HomeMy WebLinkAbout2003-06-24 - AGENDA REPORTS - SOLID WASTE FRANCHISE PROPOSAL (2)CITY OF SANTA CLARITA
AGENDA REPORT
UNFINISHED BUSINESS
DATE: June 24, 2003
AGENDA ITEM
J_M
City Manager Approva 414
Item to be presented by: Jill Fosselman
SUBJECT: EVALUATION OF SOLID WASTE FRANCHISE PROPOSALS
DEPARTMENT: Field Services
RECOMMENDED ACTION
Council to direct staff to negotiate final residential and commercial franchise agreements with
Blue Barrel Disposal, Burrtec Waste Industries, Inc. and Consolidated Disposal Services, and
return to the Council for a Special Study Session on August 19, 2003 to review the finalized
contracts in preparation for bringing the contracts for award by Council at the August 26, 2003
City Council Meeting.
Council to review and approve the contract negotiation process.
Council to transfer $50,000 from the City Council Contingency Fund Account No. 2250-7401 to
Account No. 3811-8110 for completion of the Solid Waste Franchise Request for Proposal (RFP)
project.
BACKGROUND
On March 17, 2003, pursuant to City Council direction, staff released an RFP for Residential and
Commercial Waste Management Services. The deadline for submittal of proposals to the City
was May 19, 2003. The following six waste hauling firms responded to the RFP and submitted
proposals:
• Blue Barrel Disposal (Waste Management, Inc.)
• Burrtec Waste Industries, Inc.
• Browning -Ferns Industries
• Consolidated Disposal Service
• Crown Disposal Company, Inc.
• E.J. Harrison and Sons, Inc.
Based on recommendations made by the City's consultants, Hilton Famkopf & Hobson (HF&H)
and Rutan & Tucker (R&T), and staff review of the six proposals, staff recommends entering
into contract negotiations with Blue Barrel Disposal, Burrtec Waste Industries, Inc., and
Consolidated Disposal Service. Staff evaluated proposals that were submitted for the seven-year
residential franchise that will begin in April 2006 and the nine-year commercial franchise that
will begin in August 2004. The evaluation performed and the resulting recommendation
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developed was based on the evaluation criteria established by the City Council. The criteria can
be found on page 27 of the RFP and sets the following guidelines to evaluate the proposals:
• Proposers Qualifications
— General experience
— Jurisdiction satisfaction
— Public education
• Technical Qualifications
— Waste diversion
— Implementation plan
— Operations
• Exceptions to the Terms and Conditions
• Financial Resources
— Financing
— Financial stability
— Insurance
• Costs
— Cost of service (rates)
— Reasonableness of costs
The evaluation conducted by staff and consultants determined that all six proposals are
responsive to the RFP and will provide the depth and scope of the programs requested by the
City. Each of the proposals has demonstrated sufficient level of experience in providing the
type and level of services requested by the City, the technical and programmatic ability to
achieve the diversion levels desired, and the necessary financial wherewithal to meet the terms of
the programs. In addition, staff and the consultants are satisfied that all of the proposers
adequately demonstrated the capacity to guarantee priority disposal capacity. Each of the
proposers offered exceptions to the contracts, except Burrtec who offered no exceptions. The
City is under no obligation to accept any of the exceptions proposed, and these will be addressed
individually with each of the proposers that staff is recommending be advanced further through
the next phase of this process.
When comparing the rates (or cost for services) of all six proposers, the lowest proposals both
individually and collectively for both the residential and commercial franchise agreements are
Blue Barrel, Consolidated, and Burrtec. Overall, these lowest proposers will provide customers
with approximately an 11-23% reduction from current rates. This cost comparison was
determined through an evaluation of first year revenues for each of the residential and
commercial proposals, as well as through comparing combined residential -commercial proposals
given that the proposers were asked to identify a "discount' if they were to be awarded both the
residential and the commercial franchise agreements. Please see the attached HF&H Evaluation
of Solid Waste Proposals letter, pages 4 and 5, for summary charts of first year revenue
(demonstrated by franchise and hauler).
