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HomeMy WebLinkAbout06/19/2001, 4 - RESOLUTION OF INTENT TO GRANT SAN LUIS GARBAGE COMPANY EXCLUSIVE FRANCHISES FOR GREEN WASTE AND RES council Mccnn June 19 2001 ac,Enaa nEpont CITY OF SAN LUIS OBI SPO FROM: John Moss, Utilities Director Prepared By: Ron Munds, Utilities Conse ion CoordinatogA^l SUBJECT: RESOLUTION OF INTENT TO GRANT SAN LUIS GARBAGE COMPANY EXCLUSIVE FRANCHISES FOR GREEN WASTE AND RESIDENTIAL RECYCLING COLLECTION SERVICES. CAO RECOMMENDATION Adopt a resolution declaring the City's intent to grant exclusive franchises to San Luis Garbage for green waste and residential curbside recycling collection services. DISCUSSION Background San Luis Garbage Company (SLG) has provided curbside recycling services for the City since 1975. At the City's request, SLG intensified its recycling efforts in 1989 with the passage of Assembly Bill 939 and the 50% waste reduction mandate. During this time, recycling services were part of the refuse collection franchise agreement and costs associated with the program were recovered through the integrated solid waste rate. In 1995, SLG requested a renewal of their solid waste collection franchise agreement which was to expire in 1997. During the discussions with the Council regarding solid waste services and the contract renewal, the Council requested that different procurement options be identified for green waste collection (a new service requested by the City) and recycling services to insure that the City was receiving quality service at a fair rate. The City hired the consulting firm of Hilton, Farnkopf and Hobson to assist in developing the alternatives for procuring these services, as well as aid in the development of the agreements, including the refuse franchise. After evaluating the options, the consultant and staff recommended that SLG be granted a first right of proposal to provide recycling and green waste collection services because of the long standing working relationship between the City and SLG, the level of service and corresponding rates, and the collection and processing infrastructure that was in place. The concept was that SLG would submit a cost proposal for the services and the City would analyze and determine if the costs were reasonable. If it was determined that the cost were not reasonable, the City would then solicit competitive bids through a Request for Proposal (RFP) process for both green waste and residential curbside recycling services. It was Council's sentiment at that time that it would be a good opportunity to determine reasonable cost through a RFP and directed staff to solicit competitive bids. Three proposals were received, of which SLG's was deemed the most competitive. In August 1996, the City Council approved and in September the City entered into separate exclusive 10 Council Agenda Report—Resolution of Intent Page,2 franchise agreements with SLG for green waste and residential curbside recycling (including multi-family customers) collection services. The term of both the agreements are for a five year period with the option to extend for up to 24 months in periods of at least 12 months each. After securing the green waste and recycling service from SLG, staff proceeded with the negotiations to renew the refuse collection franchise. In March 1997, the City entered into a 15 year exclusive franchise agreement with SLG for solid waste collection services. This contract was executed absent a competitive proposal process for the following reasons: 1. SLG had provided solid waste collection service for the City for over 40 years. 2. SLG had provided high quality and reliable service during that time period. 3. SLG was a locally owned company. 4. Solid waste rates were very reasonable when compared to the levels of service provided. 5. SLG agreed to reduce its operating ratio which determines the company's profit from 92% to 93% (a savings to the customer's rate base of about$42,000 per year).. With the green waste and curbside recycling contracts due to expire in September 2001, staff is recommending that the contracts be extended to match the remaining length of the solid waste collection franchise, March 2012, absent a competitive bidding process based on the previously mentioned reasons for not competitively bidding the refuse collection franchise and staff's evaluation of the following issues regarding green waste and recycling services: 1. SLG has made a significant investment in recycling waste wheelers at the request of the City for commingled recycling services. 2. The economically beneficial relationship between the refuse and recycling operations of SLG in sharing equipment and labor force which ultimately reduce operating costs (example: retired refuse trucks become recycling trucks). 3. The avoidance of collection problems that have occurred in other local jurisdictions when there are separate contractors for refuse and recycling services (i.e. handling of disputes and complaints, confusion over who to call for what service). 4. The continuation of the integrated solid waste rate structure for all solid waste services versus separate billing for the different services. 