Rancho Palos Verdes City Council
   

NOVEMBER 21, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-POLICY OPTIONS/DECISIONS REGARDING FUTURE RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES NOVEMBER 21, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-POLICY OPTIONS/DECISIONS REGARDING FUTURE RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES NOVEMBER 21, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-POLICY OPTIONS/DECISIONS REGARDING FUTURE RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: NOVEMBER 21, 2006

SUBJECT: POLICY OPTIONS/DECISIONS REGARDING FUTURE RESIDENTIAL AND COMMERCIAL SOLID WASTE AND RECYCLING SERVICES

Staff Coordinator: Lauren Ramezani, Sr. Administrative Analyst


RECOMMENDATIONS

1. Consider and reduce the various policy options for a possible future RFP.

2. Accept Waste Management’s offer of granting the City an extension of one month, from December 31, 2006 to January 31, 2007, on the deadline to issue an extension option.

3. Accept WM’s request to meet with the trash subcommittee.

4. Do not reject WM and UWS’s proposals at this time.

BACKGROUND

The City’s current trash and recycling contracts with Waste Management of Los Angeles and Universal Waste Systems expire on June 30, 2007. The City has options for renewal of the contracts.

The City currently has non-exclusive one-year contracts with 14 commercial haulers. The current contracts expire on December 31, 2006, and staff plans to come back to Council in December to award another one-year contract for 2007. The City issued a 5-year notice of non-extension to the authorized haulers in December 2000.

On November 7, 2006, the City Council reviewed the negotiated 10- year rates offered by Waste Management (WM) and Universal Waste Systems (UWS), but did not accept them. Instead, staff was directed to:

1. Send letters to the two companies and extend the current contract for one year.

2. Directed staff to bring back a schedule and the options to be included in a new RFP.

DISCUSSION

1. NOTICE OF EXTENSION: A notice of a 1-year extension was mailed to both haulers on November 11, 2006, with a confirmation due date of November 21, 2006. WM hasn’t formulated a response to that notice yet.

Meanwhile, the City received a letter from WM on November 14, 2006. (See attached) Staff contacted one of WM’s representatives and was told that WM’s letter was sent prior to receiving the City’s notice on November 15, 2006. In WM’s letter, WM states that their negotiated prices are competitive, and allows WM to continue providing safe and quality services in RPV and be compensated for it accordingly. Additionally, it indicates that WM is still supportive of staff’s November 7, 2006 recommendation to finalize negotiations with WM for the residential and commercial trash and recycling services.

In this WM letter, WM requests the following considerations by the City, if their proposal is rejected and a second RFP is to be issued. The requests are:

- Grant WM only one 6-month extension to the current agreement, instead of 1, 2 or 3 years, with no other extension thereafter.

- Consider transferring WM’s contract to UWS. WM suggests the City explore the possibility of UWS servicing the entire City, with UWS’s lower proposed rates.

- Postpone the current agreement’s deadline on the issuance of an extension from December 31, 2006 to January 31, 2007. This would allow both parties time to consider their decisions and options, after the holiday season is over.

- Allow WM to meet with the trash subcommittee and present their position and details of the negotiation.

Currently WM is considering a response to the City’s notice and the City should receive that shortly (but not before this staff report is finalized).

2. NEW RFP OPTIONS & SCHEUDLE: On November 7, 2006, the City Council also directed staff to bring back a schedule and the options to be included in a new RFP.

In the following pages, staff and the City consultant are providing the City Council with contracting choices, and presenting program/service options that could be included whenever the City issues a new Request for Proposal (“RFP”).

RFP’s BASE SERVICE PLAN:

First, prior to issuance of an RFP, The City should inform proposers that the City would extend WM and UWS’s residential agreements only through June 30, 2008, with no options for additional extensions. This will let potential proposers know that their time and effort in preparing a proposal will not be in vain.

Second, to increase the competitiveness of a new RFP, have more potential proposers and obtain lower rates, the City consultant suggests a “Base Service Plan”.

