HomeMy WebLinkAbout10-06-2015 Item 09 - Granting a Franchise to San Luis Garbage Company for Food and Green Waste Services
Meeting Date: 10/6/2015
FROM: Carrie Mattingly, Utilities Director
Prepared By: Ron Munds, Utilities Services Manager
SUBJECT: GRANTING A FRANCHISE TO SAN LUIS GARBAGE COMPANY FOR
FOOD AND GREEN WASTE SERVICES
RECOMMENDATION
Introduce an Ordinance entitled “An Ordinance of the City Council of the City of San Luis
Obispo, California, granting a twenty-year franchise to San Luis Garbage Company for food and
green waste collection, processing and/or disposal within the City of San Luis Obispo.”
DISCUSSION
Background
At the August 18, 2015 City Council meeting, the Council conceptually approved a two phase
organics diversion program to meet the state’s mandatory organics diversion requirements and
adopted a solid waste rate increase to support the implementation. The first phase of the
program, known as the “Interim Phase,” will expand the existing residential green waste
collection program to include residential and commercial food waste. The material will go to
Engle and Gray composting facility in Santa Maria. The second phase, or the “Permanent
Phase,” will include the construction of an anaerobic digestion facility using Kompogas
technology.
In order to implement the Permanent Phase, the San Luis Garbage Company (“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 fully operational. This guarantee is necessary for HZI to obtain the financing
to build a multi-million dollar plant (estimated to cost more than $12 million). The Garbage
Company’s guarantee to HZI in turn requires the communities the Garbage Company serves to
guarantee a waste stream to the Garbage Company for the twenty year period. The City’s current
green waste franchise agreement expires in 2025.
Granting of the Food and Green Waste Franchise
The City’s Charter provides specific procedures for granting franchises. In accordance with the
Charter, the City Council adopted a resolution of intent on September 15, 2015 to grant a food
and green waste franchise agreement to the Garbage Company. As required in the Charter, the
resolution provided the character of the franchise (food and green waste collection) and the
conditions upon which it is proposed to be granted. The resolution also set the public hearing
date for the regular City Council meeting on October 6, 2015.
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The next step in the process is for the City Council to adopt an ordinance (Attachment A) which
grants the franchise (Exhibit A) for food and green waste collection services to the Garbage
Company. The new franchise agreement includes the collection of food waste and the
mechanism to extend the franchise beyond 2025. The caveat to the implementation plan is if the
Kompogas facility is not built, the food and green waste franchise agreement would not be
extended beyond 2025 and the Interim Phase of transporting organic waste to Santa Maria for
processing would continue. Section 2.3.1 of the franchise agreement provides the specific
milestones and timeline for determining if and when the twenty year term of the agreement
begins. The most significant date in this section is that the Kompogas facility must be built (or
substantially completed) by January 2020 in order for the agreement to be extended.
CONCURRENCES
The San Luis Obispo Integrated Waste Management Authority concurs with the recommendation
made in this report.
FISCAL IMPACT
There is no fiscal impact associated with the granting of the new franchise agreement. On August
18, 2015, the City Council approved the solid waste rate increase that will support the
implementation of the organics diversion program.
ALTERNATIVE
The City Council could choose not to approve the granting of the franchise agreement to the
Garbage Company’s and request staff to return to the City Council with other alternatives for
organics recycling. Since it has taken many years of research to find the best long-term solution
for the service area, the mandatory requirement for commercial food waste recycling, and the
changing regulations for composting operations, this would not be a preferred alternative and
therefore not recommended.
Attachments:
a - Franchise Ordinance Final
a - Exhibit A - Green Waste Franchise Contract 2015 Final
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