The consultants have recommended and staff concurs that the City should enter into a contract
negotiation process with the three lowest overall proposers because this process will yield the
best overall value to customers. Given that the proposals are public, inducing a competitive
environment with three lowest overall cost proposers creates incentive to enhance the long-term
value of their proposals. In the absence of competition, the ability to achieve this enhanced value
is greatly reduced. Similarly, creating this "incentivized" environment with more than three
proposers will also affect the City's ability to achieved enhanced value due to the lengthy and
greatly complicated process expected. According to HF&H, negotiating with more than three
proposers will induce a more lengthy and complicated process. The total difference in rates
between the lowest bid and the third lowest bid is 15%, while the difference between the lowest
bid and the fourth lowest bid is 22%. A 15% rate range is within standard practice for selecting
the lowest bidders for contract finalizations, while extending it to ranges beyond 20% does not
produce sufficient additional results to justify the additional time and effort required and is
beyond industry standards according to consultants. In addition, the three recommended
proposers offer a rate reduction from the current levels in the commercial franchise, while the
other three proposers are proposing an increase in rates. Although the cost for the RFP process
will be reimbursed to the City by the hauler(s) being awarded the contract, entering into contract
negotiations with four or more haulers would not produce results that would justify the additional
costs that will be incurred.
Upon Council direction, staff and consultants will clarify the final terms for both the residential
and commercial franchise agreements with each of the three selected proposers and negotiate a
total of six final contracts (three residential and three commercial). The desired outcome of this
process will be to enhance the final terms in each of the contracts that will yield the best overall
program and long-time deal for the customers. Please see the attached Proposed Negotiations
Timeline for the proposed negotiation and contract finalization process.
At a Special Study Session on August 19, 2003 staff will present the final signed residential and
commercial franchise agreements with the Council. During the Study Session, staff will review
the redlined changes made to the original franchise agreements released in the RFPs and
highlight the results of the negotiations. At the regular City Council meeting on August 26,
2003, Council will be presented with the final contracts and will consider the final awarding of
contracts.
Additional funding in the amount of $50,000 to negotiate with three proposers is being requested
as part of this item. hi an effort to minimize anticipated costs, and in the absence of knowing the
number of qualified proposals that would be submitted, staff originally only budgeted to
negotiate with one hauler. However, given that the City received multiple proposals, that the
proposals have been made public, and that inducing competition to create incentives to enhance
proposal value will greatly benefit customers, additional funds are needs to cover this expanded
scope of negotiations.
ALTERNATIVE ACTIONS
Other action as determined by the Council.
FISCAL IMPACT
The Council has allocated a total of $250,000 from the City Council Contingency Fund for the
Solid Waste Franchise RFP. Based on the proposed recommendation to negotiate with all three
finalist proposers, staff is requesting the transfer of $50,000 from the City Council Contingency
Fund Account No. 2250-7401 to Account No. 3811-8110 which will bring the total to fund this
project to $300,000. The current balance of the City Council's Contingency Fund is $1,129,421.
If the City Council elects to appropriate the additional funds as requested by staff, the remaining
City Council Contingency Fund will total $1,079,421. The entire amount needed to complete the
project will be reimbursed to the City's General Fund upon execution of the contract during the
2003-2004 Fiscal Year.
Based on the proposed rates for the three proposers staff is recommending to enter into
negotiations, which are lower than current rates, franchise fees will also decrease by the same
percentage that rates are decreased. Upon negotiation of the final contracts, staff will illustrate
the actual impact to franchise fee revenue that is associated with each of the contracts.
ATTACHMENTS
HF&H Letter Regarding Evaluation of Solid Waste Proposals
Section V of RFP (Proposal Evaluations)
Proposed Negotiations Timeline
HILTON FARNKOPF & HOBSON, LLC
Advisory Services to
Municipal Management
3990 Westerly Place, Suite 195
Newport Beach, California 92660
Telephone: 949/251-8628
Fax: 949/251-9741
www.hf h<omultants.com
June 16, 2003
Mr. Travis Lange
Environmental Services Manager
City of Santa Clarita
23920 Valencia Blvd., Suite 300
Santa Clarita, California 91355-2196
Evaluation of Solid Waste Proposals
Dear Mr. Lange:
San Francisco
Los Angeles
Sacramento
Portland
Robert D. Hilton, CMC
John W Farnkopf, PE
L. Scott Hobson, CPA
Laith B. Emet, CMC
We have completed our preliminary evaluation of the six proposals received in
response to the City's request for proposals dated March 17, 2003. Proposals were due
on May 19, 2003 and were received from the following companies:
• BFI Waste Systems of North America (BFI), a subsidiary of Allied Waste
Industries, Inc., the second largest solid waste company in North America.
