Rancho Palos Verdes City Council
   

MAY 16, 2006 RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES
RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: MAY 16, 2006

SUBJECT: RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES

Attachemnt: Staff Report

Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst

RECOMMENDATION

  1. Discuss the contracting options presented for residential and commercial solid waste and recycling services.
  2. Discuss the proposed program options presented by staff.
  3. Authorize R3 Consulting Group, Inc. to prepare a Request for Proposals for residential and commercial solid waste and recycling services, and assist the City in the evaluation processes.
  4. Authorize staff to circulate a Request for Proposals.
  5. Direct staff to implement the proposed Process Integrity Procedures.

BACKGROUND

The City currently has two exclusive residential franchise agreements with Waste Management of Los Angeles and Universal Waste Systems, Inc. that will expire on June 30, 2007. The City has the sole option to extend the residential franchise agreements in one-year increments, a maximum of three times.

The City’s commercial waste and recycling programs are managed through fourteen (14) non-exclusive agreements. The non-exclusive agreements are renewed on an annual basis, and the individual companies do not have the right to continue providing collection services if the non-exclusive agreements are not renewed by the City.

While the current programs meet the basic needs of the City’s residents and business, there is room for improvement. For example:

  • The current containers for recyclables and green waste provided by the haulers are of low quality, do not last long, fall over easily and do not have attached lids. Additionally, residents provide their own trash containers. This has resulted in the use of non-standard trash containers, residents paying for the cost of their replacement trash containers, and because lids are not always used this causes increased liter and scavenging by animals.
  • Collection vehicles are large, heavy, and do not employ the best available clean air technology, and are limited to outdated and inefficient collection trucks and methods. This also adds to the City’s street wear and tear.
  • The current franchise agreements do not adequately address collection standards, temporary stop service requests, late payments, and delinquent accounts.
  • Allowing 14 haulers to provide commercial collection increases the number of collection trucks operating within the City, requires more City oversight and management, and results in lower efficiency of collection and administrative operations by the haulers. In addition, the current commercial collection program results in a lack of consistency in service levels, customer rates, or recycling programs.
  • The current flat-fee rate structure for unlimited trash collection allows for residents that place a lot of trash out for collection to pay the same amount as residents who recycle and dispose of minimal amounts of trash. Additionally, the California Integrated Waste Management Board discourages communities from using flat-fee rate structures and unlimited trash collection.

DISCUSSION

The purpose of this staff report is to provide the City Council with contracting options, and present program options that could be included if the City decides to issue a Request for Proposal ("RFP"). The program options are briefly summarized below. This is followed by a discussion of proposed programs.

Option 1: Extend the existing franchise agreements for residential services by one (1) year, and continue commercial collection with the 14 non-exclusive agreements.

Option 1 would result in a continuation of the City’s current programs and haulers. Under this option it would not be possible to make program changes that require capital outlay (i.e., better quality containers or new trucks) by the residential haulers because the one year extension period does not provide adequate time for the haulers to recapture their capital outlay without a significant rate increase. In addition, pursuing Option 1 would not result in reducing the number of non-exclusive commercial haulers. The deadline for contract extensions is December 30, 2006. Therefore, a staff report will have to go before the City Council no later than December 19, 2006.

Option 2: Negotiate a new agreement with one or both of the existing residential haulers, and continue commercial collection with the 14 non-exclusive agreements.

Under Option 2, the City could make program changes that require capital outlay by the residential haulers. However, because a negotiation is not done in a competitive environment, the haulers may not provide the City with the best pricing. In addition, it may not be in the City’s best interest to reduce the number of non-exclusive commercial haulers to the two existing residential haulers in a non-competitive (negotiated) environment. The deadline to accept the renegotiation offers, or decide to extend the current contracts is December 30, 2006. Therefore, a staff report to will have to go before the City Council no later than the December 19, 2006.

Option 3: Issue a Request for Proposals for combined residential and commercial collection services, with a single hauler providing exclusive residential and commercial collection services.

Option 3 provides the City more flexibility and lower risk than either Option 1 or Option 2. First, through an RFP process, the City will receive pricing on the City’s requested program options in a competitive environment. Second, the City can include provisions for exclusive commercial collection services in a competitive environment, and including exclusive commercial collection may have a positive impact on both the City’s residential rate payers and commercial rate payers due to increased collection and administrative efficiencies. Third, through an RFP process, the City will receive market-based competitive pricing to help the City evaluate and decide on program changes. Last, issuing an RFP does not commit the City to selecting an exclusive residential and commercial service provider. After proposals are received and evaluated, the City can elect to take no action on the proposals and pursue either Option 1 or 2. The deadline to accept or reject proposals is by no later than the December 19, 2006 Council meeting.

