HomeMy WebLinkAboutAgenda Bill 4.B 05/03/2004CITY OF PETALUMA, CALIFORNIA
AGENDA BILL ' 3 3
Agenda Title
Meeting Date: May 3, 2004
Resolution Approving Extension
pp g of Contract With Empire Waste
Management For Solid Waste Collection Services For A Period Not
. Meeting Time N 3:00 PM
To Extend Beyond February 28, 2005.
❑ 7:00 PM
Category (check one) ❑ Consent Calendar ❑ Public hearing ❑ New Business
]C Unfinished Business ❑ Presentation
Department
Director
Contact Person
Phone Number
City Manager
Mike Bierman
Mike Bierman
70 778 4345
Cost of Proposal -0-
Account Number n/a
Amount Budgeted n/a
Name of Fund:
n/a
Attachments to Agenda Packet Item
1. Resolution Authorizing Contract Extension.
2. Letter for Empire Waste Management Committing To Extension And Certain Obligations.
' Summary Statement
On December 17, 2003, Staff recommended extending the current contract with Empire Waste
Management for collection of solid waste. The purpose of the extension was to ensure uninterrupted
collection service while the City concludes the review and award of a new franchise agreement for solid
waste collection services. Council requested staff to meet with Empire Waste Management in an attempt to
gain additional concessions and commitments from the current hauler in return for granting the extension.
City Staff met with Empire 'Waste Management representatives. The attached resolution contains
additional changes in service as. agreed to by Empire Waste Management.
Recommended City Council Action /Suggested Motion
Pass resolution approving Amendment 3 to the franchise agreement, including an extension of the term of
the agreement.
Re ' ed bv Finance Director:
Reviewed by City Attorney
Dater
Approved City Manage
Date:
Date:
/
da s Date:
Revision # and Date Revised'
Code:
#
Amendment 3 Empire Waste Franchise
April 26, 2004
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CITY OF PETALUMA, CALIFORNIA
MAY 3, 2004
AGENDA REPORT
FOR
Amendment 3
EXECUTIVE SUMMARY
Staff met with representatives of Empire Waste Management to discuss additional commitments in
regards to an extension of the current solid waste collection franchise agreement. The attached
resolution authorizes the P Amendment to the franchise agreement.. The amendment extends the
agreement.to February 28, 2005. In consideration of the extension, Empire Waste Management agrees
to forego a rate increase of 2.24% currently allowed.in the contract plus agrees to forego the adjustment
due in January 2005 that is allowed in.the formula contained in thecurrent contract. An additional
incentive is also provided to the City in return for disposal. of solid waste material at the Redwood
landfill in Marin County for the remainder of the franchise. Additional refuse containers for downtown,
additional street sweeping in the ;fall, and additional recycling services during community events are also
provided under the amendment.
2. BACKGROUND
Due to the ongoing process of soliciting proposals for solid waste collection, it is apparent that the
process will extend beyond the termination of the current franchise agreement with Empire Waste
Management. City staff, along with our consultant, recommends that the current agreement be extended
to provide uninterrupted service during the process. In return for the extension of the current franchise
agreement, Empire Waste.Management has agreed to make certain improvements to its service and to
waive current and future increases in rates provided for in the current contract for the remainder of the
current agreement. It should be noted, however that Sonoma County has approved an additional rate
increase of approximately 27% in disposal fees to cover some additional expenses associated with a
recent discovery of leakage at the Central Landfill and their need to haul a large quantity of material out
of county for disposal. Empire Waste Management states that they would not be able to absorb that
additional increase without some rate increase in the event the City elects to continue disposal in
Sonoma County. Based on the, increase in the. county fees, Empire Waste Management has stated that
they will need a rate increase of 6.6.1 % across the. rate structure to cover those additional costs. Empire
Waste. Management has agreed to extend service to Petaluma, even if the City elects to stay with in
county disposal.
Sonoma Waste MaPagerne-rit officials have indicated a need to transport a portion of their refuse out of
county for an extended.period as they address current issues at the Central Landfill. An increase in the
tipping fees at the Central Landfill of approximately $14 per ton would increase the fee to approximately
$70 from the current $54 per ton fee. That increase would be reflected in an increase to Petaluma's
residential customers of $..34 to $1,.78 per month, depending on. the container size. Commercial
containers would increase $1;05 to $2.61 per month, depending on container size. Commercial Bin rates
would have the same 6.61 % increases.