• USA Waste of California, d.b.a. Blue Barrel Disposal (Blue Barrel), a subsidiary of
Waste Management Inc., the largest solid waste company in North America.
• Burrtec Waste Industries (Burrtec), a privately -held company based in Fontana
and one of the 15 largest solid waste companies in the United States.
• Consolidated Disposal Service (Consolidated), a subsidiary of Republic Services,
Inc., the third largest solid waste service provider in North America.
• Crown Disposal Company (Crown), a privately -held company with operations
primarily in Los Angeles County, headquartered in Sun Valley.
• E.J. Harrison & Sons (Harrison), a privately owned, family operated company
headquartered in Ventura with operations primarily in Ventura and Santa
Barbara counties.
KEY TERMS OF THE RFP
Proposers were allowed to propose separately on residential and commercial
services, with an overall discount proposed if both the residential and commercial
services were awarded to the same proposer. Commercial services will start on
HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 2
August 1, 2004 and residential services on April 15, 2006. A summary of the key
services and contract terms requested by the City in its RFP is provided in
Attachment 1.
The City's RFP included the draft residential and commercial franchise agreements
(Agreements) that the successful proposer(s) would be expected to execute. The
Agreements identify in significant detail the various solid waste collection and
recycling services to be provided, including the method of collection, types of
containers, materials to be collected, services to be provided at no additional charge
to the City or the ratepayers, and many other terms and conditions. The scope of
services contained in the Agreements is comprehensive, specific, and tailored to
meet the needs of the residents and businesses within Santa Clarita. Therefore,
unless significant exceptions were proposed or significant enhancements added to
the City's desired terms, all of the proposals would have similar services.
PROPOSAL EVALUATION MATRIX
In order to compare the proposals, we prepared a proposal evaluation matrix
(Attachment 2) that summarizes the following information obtained from the
proposals:
1. "Proposer Overview," including general company information about each
proposer and a summary of each proposer's experience and financial resources.
2. "First -Year Rate Revenue," summarizing the total costs proposed by each
proposer. Since the rate adjustment mechanism for future years was defined in
the franchise agreement and is the same for each company, comparing the first-
year annual revenues provides a common basis for evaluating the proposed
costs. Detailed rate information and the rate revenue calculations are provided
in Attachment 3.
3. "Facilities," describing the proposed operating yard, recycling facilities and
disposal arrangements, including the capacity guarantee, if proposed.
4. "Estimated Waste Diversion," summarizing the percentage of the waste that
each proposer estimated would be diverted by the proposed programs.
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HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 3
5. "Exceptions Proposed to the Franchise Agreement," identifying the contract
terms that the proposer indicated that it wanted to negotiate with the City rather
than accept the language that was included in franchise agreement provided
with the RFP.
6. "Other Unique Proposal Features," describing key features of the proposals that
exceed the minimum requirements of the RFP.
7. "Clarifications Needed," identifying proposed terms that are unclear and items of
concern that need to be further researched or addressed in further detail in the
next evaluation phase.
FINDINGS
Experience
All six of the proposers are significant providers of solid waste services in Southern
California. All of them have extensive experience providing the requested
residential and commercial solid waste collection and recycling services. In addition
to providing collection services, all of them have experience operating transfer
stations and/or recycling facilities. The parent companies or affiliates of three of the
proposers also own landfills (BFI, Blue Barrel, and Consolidated). We believe all of
the companies have the necessary experience to implement the requested services.
Financial Resources
The proposed rate revenues in the City of Santa Clarita represent less than one
percent of the total revenues for the parent companies of BFI, Blue Barrel, and
Consolidated. Burrtec did not provide financial statements but indicated they
would make them available at a later stage of evaluation. Using public records
previously made available in 2001, it is estimated that the City of Santa Clarita
contract would increase Burrtec's revenues by an estimated 20%. The City of Santa
Clarita contract would significantly expand the size of Crown and Harrison,
increasing each proposer's existing revenues by more than 60% if awarded both the
residential and commercial contracts.
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HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 4
Costs
Total first-year costs to residential ratepayers will be reduced from current rates
under five of the six proposals. Total costs to commercial ratepayers will be reduced
under three of the six proposals. Proposed costs are summarized below.
Residential First Year Revenue*
* Starting 2006.
