HomeMy WebLinkAboutStaff Report 2.F 01/04/20102.F
January 4, 2010
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EFFECTIVE DATE
OF ORDINANCE
ORDINANCE N0.2361 N.C.S.
Introduced by Seconded by
CONDITIONALLY APPROVINGASSIGNMENT OF THE FRANCHISE AGREEMENT BETWEEN THE
CITY OF PETALUMA AND GREENWASTE RECOVERY (GWR), INC. FOR SOLID WASTE,
RECYCLABLE MATERIALS AND. YARD TRIMRAINGS SERVICES TO PETALUMA REFUSE AND
RECYCLING, INCORPORATED, AN AFFILIATE. OF THE RATIO GROUP OF COMPANIES, INC.,
AND AUTHORIZING CITY AAANAGER TO EXECUTE A SECOND AMENDMENT TO THE
FRANCHISE AGREEMENT UPON SATISFACTION OF THE CONDITIONS PRECEDENT SPECIFIED
IN THIS ORDINANCE
WHEREAS, on September 13, 2005, fhe City entered ihto an exclusive Franchise
Agreement ("Agreement") with GreenWaste Recovery, Inc., ("GreenWaste") commencing on
January 1, 2006, for collection of solid waste, recyclable materials and yard trimmings, pursuant
to Resolution No. 2005-141 N.C.S.; and,
WHEREAS, On July 6, 2009, the City Council amended the Agreement (the First
Amendmenf) to modify the Rate Periods originally specified in the Agreement and to extend the
Term of the Agreement six months to June 30, 2016; and,
WHEREAS, on February 24;.2009., GreenWaste requested an assignment of the Franchise
Agreement, in accordance with Section 16.6 of the Agreement, to The Ratto Group of
Companies, Inc. ;and,
WHEREAS, Section 16.6 of the Agreement requires the City's consent to any assignment of
the Agreement to a third party, as defined therein, which includes the sale of GreenWaste's
assets dedicated to service under this Agreement; and,
WHEREAS, the. City has considered the potential risks associated with such an assignment,
including, but not limited to; those discussed in its consultant's report, and seeks certain
assurances regarding the performance of the Franchise following assignment, as provided for
herein, including, .but not limited to, creation of a separate legal. entity, Petaluma Refuse and
Recycling, Incorporated ("Assighee") , to be assigned the Agreement, in consideration of the
City's consent to the assignment; .and,
WHEREAS, the Assignee seeks to assure the City that, following the sale, Assignee will
continue operation of the Franchise in accordance with high professional standards and
provide services to the City ih full compliance with the terms of the Agreement and the City's
operational expectations (not limited to but specifically including, the maintenance of separate
operations and financial records, and separate records of all other transactions, except for the
allocation of health, liability and workers compensation insurance) and keep separate from any
Ordinance No. 2361 N.C.S. Page 1
1 otherfranchise agreement or other activity of the Assignee reporting of activities under this
2 Agreement, as well as .keep separate identification and use of all assets, including vehicles and
3 containers under this Agreement, as a separate entity from Redwood Empire Disposal or any
4 other affiliate (notwithstanding that these assetsmay be supplemented with the assets of
5 Assignee and its affiliates), unless specifically approved in writing in advance by the City; and,
6
7 WHEREAS, Assignee seeks to assure. the City that the sale will not result in increased costs
8 or a reduction in services or the quality of those services provided to the City, its residents, or
9 businesses, or a reduction to the other obligations of Contractor under the Agreement.
10
11 MOW THEREFORE BE IT ORDAIPIED by the Council of the City of Petaluma as follows:
12
13 Section 1. Conditions Precedent. The following. are conditions precedent to
14 assignment of the Agreement to Assignee contemplated pursuant to this ordinance taking
15 effect:
16 a. Payment of`Funds Due City. Assignee shall demonstrate to the satisfaction
17 of the City that all amounts due the City have been paid in full in accordance with the