0 Empire Waste Management, in addition to waiving the rate adjustments under their current contract, has
offered to haul the refuse to Marin Landfill instead of continuing with hauling to Sonoma County
Central Landfill. A credit of $250,000 would be provided to the City if Empire Waste Management is
allowed to haul out of county. Empire Waste Management has further offered to either pay the credit
in monthly installments of approximately $20,833.33 while the out of county disposal is provided, or, to
reduce our current rates. If the reduction is applied across the customer base, the rate reduction
would be-3.6%. If, however, the reduction is limited to the residential customers, their rates would be
reduced by 8.88 %. In the event the City chooses to dispose out of Sonoma County, the Sonoma County
Waste Management Agency has indicated that the City would not be allowed to participate in future
programs currently provided by the Agency, including hazardous waste, .collection events. Other
services including preparation aration of , g p p solid waste reports to the State of California, would no longer be
provided by the Agency and would have to be provided by City and the hauler. Currently, the disposal
fees at the local landfill cover these costs. Should the Council authorize out of county disposal provided
by Empire Waste Management Agency programs, the City would need to, either develop it's own
programs, eliminate certain programs, or try to negotiate with the Waste Management Agencyto allow
us to participate.in their programs. The cost of those programs, regardless of the provider, would need
to be reflected in future rate adjustments. According to Waste Management Agency officials, the
current charge for these programs is in the amount of'$3.50 /ton in the current tipping fee. That amounts
to about $127,500 a year from Petaluma residents.
3. ALTERNATIVES
Extend the current contract without waiver of rate increases or changes in service. This would result in
a more significant increase in customer rates:
Continue disposal at the Sonoma County Landfill. Staff will need to return for approval of 'a rate
increase to be effective July 2004.
4. FINANCIAL IMPACTS
Waiver of rate increases will save the ratepayers of Petaluma approximately $1`70,000 during the
remainder of the,franchise agreement. The City of Petaluma will loose approximately $21,600 in •
potential franchise fees without ther scheduled rate adjustments. Depending on the option chosen by the
Council, that loss could be recovered by the $250,000 cash payment to the City out. of county disposal
was allowed. While additional franchise fees would be lost if the rate reduction option was chosen, the,
rate payers could see a reduction in their billings from 3.6% to 8.88 %, depending on the option chosen.
CONCLUSION
The extension of service .is an appropriate action to insure continuation of service during the selection
process. While a loss .of potential franchise fees would result from a reduction of the collection rates,
the ratepayers experience at least a_36 %savings in their 2004 collection rates.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR COMPLETION:
Continuation of services during the extension period or until the City identifies a preferred contractor
and reaches a new agreement. '
7. RECOMMENDATION
The most important item of business is to conclude the extension agreement with the ,current contractor.
Empire Waste Management has agreed to continue service up to March 1, 2005 regardless of what
disposal option the City selects. Finalization of this item has been delayed several months while Staff
has tried to anticipate the action of Sonoma County concerning its fee increase. Now that we know'wha
those increases are, and know the impact of those increases on our rates, the City needs to (1) approve
the contract extension with Empire Waste Management and (2) provide staff with direction regarding
the issue of continuing with Sonoma County disposal or allowing out of county disposal on at least a
temporary basis.
On an.inierim basis, allowing the current hauler to dispose out of county during the extension term will
provide rate relief for our residents. At the current rate in Sonoma County verses the Redwood Landfill
rate, on.an arulualized basis, the residents could save approximately $35.1,000 a year in disposal fees.
With the new rates,effective July 2004, the annualized savings could be $897,000 based on an annual
tonnage of 35,000 tons_. On the. other hand, we risk-the real.potential of not being able to participate in
• local waste diversion and reduction programs provided by the Waste Management Agency and will need
to negotiate with the preferred proposer how those progrars; such as hazardous waste collection, public
education and other programs, including state waste reporting obligations, will be handled and funded.
Based on the current state of affairs within Sonoma County relating to disposal, we recommend that the
extension be approved and include a provision, on an interim basis, to allow out of county disposal at
least until the new contract :is agreed upon and executed. This will also allow us time to evaluate the
potential future increases Sonoma County may add to repair and /or upgrade their facility.
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A RESOLUTION AUTHORIZING CITY MANAGER TO SIGN
AMENDMENT NO 3 TO THE AGREEMENT FOR, COLLECTION AND
DISPOSAL OF GARBAGE RUBBISH, WASTE MATTER AND
RECYCLABBLES AND STREET SWEEPING WITHIN THE CITY OF
PETALUMA EXTENDING THE TERMINATION DATE
WHEREAS, the City is engaged in a process to solicit proposals for a new
Franchise Agreement for waste collection services, and,
WHEREAS, the City and' Empire Waste Management wish to extend the term of
the current agreement to provide adequate time for solicitation review and selection of a
contractor for future waste collection services, now,
NOW, THEREFORE, BE IT RESOLVED, that the City Manager is hereby
authorized to sign Amendment 3 to the Agreement for Collection and Disposal of
Garbage, Rubbish, Waste'Matter, and Recyclables and Street Sweeping within the City of
i Petaluma, attached as Exhibit A.
