HomeMy WebLinkAboutOrdinance 2361 N.C.S. 01/04/2010EFFECTIVE DATE ORDINANCE NO. 2361 N.C.S.
OF ORDINANCE
February 4, 2010
Introduced by
Teresa Barrett
Seconded by
Mike Harris
CONDITIONALLY APPROVING ASSIGNMENT OF THE FRANCHISE AGREEMENT BETWEEN THE
CITY OF PETALUMA AND GREENWASTE RECOVERY (GWR), INC. FOR SOLID WASTE,
RECYCLABLE MATERIALS AND YARD TRIMMINGS SERVICES TO PETALUMA REFUSE AND
RECYCLING, INCORPORATED, AN AFFILIATE OF THE RATTO GROUP OF COMPANIES, INC.,
AND AUTHORIZING CITY MANAGER TO EXECUTE A SECOND AMENDMENT TO THE
FRANCHISE AGREEMENT UPON SATISFACTION OF THE CONDITIONS PRECEDENT SPECIFIED
IN THIS ORDINANCE
WHEREAS, on September 13, 2005, the City entered into 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
Amendment) 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 ( "Assignee ") , 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 in 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
other franchise agreement or other activity of the Assignee reporting of activities under this
Agreement, as well as keep separate identification and use of all assets, including vehicles and
containers under this Agreement, as a separate entity from Redwood Empire Disposal or any
other affiliate (notwithstanding that these assets may be supplemented with the assets of
Assignee and its affiliates), unless specifically approved in writing in advance by the City; and;
WHEREAS, Assignee seeks to assure the City that the sale will not result in increased costs
or a reduction in services or the quality of those services provided to the City, its residents, or
businesses, or a reduction to the other obligations of Contractor under the Agreement.
NOW THEREFORE BE IT ORDAINED by the Council of the City of Petaluma as follows;
Section 1. Conditions Precedent. The following are conditions precedent to
assignment of the Agreement to Assignee contemplated pursuant to this ordinance taking
effect;
a. Payment of Funds Due City. Assignee shall demonstrate to the satisfaction
of the City that all amounts due the City have been paid in full in accordance with the
Agreement (principally the Franchise Fee and HHW /AB939 as described in Article 11 of the
Agreement and Section 16.6 of the Agreement).
20 b. Furnishing of Contractor and Its Independent Certified Public Accountant
21 of Certification of No Material Change to Financial Condition. The President of the Ratto 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 Ratto Group, since the date of its audited 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 Ratto 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 agents) 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 representations 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 conditions precedent specified in Section 1,
6 above, the City Council approves the Second Amendment to the Franchise Agreement
7 between the City of Petaluma and GreenWaste Recovery, Inc. for Solid Waste, Recyclable
8 Materials, and Yard Trimmings Services, assigning the Franchise Agreement to Redwood Empire
9 Disposal - Petaluma, an affiliate of the Ratto Group of Companies, 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 section, 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 otherwise invalid.
19 Section 4. This ordinance or a synopsis of it shall be posted and /or published for the
20 period and in the manner required by City charter.
21 Section 5. This ordinance shall become effective thirty (30) days after the date of its
22 adoption by the Petaluma City Council.
23
24 INTRODUCED and ordered posted /wed this 210 day of December, 2009.
25
26 ADOPTED this 41h day of January, 2010 by the following vote:
27
28 AYES: Barrett, Vice Mayor Glass, Harris, Healy, Rabbitt, Ren6e, Mayor Torliatt
29 NOES: None
30 ABSENT: None
31 ABSTAIN: None
32
33
34
35
36
!ya
Ordinance No. 2361 N.C.S. Page 3
Second Amendment to Franchise Agreement
between the City of Petaluma and GreenWaste Recovery, Inc.
This Second Amendment ( "Amendment ") to the Franchise Agreement between the City of
Petaluma ( "City "), a charter city, and GreenWaste Recovery, Inc. for Solid Waste, Recyclable
Materials and Yard Trimming Services, dated September 13, 2005 { "Agreement ") is made on the
of , 2009 ( "Amendment Effective Date ") by and between the City and
Petaluma Refuse and Recycling, Incorporated, an affiliate of The Ratto Group of Companies,
Inc. ( "Contractor "), assignee of GreenWaste Recovery, Inc., a Subchapter S corporation
organized and operating under the laws of the State of California. City and Contractor are
collectively referred to as the "Parties."
RECITALS
This Agreement is entered into on the basis of the following facts, understandings and intentions
of the Parties.