18 Agreement (principally the Franchise Fee and HHW/AB939 as described in Article 1 1 of the
19 Agreement and Section 16.6 of the Agreement).
20 b. Furnishing of Cont"ractor and Its Independent Certified Public Accountant
21 of Certification of Mo Material Change. to Financial Condition. The President of the Ratio Group
22 and its independent Certified Public .Accountant shall present to the City a notarized letter
23 certifying under penalty of perjury that there has been no material adverse change to the
24 financial condition of the Ratio Group, since the ddte of its dudited financial statements dated
25 May 27, 2009, supplied to the. City, and statement shall be subject to Section 2.7 Contractor's
26 Statements of the Agreement.
27 c. Corporate Status. Assignee shall provide documentation to the;
28 satisfaction of the City Manager that it is a corporation duly organized,. validly existing and in
29 good standing under the laws of the State of California .qualified to transact business in the State
30 and with the power to own its properties. and to carry on its business as now owned and
31 operated and as required by the Agreement and applicable law.
32 d. Financial Ability. Assignee shall provide, to the satisfaction of the City
33 Manager,. an opening balance sheet presenting the assets, liabilities and owners equity for
34 Petaluma Refuse and Recycling, 'Incorporated with no "Due To" the Ratio Group or any other
35 affiliate, but instead with "Paid in Capital" demonstrating the adequacy of the capitalization of
36 the Assignee to undertake the financial obligations under the. Agreement.
37 e. Statement of Operations. Assignee shall submit, to the satisfaction of the
38 City Manager, a .statement of operations and cash flows demonstrating the ability of the- -
39 Assignee to perform in accordance with the Agreement at the current rates authorized by the
40 City. Council.
41 f. Review of Purchase Agreement. Assignee shall 'make available for review
42 by the .City Manager and/or his agent.(s) a copy of the Purchase Agreement with Green Waste
43 Recovery .Services in order to ascertain that all assets currently used .and useful in the provision of
44 service: to the City are included and to review other terms and conditions to confirm the
45 Assignee"'s represehfations regarding the cost and any future. liabilities associated with the
46 purchase of'the franchise from Green Waste Recovery.
47 - g. Transition and Ongoing Records Management Plan. Assignee shall deliver
48 to the City a comprehensive and detailed transition and on-,going records management plan
Ordinance No. 2361 N.C.S. Page 2
1 satisfactory to the City. Manager. The Assignee shall compensate, the City for its cost of
2 reviewing and monitoring its implementation of this plan up to $15,000.
3 h. Compensation for Assignment Costs. Assignee shall compensate City for
4 all reasonable costs incurred to determine Assignee's satisfaction of the above items A - G.
5 Section.2. Subject to satisfaction of the co"nditions precedent specified in Section 1,
6 above, the City Council approves #he,Second Amendment: #o the Franchise Agreement
7 between the. City of Petaluma and GreerWaste Recovery, Ine: for Solid ~Naste, Recyclable
8 Materials; and Yard Trimmings Services; assigning the Franchise Agreement to Redwood Empire
9 Disposal- Petaluma, an affiliate of the Ratto Group of Compan.ies;: Inc., and authorizes the City
10 Manager to execute on behalf of the City the Second Amendment to the Franchise Agreement
11 and any necessary implementing documents.
12 Section 3. If any secfion; subsection, sentence; clause; .phrase or word of this ordinance
13 is for any reason held to be unconstitutional, unlawful. or otherwise invalid- by a court of
14 competent jurisdiction or preempted by state legislation,. such decision or legislation shall not
15 affect the validity of the remaining portions of this ordinance. The City Council of the City of
16 Petaluma hereby declares that it would have. passed and adopted this ordinance and each
17 and all provisions thereof irrespective: of the fact that. any one or more of said provisions be
18 declared unconstitutional, unlawful or gtherwise invalid.
Section 4. This ordinance or a synopsis of it 'shall' be posted anal/or published for the
period and in the manner required by City charter.
Section 5: This ordinance shall become effective thirty (30) days after the date of its
adoption by the Petaluma City Council.
INTRODUCED and ordered posted%k~ed fhis 21 sf day of December, 2009.
ADOPTED this day of
27
28 AYES:
29 NOES:
30 ABSENT:
31 ABSTAIN:
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37 ATTEST:.
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41 Claire Cooper, City Clerk
42
20T0 by the. following. vote:
Pamela Torliatt; Mayor
APPROVED AS TO FORM:
Eric Danly, City Attorney
Ordinance No. 2361 N.C.S.
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