A base service plan, meets basic trash and recycling collection requirements, but does not have extras and popular “add-ons”. Therefore, it includes a reduced level of services than what residents currently receive and are accustomed to. The “add-ons”, extra services and discounts, are listed in the following spreadsheets and can be added resulting in a higher monthly rate.

The base service would include:

1. Single-family collection would be automated. (It will increase RFP competitiveness)

2. The frequency for single-family trash collection would be once per week. (Typically a $2-4/mo savings over 2x/wk)

3. The single-family rate structure would be variable rates (“pay-as-you-throw”).

4. One hauler would service all the single-family residential customers Citywide. (More uniformity, easier proposal preparation)

5. One hauler would provide all multi-family and commercial bin accounts Citywide. (Would increase competition and number of proposals. May increase single-family rates by lack of opportunity to spread costs among all residential accounts)

6. Multiple haulers (limit of 4-5 haulers) would provide citywide roll-off services.

7. Limit “free” City Services. (Typically $1-2 mo savings)

8. Do not allow trash overages or the use of non-hauler provided cans. (Typically $1-2/mo savings)

9. Limit the number of “free” recycling carts to one. (This would no longer be unlimited. Typically a very minor savings. However, limiting the number of containers helps proposers in calculating rates, since they would have specific number of containers and estimated tonnage to work with in doing their rates worksheet (i.e. Performa).

10. Limit the number of “free” green waste carts to two. (This would no longer be unlimited cans and unlimited bundles. Typically a $1/mo savings. Additionally, limiting the number of containers helps proposers in calculating rates, since they would have specific number of containers and estimated tonnage to work with in doing their rates worksheet (i.e. Performa). It also removes the ‘what ifs’. Large yard cleanups will be handles under the limited bulky item collection.)

11. Eliminate the senior discount. (Typically a $1/mo savings)

12. Remove the pre-payment discount. (Typically a very minor savings. However, offering pre-payment discounts is not widely done. Eliminating it, reduces hauler customer service time and issues, and adds to RFP simplicity.)

13. Allow the hauler to retain all recycling (CRV) revenue, grants and rebates. (Typically a $1-2/mo savings)

14. Require pup truck customers to pay the full cost of the specialized service. (Typically a $1/mo savings to curbside customers)

15. Reduce the bulky waste/E-waste pickup to 3 times/year with a maximum of 3 CY/pickup. (Typically a minor savings)

16. Reduce the trucks requirements (age “like new” vs. new, size and weight limitations, CNG/LNG fuel vs. diesel) (Savings vary depending on choices made)

NUMBER OF RFP’s

Additionally, decision on the number and format of the RFP has to be made. They are:

- Two separate RFPS for:

i. One RFP for single-family CART/CAN collection and multi-family and commercial BIN collection. (One hauler)

ii. One RFP for Residential and Commercial ROLL-OFF collection. (Multiple haulers)

- Three separate RFPs for:

i. One RFP for single-family CART/CAN collection. (One hauler)

ii. Residential and Commercial ROLL-OFF collection. (Multiple haulers)

iii. Multi-family and commercial BIN collection. (Multiple haulers)

SPREADSHEETS & OPTIONS

Tables 1 – 3 on the following pages compare the various options, what the City’s choices are, what the current collection services are, and what the potential implementation of each option is.

NOTE: The remainder of this staff report continues after the tables.

Table 1

SINGLE FAMILY RESIDENTIAL SERVICES

City Council Policy Options

Options

Choices

Current System

Implication

  1. No. of Residential Haulers.

Only one exclusive hauler- Citywide; or two haulers-Area A and B.

2 haulers (WM in Area A & UWS in Area B).

  • Two haulers to manage.
  • Separate services levels.
  • Potential for different rates for the same level of service.
  • Area B residents perception that having one Citywide hauler would not work, and would reduce service levels in Area B
  • Cost: none or minor financial impact
  1. Method of Collection (with the exception of hard to get areas).

Automated/semi-automated; or manual.

Manual trash, recycling and greenwaste.

