HomeMy WebLinkAbout09-15-2015 Item 09 - Resolution of Intent to Grant San Luis Garbage Company a Franchise for Food and Green Waste Services
Meeting Date: 9/15/2015
FROM: Carrie Mattingly, Utilities Director
Prepared By: Ron Munds, Utilities Services Manager
SUBJECT: RESOLUTION OF INTENT TO GRANT SAN LUIS GARBAGE COMPANY A
FRANCHISE FOR FOOD AND GREEN WASTE SERVICES
RECOMMENDATION
Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo,
California, declaring the City’s intent to grant an Exclusive Franchise to San Luis Garbage
Company for food and green waste services and setting a Public Hearing for October 6, 2015.”
DISCUSSION
For over sixty years, San Luis Garbage Company (owned by Waste Connections, Inc. since
2002) has provided solid waste services to the community. The City of San Luis Obispo has
three separate franchise agreements with San Luis Garbage Company (Garbage Company) for
the collection and disposal of solid waste, recycling and green waste.
Due to requirements associated with expanding Cold Canyon Landfill, in 2010 the City Council
granted the Garbage Company fifteen year franchise agreements for all three services with each
term ending in 2025. Historically these agreements were for a 10 year term.
In late 2010, the green waste composting facility at Cold Canyon Landfill was closed due to odor
complaints. As an interim measure, the City Council approved the use of green waste for
alternative daily cover until a permanent solution could be developed.
In 2014, AB 1826 was enacted which established mandatory organics diversion requirements
from the landfill. It requires businesses to recycle organic materials, including food waste,
starting in April 2016.
To address changing regulations and the desire to locate a composting facility in San Luis
Obispo County, the City Council conceptually approved a two phased organics diversion
program at its August 18, 2015, meeting. The first phase, known as the Interim Phase, will
expand the existing residential green waste collection program to include food waste. The
material will go to Engle and Gray composting facility in Santa Maria. The second, or the
Permanent Phase, will include the construction of an anaerobic digestion facility using
Kompogas technology.
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In order to implement the Permanent Phase, the Garbage Company must enter into an agreement
with the owners of the Kompogas technology, Hitachi Zosen Inova (HZI), that guarantees
delivery of organics for a twenty year period once the facility is constructed and operational. The
Garbage Company will provide land for the Kompogas plant at its Old Santa Fe Road facility. In
return, HZI would agree to design, build, finance, operate and maintain a Kompogas plant at
such location. HZI would receive a negotiated fee from the Garbage Company subject to cost of
living increases and other adjustments.
In order to move to the next step in the Garbage Company/HZI negotiations, the Garbage
Company is requesting the City grant it a food and green waste franchise agreement with the
twenty year term commencing once the facility is operational. A similar commitment will be
needed from the other cities in Waste Connection’s service area.
City Charter Requirements to Grant a Franchise Agreement
In alignment with Article X of the City’s Charter, the Garbage Company’s request is outside of
the allowed time period to extend the current franchise agreement and therefore is considered to
be a termination and the granting of a new franchise. Prior to granting a franchise, the City
Council must pass a resolution declaring its intention to grant the franchise. Additionally, the
resolution must state the character of the franchise, the terms and conditions upon which it is
proposed to be granted and the date of public hearing by the City Council. A public hearing to
pass an ordinance to grant the franchise must be set no less than twenty days and no more than
sixty days after the passage of the resolution. The public hearing is scheduled for the City
Council’s October 6, 2015 regular meeting.
The attached resolution (Attachment 1) satisfies the requirements of the City Charter by
providing the following information relative to the franchise:
1. Type: Exclusive
2. Term: 20 year term commencing when the facility is operational
3. Franchise fee: 10% of gross revenue paid to the General Fund
4. Agreement Highlights:
a. Flexibility to add or change solid waste collection programs
b. Addition of food waste for collection
c. Periodic performance evaluations
d. Performance incentives
e. Regulatory reporting requirements
f. Public education
g. Assignment of contract provisions
Should the City Council adopt the Resolution of Intent, an ordinance would be introduced at the
October 6, 2015 City Council meeting that would, on the condition the Kompogas plant is built,
grant the new food and green waste franchise agreement for a twenty year term commencing
once the facility is operational.
