FROM: DIRECTOR OF PUBLIC WORKS

DATE: FEBRUARY 17, 2004

SUBJECT: ASSIGNMENT OF IVY RUBBISH DISPOSAL RESIDENTIAL SOLID WASTE AND RECYCLING COLLECTION AGREEMENT

Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst

RECOMMENDATIONS

1. Approve the assignment of Ivy Rubbish Disposal's exclusive residential solid waste and recycling collection agreement to Universal Waste Systems, Inc., subject to City's receipt of the Transfer Fee described below.
2. Approve the Amended and Restatement Solid Waste and Recycling Collection Agreement with Universal Waste Systems, Inc. in the form attached hereto as Exhibit A, including proposed new services and collections, and single-family and multi-family rates for FY 03-04.

BACKGROUND

The residents of Rancho Palos Verdes are serviced by two waste hauling firms, Waste Management of Los Angeles (Waste Management) and Ivy Rubbish Disposal (Ivy Rubbish) who have exclusive franchise agreements with the City. The term of each agreement is for seven years, with the possibility of three one-year extensions. Both haulers are currently in the fourth year of their seven-year exclusive residential agreements that have been in effect since July 2000.

Ivy Rubbish's service area includes approximately 600 customers, or 5% of the City, mainly single-family units with a few multi-family units, in the Portuguese Bend Community, and the area south of PVDS. Waste Management services 95% of the City. Waste Management and Ivy Rubbish's service areas are shown on the attached map. Ivy Rubbish has been servicing the area for over three decades. Under the terms of the City's agreement with Ivy Rubbish, the franchise agreement may be assigned to a firm satisfactory to the City.

In 2003, the City was notified that Ivy Rubbish's owners intended to retire, and wished to assign their agreement to a new firm. Subsequently, Universal Waste Systems, Inc. (Universal) notified the City that it has reached an agreement with Ivy Rubbish (pending City approval) to take over Ivy Rubbish's route and business.

DISCUSSION

Universal is a family owned and operated business that has been providing refuse and recycling services in Southern California for the past 30 years. Staff met with the principals of Ivy Rubbish and Universal. In staff's view, the assignment proposed by Ivy Rubbish would be acceptable if the following conditions were met:

Currently there are several difference between services offered by Ivy Rubbish and Waste Management. Staff sees this requested assignment as a good opportunity to bring uniformity to the services offered by the two haulers without increasing the monthly rates. Additionally, the main benefit of this assignment is the addition of green waste recycling to Ivy's area at no charge, and a correspondingly improvement in the City's diversion. Ivy currently does not offer green waste recycling. Listed below are some of Universal's proposed services. A detailed list including service similarities and differences between Ivy, Universal and Waste Management is attached.

Collection Day Changes: Universal intends to start collection in Ivy's area immediately. Initially there will be no changes in service; collection will continue with Ivy's truck and Ron Ivy as the driver. This will give Universal time to properly evaluate the route and needs of the area. Changes in collection days and addition of green waste collection are proposed to start in June. Currently Ivy services the area 6 days a week. Collection days will be reduced to 4 or possibly 2 days. Waste Management services its area 4 days a week. The benefit to reduced collection days is less truck noise, less road wear and tear, and fewer days trash cans are left at the curb. However, some customers will have to get used to new trash and recycling days. Universal intends to notify all customers of impending changes in May 2004, deliver green waste containers in late May, and have changes effective June 1, 2004.

Type of Service: There will be no change in the type of service offered. Customers currently receiving backyard service once or twice a week will continue to do so, and customers receiving twice a week curbside service will also continue to do so.

Monthly Rates: The list of some of Ivy Rubbish's current and Universal's proposed monthly rates are listed below. Primarily there are no rate changes. Waste Management's rates are also included as a reference.

Bin Service: Since Ivy does not offer bins, they do not have City Council approved rates for bin service. Staff recommends approving Waste Management's multi-family bin rates for Universal.

Manure collection: Similar to Ivy, Universal will continue to collect manure in 32-gallon cans at the previously approved rates. Universal will also offer bins for manure collection. Customers can choose either bin service or can service. However, Universal is proposing a 35% surcharge on bin rates, if used for manure collection. The extra charge is due to the additional disposal cost due to the extra weight of manure.

* These rates have not been approved by City Council yet.

Manure recycling: Universal proposes to dispose of manure, mixed with green waste, at Puente Hills Landfill for green waste diversion credit. To maximize diversion, it is proposed that manure be collected once per week as Waste Management does, rather than twice a week as Ivy currently collects. Manure will be collected (in bins or cans) once a week, on green waste recycling days. This might create a slight inconvenience to customers, however, the City will benefit from increased recycling and higher diversion.

Transfer Fee: Universal has agreed to reimburse the City for legal and administrative expenses, and credit and reference checks fees associated with the assignment. The transfer fee is currently estimated to be $10,000 with the exact amount given orally at the time of the City Council meeting.

The City's Finance Director and the City’s solid waste consultant have reviewed Universal's financial statements, performed a credit check and reference checks and find it satisfactory. The attached agreement has been prepared by the City Attorney and reviewed by staff and Universal.

ALTERNATIVES

1. Not approve the assignment of Amended and Restated Agreement.
2. Approve the assignment and Amended and Restated Agreement with amendments as determined by City Council (an amendment different than the staff recommendation).

CONCLUSION

Approving the staff recommendation would:

• Authorize Universal as the exclusive residential hauler in Area 2.
• Approve new services, collections, and bin rates for Universal for FY 03-04.

Starting June 2004, Area 2 will have green waste recycling on the second collection day and recycling on the first collection of the week (similar to Waste Management). At that time, the days of collection in Area 2 will also be reduced from 6 to 4 or possibly 2 days a week.

FISCAL IMPACT

Approving the staff recommendation will make Universal responsible for the same Collector Fee as Ivy Rubbish. Universal will reimburse the City approximately $10,000 for transfer costs associated with the assignment which will be deposited in the General Fund. The costs are City Attorney time for preparation of the agreement, consultant time in performing credit checks and reference checks and administrative fees .

Respectfully Submitted:

Dean E. Allison, Director of Public Works

Reviewed by:

Les Evans, City Manager

Exhibits: Map of service Area 2

Universal Services Spreadsheet

Universal Proposed Rates

Proposed Amended and Restatement Solid Waste and Recycling Collection Agreement