HomeMy WebLinkAboutStaff Report 3.H 07/06/2009CITY OF PETALUMA, CALIFORNIA 3.H
AGENDA BILL July 6, 2009
Agenda Title: Discussion and Possible Introduction (First Reading) of an Meeting Date: July 6, 2009
Ordinance Authorizing City Manager to Execute the First Amendment to the
Franchise Agreement Between the City of Petaluma and GreenWaste Meeting Time: 7:00 PM
Recovery, Inc. for Solid Waste, Recyclable Materials, and Yard Trimmings
Services
Category: ❑ Presentation ❑ Appointments ® Consent ❑ Pubtic Hearing ❑ Unfinished Business ❑ New Business
Department: Dirceto. Contact Person: Phone Number:
Public Works Vincent ego Vincent Marengo 778-4467
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Total Cost of Proposal or Proiect: Name of Fund:
There are no costs associated with this amendment, which General Fund, PW Admin., Vehicle Impact
modifies the agreement to align with Council action of
9/15/08 to adjust the rate year to coincide with the City's
fiscal year, extends the contract term by six months as part
of that realignment, and clarifies Section 12.4.
Amount Budgeted: NIA
Account Number:
1100.11100.41320 General Fund
1100.16100.41320 PW Admin.
1100.16500.41320 Vehicle Impact
Current Fund Balance:
NIA
Recommendation: It is recommended that the City Council take the following action:
Approve introduction of ordinance authorizing City Manager to execute the first amendment to the franchise
agreement between the City of Petaluma and GreenWaste Recovery, Inc. for solid waste, recyclable materials,
and yard trimmings services.
1. ❑ First reading of Ordinance approved unanimously, or with unanimous vote to allow posting prior to second reading
2. ❑ First reading of Ordinance approved without unanimous vote: Ordinance has been published/posted prior to second
reading; see Attachment
3. ❑ Other action requiring special notice: Notice has been given, see Attachment
Summary Statement:
On September 15, 2008, City Council approved a resolution to modify the GreenWaste Recovery, Inc. franchise
agreement so that rate years would coincide with the City's fiscal year. Accordingly, the First Amendment
(Attachment 1: Exhibit A to Ordinance) provides for modification to affected provisions throughout the
agreement, extends the contract by six months as part of adjusting the rate year from calendar to fiscal, and at the
same time, takes the opportunity to modify Section 12.4 to identify the annual adjustment method for allocated
costs related to general and administration, vehicle maintenance, and container maintenance.
Attachments to Agenda Packet Item:
1. Ordinance, including Exhibit A, First Amendment to 2005 GreenWaste Recovery, Inc. franchise
agreement
2. September 13, 2005 Franchise Agreement between the City of Petaluma and GreenWaste Recovery, Inc.
(available in City CIerk's office and through the City's website: litty://citvoll)etaluma.net/)
Reviewed by Finance Director: Reviewed by City Attornev. Approved by City Manager:
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CITY OF PETALUMA, CALIFORNIA
JULY 6, 2009
AGENDA REPORT
FOR
DISCUSSION AND POSSIBLE INTRODUCTION (FIRST READING) OF AN ORDINANCE
AUTHORIZING CITY MANAGER TO EXECUTE THE FIRST AMENDMENT TO THE
FRANCHISE AGREEMENT BETWEEN THE CITY OF PETALUMA AND GREENWASTE
RECOVERY, INC. FOR SOLID WASTE, RECYCLABLE MATERIALS, AND YARD TRIMMINGS
SERVICES
RECOMMENDATION:
Approve introduction of ordinance authorizing City Manager to execute the first amendment to
the franchise agreement between the City of Petaluma and GreenWaste Recovery, Inc. for solid
waste, recyclable materials, and yard trimmings services
2. BACKGROUND:
On September 13, 2005, the City entered into an exclusive franchise agreement with GreenWaste
Recovery, Inc., commencing on January 1, 2006, for collection of solid waste, recyclable
materials and yard trimmings. On September 15, 2008, upon review of preceding rate years and
according to the terms of the agreement, City Council approved a 9.1 % increased compensation
for Rate Year Three. At that time, Council requested an adjustment to the existing agreement to
modify succeeding rate years so that they Auld coincide with the City's fiscal year (July 1 to
June 30).