WHEREAS, on August 22, 2005, the City Council of the City of Petaluma adopted
Resolution No. 2005 -141 N.C.S. authorizing the Agreement between the City and GreenWaste
Recovery, Inc. a California corporation ( "GreenWaste "); and.
WHEREAS, on September 13, 2005 the City and GreenWaste entered into the Agreement
establishing an exclusive right to collect, transport, and process solid waste, recyclable materials,
and yard trimmings generated within the City; and,
WHEREAS, on July 6, 2009, the City Council amended the Agreement (the First
Amendment) to modify the Rate Periods originally specified in the Agreement; and,
WHEREAS, on February 24, 2008, GreenWaste requested an assignment of the Franchise
Agreement, in accordance with Section 16.6 of the Agreement, to Contractor; and,
WHEREAS, Section 16.6 of the Agreement requires the City's consent to any assignment of
the Agreement as defined therein, including the sale of GreenWaste's assets dedicated to service
under the Agreement, to a third party; 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 Contractor, as provided for herein, in consideration of
the City's consent to the assignment; and,
WHEREAS, the Contractor seeks to assure the City that, following the sale, Contractor will
continue operation of the Franchise in accordance with high professional standards, and provide
services to the City in 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 keeping separate from
any other franchise agreement or other activity of the Contractor reporting of activities under this
Ordinance No. 2361 N.C.S. Page 4
Agreement, as well as keeping separate identification and use of all assets, including vehicles .
and containers wider this Agreement, as a separate entity from Redwood Empire Disposal or any
other affiliate of Contractor (notwithstanding that Franchise assets may be supplemented with the
assets of Contractor and its affiliates), unless specifically approved in writing in advance by the
City; and,
WHEREAS, Contractor seeks to assure the City that the sale of the Franchise to Contractor
will not result in increased costs or a reduction in services or the quality of those services
provided to the City, its residents, or businesses or a reduction of any obligations of Contractor
under the Agreement; and
WHEREAS, the City Council has introduced Ordinance no. approving
assignment of the Agreement to Contractor and authorizing execution on behalf of the City this
Amendment, subject to Ordinance no. being adopted and taking effect and
satisfaction of the conditions specified in Ordinance no. ;
NOW, THEREFORE, the Parties hereto agree as follows:
1. CONDITION PRECEDENT AND AGREEMENT MODIFICATIONS. Satisfaction of
the conditions precedent contained in Ordinance no. and Ordinance no. tatting effect
in accordance with Sections 45, 46, and 51 of the Petaluma Charter, and section 16. 6 of tlwe
Agreement, and other applicable Iaw, shall be conditions precedent to this Amendment
taking effect. Upon satisfaction of such conditions precedent, and execution of this
Amendment by authorized representatives of the City and the Contractor, the Agreement
shall be amended in accordance with the following.
a. Article 1., Definitions, of the Agreement is hereby modified by replacing the definitions of
"Approved Composting Site," "Approved Disposal Location," "Approved Recyclable
Materials Processing Site' and "Contractor' with the following:
"Approved Composting Site" means Sonoma Compost on Mechain Road in Petaluma,
California. If the Contractor desires to change the Approved Composting Site, Contractor
shall request and receive written approval from the City Manager.
"Approved Disposal Location" means Redwood Landfill in Novato, California. If the
Contractor desires to change the Approved Disposal Location, Contractor shall request and
receive written approval from the City Manager.
"Approved Recyclable Materials Processing Site" means the North Bay Corporation on
Standish Avenue in Santa Rosa, California. if the Contractor desires to change the Approved
Recyclable Materials Processing Site, Contractor shall request and receive written approval
from the City Manager_
"Contractor" means Petaluma Refuse and Recycling, Incorporated, a corporation organized
and operating under the laws of the State of California and its officers, directors, employees,
agents, companies, and subcontractors.
b. Article 3. Term of Agreement. Section 3.4 Option to Extend Term is hereby replaced to read
as follows:
Ordinance No. 2361 N.C.S. Page 5
3.4 Extension of Agreement Term
In accordance with Section 51 of the City's charter, any extension of the Agreement Term
pursuant to this section may take effect no sooner than December 31, 20I4.
A. Extension by City. At the City's sole discretion, the City may extend this Agreement on
one or more occasions provided that the combined extension does not exceed a total of 3 6
months or extend the Agreement expiration date beyond December 31, 2018. If the City
extends the Agreement pursuant to this paragraph, it will give written notice to
Contractor 180 calendar days prior to the then - current expiration date of the Agreement.