The following is a brief description of the proposed RFP and the all requested services. Attachment 1 summarizes the proposed residential collection services.

REQUEST FOR PROPOSAL (RFP) SUMMARY

GENERAL PROVISIONS:

Term: The Franchise Agreement will contain a 7-year initial term, plus one 3-year extension option at the sole discretion of the City.

Exclusive Services: A single hauler will provide exclusive services for all single-family residential, multi-family residential and commercial businesses within the City. Currently the City has two haulers for residential and multi-family services, and 14 haulers for commercial collection.

Number of Haulers: The proposed franchise agreement will result in limiting the number of haulers to one exclusive hauler providing all residential and commercial services Citywide.

Method of Collection: The method of collection (choice of manual, semi- or automated collection) is to be proposed by the haulers. The RFP will not require a specific method. The City Council will make the final determination on the collection method that best meets the City’s needs.

Frequency of Collection: The RFP requires the haulers to propose on once/week and twice/ week collection of trash. Green waste and commingled recyclables will continue to be collected once a week. The City Council will make the final determination on the frequency of trash collection that best meets the City’s needs.

Residential Containers: The hauler will provide new containers for trash, recyclables, and green waste collection. Customers may choose from 32, 45, 64, or 96 gallon containers depending on their individual needs and space constraints. Customer will be provided an unlimited number of recycling and green waste carts free of charge. Trash will also be unlimited; however, customers will be billed based on the size of their chosen containers, and number of trash containers used.

Minimum Diversion Rate: The contractor will be required to divert a minimum of fifty percent (50%) from the total of all single family residential, multi-family residential and commercial material collected under the scope of the exclusive franchise agreement.

Franchise Fee: The contractor will be required to remit 12% of the gross revenue collected (quarterly) for all services provided as a Franchise Fee. The gross revenue includes all revenue received from single-family, multi-family, commercial, roll-off and industrial collection services, and additional revenue received for push rates, bin rental charges, extra collection services, recyclables revenue, service stop/start fees, late fees, state/Federal or local agency grants and rebates. Including a percent of gross revenues instead of a fixed amount will more accurately reflect the revenue due to the City, reflecting future new residential housing and commercial developments.

Recycling Fee: The contractor will be required to make quarterly payments of 100% of the California Redemption Value (CRV) revenue received from the City’s residential and commercial recycling programs. The City currently receives CRV payments of approximately $220,000 annually.

Infrastructure Maintenance Fee: This is a new revenue source. The contractor will be required to make an annual payment of $215,000 - $260,000 (depending on the frequency of trash collection) for the cost to repair the City’s roads due to wear and tear caused by the collection vehicles. The City currently does not collect a separate infrastructure maintenance fee.

Miscellaneous Grants and Rebates: The City will require the contractor to continue to turnover to the City any grant monies or rebates the contractor receives as a result of providing franchised services to the City. The City currently receives approximately $35,000-$40,000 from the haulers for cash backs for curbside beverage container recycling program.

Annual Rate Adjustments: The compensation paid to the contractor will be adjusted annually using a multi-indexed rate methodology that uses annual changes (increases or decreases) in five nationally published commodity and price indices. (i.e., diesel fuel, trash truck capital, trash truck driver labor, etc.).

Performance Bond: The contractor will be required to submit a Performance Bond (renewed annually) in the amount of $750,000.

Insurance: The contractor will be required to maintain minimum insurance coverage of $3 million for combined single limit per occurrence, $5 million for aggregate limit, $5 million for automobile/vehicles, $3 million for hazardous waste and environmental impairment liability, and worker’s compensation and employer’s liability at the statutory limits.

Liquidated Damages: The franchise agreement will contain liquidated damages ranging from $100 - $25,000 for non-compliance with specific contractual requirements.

Border Street Compatibility: There are several streets that border Rolling Hills Estates. The RFP will require proposers to discuss methods on how those streets can have more uniform and compatible services, and/or collection days.

SERVICE PROVISIONS:

Residential Collection Frequency. The proposed RFP includes the following two options for residential collection:

  • Option 1: Twice/week collection of trash, with once/week collection of recyclables and green waste. All three commodities will be picked up on first collection day of the week; only trash will be collected on the 2nd collection day of the week.
  • Option 2: Once/week collection of trash, recyclables and green waste. All three commodities will be picked up on the same day of the week.

