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HomeMy WebLinkAbout2002-03-26 - AGENDA REPORTS - SOLID WASTE FRANCHISE (2)CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval: Item to be presented by: Jill Fosselman DATE: March 26, 2002 SUBJECT: CITY OF SANTA CLARITA SOLID WASTE FRANCHISE DEPARTMENT: Planning & Building Services City Council open the public hearing on the solid waste franchise agreements, receive public testimony, close the public hearing and direct staff to do one of the following: 1. Direct staff to return to the Council with a new franchise agreement with the existing refuse haulers, incorporating the March 13, 2001 Council -approved agreement points, for execution by the Council; or 2. Reject the March 13, 2001 approved agreement with the existing haulers, direct staff to give notice on the commercial franchise agreement, and direct staff to begin preparations to re -bid the residential and commercial franchise agreements in the Spring of 2005. BACKGROUND On March 13, 2001 the City Council approved the negotiated deal with the haulers and directed staff to return to the Council with new franchise agreements. Following this meeting, SCS Engineers initiated their analysis to determine the correct City disposal amounts for 1999 and 2000. Due to the length of time expected to develop the new franchise documents, staff returned to the Council with a Memorandum of Understanding (MOU) on April 24, 2001 that formalized all of the agreement points of the March 13, 2001 Council decision. Based on California Integrated Waste Management Board data that stated the City may not be in compliance with AB939 2000 diversion requirements, the Council determined not to approve the MOU and instead decided to hire outside consultants and conduct an audit of the solid waste program. At that time, the Council also determined to suspend staffs efforts on the new franchise documents until the audit had been completed and the City's 1999 and 2000 diversion rate situation was resolved. The City Council approved the scope of the audit on July 24, 2001, and executed the contract with Ernst & Young on November 14, 2001 to conduct the audit. The final findings of the audit were presented to the City Council at the March 12, 2001 Council meeting. During this meeting, it was reported by Ernst & Young that they were unable to answer cost questions that were raised in the scope of the audit. The auditors were unable to assess the cost data and determine whether residential rates were "too high" because the Agenda Item:, -e_._. AP r-10WED i i funds allocated for exploratory data collection and review were expended prior to receiving cost data from the haulers. Rather than extend the contract with the auditors, Council determined to close the audit and hold a public hearing. The purpose of the public hearing is to obtain public input on whether the City should execute the March 2001 negotiated solid waste agreement with the existing refuse haulers or whether the City should go out to bid for a new franchise agreement. The following chart illustrates the pros and cons of both alternatives before the Council for consideration: Accept the Negotiated Agreement Conduct a co m etitive process Pros Cons Pros Cons • All negotiated service • Potential for legal • Least potential for • No increase in service enhancements challenge from other successful legal enhancements for would be effective interested challenge four years (does not immediately companies mean that services (including the senior will decline since discount, MRF, current haulers are commingled still required to recycling, and comply with the additional bulky current contract) pickups) • No disruption of • City will be locked • Potential for • Potential residential service to residents into a ten-year term donation of 800 rate increases with continuation of acres of Elsmere commencing on current provider Canyon (no January 1, 2002 (up certainty) — only if to 5% per year) based a deal is made on current franchise with AlliedBFI language • Residential rate • Lost potential to • City designed • Increased potential for freeze continued for obtain Elsmere state-of-the-art the City to not additional 4 years Canyon (800 acres) franchise achieve its diversion (total of 10 years) through a donation document with goals since no new new bid programs are likely to be implemented over the next four years • Improved collection • Limited potential for • Potential to gain • Five years of of waste stream data City designed state- enhanced service potentially heavy (upon inclusion of of -the -art franchise and cost package lobbying by all viable non-exclusive roll -off document for the community haulers to get the services after a (exclusive ultimate contract competitive selection franchise process) agreement) in five years • Increased potential • Rates will still • Potential to alienate for achieving remain among the Granada Hills diversion goals due highest rates in community against to enhanced services Southern California. the City ALTERNATIVE ACTIONS 1. Other actions determined by the City Council. FISCAL IMPACT No fiscal impact on the General Fund is anticipated at this time. However, upon Council direction to direct staff to prepare an RFP for a competitive bidding process, additional funds will be necessary for legal and technical expenses related to the development of the RFP. Upon Council direction to execute the residential and commercial franchise agreements with the existing haulers, the City will obtain up to an additional $112,000 per year from the haulers for solid waste and recycling discretionary activities. In addition, net franchise fees received by the City may either increase or decrease from the following two modifications: fees collected from seniors citizen residential accounts will be reduced due to the reduction in the senior citizen rate ($22.13 to $15/month), and revenue from fees collected from commercial accounts may be increased due to the requirement that all commercial accounts will be transitioned into compliance with the rate band. ATTACHMENTS April 24, 2001 Proposed Memorandum of Understanding between the City of Santa Clarita and Atlas Consolidated Services, Blue Barrel Disposal and Santa Clarks. Disposal GAC:JJL:JAF S:/PBS/Fossehnan/ES/Solid Waste/Counil/3-26 bid decision AR.doc [aIWL.)