Commercial First Year Revenue**
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rprese
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Current; kktes''
1) Blue Barrel
$ 8,610,000
(27%)
2) Burrtec
$ 9,449,000
(20%)
3) Consolidated
$ 10,237,000
(13%)
4) BFI w/o Elsmere
$ 10,276,000
(13%)
land transfer
$ 4,342,000
13%
5) BFI w/Elsmere
$ 10,737,000
(9%)
land transfer
$ 7,652,000
100%
6) Crown
$ 10,895,000
(8%)
Current Rates
$ 11,802,000
0%
7) Harrison
$ 15,790,000
34%
* Starting 2006.
Commercial First Year Revenue**
** Starting 2004
The financial comparison of the proposals contained in the tables above is based on
the total proposed costs to the ratepayers for all levels of service. This is calculated
by multiplying the proposed rates for each type of service by the number of
customers subscribing to each type of service. This is the best method to compare
the proposed overall costs. Specific rates proposed for each customer category are
shown in Attachment 3. A breakdown of single family and multi -family rate
revenues is shown on page 3-1. Single family residential rates are shown on page 3-
2, multi -family residential rates are shown on page 3-3 and commercial rates are
shown on page 3-4.
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'nt Ratesi•:
1) Blue Barrel
$ 3,494,000
(9%)
2) Burrtec
$ 3,627,000
(5%)
3) Consolidated
$ 3,818,000
0°%
Current Rates
$ 3,828,000
0%
4) Crown
$ 4,342,000
13%
5) BFI
$ 4,956,000
29°%
6) Harrison
$ 7,652,000
100%
** Starting 2004
The financial comparison of the proposals contained in the tables above is based on
the total proposed costs to the ratepayers for all levels of service. This is calculated
by multiplying the proposed rates for each type of service by the number of
customers subscribing to each type of service. This is the best method to compare
the proposed overall costs. Specific rates proposed for each customer category are
shown in Attachment 3. A breakdown of single family and multi -family rate
revenues is shown on page 3-1. Single family residential rates are shown on page 3-
2, multi -family residential rates are shown on page 3-3 and commercial rates are
shown on page 3-4.
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0HILTON FARNKOPF A HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 5
Individual rate comparisons may be misleading as to the overall cost effectiveness
of a proposal. For example, BFI proposed a lower single family rate than
Consolidated; however, BFI's total proposed residential service cost is higher than
Consolidated's proposed residential cost because BFI proposed significantly higher
multi -family bin service rates.
The proposed first-year total costs if one contractor is awarded both the residential
and commercial agreements are shown in the table below.
Total Residential and Commercial Revenue
The lowest cost proposal, if selected, would save the City approximately $25 million
over the contract term compared to the existing rates, based on the proposals as
submitted without clarification of contract terms.
Exceptions Proposed to the Franchise Agreement
Burrtec did not take any exceptions to the proposed agreement. BFI, Consolidated,
and Crown each took two exceptions, and Harrison took eight. These contract terms
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'Residential
Commercial Total
,
3 8�1)
Blue Barrel
$ 8,610,000
$ 3,494,000$12,104,00
$ 12,104,000
(23%)
2) Burrtec
$ 9,449,000
$ 3,627,000
-0.00%
$ 13,076,000
0.00%
$ 13,076,000
(16%)
3) Consolidated
$ 10,237,000
$ 3,818,000
$ 14,055,000
1.25%
$ 13,879,000
(11%)
4) BFI w/o Elsmere
land transfer
$ 10,276,000
$ 4,956,000
$ 15,232,000
3.00%
$ 14,775,000
°
(5 /°)
5) Crown
$ 10,895,000
$ 4,342,000
$ 15,237,000
2.00%
$ 14,932,000
(4%)
6) BFI an Elsmere
land transfer
$ 10,737,000
$ 4,956,000
$ 15,693,000
3.00%
$ 15,222,000
°
(3 /°)
Current Rates
$ 11,802,000
$ 3,828,000
$ 15,630,000
N/A
$ 15,630,000
0%
7) Harrison
$ 15,790,000
$ 7,652,000
$ 23,442,000
0.50%
$ 23,325,000
49%
The lowest cost proposal, if selected, would save the City approximately $25 million
over the contract term compared to the existing rates, based on the proposals as
submitted without clarification of contract terms.