Cost for Organics Diversion Program
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As part of its regular course of business, the Garbage Company submitted its base year
application for the City’s consideration on June 11, 2015. It included a plan to implement a new
organics diversion program. At the August 18, 2015 City Council meeting, the Council adopted
the solid waste rates and conceptually approved the plan to support and implement the Interim
and Permanent Phases of the organics diversion program.
CONCURRENCES
The San Luis Obispo County Integrated Waste Management Authority, which regionally
coordinates waste diversion activities in the county, supports the extension of the food and green
waste franchise agreement and concurs with the recommendation made in this report.
FISCAL IMPACT
There are no direct fiscal impacts associated with this action. The cost and associated rate
increase to support the implementation of the organics diversion program was adopted at the
August 18, 2015 public hearing on solid waste rates at the City Council meeting.
ALTERNATIVES
Do not adopt the Resolution of Intent. Should Council decide not to adopt the Resolution of
Intent it should do so only if it does not support the proposed organics diversion program. Five
years of research and study has taken place in the development of a new organics diversion
program. Staff supports the proposed program as a long-term solution to meet the AB 1826
mandates and it aligns with Council’s expressed desire to compost green waste.
Attachments:
a - Resolution of Intent
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R ______
RESOLUTION NO. (2015 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, DECLARING THE CITY’S INTENT TO
GRANT AN EXCLUSIVE FRANCHISE TO SAN LUIS GARBAGE
COMPANY FOR FOOD AND GREEN WASTE SERVICES AND
SETTING A PUBLIC HEARING FOR OCTOBER 6, 2015
WHEREAS, public health and safety demand the orderly and periodic collection and
safe disposal of green waste; and
WHEREAS, it has been determined that an exclusive franchise granted to a private
company is the most effective and efficient way to collect and remove green waste within the
City; and
WHEREAS, the City has granted San Luis Garbage Company (Franchisee) an exclusive
franchise for the collection and disposal of green waste within the City; and
WHEREAS, California state law requires the City to divert food waste from the landfill
starting in 2016; and
WHEREAS, in order to comply with the new and future composting regulations, a new
organics composting facility will need to be constructed; and
WHEREAS, securing the financing to construct the composting facility requires a
guarantee of the delivery of compostable material for at least twenty years commencing upon
initial operation of the facility; and
WHEREAS, the Franchisee has provided a high level of service and reasonable rates for
green waste services for the term of the current franchise agreement and is in the process of
obtaining commitments for the long term processing of compostable material .
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. That the City hereby intents to grant an exclusive franchise to San Luis
Garbage Company for food and green waste services based on the following terms and
conditions:
a) Type: Exclusive
b) Term: The term of the proposed franchise shall commence upon the effective date of the
proposed Ordinance granting a franchise for food and green waste services and shall
expire twenty years after the “Facility Operation Date” which is the date when a
Kompogas facility (or other similar technology) located at 7388 Old Santa Fe Road, San
Luis Obispo, begins commercial processing of food and green waste. In the event the
Kompogas facility is not constructed or certain benchmarks regarding the construction of
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Resolution No. _____ (2015 Series) Page 2
R ______
such facility are not achieved, then the term of the franchise shall be from the effective
date of the proposed Ordinance until November 20, 2025.
c) Franchise fee: 10% of gross revenue
SECTION 2. That a public hearing will be held on October 6, 2015 at 6:00 pm in the
City Council Chambers at which time it is the intention of the City Council to grant such
franchise.
SECTION 3. Any persons having any interest in the franchise or any objections to the
granting of the franchise may appear before the Council and be heard thereon.
SECTION 4. The City Clerk will publish this resolution at least once within twenty
days of its passage in a newspaper in the City of San Luis Obispo.
Upon motion of _______________________, seconded by
_______________________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2015 .
____________________________________
Mayor Jan Marx
ATTEST:
____________________________________
Anthony Mejia
City Clerk
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Resolution No. _____ (2015 Series) Page 3
R ______
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
______________________________
Anthony J. Mejia
City Clerk
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