  • Manual collection costs more to operate due to lower collection efficiency and higher labor and workers compensation insurance costs. Full trash cans have to be limited to 60 lbs.
  • Increases responses to RFP and offers efficient services to City.
  • Cost: Automated collection requires capital investment in vehicles and containers ($4.2 - $6.3 million)
  1. Frequency of Trash Collection.

Once a week; or twice a week.

Twice a week.

  • Twice/week trash collection increases customer rates 10- 25%; requires 4- 6 additional collection trucks, increases truck traffic, unbalances route collection; makes holiday collection problematic; requires recycling and green waste to be picked up on separate days.
  • Potentially decreases competition for this RFP do to the high cost born by the hauler for "idle" vehicles/collection crews.
  • Cost: adding a second trash day amounted to an additional cost of approximately $4.00 - $6.00/month/customer.
  1. Trash Overages.

No additional charge for "occasional" trash overage (i.e., once every 6 weeks); or limit trash volume (to fit in container only) with overage at an extra cost.

No limit.

  1. Recycling and/or Green Waste Overages.

No additional charge for bundles, or greens outside the containers; or limit green waste volume (to fit in container only) with overage at an extra cost.

No limit.

  • Not consistent with automated collection and will increases costs.
  • Most contracts have provisions for "free" collection of recyclables and green waste overages.
  • Cost: collection of green waste overage amounted to an approximate cost of $0.70/month/customer.
  1. Customer Rate Structure.

Variable Rates- based on number, size, & frequency of trash collection; or flat fee

Flat monthly fee.

  • Variable rates require residents to "pay for what they use" and is not consistent with "free" collection of overages.
  • Flat rates require customers that do not generate much trash to pay a higher bill to subsidize customers that generate a lot of trash.
  • Cost: more equitable to customers
  1. Senior Discount

Include a senior discount or not? If yes, how much? And at what age?

10% for 62 and older.

  • The cost of collection is the same regardless of customer’s age. Therefore, customers that do not receive a senior discount, subsidize those customers that receive a senior discount.
  • Cost: Discount amounted to an approximate $1.09/month/customer subsidy.
  1. Annual Pre-Payment Discount

Include an annual pre-payment discount or not? If yes, how much?

5%.

  • The cost of collection is the same regardless of payment frequency. However, prepayment reduces hauler’s cost from repeat invoicing, reduces the haulers account receivables, and increases the hauler’s cash flow. Accordingly there is almost no real cost to the haulers for providing this discount.
  • Cost: Approximately $0.05/month/customer).
  1. Recycling (CRV) Fee

(approximately $220,000-260,000/yr)

Hauler gives City the recycling (CRV) revenue or not? If yes, how much?

Hauler gives City 100% of CRV value for Beautification Grants and possibly median improvements

  • This results in higher customer rates because in most contracts, the hauler retains the CRV value and uses these monies to "buy down" customer rates.
  • Starting January 2007, the CRV for beverage containers (bottle and can deposit) will increase, hence, the recycling revenue will increase.
  • Cost: this amounted to an approximate cost of $1.60/month/customer.
  1. Misc Grants & rebates

    (Approximately $40,000/yr).

City keeps grants/rebates approximately ($40,000/year) or not?

Hauler gives City the rebates.

  • This results in higher customer rates because in most contracts, the hauler retains the all grants/rebates and uses these monies to "buy down" customer rates.
  • Cost: an approximate cost of $0.30/month/customer.
  1. Collector Fee.

Collect 10% of hauler’s Gross Revenue received; or a different percentage

Fixed amount (annual % increases same as % of rate adjustments).

  • This results in higher customer rates but is consistent with most other cities.
  • Most contracts have "collector" fees ranging from 5–20%, with 10% standard.
  • Cost: at monthly rate of $33.00 this amounted to an approximate cost of $3.30/month/customer.
  1. City Services.