Residential Services. Residential services will remain the same as current services. Curbside collection will be provided for trash, recyclables, and green waste. Backyard collection will be provided on a subscription service for an additional fee, or free if required due topography, and safety (areas to be mutually agreed on between the City and hauler). Commingled recycling will be collected weekly. Green waste will also be collected weekly, with additional unlimited bagged leaf or bundled brush collection. Residents will be provided unlimited recycling and green waste carts at no charge. Used oil and motor filters will be collected weekly, with used oil containers and filter bags provided by the contractor at no cost.

Curbside collection of bulky waste will be provided on an on-call basis 4/year, with a maximum set out of 5 cubic yards per collection. E-waste will be collected as part of bulky waste collection. Residents may request backyard collection of bulky waste for an additional fee.

Residents will not be allowed to place construction and demolition (C & D) materials in regular trash carts, or at the curb as part of bulky waste collection. Residents will have to order small or large bins to discards their C & D material.

In areas that have topographical considerations, narrow or steep streets, or safety concerns (fire truck access, minimum street width, etc.), the contractor will be required to operate pup trucks at no additional cost. Manure collection will be provided on a subscription basis for an additional fee.

Commercial Services. Under the proposed franchise agreement, commercial collection services will be exclusive to the same hauler that provides residential services. This will result in reducing the number of commercial haulers from the current 14 haulers to 1 exclusive hauler citywide. Commercial collection bins will be available in 1– 6 cubic yards, 10–40 cubic yard roll-off boxes, and carts will be available in 32– 96 gallon capacity. The collection frequency will be based on the customer’s needs.

Notable under the proposed franchise agreement is that commercial recycling services will be included as part of solid waste collection. Commercial customers may request recycling bins or carts for the collection of commingled recyclables. There will be no additional charge to customers for the provision of commercial recycling services.

City Services. The City will continue to receive various collection services at not charge. These services include free collection from City owned, rented, or leased facilities and parks, or City projects, free collection from bus stops/shelters (approximately 25 locations, free collection from City sponsored community events (approximately 6 events/year), free collection from City directed community clean-up events (15 events/year), and the contractor will provide staff at City sponsored community events (2 events/year).

Collection Carts and Bins. Under the proposed franchise agreement, the contractor will provide new carts and bins to all residents and businesses. Carts will be available in four sizes: 32, 45, and 96 gallon capacity, with all carts except the 96 gallon cart able to be stacked (nestable). All carts will have heavy-duty wheels, attached hinged lids, and be designed to be resistant to inadvertent tipping due to high winds or hilly locations. The carts will be embossed with the City logo, and with the words "recyclables", "trash", or "green waste" (no stickers). The City will approve the specific colors of the carts (blue, green, grey, black, brown) and cart design (square, round, rectangular, tall, short). All carts will be manufactured with a minimum 20% recycled material content, come with a 10-year warranty against defects, and carts will be replaced or repaired at not cost to the residents. It should be noted that if the City elects to keep a manual collecting system, then cart size would be limited to 32 gallon capacity with a maximum weight limit of 60 pounds. For businesses and multi-family complexes, the contractor will also be required to provide new bins ranging in size from 1 to 6 cubic yards capacity.

Collection Vehicles. The contractor will be required to provide new collection vehicles that meet or exceed local, regional, state and federal clean quality standards throughout the term of the franchise agreement. This could be done through the use of compressed or liquefied natural gas, biodiesel, clean diesel, particulate traps, catalytic converters, or advanced engine management systems. To address wear and tear on the City’s streets, noise and safety concerns, residential collection vehicles will have a maximum total gross weight capacity of 47,000 lbs., rear axel weight limits of 16,000 lbs., a total 3 axels maximum, a total load capacity of 28 cubic yards, and a maximum turning radius of 45 feet. This is a significant improvement over the current trucks. All collection vehicles will have maximum noise standards of 75 decibels measured at 25 feet, they will use re-refined motor and hydraulic oil, be washed at least weekly, and repainted at least once every 30 months

Rate Structure. Under the proposed franchise agreement, the City will approve both residential and commercial rates charged to customers. The rates will be based on the amount of trash each customer generates, and the frequency, in which trash is collected. Residents and businesses will be provided unlimited recycling and green waste collection services at no additional cost.