3. DISCUSSION:
The proposed First Amendment (Attaclurnent 1: Exhibit A to Ordinance) provides for a
modification to the rate year and affected provisions throughout the agreement. Consequently,
the tern of the Agreement is extended six months so that the term expires at the end of the City's
fiscal year on June 30, 2016 (unless extended in accordance with Section 3.4 of the Agreement).
In addition, the City has requested that Section 12.4 be modified to identify the annual
adjustment method for allocated costs related to general and administration, vehicle
maintenance, and container maintenance.
4. FINANCIAL IMPACTS:
There is no financial impact to modification of the rate year from calendar to fiscal, nor to
clarification of Section 12.4 by identifying the adjustment method for certain allocated costs.
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ORDINANCE NO. N.C.S.
AUTHORIZING CITY MANAGER TO EXECUTE THE FIRST AMENDMENT TO THE
FRANCHISE AGREEMENT BETWEEN THE CITY OF PETALUMA AND GREENWASTE
RECOVERY, INC. FOR SOLID WASTE, RECYCLABLE MATERIALS, AND YARD
TRIMMINGS SERVICES
WHEREAS, on September 13, 2005, the City entered into an exclusive Franchise Agreement
with GreenWaste Recovery, Inc., 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, the City desires that rate periods specified in the Agreement (which commence
January I and end December 31) be modified to coincide with the fiscal years of the City (which
commence July 1 and end June 30) and desires that the Term of the Agreement be extended six months
so that the Term expires at the end of the City's fiscal year on June 30, 2016 (unless extended in
accordance with Section 3.4 of the Agreement); and
WHEREAS, the City desires that other provisions of the Agreement which may be impacted by
the change in the start and end dates of the rate periods be amended as necessary; and
WHEREAS, the Parties agreed in 2008 to adjust Rate Period Three to an 18 -month rate period
to facilitate changing future rate periods to coincide with the City's fiscal year and further agreed to
modify Rate Period Three contractor's compensation and rate adjustment procedures for Rate Period
Three to reflect an 18 -month period and such modifications are not described herein; and
WHEREAS, on September 15, 2008, the City Council adopted Resolution No. 2008-182 N.C.S.,
modifying Rate Period Three to reflect an 18 -month period from January 1, 200$ through June 30, 2009
to reflect fiscal year rather than calendar year rate periods and adjusting Contractor's compensation
accordingly; and
WHEREAS, the City identified that the adjustment method for Contractor's compensation
presented in Sections 12.4 does not describe the annual adjustment method for allocated costs related to
general and administration, vehicle maintenance, and container maintenance and desires to specify the
method.
NOW THEREFORE BE IT ORDAINED by the Council of the City of Petaluma as follows:
Section 1. The City Council ratifies the Franchise Agreement between the City of Petaluma
and Greenwaste Recovery, Inc. for Solid Waste, Recyclable Materials and Yard Trimmings Services,
dated and effective September 13, 2005, ("Agreement") approved by City Council Resolution No. 2005-
141 N.C.S. on August 22, 2005, subject to rate period and rate adjustments made pursuant to Resolution
No. 2008-182 N.C.S., adopted September 15, 2008,
Section 2. The City Council approves the First Amendment to the Franchise Agreement
between the City of Petaluma and Greenwaste Recovery, Inc. for Solid Waste, Recyclable Materials and
Yard Trimmings Services ("First Amendment"), attached hereto as Exhibit A and incorporated herein by
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reference, and authorizes the City Manager to execute said First Amendment and any necessary
implementing documents.
Section 3. if any section, subsection, sentence, clause, phrase or word of this ordinance is for
any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent
jurisdiction or preempted by state legislation, such decision or legislation shall not affect the validity of
the remaining portions of this ordinance. The City Council of the City of Petaluma hereby declares that
it would have passed and adopted this ordinance and each and all provisions thereof irrespective of the
fact that any one or more of said provisions be declared unconstitutional, unlawful or otherwise invalid.
Section 4. This ordinance or a synopsis of it shall be posted and/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.
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FIRST AMENDMENT
TO THE FRANCHISE AGREEMENT
BETWEEN
THE CITY OF PETALUMA AND GREENWASTE RECOVERY, INC.
FOR
SOLID WASTE, RECYCLABLE MATERIALS,
AND YARD TRIMMINGS SERVICES
This First Amendment is made and entered into by and between the CITY OF PETALUMA, a charter
city, (hereinafter "City"), and GreenWaste Recovery, Inc., a Subchapter S corporation organized and
operating under the laws of the state of California (hereinafter "Contractor"). City and Contractor may
be collectively referred to herein as the "Parties."