5. In a competitive bid process just completed in Morro Bay (closed 6/1/01), Morro Bay Garbage (an affiliated company to SLG) was the lowest bidder for all solid waste services including green waste collection and recycling services. Morro Bay's rates are comparable to the City's rates. Another important issue which may be a factor in the future is the possible sale of SLG. The current ownership has indicated that sometime in the future SLG would be put on the market for sale. Given the high level and flexibility of service currently provided to our customers, staff would advocate that the City lock into these services for the remainder of the solid waste franchise in order to maintain the service levels and control rates. According to Chapter X of the City Charter, before granting any franchise, the City Council must first pass a resolution declaring its intention to grant the same. Additionally, the resolution must _2 Council Agenda Report—Resolution of Intent Page 3 state the character of the franchise and the terms and conditions upon which it is proposed to be granted. A public hearing to pass an ordinance to grant the franchise must be set no less than twenty (20) days nor more than sixty(60) days after the passage. The attached resolution (Attachment 1) satisfies the requirements of the City Charter. CONCURRENCES SLO County Integrated Waste Management Authority FISCAL IMPACT There are no new fiscal impacts associated with the recommended action. On November 9, 2000, the City Council reviewed a base year solid waste rate application submitted by SLG and approved an integrated solid waste rate effective January 1, 2001 that includes residential curbside recycling and green waste collection services. ALTERNATIVES 1. Extend the green waste and residential curbside recycling franchise agreements for two years, and direct staff to prepare a Request for Proposals (RFP) to be brought back to Council for consideration prior to issuance. ff Advantage- The City could again examine these services to determine if the quality of service and the costs are reasonable. Disadvantages- As previously discussed, there are numerous benefits in linking the services and length of all the solid waste related franchises. If SLG is sold during this time period, the City could be faced with prospect of having to contract with separate service provider for the each solid waste service. These negotiations with a new provider could result in lower quality and/or higher cost services. Because of the current high quality and reasonable cost of service and the advantages of using one service provider for all solid waste services, staff does not recommend this alternative. ATTACHMENTS Attachment 1- Resolution of Intent AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE Residential Curbside Recycling Franchise Agreement Green Waste Collection Franchise Agreement RESOLUTION NO. (2001 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO DECLARING THE CITY'S INTENT TO GRANT A TWELVE YEAR FRANCHISE TO SAN LUIS GARBAGE FOR RESIDENTIAL CURBSIDE RECYCLING AND GREEN WASTE COLLECTION AND SETTING A PUBLIC HEARING FOR JULY 179 2001 WHEREAS, the City of San Luis Obispo has adopted a Source Reduction and Recycling Element(SRRE)to meet the state law AB 939 requirements; and WHEREAS, the SRRE states that the City will provide residential curbside recycling and green waste collection services; and WHEREAS, the San Luis Garbage Company has provided recycling services at a reasonable rate since 1975; and WHEREAS, San Luis Garbage Company has agreed to the continue the provisions in the existing franchise agreements. These agreements contain the following key provisions: ■ Type: Exclusive 0 Term: Twelve years R Franchise fee: 6% of gross revenue • Service Highlights: ■Green waste containers provided to all residential and commercial customers °Commingled recycling for all customers °Public education and information component ■Bulky waste collection and recycling EAddition of other materials as markets develop NOW,THEREFORE, BE IT RESOLVED, that the City Council of the City of San Luis Obispo hereby declares: 1. A public hearing will be held on July 17, 2001 at 7 pm in the City Council Chambers located at 990 Palm Street at which time it is the intention of the City Council to grant a twelve year exclusive franchise (to expire March 2012)to San Luis Garbage company. 2. Any persons having any interest in the franchise or any objection to the granting of the franchise may appear before the Council and be heard thereon. 3. The City Clerk will publish this resolution at least once within fifteen days of its passage in a newspaper in the City of San Luis Obispo. ��'7 Page 2 Resolution No. Upon motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of , 2001. Mayor Allen Settle ATTEST: Lee Price, City Clerk APPROVED AS TO FORM: J eiwlen/n, Ci Att ey ! 1 �►►IIIIIIIII II IIIIIIII I����;��� �IIIII I �� city of sIS OBISPO 990 Palm Street, San Luis Obispo, CA 93401-3249 June 7, 2001 Mid-State Solid Waste and Recycling Post Office Box 428 Creston, CA 93432 SUBJECT: Renewal Green Waste and Recycling Services Franchise To Whom It May Concern: The San Luis Obispo City Council will hold a public hearing regarding the renewal of a green waste and recycling services franchise on June 19, 2001 meeting at 7:00 p.m,, City Hall, 990 Palm Street, San Luis Obispo. Other agenda items may be held before or after this item. Please know that if you challenge this action 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. For additional information or questions concerning this item, please contact the Utilities Conservation Department at 781-7258. The Council agenda report with recommendation by staff will be sent to you on the Wednesday before the meeting. Please call the City Clerk's Office at 781-7102 if you would prefer to pick up the agenda report. Si ere ti Lee Price, CMC City Clerk c: Ron Munds The City of San Luis Obispo is committed to include the disabled in all of its services, programs and activities. Telecommunications Device for the Deaf(805)781-7410.