TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: FEBRUARY 7, 2006

SUBJECT: RESIDENTIAL SOLID WASTE CONTRACT OPTIONS

Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst

RECOMMENDATION

1. Consider the different residential solid waste contract renewal or extension options
2. Direct staff and the Residential Trash/Waste Hauling Contract Ad Hoc Committee to take appropriate action

BACKGROUND

The City currently has two exclusive residential solid waste contracts with Waste Management of LA (WM) and Universal Waste Systems (UWS) dba Ivy Rubbish Disposal. The residential contracts include: single-family homes and multi-family (apartments, condominiums and townhomes) accounts. Both contracts expire on June 30, 2007, with three, one-year extension options. If all the extensions are used the current contracts will expire on June 30, 2010. There are no other extensions available after that.

WM services approximately 11,000 homes, or 95% of the City. WM provides twice a week manual trash, once a week manual commingled recycling, and once a week manual green waste collection. The curbside collection is either on Monday/Thursday or on Tuesday/Friday at a rate of $20.34/month.

UWS services approximately 500 homes, or 5% of the City. They provide twice a week manual curbside, twice a week backyard collection, and once a week backyard service. They service on Monday/Thursday. UWS also provides manure collection. The curbside twice a week rate is $23.44/month and 40% of UWS’s customers receive that. However, the majority of UWS’s customers (60%) receive backyard service. The twice a week backyard rate is $47.08/month, and the once a week backyard rate is $28.08/month.

In the City, the first pickup of the week is trash and commingled recycling, and the second pickup of the week is trash and green waste. Both haulers provide free electronic waste and bulky item pickup, and provide senior citizen, low income, and annual prepayment discounts.
Since April 2005, WM and the City have embarked on a pilot automated trash and recycling program in two select areas of the City. The pilot areas represent less than 1,000 homes in the Westside and the Eastside of the City. The pilot program did not change the existing collection days, frequency of collection, or rates.

DISCUSSION

The City’s residential contracts will expire in approximately 18 months. The City has a few options on how to proceed with future solid waste services. The steps for the different options are varied, and one is lengthy, while others are not. The options include procure new contracts, renew/extend or renegotiate. For example, a typical procurement process (going out to bid) takes close to 18 months, while extending a contract takes less than a couple of months. The City Council has appointed a Residential Trash/Waste Hauling Contract Ad Hoc Committee (Committee). Staff has outlined the various options and is requesting Council to consider them, and then direct staff and the Committee to take appropriate action and report back to the Council.

POTENTIAL CHANGES

There are a range of potential changes that could be considered to the City’s current trash and recycling system and agreements. The major changes typically require a large capital outlay (for equipment and containers) by the trash haulers. Those changes are typically accomplished through a procurement process, or negotiating a long-term contract. Therefore, the length of a new contract is typically between seven to twelve years. That time frame allows haulers adequate time to amortize the cost of the new equipment without negatively affecting their customer’s monthly rates. On the other hand, minor changes can be accomplished through a contract extension or a short-term contract renegotiation.

Major changes may include, but are not limited to:
- Changing to a new method of collection (from manual collection system to automated collection system). This includes equipment/truck changes and container changes. It also allows the possibility of changing to clean fuel automated trucks to reduce smog and smell, and/or changing to lighter weight trucks to reduce street wear and tear.
- Changing to a new frequency of collection (from twice a week to once a week) and changes to trash and recycling schedules.
- Creating a variable rate structure (lower monthly rates for small trash cans/carts, higher rates for larger ones). The variable rates can only be done with an automated system, because with the automated system, the customer has to use specific cans/carts. While with the current manual system this is not possible.
- Changing from current haulers to new one(s).
- Switching from two residential haulers to one.
- Including the commercial hauling contract with the residential contract.
Minor changes may include:
- Changing the annual rate adjustments structure, or extraordinary rate adjustment requests.
- Changing the hauler provided City facility/events services, or customer bulky item and special waste collection.
- Enhancing multi-family or commercial recycling programs, and public education/outreach programs.
- Changing the City Collector Fees (franchise or AB 939).
- Conducting more pilot automated programs, or testing changing the frequency of collection in select/limited areas.

Furthermore, on December 20, 2005, the City Council decided to accept no new commercial haulers in 2006. Therefore, there is an opportunity for the commercial sector to be included with the residential contract if it goes out to bid, or if the residential contract is re-negotiated. Combining the two contracts could lead to cost savings to the City and to customers.

Residential Contract Options

The following matrix lists the advantages and disadvantages of the various options:

RESIDENTIAL HAULER CONTRACT OPTIONS

#	OPTIONS	ADVANTAGES	DISADVANTAGES
1	Start a procurement process (go out to bid)	Opportunity to make major changes (see list provided in previous page) Some residents do not like the current system, and want to change to a new system, hauler, and/or collection frequency	Time consuming Inconvenience- new hauler (if not WM and UWS) may mean new trash schedule, system, frequency of collection, etc.Some residents like the current system and do not want any changesCost for consulting services Rates may change
2	Extend the contract 1, 2, or 3 years	Same hauler, same days, same system Easy and short process Some residents like the current system and do not want any changes Minor program changes/ enhancements possible	Cannot implement major changes Rates remains relatively the same as current
3	Re-negotiate contracts with WM and UWS	Same advantages as Option #2, but more enhanced Some changes and guarantees could be negotiated Some residents like the current system and do not want any changes	Can not implement major changes (unless a long term contract is negotiated) Cost for consulting services Rates may change Cannot include commercial hauling contract in the re-negotiation Some residents do not like the current system, and want to change to a new system, hauler, and/or collection frequency

 

PROCUREMENT PROCESS

The process for Option 1 (going out to bid), if selected, is lengthy because it includes the following steps:

 Preparing and sending an RFP for a solid waste procurement consultant
 Selecting and awarding a consultant’s contract
 Preparing & sending a survey regarding service options to residents
 Selecting service options for inclusion in RFP to haulers
 Holding 3-4 community meetings (at various stages of the process)
 Preparing and sending RFP to various haulers
 Evaluating the hauler proposals
 Possibly changing/amending the RFP for new/different service options
 Selecting top 3 haulers and interviewing them
 Selecting a firm(s)* for final negotiations
 Award of contract(s)* to hauler(s)
 Public outreach before start of contract(s)
 Equipment order & can distribution (if needed)
 Start of the new contract(s)

* The City currently has two exclusive residential haulers. Council may decide to keep both, or have only one residential hauler for the City.

CONTRACT RE-NEGOTIATION AND/OR EXTENSION ISSUES

Options 2 and 3 do not have as many steps; therefore, the process can be completed in a shorter time frame. Several changes and items can be considered with either option 2 or 3, which will change/enhance the City’s current services. (See previous page)

CONCLUSION

There are various options regarding the future of the City’s residential solid waste contracts. Staff recommends the City Council consider the options, and direct staff and the Committee to take appropriate action and then report their findings back to the City Council.

Finally, representatives from both WM and UWS will be at the council meeting to address any questions or clarify any issues that the City Council may have.

FISCAL IMPACT

The City received approximately $322,000 in collector fees in FY 04-05 from WM and UWS. The cost of a full procurement process is between $100,000 and $150,000 if
outside consultants are used. The cost for renegotiating existing contracts is between
$10,000 and $20,000 if outside consultants are used, while the cost for extending the existing contract is minimal. The City’s Waste Reduction Fund will pay for these charges. The Waste Reduction fund FY 05-06 projected year ending balance is $415,000.

Respectfully Submitted:

Ray Holland
Interim Director of Public Works

Reviewed by:

Les Evans
City Manager