=WW.V l"10- � NOTICE OF PUBLIC HEARING PUBLIC NOTICE IS HEREBY GIVEN: Notice of Public Hearing is hereby given regarding the City's proposed new residential refuse service agreements with Atlas Consolidated 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 26th day of March 2002, at or after 6:00 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 Jill Fosselman, Environmental Services Manager at (661) 255-4337, Santa Clarita City Hall, 23920 Valencia Blvd., Suite 225, 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: March 14, 2002 Sharon L. Dawson, CMC City Clerk Publish Date: March 16, 2002 CITY OF SANTA CLARITA --- ,5�p� BLUE BARREL DISPOSAL, SANTA CLARITA DISPOSAL, AND CONSOLIDATED DISPOSAL SERVICES ( �' \ / MEMORANDUM OF UNDERSTANDING I. PURPOSE Pursuant to Council direction, City staff negotiated with the franchised municipal solid waste haulers to obtain service enhancements and a rate reduction/freeze similar to those that could be achieved through re -bidding the franchise. After nearly 11 months of negotiations, the City Council, on March 13, 2001, approved a package deal of improvements with the existing franchisees and directed staff to prepare the final franchise agreements for Council review and approval. The City ("City") and the franchised municipal solid waste haulers ("franchisees") are eager to begin offering the programs, services, and rate reductions developed in the package. Due to the complexity in working out the details to be included in the new residential and commercial franchise agreements, this Memorandum of Understanding (MOU) summarizes the basic elements of the final package approved by the Council on March 13, 2001, and facilitates immediate application and implementation. This MOU serves as a non-binding understanding between the City and the franchisees; no formal agreement will exist until such time as the elements in this document have been incorporated into the residential and commercial franchise agreements, and have been approved and executed by the City and the franchisees. II. SCOPE OF THE MODIFICATIONS A. Residential Franchise Modifications 1. Contract Enhancement: The term for the residential agreement is fixed at ten years, effective on the date of City execution of the new franchise agreement and expiring at midnight on the day preceding the 10d' anniversary of the date of execution by the City. 2. Service Enhancement: Residential rates will remain frozen for four additional years at the current rate of $22.13, with the four-year term beginning on January 1, 2002 and terminating on December 31, 2006. Beginning January 1, 2007, the franchisees will have the right to increase residential rates on an annual basis based on the modified CPI increase (see point 4 below). 3. Service Enhancement: All individuals age 60 and older shall be offered the senior citizens discount, at the amount of $15/month, which is also frozen through December 31, 2006 along with the regular residential rate. Beginning January 1, 2007, the franchisees will have the right to increase the senior citizens discount on City of Santa Clarita, Blue Barrel Disposal, Santa Clarita Disposal, and Consolidated Disposal Services Memorandum of Understanding Page 2 of 6 an annual basis (along with the regular residential rate) based on the modified CPI increase (see point 4). 4. Contract Enhancement: Beginning January 1, 2006 the franchisees shall have the opportunity to raise residential and senior citizens rates by 40% of the change in the Los Angeles -Anaheim -Riverside CPI, with a cap on the annual increase of 2%. The franchise agreement will have a set criteria that will determine if the rate increase request is reasonable, and the City Council will have the right to approve a lower rate increase than the proposed increase based on the criteria. Reasonable criteria will be determined by City staff in mutual agreement with the franchisees and will be incorporated into the final franchise agreement. This rate adjustment option shall be available to the franchisees on an annual basis for the balance of the franchise term. 5. Contract Enhancement: Franchisees are required to provide the City with route verifications and must provide the City with notice prior to changing any routes. Additionally, the franchisees must provide reports to the City reporting current routes and any changes that have been made to them, and the residential franchise agreement will provide a schedule of due dates for the route reports. 6. Contract Enhancement: The City will perform, at a minimum, one audit of the franchisees' residential records per year. The audit will include a review of each franchisee's accounts, review of information related to the calculation and submittal of franchise fees to the City, and review of information related to the allocation of disposed waste to the City. 7. Contract Enhancement: Franchisees will pursue good faith efforts to divert a minimum of 75% of the total waste stream by December 31, 2005. 