services would allow fora new agreement to be created through a competitive bid process. In addition, if the City chooses to grant a single exclusive franchise, all local refuse operations could be streamlined by opting for one provider rather than three. Legal counsel has also indicated that following the C.A. Carbone vs. Clarkrtown decision in 1994, annual term extension provisions in solid waste disposal agreements may be viewed as an instrument to interfere with competition for solid waste disposal services and raises the possibility of potential City liability. Terminating the extensions would negate this potential liability. B) CONS Termination of the annual extension at this time would only be applicable to residential franchises. The commercial agreements are not subject to franchise extension provisions until the year 2000. The existing franchisees are also longtime local businesses that have served the Santa Clarita Valley since prior to City incorporation. This option would send a strong signal of dissatisfaction with the existing franchisees' levels of service and current rate structure. This would likely be interpreted by the existing franchisees as an indicator of eminent contract termination. Termination of these agreements would have a dramatically adverse financial impact on the three existing franchisees. These franchisees may choose not to make necessary capital investments related to future waste management plans of the City. An exclusive, or semi -exclusive franchisees could not commence service until 2002. And finally, there is no guarantee that termination of the existing agreements would significantly improve service or lower rates. To exercise this option staff must be directed to draft a letter notifying the franchisees of the City's intent to terminate the extension. The letter must be delivered to the franchisees on or before March 15, 1997. A separate letter would also be required notifying the existing franchisees of the City's intent to commence a competitive bidding process immediately prior to the termination date of the agreements. OPTION II - TERMINATION OF TWELVE MONTH EXTENSION The overall advantages and disadvantages of this option are extremely similar to Option I. The key difference with this Option is that a notice of intent to initiate a competitive bidding process would not be issued. Because this option does not necessarily provide the existing franchisees with an indication of eminent contract termination, it is likely to provide a greater incentive to workout key services provisions, e.g., unit pricing, weekly recycling and annexations, before the agreements expire in April 2002. To exercise this option staff must be directed to draft a letter notifying the franchisees of the City's intent to terminate the extension. The letter must be delivered to the franchisees on or before March 15, 1997. OPTION III - EXTENSION OF AGREEMENT FOR 12 MONTH PERIOD A) PROS Waste Management staff have established that the franchisees have been substantially in compliance with all significant provisions of the agreements. With few exceptions, the franchisees have also presented timely payment of franchise fees and reporting of disposal/diversion data. The franchisees have been responsive to calls from City staff and resolving customer complaints which fall within the scope of the franchise. This provides staff a positive atmosphere from which to work with the haulers to incorporate a unit pricing system, upcoming annexations and weekly recycling, by January 1998 and before the extension comes up for renewal one year from now. In addition to providing the services and functions required by the agreement, the franchisees have also accomplished several other tasks during 1996 that are noteworthy. These items include: • 35 percent waste diversion exceeded initial AB 939 goal by nearly 10 percent • Implementation of the City -Wide Yard Trimmings Recycling Program • Expansion of the Curbside Recycling Program to include several new materials for collection • Distribution of Commercial Recycling Guidebooks to all local Commercial Accounts • Stabilized Residential Refuse Rates until 1998 • Cooperated with City to investigate Unit -Pricing System • Sponsored and Participated in various Community Events including Pollution Prevention Week, Arbor Day and Earth Day • 1996 Public.Opinion Poll indicated high-level of customer satisfaction regarding local trash services B) CONS Extends the franchise an additional year whether, or not satisfactory price and additional services are agreed upon between the City and the current franchisees before January 1998. No City Council action is required for this option. I0 a—Kai kyj I kv, 191 Ut : • Receive public input and direct staff to pursue the action indicated in Option I, Option H or Option Ill. SACCAGCNDATVRGRNS.AGN