This Agreement is entered into on the basis of the followings facts, understandings, and intentions of the
Parties.
WHEREAS, the City and Contractor entered into a Franchise Agreement for Solid Waste,
Recyclable Materials, and Yard Trimmings Services (the "Agreement") dated as of September 13, 2005;
and
WHEREAS, on August 22, 2005, the City Council of the City of Petaluma adopted Resolution
No. 2005-141 N.C.S. authorizing a Franchise Agreement between the City and Contractor; and
WHEREAS, the City desires that Rate Periods specified in the Agreement (which co>nmence
January 1 and end December 31) be modified to coincide with the fiscal years of the City (which
commence July 1 and end June 30) and desires that the Tenn of the Agreement be extended six months
so that the Term expires at the end of the City's fiscal year on June 30, 2016 (unless extended in
accordance with Section 3.4 of the Agreement); and
WHEREAS, the City desires that other provisions of the Agreement which may be impacted by
the change in the start and end dates of the Rate Periods to be amended as necessary; and
WHEREAS, the Parties agreed in 2008 to adjust Rate Period Three to an I8 -month Rate Period
to facilitate changing future Rate Periods to coincide with the City's fiscal year and further agreed to
modify Rate Period Three Contractor's Compensation and rate adjustment procedures for Rate Period
Three to reflect an 18 -month period and such modifications are not described herein; and
WHEREAS, on September 15, 2008, the City Council adopted Resolution No. 2008-182 N.C.S.,
modifying Rate Period Three to reflect an 18 -month period fi•om January 1, 2008 through June 30, 2009
to reflect fiscal year rather than calendar year rate periods and adjusting Contractor's Compensation
accordingly; and
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WHEREAS, the City identified that the adjustment method for Contractor's Compensation
presented in Sections 12.3 and 12.4 does not describe the annual adjustment method for allocated costs
related to general and administration, vehicle maintenance, and container maintenance and desires to
specify the method; and
NOW, THEREFORE, for the reasons stated above and in consideration of the provisions and
mutual covenants contained herein, City and Contractor agree to amend the Agreement as follows:
1, AGREEMENT MODIFICATIONS. This section describes the modifications to the Agreement.
a. Article 1, Definition of "Rate Period" is hereby modified to read as follows:
"Rate Period" means a 12 -month period for which Contractor's Compensation is calculated
commencing July 1 and concluding June 30 with the following exceptions: (i) Rate Periods One
and Two shall be 12 -month periods commencing January 1 and concluding December 31; and
(ii) Rate Period Three shall be an 18 -month period commencing January 1, 2008 and concluding
June 30, 2009."
b. Section 3.3, Term is hereby modified to read as follows:
"The Term of this Agreement shall continue in full force for a period of 10.5 years from 12:01
a.m. on January 1, 2006 (Commencement Date), to midnight June 30, 2016, unless the
Agreement is extended by City pursuant to Section 3.4 or tenninated in accordance with Section
15.2."
c. Section 3.4, Option to Extend Term is hereby modified to read as follows:
"At the City's sole discretion, the City shall have the option to extend this Agreement on one or
more occasions provided that the combined extension period does not exceed 36 months or
extend beyond June 30, 2019. If the City extends the Agreement, it shall give written notice to
Contractor 180 calendar days prior to the initial expiration date or extended expiration date of
this Agreement. The City's written notice shall specify the number of months by which it elects
to extend the Term of this Agreement and the revised expiration date of the Agreement."
d. Section 12.4.1.A.6, Forecasted Annual Cost of Operations for Rate Period Four subsection 6
is hereby modified and new subsections 7 through 10 are added, to read in full as follows:
"6. Forecasted allocated costs from general and administration shall be calculated for Rate
Period Four by multiplying the allocated costs from general and achninistration for Rate
Period Three by one plus 75% of the percentage change in the "San Francisco -Oakland -San
Jose Metropolitan Area Consumer Price Index (Urban Wage Earners; 1982-84=100)," which
is compiled and published by the U. S. Department of Labor, Bureau of Labor Statistics or its
successor agency, between the most -recently -published monthly index at the time of the
application and the corresponding monthly index published 12 months earlier.