  • Residential rates will be based on the trash cart capacity, and/or the number of trash carts (32 – 96 gallon), and frequency of trash collection, once or twice per week based on City’s selection of frequency. Residents will continue to receive a 5% annual prepayment discount, eligible seniors will continue to receive a 10% discount, and qualified low-income households will be provided the lowest available rate. Commercial rates will be based on trash bin or cart capacity, the number of trash bins or carts, and the frequency of trash collection (1 – 6 times/week).
  • An additional new provision of the franchise agreement will allow residents to stop services for a minimum of three continuous months due to out-of area travel/vacation, vacancy, or construction. During the period of time service is stopped, residents will not be charged by the contractor. However, the contractor may charge a $10.00 fee to resume service
  • Annual Rate Adjustment Process. The City will approve any changes in residential and commercial rates on an annual basis, starting with the first rate adjustment on July 1, 2009. Accordingly, after the franchise agreement is awarded, no rate changes will occur for a two (2) year period. Annual rate adjustments will be done in a similar manner to how rates are currently adjusted. However, a new provision is included in the proposed franchise agreement that if the contractor does not meet the minimum diversion requirements, then the contractor will not be eligible for a rate increase for following fiscal year. The City retains its right to decrease rates if the rate adjustment formula results in decreased rates.

In addition, the proposed franchise agreement changes the formula for calculating rate adjustments from PPI to a new method which includes five national indices specifically tailored to solid waste collection operations (diesel fuel, trash truck driver labor, trash truck capital cost, etc.). Using solid waste indices should significantly reduce the possibility of the contractor requesting an ‘extraordinary" rate increase.

Billing Services. The contractor will continue to provide billing services to residents and businesses. However, under the proposed franchise agreement, several changes will be made to address concerns with the current agreement. These are summarized below.

  • Residential billing will continue to be done quarterly, in advance. Bills will be issued on 1st day of the first month of the billing quarter for residential customers. Payment is due 45 days after bills are issued, and the contractor may issue past due notices if payment is not received 90 days after the bill was issued. If payment is not received within 120 days after the bill was issued, the contractor may remove recycling and green waste containers and reduce trash service to lowest service level (1- 32 gallon cart collected 1/week), but the contractor must continue to collect trash.
  • Commercial billing will continue to be done monthly in advance, with bills issued on 1st day of the 1st month. Payment is due 20 days after bills are issued. The contractor may issue past due notices if payment is not received 60 days after the bill was issued. If payment is not received within 90 days after the bill was issued, the contractor may remove recycling and green waste containers (bins or carts) and reduce trash service to lowest service level (1- 32 gallon can colleted 1/week, or 1 1-CY bin collected 1/week), but the contractor must continue to collect trash.
  • For both residential and commercial billing, if services are reduced due to non-payment and payment is made later on, hauler may charge $50.00 fee to restore full service. The contractor may only collect past due amounts for non-payment for the prior 12 months, and the contractor may use a collection agency for past due accounts. The City is not responsible for collecting past due accounts.

Hours and Days of Collection. Residential collection will be Monday – Friday from 7:30 a.m. – 6:00 p.m. Saturday collection will only be allowed following a City-approved holiday, and collection on Saturday will be limited to 9:00 a.m. – 4:00 p.m. The contractor will be subject to liquated damages ($1,000) if holiday collection is not done on the schedule approved by the City.

Commercial collection will be Monday – Friday from 7:30 a.m. – 7:00 p.m., and Saturdays from 8:00 a.m. – 5:00 p.m. The City may limit the hours for commercial collection if commercial collection is within 100 feet of residential dwellings, or if the City has received repeated noise complaints from neighboring residents about the commercial collection services.

PROPOSAL EVALUATION PROCESS

The proposals will be reviewed by the evaluation team consisting of City staff and members of R3 Consulting Group, Inc. and will be scored based upon the following criteria:

  • Overall responsiveness to the RFP
  • Proposers experience and qualifications
  • Adequacy and completeness of the technical proposal
  • Exceptions and Alternatives
  • Proposed Costs

The evaluation team will review and score each proposal based upon these evaluation criteria. R3 Consulting recommends that the weighting factors not be disclosed until after the proposals have been reviewed, and scores based only on the evaluation criteria have been assigned for each of the proposal submitted. The process would be that the evaluation team would individually score each proposal, and the raw scores would be sealed and given to the City Clerk. The City Council would then assign weighting factors to the evaluation criteria. The final weighting factors would then be applied to the raw scores to determine the weighted scores and proposal rankings.