EXHIBIT A
AMENDMENT NO.3 TO THE AGREEMENT FOR COLLECTION
AND
DISPOSAL, OF GARBAGE, RUBBISH, WASTE MATTER, AND
RECYCLABLES'' AND STREET SWEEPING `WITRIN
THE CITY OF
PETA'LUMA
THIS AMENDMENT to the.Agreement for Collection and Disposal of Garbage,
Rubbish, Waste Matter; and- Recyclables and Street Sweeping Within the City - of
Petaluma, dated June .16, 1997. ( "the Agreement ") is entered .into by and between the
City of Petaluma, a charter city; and a municipal corporation (`-`,the City "), and Empire
Waste Management, a division of Waste Management Collection and Recycling, Inc., a
California. corporation ( "the Contract Agent "), effective , 2004.
Whereas, the parties desire to extend the termination date of the Agreement.from June 30,
2003 to February 28, 2005, and to ,amend the Agreement to permit such an extension
without the need for three: year's notice.
NOW, THEREFORE, the parties _agree as follows:
1. The first sentence of°the paragraph of the Agreement labeled "TERM" is amended
to read as follows:
This contract shall :commence on June 16, 19:97, and shall terminate no
later thanTebruary 28, 2005, unless terminated for cause as herein
specified.
2. For purposes of amendment, the parties agree to mutual waiver of the
following provision.in, the "final sentence of the paragraph of the agreement
labeled "TERM !, only to the extent that it requires, that any ;amendment to extend
the term of this, contract be agreed upon no later than three years' prior to the end
of the contract:
Any amendment to extend the term of this contract must be agreed upon in
writing'by the City and Contract Agent no later than three (3) years prior
to the.end of the contfact as established in this section, except if
terminated as' authorized in the contract.
3. Inconsideration of the extension, Empire Waste Mahagernent agrees to forego
the 2.24 rate increase effective January 1, 2004 as well as the rate i ncrease
allowed under the current.contract for January 1, 2005.
4. Empire Waste Management agrees to (a) pay, an additional franchise fee in the
amount of $250,000 annually. In exchange, Einpire Waste Management will be
allowed to transport all of the City's municipal solid waste to Redwood landfill.
This amount :,is basedupon current tonnages and would also be subject to any
unforeseen State or Federal regulatory fees that possibly may be imposed during
this, period, or, (b) Empire Waste Management agrees to reduce the collection
rates either 3 :6 % if applied to residential and commercial rates or 8.8.8 % if
applied to residential rates only.
, 5: Empire Waste Management w_ ill. work with the City to place additional refuse
containers in the downtown area as a means to increase service there.
6,. Empire Waste Management will provide, enhanced recycling services at
community events as determined and agreed upon between Empire Waste
Management and the City.
7. Empire: Waste Management will - increase, street sweeping servict two additional
days per week during the pealc.leaf fall period of October and December:,
8. The requirement that any amendment to the contract be agreed upon ii writing
remains in, full force and effect.
9. All otherterins and conditions of the Agreement, including any and all
amendments and addenda thereto, shall remain in full . force land effect..
IN WITNESS WHEREOF, the parties execute this Amendment to Agreement
CITY OF PETALUMA
WASTE MANAGEMENT
City Manager
APPROVED AS TO FORM:
City Attorney
ATTEST:
City Clerk
APPROVED:
President
Secretary /Treasurer
`0.
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Finance Director
IS APPROVED:
Risk Manager
APPROVED:
City Manager
Amendment 3 to Waste Collection,Agrmt
3/9/04
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April 26, 2004
Mr. Michael Bierman
City Manager
City of Petaluma
P. O. Box 61
Petaluma, CA 94953 -0061
RE: Contract Extension
Dear Michael:
R E "Ca..
APR ,' 6 2004
CIT'l( Pit A N AGE.R
Since my letter to you dated March 8, 2004 significant events have taken place at the Central Landfill in
0 Sonoma County. As you are aware on April 20, 2004 the Sonoma County,Board of Supervisors approved
a 28.7% increase in the disposal fee at the Central Landfill. This. disposal increase translates to an
aggregate rate increase of 6.61 %. Please see the attached schedule. This letter also recaps our previous
discussions regarding a contract extension through February 28, 2005 during our meeting at City Hall on
both January 13, and March 8, 2004.
Empire Waste Management proposes the following:
As previously discussed, EWM will forego the 2.24% o rate increase effective January 1, 2004 as
well as the rate increase required for January 1, 2005 by the City granting a contract extension
through February 28, 2005. Projected ,savings to the ratepayers of the City of Petaluma is
approximately $170,000.
