Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: DECEMBER 16, 2003

SUBJECT: NON-EXCLUSIVE COMMERCIAL REFUSE COLLECTION AND DISPOSAL SERVICES ANNUAL AGREEMENT RENEWAL FOR 2004

Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst

RECOMMENDATION

  1. Approve an amended non-exclusive commercial refuse collection and disposal services agreement.
  2. Authorize the Mayor and the City Clerk to execute amended non-exclusive commercial refuse collection and disposal services agreements with: Ace Roll Off Rubbish Service, Inc., BFI Waste Systems of North America, Inc., California Waste Services, Consolidated Disposal Service, LLC, Easy Roll Off Services, EDCO Disposal Corporation, Integrated Waste Industries, Inc., Ivy Rubbish Disposal, JJK Rolloffs, Inc., S & H Disposal Company, United Pacific Waste & Recycling Services (UPW), and USA Waste of California dba Waste Management.

BACKGROUND

Since 1992 the City has entered into one-year non-exclusive franchises for Commercial Refuse Collection and Disposal with any firm that meets the agreement requirements. All haulers are required to submit payments on a quarterly basis along with a quarterly report, which provides refuse disposal and recycling information. Additionally, each hauler is required to annually obtain a City business license and submit proof of general liability and workers compensation insurance.

The City Council decided to use a non-exclusive franchise instead of an exclusive franchise following a series of townhall meetings where commercial business owners stated their preference for non-exclusive franchises. The Agreement was revised in December 1994 to include additional requirements pertaining to business sector recycling and penalty provisions for delinquent quarterly reports. In November 2000, the City Attorney updated and revised the commercial hauling agreement to emphasize recycling and waste diversion efforts. In December 2002, the agreement was further amended to increase the penalties for late submittals of reports and fees.

The non-exclusive franchise allows the City to collect a franchise fee of 5% of gross receipts and an AB 939 fee of up to five (5) percent of gross receipts from haulers doing business in the City. Since January 2001, haulers have been entitled to a reduction in their AB 939 fees if they show receipts of solid waste tonnage diverted from landfills to recycling or material processing centers. The goal is to encourage haulers by providing a financial incentive to recycle construction, demolition, remodeling and business waste such as dirt, concrete, asphalt, cardboard, etc. These haulers provide bins to businesses and roll off dumpsters to residential and non-residential customers during construction, demolition, cleanup and remodeling activities, and for regular business activities.

DISCUSSION

The attached amended agreement, recommended for approval, includes minor changes from the current agreements. The changes are related to: "Section F.7. B. Source Reduction and Recycling Reports, Late Reports " and mainly deal with late reports and penalties. The recommended changes have been reviewed by the City Attorney's office.

Currently reports and fees are due within 40 days after the end of a calendar quarter. A penalty of $250 is added if the report/fee are not submitted by then. An additional penalty of $15 per day is also added for every day past 40 that a report/fee is late. Therefore, if a hauler submits a report 50 days after the end of a quarter, a penalty of $250 plus $150 (10 days x $15) is due. A contract is terminated if the report/fee is not submitted within 90 days after the end of a quarter.

Staff's recommended changes are as follows:

  1. Authorizes the City Manager to terminate an agreement. This recommended change is proposed to increase efficiency. The previous agreement required City Council approval for any terminations.
  2. The penalty structure has been modified. The recommended agreement maintains the $250 penalty, but has replaced the daily $15 penalty add-on with one based upon % of gross receipts. The reason for this revision is that the $15/day flat amount was too onerous for small haulers, and not a significant deterrent for large haulers.
  3. If a report/fee is over 60 days late, the hauler will be suspended and is not allowed to do any commercial hauling activity in the City until they are in compliance.
  4. If a hauler does not submit the necessary report/fee within 90 days after the end of a quarter, the contract will be terminated by the City Manager.
  5. If City Council approves the reinstatement, a $500 reinstatement penalty/fee is added to cover both staff's administration time and to motivate haulers to be more responsive and not allow a late submittal to get to the point of contract termination.

Below shows an example of penalties recommended by staff:

Report Submittal Date to City

Fees

Penalties

Additional Action

Within 40 days from the end of a quarter

5% franchise fee

5% AB 939 fee

None

None

After 40 days from the end of the quarter, but less than 60 days

5% franchise fee

5% AB 939 fee

$250

None

After 60 days from the end of the quarter, but less than 90 days

5% franchise fee

5% AB 939 fee

$250, plus 1% of gross receipts for the past due quarter

Contract is suspended.

After 90 days from the end of the quarter

5% franchise fee

5% AB 939 fee

$250, plus 1% of gross receipts for the past due quarter.

Plus a $500 reinstatement fee

Contract is terminated by the City Manager.

NOTICE OF NON-EXTENSION: In December 2000, a five-year notice of non-extension was issued to all of the City's authorized non-exclusive commercial haulers. This notice allows the City Council, anytime after December of 2004, to decide to:

  1. Continue the City's current non-exclusive (unlimited) franchise agreements with the commercial haulers; or
  2. Change to an exclusive (limited) franchise agreement with one or more commercial haulers.

One of the benefits of reducing the number of haulers is more accurate disposal reporting, monitoring and implementation of recycling programs in the commercial/non-residential sector.

FISCAL IMPACT

The City received approximately $30,000 in franchise fees and $25,000 in AB 939 fees in FY 02-03 from commercial haulers. AB 939 fees are deposited in the Waste Reduction fund and are used to develop and implement recycling programs to meet the AB 939 mandate. Franchise fees and late submittal penalties are deposited in the General Fund.

Respectfully Submitted:

Dean E. Allison, Director of Public Works

Reviewed by:

Les Evans, City Manager

Attachment: Copy of amended agreement with markups