Should hauler provide City services free of charge or not? (free trash and recycling services and/or rolloffs for City owned/leased buildings and facilities- i.e. City hall, parks, open space- limited City sponsored events and directed community clean-up)

Free non-specified City services

  • This results in higher customer rates but is consistent with most other cities. However, most Cities limit the "free" collection to specific City properties, and have limits on the frequency and the number of bins to be used at City directed cleanup events.
  • Specifying/limiting the # of events and cleanups will reduce costs.
  • Cost: an approximate cost of $1.75/month/customer.
  1. Trucks.

New trucks or "like new trucks"? Diesel or alternative fuel?Decide and prioritize the importance of:

  • Truck Weight
  • Truck Age, and
  • Truck fuel/Clean air

Heavy diesel trucks (new in 2000, now 6 years old).

  • Hauling companies typically depreciate new trucks over a 7 year period, and most contracts that run 7 – 10 years require the use of new trucks.
  • "Like new" trucks require less initial capital outlay, but generally require higher operating costs.
  • Requiring new trucks may reduce competition due to the initial capital investment in vehicles.
  • Cost: New trucks cost approximately $2.2 - $3.5 million.
  1. Pup Truck Routes.

Pup trucks required in areas with steep or narrow streets, poor condition of streets, or fire or safety concerns. Smaller manual or smaller semi-automated (depending on home/area).

Same. However, pup truck is manual.

  • This requires a specialized truck, generally with manual or semi-automated collection.
  • Pup truck collection is a higher cost than regular curbside collection.
  • Customers that have curbside collection subsidize pup truck customers unless pup truck customers are charged the full cost of this method of collection.
  • Cost: an approximate subsidy of $1.00/month/curbside customer.

  1. Multi-Family services.

Should Multi-family bin services be separated out from the single-family services?

All under one residential exclusive contract.

  • Most multi-family complexes use bin collection, which is consistent with the collection method used for most businesses.
  • If separated, single-family rates may increase, due to actual costs being attributed to multi-family customers.
  • Cost: Single-family rates will increase since reduces opportunity to spread costs.


Table 2

Commercial and Residential- Bin Service

City Council Policy Options

Options

Choices

Current System

Implication

1. Scope of services.

Both multi-family and commercial bins collection.

Multi-family bins are under the residential contract, and commercial bins are under the non-exclusive commercial contracts.

  • Bin collection uses the same collection equipment, and having multi-family and commercial collection together may increase collection efficiency (better routing) and lower costs.
  • Separating multi-family bins from the residential contract may increase single-family rates and make the single-family RFP less attractive.
  1. Number of haulers.

How many haulers? (Minimum # and maximum # of haulers).

Two multi-family haulers.

Fourteen commercial haulers.

  • Exclusive to one hauler City-wide will promote collection efficiency, include hauler required recycling, reduce truck traffic, provide for better City management and oversight, provide for more accurate reporting and collector fee payments, allow the City to regulate not-to-exceed hauler rates, allow the to City to establish and enforce diversion standards.
  • Open completion to a limited number of qualified haulers will allow for individual customer to choose their preferred service provider, and possibly negotiate lower rates. Under an "open" system, the City would regulate individual not-to-exceed hauler rates.
  • Haulersmay notactively promote recycling because it may put them at a cost disadvantage compared to their competitors.
  • More haulers will increase truck traffic and road wear and tear, noise and pollution.
  1. Criteria for selection.

Must have prior multi-family and commercial bin collection experience, positive references, and proposed rates.

None.

  • Inexperienced companies may not have the operational expertise to properly service the City, which may result in service disruptions and customer complaints.
  • Proposed rates may allow the City to choose a) the one company with the lowest rate, or b) 4 – 5 companies with the lowest rates.
  1. Performance standards.

Should it be the same standards as single-family collection, or the lower standards for current commercial collection?

Age of vehicles, maintenance of vehicles and bins, diversion standards.

Limited for commercial bin.

  • Lower performance standards may result in substandard collection operations, but will allow small companies to compete for the City’s work.
  1. Insurance.

Should it be the same standards as single-family collection, or the lower standards for current commercial collection?