Exceptions Proposed to the Franchise Agreement
Burrtec did not take any exceptions to the proposed agreement. BFI, Consolidated,
and Crown each took two exceptions, and Harrison took eight. These contract terms
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HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 6
would need to be negotiated. The exceptions are described in Attachment 2, pages 11
and 12.
Blue Barrel took four specific exceptions as described on Attachment 2, page 12.
Three exceptions are potentially significant and cause for concern, although its
possible these will be satisfactorily resolved during the proposal clarification stage.
Further, Blue Barrel stated in its proposal that it wanted to discuss changes that it
had identified earlier in a letter submitted during the drafting of the RFP. This letter
contained a list of over 50 suggested changes to the RFP and contract documents,
some of which may have already been reflected in the final RFP and others that are
probably unacceptable. If Blue Barrel is selected for further consideration, specific
information is required during the proposal clarification phase to assess the
reasonableness of the exceptions proposed.
Blue Barrel proposed to use its existing refuse and green waste carts. The RFP
required carts to be uniform in appearance but did not require them to be new. In
order to facilitate a comparison to other proposers that proposed new carts, Blue
Barrel should be asked to propose the cost impact if new carts are used. Based on
our understanding of costs in the solid waste industry, we would still expect Blue
Barrel's proposed costs to be among the three lowest even if new carts are utilized.
Unique Proposal Features
Because the City's RFP and contract documents are comprehensive and require all of
the contractors to offer a complete set of very specific solid waste collection,
recycling, and disposal services, most of the proposed services are standard.
Consequently, there are a limited number of unique proposal features. The unique
proposal features for each proposer are summarized in Attachment 2, pages 13-14.
These features can be somewhat difficult to quantify and are generally minor (for
example, one contractor offered a talking robot for community outreach activities).
The unique proposal features of a significant nature are as follows:
• Blue Barrel proposed a reduction in the current residential rate, prior to the start
of the new contract, if it is awarded both the residential and commercial
agreements, and if the lengths of the new residential and commercial
agreements are extended by an additional three years.
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HILTON FARNKOPF Q HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 7
• Burrtec proposed to construct a MRF in the City, although its unclear if they will
provide the MRF to the City at the end of the contract term and if there are
special conditions. This needs to be clarified.
• Blue Barrel proposed to construct a 1,500 ton per day transfer station and
recycling center that includes a 100 ton per day recyclable processing line. Since
the City generates a total of less than 500 tons per day of residential and
commercial contract waste and recyclables, this facility may be designed to accept
waste from surrounding areas. It did not appear that the facility would be
provided to the City at the end of the contract term; this needs to be clarified.
• BFI proposes to negotiate the transfer of 400 acres of Elsmere land to the City,
although this results in a higher residential rate and increases the annual cost of
BFI's proposal by $445,000 annually, or approximately $3.1 million over the
seven year term of the residential agreement.
NEXT STEPS
We believe the City will achieve the combination of the best services at the lowest
reasonable cost by entering into simultaneous negotiations with a select number of
proposers. In the process of finalizing agreements with proposers in other
jurisdictions, we have sometimes found that significant new exceptions appear that
were not made clear in the proposal. By finalizing agreements simultaneously, the
process will take place in a competitive framework and most likely improve the
City's final terms.
The recommended process would be as follows:
1. Proposers selected by the City Council will enter into negotiations with staff, with
the goal of presenting final agreements signed by the proposers at a subsequent
City Council meeting for award. The award may be to one proposer for both
residential and commercial services, or to separate proposers for each service.
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HILTON FARNKOPF @ HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 8
2. The scope of the negotiations should be limited to the following:
• Resolving the exceptions proposed in the original proposals.
• Clarifying terms of the proposal that are unclear so that its terms may be
properly reflected in the agreement.
• Confirming whether or not companies that proposed to construct a materials
recovery facility in the City will transfer ownership to the City at the end of
the contract term and if there are any special conditions associated with such
transfer.
• Confirming contingency plans in the event that a proposed MRF or transfer
station is not operational before the start of the agreement. It is our
understanding that the contractor would be responsible for contracting with
existing facilities to provide the required services without a rate increase in
the event that it is unable to develop its proposed facilities prior to the start of
the contract. Further, a disposal capacity guarantee, if proposed, would
guarantee capacity at the disposal site regardless of whether a transfer station
or MRF is constructed.
• Allowing the proposers to propose a "rate freeze" beyond the first year in
order to provide increased rate stability.
