HomeMy WebLinkAbout1998-01-13 - AGENDA REPORTS - RESIDENTIAL REFUSE AGMT (2)Z%
PUBLIC HEARING
DATE: January 13, 1998
City Manat
Item to be
Amelia Rietzel
SUBJECT: RESIDENTIAL REFUSE AGREEMENTS: ANNUAL TERM EXTENSION
DEPARTMENT: Planning & Building Services
It is recommended that the City Council:
1. Receive public input,
2. Direct staff to amend the residential franchise agreements to reflect the agreements
outlined in this report, and
3. Allow the residential refuse franchise agreements to automatically extend for a 12 month
period.
Each year the City Council is asked to make a determination of whether or not to extend the
City's residential refuse agreements for an additional twelve (12) month term. 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 that 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 1998, the agreements will be extended to April 15,
2004. 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.
City of Santa Clarita Resolution 96-43 requires that a public hearing be held annually prior to
the activation of the automatic 12 -month term extension of the City's refuse agreements. The
intent of the public hearing is to provide residents with an opportunity to publicly express their
level of satisfaction with service performance and any other issues related to the refuse
franchisees. After taking public testimony, the City Council may choose to take action on one
of the three options below.
�'J Agenda Item:
1. Termination of 12 month extension and give notice to bid for new franchise.
2. Termination of 12 month extension only.
3. Extension of agreement for 12 month period.
An analysis of the pros and cons of each of these actions is attached.
The public hearing process in 1997 resulted in several improvements to residential refuse
service in the City and agreements to work toward implementing a weekly recycling program
and to develop a "unit pricing" structure that would offer a mechanism for residents to control
their disposal costs. In October 1996 the franchisees agreed to hold rates constant until
January 1998. All of the activities agreed to have been completed.
In preparation for the potential rate change scheduled for January 1998, staff and the
franchisees have been working together to try to extend the rate freeze for another twelve (12)
months and to increase our level of recycling service to weekly. According to the rate setting
methodology developed for the City by Hilton Farnkopf & Hobson in 1994, residential refuse
rates for 1998 would increase by $0.62 per household per month (from $22.13 to $22.75) without
the addition of weekly recycling. This increase is the result of a $2.75 per ton increase in
disposal costs for refuse ($1.25) and yard trimmings ($1.50) and a 1.42% change in the Producer
Price Index (PPI).
The franchisees have agreed to forego the $0.62 per household per month. rate increase for
twelve (12) months. This will extend the rate freeze to a total of 26 months. The franchisees
have also agreed to begin weekly curbside recycling on July 1, 1998 at no cost for six (6) months.
It is estimated that the additional cost for weekly pick-up is between $1.00 and $1.50 per
household per month.
ALTERNATIVE ACTIONS
The City Council may choose to:
♦ Terminate the 12 month extension and give notice to bid for new franchise, or
♦ Terminate the 12 month extension only.
ATTACHMENT
Options: Annual Term Extension
aolwa.t %counci1\1998\eztenik98
OPTIONS: ANNUAL TERM
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 bidding
for residential refuse services would allow for a 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 us. Clarkstown 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 served the Santa
Clarita Valley 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 an adverse financial impact on the
three existing franchisees. During the period before termination the franchisees may choose not
to make necessary capital investments to continue high quality service and to assist in new
programs and future waste management plans of the City. An exclusive, or semi -exclusive
franchise could not commence service until 2003. 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, 1998. 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 H -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, annexations, before the agreements expire
in April 2003.
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, 1998.
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
with a positive atmosphere within which to work with the haulers to continue evaluation of a
unit pricing system and upcoming annexations, by January 1999 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 1997 that are noteworthy. These items
include:
Achieved approximately 42 percent waste diversion in 1996
Agreed to stabilize Residential Refuse Rates until 1999
Sponsored and Participated in various Community Events including Pollution Prevention
Week, Arbor Day and Earth Day
Implemented programs in response to citizen input during 1997 public hearing process.
Includes:
* The franchisees provided, free of charge, collection tags for up to 12 additional 32 -
gallon containers, or 12 bundles, of yard trimmings each year, upon customer
request.
* Franchisees collect additional trash at a cost of $1.00 per 32 -gallon container, or
residents can order 12 extra collection tags for a cost of $10.00
* Franchisee increased advertisement of the annual Pride Week Event as another
mechanism for collection of excess refuse and yard trimmings.
* To ensure uniform customer service and complaint resolution, the City continued
to provide the franchisees customer service staff with standardized complaint
forms and updated training on an annual basis, or more frequently when
necessary.
* The franchisees worked with City staff and contracted consultants to seek viable
solutions to stabilize refuse rates through a unit -pricing structure which would
have offered residents more options to control household disposal costs.
* Franchisees continued dialogue related to the implementation of weekly curbside
recycling and will begin the service on July 1, 1998.
B) CONS
Extends the franchise an additional year. Does not allow the City to obtain benefits from
bidding for and acquiring a new refuse service arrangement.
No City Council action is required for this option.
eolwae[e\muncdU996\greanpro.er
CITY OF SANTA CLARITA
NOTICE OF PUBLIC HEARING
REGARDING THE ANNUAL EXTENSION OF THE CITY S RESIDENTIAL REFUSE
SERVICE AGREEMENTS WITH ATLAS REFUSE REMOVAL COMPANY, BLUE
BARREL DISPOSAL COMPANY AND SANTA CLARITA DISPOSAL COMPANY IN THE
CITY OF SANTA CLARITA, CALIFORNIA.
PUBLIC NOTICE IS HEREBY GIVEN:
Notice of Public Hearing is hereby given regarding the annual extension of the City's
residential refuse service agreements with Atlas Refuse Removal Company, Blue Barrel
Disposal Company, and Santa Clarita Disposal Company in the City of Santa Clarita,
California.
The hearing will be held by the City. Council in the City Hall Council Chambers, 23920
Valencia Blvd., 1st Floor, Santa Clarita, the 13th day of January- 1998, at or after 6:30 p.m.
Proponents, opponents, and any interested persons may appear and be heard on this matter
at that time. Further information may be obtained by contacting the City Clerk's office, Santa
Clarita City Hall, 23920 Valencia Blvd., 3rd Floor, Santa Clarita, California.
If you wish to challenge this order in court, you may be limited to raising only those issues you
or someone else raised at the public hearing described in this notice, or in written
correspondence delivered to the City Council at or prior to the public hearing.
Dated: December 26, 1997
Sharon L. Dawson, CMC
City Clerk
Publish Date: January 2, 1998