$5 million auto, $3 million general liability for residential.

$1 million for commercial.

  • Lower insurance standards may place liability on the City if accidents occur, but will allow small companies to compete for the City’s work.
  • Higher insurance protects the City, but may reduce the # of proposals from small sized companies.

  1. Proposal Submittal fee.

(Copies of RFP are free).

Should the City charge a non-refundable $500 Proposal Submittal fee to make sure haulers are serious about the project?

$1,000 for proposal submittal.

  • The amount has been reduced to help small companies propose in an open system with no guarantee of business.
  • $1,000 for single-family collection
  • $500 for multi-family and commercial bin collection
  • $250 for roll-off collection
  1. Recycling.

Should haulers be required to provide recycling services? Should recycling bins be free or at a discount?

Recycling is not required.MF recycling is free. Commercial recycling is at 25% discount.

Commercial hauler receives a discount of City fees for recycling.

  • The City must meet the State’s 50% diversion requirements and can not do so without multi-family and commercial recycling programs.
  • "Free" recycling will allow for multi-family complexes and business that actively participate in recycling programs to possibility reduce trash collection, thereby reducing their bill.
  1. Rates.

Does the City use a uniform rate Citywide, or do the selected hauler(s) charge their individual rates?

Would the rate be a not to exceed rate?

City sets multi-family rates.

The City does not set commercial rate.

  • If the City selects one hauler City-wide, the hauler’s proposed rates would be the not-to-exceed rates.
  • If the City selected multiple haulers, than the individual hauler’s proposed rates would be their not-to-exceed rates.
  • If the City selects multiple haulers it may establish a City-wide not to exceed rate based on thehighest of the proposed rates of the selected haulers (i.e, haulers would be unwilling to agree to a not-to-exceed rate that is not what they proposed).
  1. Payment to the City

Collect 16% of hauler’s Gross Revenue received; or a different percentage.

5% franchise fee and 5% AB 939 fee.

  • This results in higher customer rates but is consistent with most other cities.
  • Should be higher than the single-family rate because single-family customers absorb the cost of the "free" City Services.
  • Most contracts have "collector" fees ranging from 5–30%, with 10% standard.
  1. Recycling Fee.

Should hauler give City the recycling (CRV) revenue; or hauler keeps it?

Hauler gives City 100% of CRV value (for Beautification Grants and possibly median improvements).

  • This results in higher customer rates because in most contracts, the hauler retains the CRV value and uses these monies to "buy down" customer rates.
  1. Misc Grants & rebates

(approximately $40,000/yr)

Should hauler give City the grants/rebates; or hauler keeps it?

Hauler gives City the rebates.

  • This results in higher customer rates because in most contracts, the hauler retains all the grants/rebates and uses these monies to "buy down" customer rates.

 

Table 3
Roll-off Services
City Council Policy Options (only those items that are different for multi-family and commercial bin collection)

Options

Choices

Current System

Implication

  1. Scope of services.

Separate residential and commercial roll-off services from residential and commercial bin services.

Commercial contracts include both roll-off and bin services.

  • Roll-off collection uses specialized collection vehicles that only can be used to collection roll-off containers (10 CY – 40 CY containers), and having roll-off collection as a stand-alone service promote competition for the contract and may allow for smaller haulers to compete.
  1. Recycling.

Should haulers be required to provide recycling of roll-off materials?

Recycling is not required, but encouraged.

Roll-off hauler receives a discount of City fees for recycling.

  • The City must meet the States 50% diversion requirements and can not do so without roll-off recycling programs.
  1. Payment to the City.

Collect 16% of hauler’s Gross Revenue received, or a different percentage.

5% franchise fee and 5% AB 939 fee.

  • This results in higher customer rates but is consistent with most other contracts.
  • Should be higher than the single family rate because single-family customers absorb the cost of the "free" City Services.
  • Most contracts have "collector" fees ranging from 5 – 3%, with 10% standard.
  1. Recycling Fee.