2. EWM will forego. the 6.6.1% o increase that would be required using the Central Landfill in Sonoma
County. EWM would haul the City's refuse to the Redwood Landfill in Marin County. This
additional savings to the ratepayers of Petaluma is approximately $360,000.
3. EWM' Will pay an additional fee to the City in the amount of $250,000 annually. This amount will
be paid to the City on :a monthly basis in the amount of $20,833.33 upon Council approval and
until the end of our current contract term. In exchange, EWM will be allowed to transport all of
the City's municipal solid waste to our Redwood landfill. This is based upon the current tonnages
and would .also be subject to any unforeseen State or Federal regulatory fees that possibly may be
imposed during this. period.
If the City wishes, the $250, 000 may be reflected in the rates, as an alternative to a direct payment
to the City. If applied to residential only, residential rates would be reduced by 8.88 %. If applied
to both residential and commercial, the residential and commercial rates would be reduced by
3.60 % Note that the revenues- from and commercial fluctuate from year to year.
These rate decreases were computed based upon actual 2003- billed revenues.
If the City wishes, a portion of the $250,000 may be used to fund the continuation of the City's
participation in the Sonoma County JPA.
4. EWM will work with the City to place additional refuse containers in the downtown area as a
means to increase service there.
5. EWM will provide enhanced recycling services at community events as determined and outlined
between the City and EWM.
EWM will increase the street sweeping service two additional days per week during the peak leaf -
fall period of October through December.
Disposing of refuse at our Redwood Landfill stabilizes rates to the City's, constituency'while offering
alternative solutions to the soaring costs of disposal at the Central Landfill in Sonoma County. EWM
appreciates the opportunity to present this proposal to the City. If you have any further questions, please
contact me at your convenience.
Very Truly Yours,
James Landa
Director of Municipal Relations
707 - 484 -6150
cc: Gene,Beatty
Interim Assistant City Manager
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CITY OP- PETALUMA
Rate-Schedule -
-Effective Jaly 2084
Proposed increase; AM %.
C7
Current Proposed,
20 Gallon Can (auto)
5.12
5.46
Per Month
Each Addl 20 Gal (Extras)
6;60
7.04
Per Service
35 Gallon Can (auto)
9;09
9.69
Per Month
Each Add'l 35 Gal (Extras)
6.60
7.04
Per Service
60 Gallon Can (auto)
15.90
16.95
Per Month
Add'I 60 Gal Can
17.10
18.23
Per Month
Each Add'I 35 Gal (Extras)
6.60
7.04
Per Service
90 Gallon Can (auto)
26.92
26.70'
Per Month
Add'I 90 Gal Can
29.39
31.33
Per Month
Each Add'I 35 Gal (Extras)
6.60
7.04
Per Service
62 Years Or Older On SSI & Medi -CA
9.94
10.60
Per Month
Anartm ants-
3llon Can
15:94
16 ;99
Per'Month
Gal Can
13.59
14:49
Per Month
ch Add'I 32 Gal xtras
5.24
5 ;59
Per Service
Cemmarrial. Srhm it day
32 Gallon Can
1524"
16.99
Per Month
Add'I 32 Gat Can
1524
18.99
Per Month
Each Add'I 32 Gal (Extras)
-6.60
7.04
Per Service
90 Gallon Can
39.50
42.11
Per Month
Add'I 90 Gal Can
39.50
42A 1
Per Month
Each Add9 32 Gal (Extras)
6;60
7.04
Pdr:Service
Commercial Bin Service
FREQ 1YD Current 1.5YD Current
2YDS Current
3YDS.Current
4YDS Current
6YDS Current
1X/WK : k 134.94
158.52
212.11
233:04
318.92
2kWK 216.06
261.19
353.96
435.64
526.56
3X/WK -: .. " ' 29916
353.96
565.76
637
795.09
4wWK 353.35
501:16
742.24
840.78
1,049.35
5X/WK 476.50
621.93
917:07
1,043:75
1,302.89
6X/WK , e�,
; 565.14
648,31
1,095:84
1,245:67
1,629.00
FREQ.. 1YEiRroposed, 1 I-5YUProposed
2YD5 Pro sed
3YDS;Pro - sed ,
4YDS Current
6YDS:Current
1X(WK 14186
169.00
226.13
248.44
340.00
2X/WK } ., 230.34
278:45,
377.36
464.44
561.37
3XlWK 319.04
377.36
603:16
679.16
847.65
lW
4XK 376.71
53429
791.30
896.36
1,118.71
5XNUK 508.00
663.04
977.69
1,112.74
1,389.01
6X/WK u, 602.50
691:16 1
1, 168.28
1,328.01 1
1,736.68
• Each Additional'Yard`. 1 17.01