7. Forecasted allocated costs from vehicle maintenance shall be calculated for the Rate Period
Four by multiplying the allocated costs from vehicle maintenance for Rate Period Three by
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one plus the percentage change in the "Motor Vehicle Repair Index, All Urban Consumers,
U.S. City Average (PI -U) 1982-1984 = 100," which is compiled and published by the U. S.
Department of Labor, Bureau of Labor Statistics or its successor agency, between the most -
recently -published monthly index at the time of the application and the corresponding
monthly index published 12 months earlier.
8. Forecasted allocated costs from container maintenance shall be calculated for the Rate Period
Four by multiplying the allocated costs from container maintenance for Rate Period Three by
one plus the percentage change in the "Motor Vehicle Repair Index, All Urban Consumers,
U.S. City Average (Pl-U) 1982-1984 = 100," which is compiled and published by the U. S.
Department of Labor, Bureau of Labor Statistics or its successor agency, between the most -
recently -published monthly index at the time of the application and the corresponding
monthly index published 12 months earlier.
9. Forecasted allocated depreciation costs for Rate Period Four shall be $13,400.
10. Forecasted annual cost of operations for Rate Period Four shall equal the sum of the
following costs, which shall have been calculated in accordance with procedures in this
Section:
(1) Forecasted labor -related costs
(2) Forecasted vehicle -related costs
(3) Forecasted recyclable materials processing costs
(4) Forecasted other costs
(5) Forecasted depreciation expense
(6) Forecasted allocated costs from general and administrative
(7) Forecasted allocated costs from vehicle maintenance
(8) Forecasted allocated costs from container maintenance
(9) Forecasted allocated costs for depreciation."
e. Section 13.2.B, Reconciliation Procedure, is hereby modified to read as follows:
"By October 10, of each year of the Agreement, Contractor shall submit to the City its audited
financial statement for Contractor's most recently completed fiscal year, which shall describe the
actual Rate Revenues collected for services billed and performed in the City, and Contractor
shall describe any difference in the audited actual Rate Revenues and the Rate Revenues
anticipated to be due for the prior Rate Period, as determined by these procedures. The
difference shall be reconciled as described in Section 13.2.A above.
The City may request reconciliation of revenue with Customer account information. if such a
request is made the Contractor shall provide the actual number of accounts and type and
frequency of service along with a copy of the most recent review of its Billings, which small be
reconciled to the audited actual Rate Revenues. If the variance between the actual Rate
Revenues determined through the audit process using Customer account information and the
actual Rate Revenues reported in the audited financial statements is greater than 0.5%, the
amount of the variance between the actual Rate Revenues determined through the audit process
using Customer account information and the actual Rate Revenues reported in the audited
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financial statements shall be deducted from (credited to) the Contractor's Compensation for the
next Rate Period."
f. Section 17.6, Severability, is hereby modified to read as follows:
"If any non -material provision of this Agreement and this Amendment (including any phrase,
provision, covenant, or condition) is for any reason deemed to be invalid and unenforceable, the
invalidity or unenforceability of such provision shall not affect any of the remaining provisions
of the Agreement, which shall be enforced as if such invalid or unenforceable provision had not
been contained herein."
2. HEADINGS. The heading titles for each paragraph of this First Amendment are included only as a
guide to the contents and are not to be considered as controlling, enlarging, or restricting the
interpretation of the Agreement.
3. MODIFICATIONS. This First Amendment may not be modified orally or in any manner other
than by an agreement in writing signed by both Parties.
4. TERMS. All other terms in the Agreement for Solid Waste, Recyclable Materials, and Yard
Trimming Services, not specifically amended by this First Amendment shall remain in full force and
effect. This First Amendment is executed in three (3) duplicate originals, each of which is deemed to
be an original.
5. SIGNATURES. The individuals executing this Agreement represent and warrant that they have the
right, power, legal capacity, and authority to enter into and to execute this First Amendment on
behalf of the respective legal entities of the Contractor and the City. This First Amendment shall
inure to the benefit of and be binding upon the Parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the City and Contractor do hereby agree to the full performance of the
terms set forth herein.
CITY OF PETALUMA CONTRACTOR
GreenWaste Recovery, Inc.
City Manager President
ATTEST:
City Clerk
APPROVED AS TO FORM:
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City Attorney
APPROVED:
Department Director
APPROVED:
Risk Manager
APPROVED:
Finance Director
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