3. Proposers should not be allowed to change their first year rates, unless the
existing proposals are thrown out and new rate proposals are submitted by all the
proposers. We recommend against such a process as it defeats the purpose of
competitive process that was just completed.
Alternatively, if the City Council believes it already has sufficient information to
select a single proposer for both Agreements (or two proposers for separate
Agreements), it could do so at this time and we would enter negotiations to resolve
the proposed contract exceptions. Such an approach may result in less favorable
final negotiated terms.
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HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 9
SELECTION OF PROPOSERS TO FINALIZE AGREEMENTS
The goal of selecting proposers to finalize agreements is to narrow the number of
proposals for further consideration to a manageable number. The proposals selected
for clarification and further consideration should:
• Contain the range of service features that the City desires;
• Be submitted by experienced companies that the City would want as partners to
manage the City's solid waste system; and,
• Be cost effective for the services offered.
The City is fortunate to have received several very good proposals from qualified
companies. All of the companies have the necessary experience. The contract
requires all of the proposers to enhance recycling services offered in the City. Five of
the six proposals will lower costs to residential ratepayers, and three of the six
proposals will lower costs to commercial ratepayers.
Besides costs, there are some differences between the proposals, particularly in the
exceptions taken to the franchise agreement and these need to be resolved before
making final contractor recommendations in the next phase. Additionally,
although all of the operators are qualified, some may do a better job than others.
Reference checks of the finalists will help confirm the better contractors.
Most of the recycling program enhancements offered are minor compared to the
specified recycling requirements in the Agreements. For example, all proposers are
required to divert residential commingled recyclables and greenwaste, and offer free
commercial recycling of specified materials to any business that requests it. As a
program enhancement, Blue Barrel, Burrtec and Crown also offered to divert food
waste, and Consolidated offered to implement a pilot food waste diversion program.
On an overall basis, we believe the proposals offered by Blue Barrel, Burrtec, and
Consolidated all offer the City excellent value for the services received; these are
also the three lowest cost proposals for residential service, commercial service,
combined residential and commercial service, and the optional diaper recycling
service. Total costs for residential and commercial services would be reduced from
11% to 23% if one of these three proposers were selected. Two of these proposers
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HILTON FARNKOPF & HOBSON, LLC
Mr. Travis Lange
June 16, 2003
Page 10
(Blue Barrel and Consolidated) currently provide services to the City of Santa
Clarita, and one (Burrtec) does not. Simultaneously finalizing terms with these
three companies should produce one or more excellent Agreements for final
consideration and award by the City Council.
The proposals submitted by BFI and Crown are good overall proposals from
experienced companies, but they do not appear to offer significant additional solid
waste services to the City that would justify the additional costs compared to the
proposals submitted by Blue Barrel, Burrtec and Consolidated. The proposal from
Harrison is several million dollars more annually than the next lowest proposer
and is not cost effective.
We would like to highlight a special consideration with BFI's proposal. BFI
proposed to negotiate the transfer of 400 acres of Elsmere Canyon land to the City if
selected. It is uncertain what the negotiations would entail. The total first-year cost
to the solid waste ratepayers of the BFI proposal with the Elsmere Canyon land
transfer (if successfully negotiated) is $15.2 million, compared to $12.1 million to
$13.9 million for the three lowest cost proposals. The proposed land transfer would
fund land acquisition from solid waste rates; the City Council needs to determine
whether that source of funding is appropriate and whether the value of the Elsmere
Canyon land would merit including BFI in the next phase of evaluation.
We look forward to discussing our evaluation with the City Council. Please call me
at (949) 251-8902 if you have any questions.
Very truly yours,
Laith EZ" et, CMC
Senior Vice President
Attachments
1. Summary of Requested Services and Important Contract Terms
2. Proposal Evaluation Matrix
3. Rate Revenues
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ATTACHMENT
SUMMARY OF REQUESTED SERVICES AND
IMPORTANT CONTRACT TERMS
The City requested proposals to provide residential and commercial services under
separate contracts. Proposers were permitted to propose on one or both franchise
agreements. The following is a brief summary of the services requested in the RFP
and key franchise agreement terms.
I. RESIDENTIAL FRANCHISE
A. Single Family Refuse Collection Service
• Standard service includes one automated 90 -gallon refuse cart.
• Extra refuse carts are $10.00 per cart per month.