The City's written notice will specify the number of months by which the Agreement
Term is extended and the new Agreement expiration date.
B. Extension by Agreement between City and Contractor. Notwithstanding the City's
right to extend the Agreement Term in accordance with A, above, based on Contractor's
satisfactory performance during Rate Periods 5 and 6, (fiscal years 2010/11 and 2011/12).
the City and Contractor may, by mutual agreement, negotiate an extension of the
Agreement Term of up to a total of an additional 60 months or until December 31, 2020,
whichever expires earlier.
c. Article 5. Section 5.4 Annual Residential Drop -Off Event is hereby replaced to read as
follows:
Article 5. Section 5.4 Annual Cleanups
The City elects to have the Contractor provide each residential customer two pre - scheduled
clean -ups during a period mutually established by the Contractor and the City. Each
residential customer shall be limited to four (4) cubic yards of materials per event. The
Contractor shall pick up solid waste placed at curbside and transport such items to the
Approved Disposal Location at no additional charge to customers. The following guidelines
must be followed:
I . AlI waste must be left at the curb by 6:00 a.m.
2. Items, where appropriate, should be placed in Contractor - approved cans, bags or boxes.
3. Residents may place major appliances (maximum I per event), bulky items, recyclable
materials, yard trimmings, tires (maximum 4 per residential customer; removed from
rims; no commercial tires), clean unfinished wood, and rubbish at the curb.
4. Yard trimmings cannot exceed 3 inches in diameter, or be longer than 3 feet, and weigh
no more than 75 pounds per bundle.
5. The following items will not be picked up: e -scrap items, liquids or sludge, cement, dirt,
asphalt, construction and demolition debris, a single item that weighs more than 75
pounds (excluding major appliances), hazardous waste or infectious waste.
Contractor may refuse to collect clean -up items and shall not be obligated to provide this
service to any person who does not set out'solid waste, and/or whose account is in delinquent
status.
Ordinance No. 2361 N.C.S.
Page 6
Contractor shall separate recyclable materials and yard trimmings collected from the clean-
up events and transport such materials to the appropriate Processing Site.
Major appliances shall be reused, recycled, or disposed by Contractor in accordance with
requirements of Applicable Law. Any changes to such regulations made after the Effective
Date shall be addressed as though they are a Change in Law in accordance with Section 12.7.
Contractor shall record the kind and weights (in tons) of solid waste diverted from the
landfill, if any, during these clean-tips through recycling, reuse, transformation or other
means of approved diversion.
d. Section 5.7 Collection from City Facilities, Exhibit B, referred to in this section, shall be
replaced by Exhibit B -1, which is attached hereto and made a part hereof.
e. Section 6.3 Solid Waste Disposal, is hereby amended by replacing the penultimate sentence
in B, Disposal Arrangements, with the following:
If the City exercises its right under this provision and specifies use of a Disposal Site that is
different from the Contractor - selected Approved Disposal Location, the City shall provide
written notice to the Contractor of one year or such shorter time on which the City and
Contractor may agree before the effective date of the change when the Contractor shall
commence use of the site.
L Section 9.3.3 Vehicle Identification, is hereby amended by adding the following sentence:
Vehicles identified for use in the City shall display on both sides in letters that are a
minimum of 4 inches high the following: "This vehicle is for use solely under the City of
Petaluma Waste Franchise."
g. Section 9.4 CONTAINER REQUIREMENTS, A. General, shall be amended to add the
following:
Containers identified for use in the City shall display on two sides in letters that are a
minimum of 4 inches high the following: "This container is for use solely under the City of
Petaluma Waste Franchise."
h. Section 10.1.1 Maintenance of Records, is hereby amended by adding to the end of the
section the following paragraphs:
The Contractor will cooperate with and compensate the City up to a total of $1 5,000 for up to
two reviews of the Contractors compliance with the procedures contained in the
Contractor's transition and ongoing records management plan for management of records
and reporting in accordance with this Agreement. Contractor's costs of reviewing and
monitoring the Contractor's transition and ongoing records management plan and monitoring
compliance with such plan shall be borne by the Contractor and not be passed through to the
ratepayers.