N/A

N/A

N/A

  • Misc Grants & rebates.
  • N/A

    N/A

    N/A


    Overall RFP Recommendations: Staff and the City’s consultant recommend that collection services be put into groups with similar collection methods.

    1. Single-family Cart/Can Collection. This would include all housing units that receive curbside, backyard or pup truck collection of manual cans or automated carts. Currently there are approximately 11,400 accounts that receive manual can collection service. There are a handful of small multi-family complexes that receive curbside rather than bin service. Those few will be under the single-family cart/can collection.
    2. Multi-family Bin and Commercial Bin Collection. This would include all housing complexes that receive regularly scheduled bin collection, and all businesses that receive regularly scheduled bin collection. Bins sizes run from 1 cubic yard to 6 cubic yard, and collection frequency runs from one day/week to 6 days/week. Currently, multi-family collection is included as part of the exclusive residential collection services, businesses are part of the non-exclusive commercial collection services. There are approximately 47 multi-family complexes serviced by Waste Management, and 2 multi-family complexes serviced by Universal Waste Systems.
    3. Approximately 187 businesses receive commercial bin collection service under the non-exclusive services, and no reliable data is available on the size, frequency or number of rolloff currently serviced. The City does not set rates for commercial accounts, but sets not-to exceed amounts for multi-family accounts.

    4. Residential and Commercial Roll-off Collection: This would include all roll-offs used by residents for temporary clean-ups and remodeling, and all businesses that use roll-off containers for regular collection, and all contractors that place roll-offs for both residential and commercial construction projects. Roll-off containers range form 10 cubic yards to 40 cubic yards, and include 10 cubic yard "lowboys" used for heavy materials (concrete) and stationary compactors used at larger businesses.

    Because roll-off collection falls under the non-exclusive services, no reliable data is available on the size, frequency, or number of roll-offs currently serviced.

    PROJECT SCHEDULE

    Action Item

    Date

    RFP options presented to the City Council

    November 21, 2006

    Agree to postpone extension deadline by 1-month

    November 21, 2006

    Due date for receiving signed extension letter

    November 21, 2006

    Meet/talk with major residential haulers, roll-off companies and get feedback/suggestion about previous RFP

    Mid December 2006

    Renew annual commercial hauler contracts

    December, 2006

    Meeting with WM and Trash subcommittee

    December 2006 or January 2007

    Circulate preliminary draft RFP to a few haulers

    Early February 2007

    Present draft RFP to CC for approval

    March 6, 2007

    Release RFP documents

    March 22, 2006

    Conduct mandatory pre-proposal conference

    March 29, 2007

    Proposals due

    May 31, 2007

    Complete initial evaluation

    July 6, 2007

    Conduct Interviews with short-listed proposers

    July 16 - 18, 2007

    Present initial RFP results to City Council

    August 7, 2007

    Conduct Negotiations, if necessary

    August 13- 27, 2007

    Present additional RFP results and recommendations to City Council

    September 18, 2007

    Finalize Franchise Agreements

    September 19 - 28, 2007

    Award of Contract by City Council, if appropriate

    October 23, 2007

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

    Various

    Start New Collection Services

    July 1, 2008


    ALTERNATIVES

    1. Negotiate with Universal Waste Systems, Inc. to provide single-family and multi-family bin collection services Citywide. (Areas A & B)

    2. Request that both Waste Management and Universal Waste Systems voluntarily give up their multi-family collection services and include multi-family collection as part to the City’s open non-exclusive commercial contracts (1-year non-exclusive renewals), and issue a new RFP only for single-family residential services.

    3. Continue to negotiate with WM.

    FISCAL IMPACT

    The contract amount with R3 Consulting Group has reached the originally budgeted amount at the end of October 2006. If the City wishes to continue using consulting services, then additional monies will need to be budgeted from the Waste Reduction Fund. The estimated FY 06-07 year-end fund balance is $215,000.

    Respectfully submitted,

    Jim Bell, Director of Public Works

    Reviewed,

    Les Evans, City Manager