• Overage is collected at no charge during the holiday period from December
26 through the second Saturday in January and for two other special pickups.
Additional pickups are $5.00 each.
• Manual can and bag service is provided in space constrained communities
where carts are not feasible.
• In -ground can service is provided to one homeowners association
• Reduced rates are provided for mobile home parks, seniors and low
income customers.
B. Multi -Family Bin Refuse Service
Franchisee will provide bin service. Bins shall be inspected and cleaned, if
necessary, once per year at no additional charge. Additional cleanings shall be
$35.00 each.
C. Single Family Recyclables Collection Service
• Automated 90 -gallon recyclables cart collection is standard.
• An alternative collection program, such as centralized containers, was to be
proposed for space constrained communities.
• Recyclables include newspaper, glass and metal containers, catalogues,
cardboard, cereal boxes, dry food boxes, telephone books, PET (plastics #1),
HDPE (plastics #2), plastics #3 through #7, junk mail, office paper,
magazines, milk cartons, drink boxes, aluminum, and plastic grocery bags.
D. Multi -Family Recyclables Collection Service
Recycling carts or bins are to be provided to multi -family customers at no
additional charge. Materials collected will be the same as for single family.
6/6/03 1 - 1 City of Santa Clarita
E. Drop-off Recycling
Franchisee will provide four recyclables drop-off sites throughout the City.
F. Green Waste Collection
Automated 90 -gallon cart collection is standard. A $2.00 discount per home per
month is permitted if the customer does not generate, or otherwise diverts,
green waste.
G. Manure
Manure collection is to be provided at 150% of comparable refuse rates.
H. Bulky Waste Pickuv
On-call bulky waste pickup will be provided to all residential customers,
including those receiving bin service. Each residence shall receive two free
pickups per year, and be charged $20.00 for each additional pickup thereafter.
I. Holiday Tree Collection
Franchisee will collect holiday trees from all single and multi -family
residential customers.
J. Automated Street Litter Container Collection
Franchisee will collect refuse and recyclables from 60 sets of street litter cans.
K. Optional Diaper Collection and Diversion Program
Proposers were asked to propose a rate per home per month to collect and
divert diapers from residents and businesses that used disposable diapers.
II. COMMERCIAL FRANCHISE
A. Refuse Bin Collection
Franchisee will provide bin service. Bins shall be inspected and cleaned, if
necessary, once per year at no additional charge. Additional cleanings shall be
$35.00 each.
June 6, 2003 1 - 2 City of Santa Clarita
B. Commercial Can/Cart Refuse Collection
Franchisee will provide small generators with can or cart collection service.
C Rolloff Box Collection
Rolloff box service is not included in the franchise agreement.
D. Recycling
Franchisee shall provide free recycling collection of a specified list of materials
to all customers requesting such service. Franchisee must notify each customer
annually of the availability of this program.
E. Green Waste
Green waste service shall be made available at 75% of the comparable refuse
rate.
F. Processing of Commercial Waste
If franchisee does not meet minimum recycling requirements, City may request
that the franchisee perform mixed waste processing of the commercial refuse to
recover recyclables at no additional cost.
G. Com -Sponsored Events
Franchisee is responsible for providing solid waste and recycling collection
services at City -sponsored events at no additional charge.
H. City Facilities Collection
Franchisee will collect solid waste and recyclables from City facilities at no
additional charge.
III. CONTRACT REQUIREMENTS UNDER BOTH FRANCHISE AGREEMENTS
A. Contract Term
The residential franchise term is for seven years beginning in 2006. The
commercial franchise term is for nine years beginning in 2004. Both expire in
2013. The City has the option to extend the agreements up to 24 months.
June 6, 2003 1 - 3 City of Santa Clarita
B. Minimum Recycling Requirements
Franchisees are required to divert 50% of the waste stream each collects or pay
penalties of $10,000 per calendar quarter.
C. Guaranteed Landfill Priority and Capacity
Franchisees are required to provide a guarantee of landfill space and priority
over other jurisdictions' refuse for the term of the agreement.
D. Vehicles
Collection vehicles operated in the City under this agreement may be no more
than 10 years old at any time during the agreement term, and must utilize
alternative fuel to diesel, such as compressed or liquefied natural gas.
E. Rate Adjustment
Rates may be adjusted annually based on changes in published price indices
according to a weighted rate adjustment formula, with a 5% cap on increases.