Contractor shall collect, manage and report all information required under this Agreement
concerning the Franchise separately and distinctly from all other operations of the Contractor
in accordance with all applicable Agreement requirements, and keep such information
available for inspection as described in Section 10. 1.3 below.
i. Section 11.1 Franchise Fee, is hereby amended to read as follows:
Ordinance No. 2361 N.C.S. Page 7
In consideration of the exclusive rights provided Contractor herein, Contractor shall pay
Franchise Fees to the City each month equal to 10.00% of Rate Revenues remitted by
customers for collection services provided in City, commencing with Rate Period 5.
j. Section 11.2 Vehicle Impact Fee, is hereby amended to read as follows:
Contractor shall pay a Vehicle Impact Fee to the City each month equal to 5.12% of Rate
Revenues remitted by Customers for Collection services provided in City. For purposes of
calculating Contractor's Compensation ill accordance with Article 12 of the Agreement,
6.42% of the Vehicle Impact Fee shall be included in Pass - Througb Costs and 1.7% of the
Vehicle Impact Fee shall be a non - allowable cost as otherwise described in Section 12.3.2 of
the Agreement.
1c, Section 12.3.2. B,2 shall be amended to add "t ". Franchise Fees equal to 13% of Rate
Revenues remitted by customers."
1. Section 12.3.2.D.7 Forecasted Franchise Fees, Vehicle Impact Fees, HHW and AB 939
Program Fees and Other Fees shall be amended to read: The forecasted Franchise Fees
equal to 10% of Rate Revenues remitted by customers, vehicle impact fees, HHW and AB
939 program fees, and other fees specified in Article 1 l shall be calculated using forecasted
Rate Period Three values.
m. Section 12.3.2.D. shall be amended to add "9 ". The incremental cost (either more than or
less than the then current costs) resulting from a City - Directed Change in Approved Disposal
Location and /or an Approved Recyclable Materials Processing Site and /or an Approved
Composting Site from that specified on the Effective Date
n. Section 13.2 Revenue Reconciliation, shall be deleted and no reconciliation of revenues
made subsequent to Rate Period 2 (January 1, 2007 to December 31, 2007). .
o. Section 15.5.13 Service Performance Standards; Liquidated Damages for Failure to
Meet Standards. The original Exhibit D referred to in this section shall be supplemented by
Exhibit D -1 attached hereto and made a part hereof
p. Section 16.6 Assignment, shall be amended to add at the end of the section the following
paragraph:
Upon approval of an assignment and in addition to all other fees and considerations paid City
by Contractor, Contractor shall pay City $250,000.00 to City as atransfer fee.
q. Section 16.9 Notice Procedures, shall be modified to replace the Contractor contact
information as follows:
If to Contractor:
(Name)
r. Section 16.12 Offer of Employment, shall be modified by replacing the current section in
its entirety with the following:
Ordinance No. 2361 N.C.S. Page 8
Contractor shall offer employment to the workers employed in positions listed in Exhibit C
of the Agreement by GreenWaste under the same tenus and conditions as in effect between
such workers and GreenWaste on date immediately prior to the Effective Date of this
Amendment, unless such workers have already been terminated for cause prior to the date
immediately prior to the Effective Date of this Amendment.
2. HEADINGS. The heading for each paragraph of this Second Amendment are included for
convenience only and do not affect the interpretation of the Agreement.
3. MODIFICATIONS. This Second 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 Second Amendment shall remain
unchanged and 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 Second
Amendment on behalf of the respective legal entities of the Contractor and the City. This
Second 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
Petaluma Refuse and Recycling, Incorporated
City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
APPROVED:
Department Director
President, The Ratto Group
Ordinance No. 2361 N.C.S.
Page 9 I
APPROVED:
Risk Manager
APPROVED:
Finance Director
Ordinance No. 2361 N.C.S.
1•
�'■
I M or FRITI V 1
Contractor may be assessed Liquidated Damages if Contractor fails to fulfill its obligations with regards to the
events listed in this Exhibit in accordance with the terms and conditions of the Agreement with regards to the time
frame for accomplishing each event and nature of the responsibility associated with the event unless otherwise
stated in this Exhibit.
USE OF EQUIPMENT
1. Improper Use of Equipment. For each occurrence identified by or $150/ event
reported to the City of trucks and containers purchased pursuant to
this Agreement operating outside the City limits except when trucks
are in route to a Processing Facility or Disposal Location.
EXHIBIT J -1
SCHEDULE FOR ADDITIONAL STREET SWEEPING SERVICES
SCHEDULE FOR SWEEPING AND WASHING
D. Parldng Lots
■ Sweeping of the following parking lots shall be conducted as needed:
Ellis Creek Parking Lot - 3890 Cypress Dr.
Corporation Yard — 840 Hopper Street
1334647.1
Ordinance No. 2361 N.C.S. Page 1 1
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