8. Contract Enhancement: Franchisees will indemnify the City against any potential fines associated with SCAQMD Rule 1193 as it relates to fleet vehicles of the franchisee. Additionally, the franchisees will comply with any and all legislation regarding environmental policy — including a requirement for the use of re -refined oil in fleet vehicles as long as the re -refined oil does not conflict with the vehicle's warrantee. 9. Contract Enhancement: Franchisees shall provide enhanced Superfund liability, which includes liability from disposal facilities not owned or operated by the grantee. Additionally, the franchisees will have annual meetings with the City to discuss ways to reduce their respective potential CERCLA and other liabilities to third parties. 10. Contract Enhancement: Franchisees shall obtain enhanced insurance coverage. Insurance coverage shall increase workers compensation to a minimum of $1 million aggregate, $5 million auto insurance and $5 million per occurrence, and $20 million for general liability. 11. Service Enhancement: Franchisees shall provide, as part of the existing residential refuse rate, a 65 -gallon commingled recycling container for the purpose of providing single stream curbside recycling services. The container will be labeled indicating what products may be placed in the containers, as well as a number to call that will provide an up to date listing of acceptable materials. All City of Santa Clarita, Blue Barrel Disposal, Santa Clarita Disposal, and Consolidated Disposal Services Memorandum of Understanding Page 3 of 6 new commingled containers will be rolled out, and the source -separated containers picked -up, as soon as possible after the execution of this MOU. 12. Service Enhancement: Franchisees agrees to expand the types of recyclables collected curbside to all recyclables accepted by the recycler and that fit in the recycling container. The City reserves the right to expand the list of collectable items, through mutual agreement with the franchisees, throughout the term of the franchise. 13. Service Enhancement: Franchisees agree to offer residential accounts two additional bulky item pick-ups for a total of four per year per account at no additional cost to the City or the residents. Because of the provision of four coupons per account per year, bulky waste drop-offs will no longer be free. 14. Service Enhancement: Franchisees agree to provide enhanced public education by adding the following services in addition to the current education requirements (expenditure guidelines, where applicable, will be mutually developed by the City and the franchisees and incorporated into the final franchise agreements): i. Educational lids on recycling and green waste bins. ii. Two presentations per quarter per hauler to schools and a twice yearly report to the City regarding the effectiveness of the presentations. iii. Quarterly presentations to multi -family communities and a twice yearly report to the City regarding the effectiveness of the presentations. iv. Development of public education materials designed specifically for multi- family communities. v. Rotating radio and television ads. vi. Production of a half-hour informational video, with new videos being produced every two to three years. 15. Service Enhancement: Franchisees will provide all residential accounts with a minimum of two coupons per year that may each be redeemed for a one -cubic yard bag of compost. 16. Service Enhancement: Franchisees shall provide enhanced green waste recycling services. Enhanced services shall include allowing landscaping and gardening services to place green waste material, generated exclusively at the residential account, in the resident's green waste container for collection. The materials that can be placed in the green waste container include wood/lumber and all other acceptable green waste provided that the material fits in the container. The franchisee will no longer be required to provide 12 additional green waste collections. 17. Service Enhancement: As required by the current residential agreements, franchisees shall provide recycling services to all multi -family premises that do not currently have recycling services by July 1, 2001. The City will grant exemptions in cases where recycling service is not practical. 18. Service Enhancement: All single family units that currently have residential bin services must also have recycling services. 19. Service Enhancement: Franchisees shall discontinue baggy services at multi- family residential locations and shall provide the locations with 65 -gallon automated trash containers at 75% of the regular residential trash rate where City of Santa Clarita, Blue Barrel Disposal, Santa Clarita Disposal, and Consolidated Disposal Services Memorandum of Understanding Page 4 of 6 applicable. Additionally, the franchisees shall provide all residents receiving the baggy service with a single 34 -gallon bin for the collection of recyclable materials. B. Commercial Franchise Modifications 1. Contract Enhancement: The term for the commercial agreement shall coincide with the residential agreement and is fixed at ten years, effective on the date of the City's execution of the new commercial franchise agreement and terminating at midnight on the day prior to the tenth anniversary of the date of the City's execution of the new commercial franchise agreement. 2. Service Enhancement: Commercial rates will remain frozen for four additional years at the current rate band, with the four-year term beginning on January 1, 2002 and terminating on December 31, 2006. 