F. Contract Extension for Diversion Performance
The contracts can be extended from one to three years if the franchisees exceed
the 50% diversion rate.
G. Recyclables Revenue Sharing
Franchisees will share recyclables revenue with the City equal to $2.50 per ton
revenue of each ton recycled.
H. Franchise Fee
Franchisees will submit franchise fees based on 10% of gross revenue.
L Recycling Fee
Each franchisee will pay the City $35,000 per year to fund City recycling outreach
services.
J. Administrative Fee
Upon executing the agreement(s), franchisee(s) will reimburse the City $125,000
per contract for costs incurred in the development and award of this franchise.
June 6, 2003 1 - 4 City of Santa Clarita
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The proposal will be objectively evaluated based on criteria that may include, but is not limited
to, the following factors without preference of one factor over another:
PROPOSER'S QUALIFICATIONS
♦ General Experience - Demonstrated experience providing similar services, including diversion
programs, to other jurisdictions, and experience of key personnel.
♦ Jurisdiction Satisfaction - Satisfaction of proposer references with services received, including
but not limited to, implementation, customer service, and reporting.
♦ Public Education - Proposer's public education experience and demonstrated approaches to
achieving the AB 939 diversion goals.
TECHNICAL QUALIFICATIONS
♦ Waste Diversion - Innovative programs to maximize waste diversion at a reasonable cost.
♦ Implementation Plan - Reasonableness of implementation schedule and ability to meet
deadlines (i.e., equipment procurement schedules, personnel available, and notice to
customers), ability and resources to manage a service transition.
♦ Operations - Reasonableness of assumptions (e.g., number of routes).
EXCEPTIONS TO THE TERMS AND CONDITIONS
♦ Exceptions to the RFP and draft Franchise Agreement(s) - Number and nature of the
exceptions.
FINANCIAL RESOURCES
♦ Financing -Evidence that financing requirements will be fulfilled.
♦ Financial Stability - Comparison of additional revenue from contract to company's current
revenue stream, liquidity of proposer based on its ratio of liabilities to assets.
♦ Insurance - Demonstrated ability of proposer to obtain adequate insurance.
COSTS
♦ Cost of service (rates) - Cost competitiveness relative to other proposals and other similar
types of services in other jurisdictions.
♦ Reasonableness of costs - Logically consistent relationship between costs and operational
assumptions.
March 17, 2003 -27- City of Santa Clarita
AWARD
To be considered, proposals must be responsive (complete in all material respects). The
franchises will be awarded to the proposals that offer the greatest value to the City within the
budgetary limitations. The City, however, reserves the right to reject any or all proposals, to
accept or reject any one or more items of a proposal, or to waive any minor irregularities or
informalities in the proposal. It is anticipated that all services will be purchased. However,
the City reserves the right to change such service descriptions prior to award.
March 17, 2003 -28- City of Santa Clahta
PROPOSED TIMELINE FOR THE FINALIZATION OF
RESIDENTIAL AND COMMERCIAL FRANCHISE AGREEMENTS
June 24, 2003 Council Meeting to Discuss Staff's Recommendation to Finalize
Agreements with Three Haulers
June 25, 2003 Send Interview Letters to Three Proposers Selected for
Negotiations
July 8, 2003 Interviews with Three Proposers
July 10, 2003 Send Clarification Letters on Unclear Proposal Terms and Solicit
Final Terms for Specific Items (e.g. rate freeze period, contract
exceptions, etc.)
July 22, 2003 Proposers Submit Clarification Letters and Final Terms to the
Council
July 31, 2003 Ad Hoc Committee Meeting to Discuss Staff's Progress
August 1, 2003 Hilton Farnkopf & Hobson Updates Agreements to Reflect
Clarified/Final Terms and Provides to Proposers
August 2 - 10, 2003 Final Negotiations of Contracts
August 12, 2003 Receive Final, Signed Contracts from the Proposers
August 19, 2003 Special Study Session to Discuss Final Agreements
August 26, 2003 City Council Meeting to Discuss and Award Final Agreements
August 27, 2003 Staff to Commence Coordinating New Programs with New
Haulers
September 8, 2003 Ad Hoc Committee Meeting to Discuss Plan and Progress to Roll
Out New Services
TL:BAL
S:\FIELDSVCS\ENVSRVCS\SOLWAST2\FRANCHIS\RFPWegotiations Timeline.doc