The primary advantage of this option is that the selection process is completely objective, as the evaluation team members do not know the criteria weighting factors when scoring the proposals, and the Council members do not know the raw scores when assigning the weighting factors. Under this system, no party can claim that anyone had the ability to unfairly influence the outcome of the selection process. The primary disadvantage of this option is that the proposers do not know the criteria weighting factors when preparing their proposals.

PROCESS INTEGRITY PROCEDURES

The primary objective of these procedures is to preserve the integrity, objectivity and equality of the competitive procurement process. Staff seeks direction from Council on the implementation of these procedures. If the Council elects to implement the process integrity procedures, each proposer would sign the process integrity form upon release of the RFP package. The City’s consultant has implemented process integrity procedures in the administration of similar competitive procurement projects for solid waste services. The process integrity form includes the following language:

"Any attempt to contact or interact with any elected or appointed official of the City for the purpose of influencing the selection process will be grounds for disqualification from the selection process.

All communications between the City and a participant, along with the related responses, will be transmitted simultaneously to all participants.

Any participant who fails to recognize or utilize the process of communication will be notified of its violation and may be subject to disqualification from the selection process at the sole discretion of the City."

The implementation of the process integrity procedures is at the discretion of the City Council.

PROJECT SCHEDULE

Action Item

Date

RFP summary and options presented to the City Council

May 16, 2006

Release RFP documents

June 2, 2006

Conduct mandatory pre-proposal conference

June 28, 2006

Proposals due

August 31, 2006

Complete initial evaluation

Mid-September 2006

Conduct Interviews with short-listed proposers

Late September 2006

Present initial RFP results to City Council & request City Council to provide weighting factors

October 17, 2006

Present additional RFP results and recommendations to City Council

November 21, 2006

Award of Contract by City Council, if appropriate

December 19, 2006

Last day to extend existing contracts if award is not made

December 31, 2006

Community workshops to be scheduled days, evenings and weekends as determined by the City

June,
September – Dec.

Start New Collection Services

July 1, 2007

CONCLUSION

Approving the staff recommendations, and choosing Option 3 (circulating RFP), will provide the City with the greatest flexibility as it determines the best mix of programs and prices to provide its residents and businesses. Responses to the RFP documents will allow the City to make decisions on program options with competitive market based information. Approving the release of RFP documents does not commit the City to awarding a new franchise agreement; the City retains its right to discontinue the RFP process, and extend the existing residential and commercial franchise agreements with the current haulers.

RECOMMENDATION

Approve contracting Option 3, and authorize staff to circulate a Request for Proposals for one hauler to provide residential and commercial solid waste and recycling services.

ALTERNATIVE

Approve a minimum of one year to a maximum of three years extension to the two current exclusive residential contracts with Waste Management of Los Angeles and Universal Waste Systems, Inc. and direct staff to take appropriate action.

FISCAL IMPACT

The consulting cost for preparing a RFP and the completion of the procurement process is approximately $80,000-$100,000. These costs will be paid from the City’s Waste Reduction fund that has an estimate FY 05-06 ending fund balance of $415,000. In addition, each proposer will be required to submit a $1,000 non-refundable proposal fee as part of their RFP submittal.The estimated gross revenue the hauler will receive for providing exclusive residential and commercial collection services is estimated to be approximately $3.6 million/year in FY 07-08. As required in the current and proposed the franchise agreement(s), the City receives payments from the hauler(s). The table below shows the current and the estimated hauler payments to the City.

Estimated Hauler Payments to the City

 

Current (2005)

Proposed (2007)

Collector/Franchise Fee

$375,000 (fixed amount- residential, variable-commercial)

12% of total gross receipts (est. $410,000) (variable for residential & commercial)

Recycling Fee (CRV)

$220,000 (variable)

$250,000 (variable)

AB 939 Fee

$25,000 (variable)

-0- (included in Franchise Fee)

Infrastructure Maintenance Fee

-0- (included in Franchise Fee)

$215,000 (1/wk) or $260,000 (2/wk) (fixed)

Grants and Rebates (State/Federal/Local Agency)

$40,000 (variable)

$40,000 (variable)

TOTAL ESTIMATED PAYMENTS

$ 660,000

$915,000- $960,000

Respectfully Submitted: Raymond HollandInterim Director of Public Works Reviewed by:Les Evans

City Manager