3. Contract Enhancement: Exhibits A and B of the commercial franchise shall be amended to delete the word "new" in the note following the rate schedules. Removal of the word "new" in Exhibits A and B of the commercial fee schedule shall allow all haulers to compete equally within the commercial rate band for all commercial accounts. For a commercial account to receive the "recycling rate," 50% of their refuse service must be for recycling services. The City and the franchisees will develop mutually agreeable criteria to evaluate actual utilization of the recycling services, as well as the exemption and appeals processes, which will be incorporated into the franchise agreements. The City will work with the franchisees to amend the Santa Clarita Municipal Code to codify the requirements, exemptions, and enforcement process, where applicable and consistent with State legislative guidelines. 4. Contract Enhancement: Franchisees must provide notification of changes to the collection schedule on billing statements immediately prior to all holidays. 5. Contract Enhancement: Franchisees agree to provide an additional $112,000 in discretionary revenue (or in-kind services) annually to the City for discretionary programs such as HHW, commercial waste audits, and special pickup/cleanup events. Each franchisee's portion of the $112,000 will be determined each fiscal year based on the percentage share of the total commercial franchise fees paid to the City for the previous fiscal year. 6. Contract Enhancement: Franchisees will pursue good faith efforts to divert a minimum of 75% of the total waste stream by December 31, 2005. 7. Service Enhancement: Franchisees shall adjust all commercial account rates to be in compliance with Exhibits A and B of the Commercial Franchise Agreement. The compliance deadline shall be determined prior to the completion of the revised commercial franchise agreement. 8. Service Enhancement: The City shall perform a minimum of one audit of the franchisees commercial records per year. The audit will include a review of each franchisee's accounts, review of information related to the calculation and submittal of franchise fees to the City, and review of information related to the allocation of disposed waste to the City. City of Santa Clarita, Blue Barrel Disposal, Santa Clarita Disposal, and Consolidated Disposal Services Memorandum of Understanding Page 5 of 6 C. MRF/Transfer Station Prior to presenting the finalized residential franchise agreement and the finalized commercial franchise agreement to the City Council, the franchisees must prepare a memorandum of understanding (MOU) which will present a description of how the franchisees plan to build a Materials Recovery Facility (MRF)/Transfer Station. The MRF MOU will present a timeline and a scope of work for the project. The MRF MOU will also describe how the franchisees will develop a detailed plan for the MRF within two years of submitting the MRF MOU, and how the MRF will be fully operable within four years of submitting the MRF MOU. III. TERMS AND TIMELINE This MOU shall serve as a summary of the basic elements of the modifications to the current residential and commercial franchise agreements that were approved by the Council on March 13, 2001. The City reserves the right to develop state of the art franchise agreements while integrating the basic elements identified under Section H in this MOU. This MOU shall be made void on July 1, 2001 or upon the approval and execution of the revised residential and commercial franchise agreements, whichever occurs sooner. Through execution of this Memorandum of Understanding, Blue Barrel Disposal, Santa Clarita Disposal, Consolidated Services and the City of Santa Clarita confirm their commitment to work together to further the practices and principles that promote and lead to a high quality of life in the Santa Clarita Valley. The foregoing sets forth the Memorandum of Understanding between Blue Barrel Disposal, Santa Clarita Disposal, Consolidated Services and the City of Santa Clarita as of -12001. "CITY, CTTY OF SANTA CLARITA George A. Caravalho City Manager APPROVED AS TO FORM: Carl K. Newton City Attorney ATTEST Sharon Dawson City Clerk City of Santa Clarita, Blue Barrel Disposal, Santa Clarita Disposal, and Consolidated Disposal Services Memorandum of Understanding Page 6 of 6 filawl►C w" y BLUE BARREL DISPOSAL Karl McCarthy General Manager SANTA CLARITA DISPOSAL Karl McCarthy General Manager CONSOLIDATED DISPOSAL SERVICES Matt Terrell General Manager BFI March 26, 2002 Honorable Mayor Frank Ferry City of Santa Clarita 23920 Valencia Blvd., Suite 300 Santa Clarita, CA 91355-2196 Re: Municipal Waste Collection Contract Dear Mayor Ferry, RECEIVED AND MADE A PART OF THE RECORD AT _ / 6 /oa MEETING ITEM NO. --- FROM: Over the last twelve months, we have watched with interest the actions of the City Council regarding your decisions relative to the waste collection contract. Now that the audit is finished, it is our understanding that the Council will decide whether to award W1NWAtlas a new ten (10) year contract at current rates or seek competitive proposals from other companies. Browning Ferris Industries (`BFF') strongly encourages the City Council to pursue competitive bids. As BFI has previously stated, the City of Santa Clarita pays some of the highest rates in Los Angeles County. By seeking competitive proposals, rates will likely go down, resulting in substantial cost savings to the citizens and businesses of Santa Clarita. Enhanced recycling programs in residential, commercial/industrial and multi -family areas can be achieved without increased cost. In fact, millions of dollars per year are at stake. We at BFI hope you will "test the market" and hold your current haulers accountable. The City has nothing to lose and everything to gain by seeking competitive proposals. It is time for a change and we stand ready to respond to your request. Sincerely, Browning Ferris Manager Cc: City Manager City Clerk Sun Valley Division • 9200 Glenoaks Blvd. • Sun Valley, California 91352 Phone 888-742-5234•Fax 818-504-3037