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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DIRECTOR OF PUBLIC WORKS
SUBJECT: RESIDENTIAL SOLID WASTE CONTRACT OPTIONS
1. Consider the different residential solid waste contract renewal or extension options
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.
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.
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:
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
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
* 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)
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.
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