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HomeMy WebLinkAboutWORKSHOP 08-16-99 inter-Com DATE: AUGUST 16, 1999 ~ TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER PUBLIC WORKS DEPARTMENT WORKSHOP REGARDING PREPARATION OF BID SPECIFICATIONS FOR SOLID WASTE SERVICES FRANCHISE AGREEMENT SUMMARY: The City is required to seek public works bids for solid waste services and has retained Hilton, Famkopf and Hobson to prepare the bid specifications. The purpose of this public workshop is to review service options for complying with the AB-939 50% diversion mandate and provide direction to staff for inclusion in the bid specifications. Staff proposes the implementation of a single contract with automated residential collection and a three-cart recycling program~ In addition, staff proposes that a 2% franchise fee be collected from residential customers for administration and compliance costs. RECOMMENDATION: Staff is requesting the City Council to provide direction to staff regarding service issues related to the preparation of the bid specifications for the City's new solid waste services franchise agreement. FISCAL IMPACT: The current solid waste franchise agreement specifies a 2% franchise fee for commercial accounts and generates approximately $109,000 in annual revenue to the City. Uniformly applying the franchise fee would provide additional general fund revenue, to offset City costs associated with administration and implementation of the solid waste program. BACKGROUND: In 1994, City voters approved Measure J that amended the City Code to require utilization of a Public Works bid process for any new solid waste franchise agreement. City Code Section 4333 is included for reference as Attachment A to this report. On May 17, 1999, the City Council approved a professional services agreement with Hilton, Famkopf and Hobson (HFH) to prepare the bid specifications for a new solid waste contract. HFH has completed its initial assessment of the current services and, after community and City Council input, will be prepared to develop the new bid specifications. The current solid waste franchise agreement with Great Western Reclamation (GWR), a division of Waste Management of Orange County, expires on June 30, 2000.. The existing service consists of the manual collection of mixed residential and commercial waste with processing and recovery of recyclable materials at the Waste Management's Sunset Environmental Material Recovery Facility. Residual waste is then disposed in an Orange County Landfill or diverted to a waste-to-energy facility in Long Beach. In 1998, the total annual tonnage collected by GWR was 74,700 tons. Of this amount, approximately 41% of the total waste stream was from all residential customers and 59% was from commercial customers. All collected waste is processed through the Sunset Material Recovery Facility in Irvine. In 1998, approximately 29.5% of the total waste collected was removed from the waste stream for recycling or was sent to an incineration facility in Long Beach in order to divert flow from Orange County landfills. The State calculated citywide diversion percentage for 1998 was 26%. While evaluating the current level of service and analyzing future service requirements, the overriding concern of staff remains compliance with State recycling and landfill diversion requirements. AB-939 and subsequent implementing regulations mandated that the City recycle or divert from landfills 25% .of the City's 1990 landfill disPosal tonnage by 1995. In the year 2000, the mandated diversion percentage will double to 50%. Failure to comply with this mandate Could result in fines levied by the State of up to $10,000 per day The California Integrated Waste Management Board has determined that the City is making a "good faith effort" and is in compliance with the 1995 25% diversion mandate. While the current level of solid waste service provides compliance With the 1995 mandate, it is certain that the City will not comply with the year 2000 50% diversion mandate with the current level of service. Staff believes that the current program is marginal in its effectiveness at achieving the 25% mandate and that a higher margin of "safety" is required in the next contract. It should be noted that a hauler diversion rate of 55-60% is the minimum necessary to insure that the City has an effective State calculated diversion rate of at least 50%. The following significant policy issues must be resolved in order to complete bid documents. An overview of each of these issues is provided below: ISSUE ADVANTAGES DISADVANTAGES Could possibly result in more bids for commercial services. 1. Shall the City award separate contracts for residential and commercial services? 2. Should the City require that residential refuse collection be automated? 3. Is yard waste recycling alone sufficient to achieve Insures separation of solid waste costs for commercial and residential services. Improved community appearance. Significant efficiency increase for hauler and lower rates. Reduced worker injuries. Relatively simple program to for a hauler to implement City administration costs will increase with more than one contract. It would be more difficult to assign AB-939 compliance responsibility to multiple haulers. Could decrease hauler efficiencies and increase total costs. Requires a cart for each waste stream. Initial customer resistance to change. Not certain that the City would attain the 50% diversion mandate. No other incentive would be provided to recycle other products. the State's year 2000 50% diversion mandate? Maximum diversion increase for the least program change. Would force hauler to continue substantial reliance on a material recovery facility for other refuse.' Additional program costs ISSUE 4. Should the City implement a three-cart source separation program for residents and selected ADVANTAGES Would maximize the City's ability to meet the State's AB- 939 50% diversion mandate Source separation is now an industry standard and most DISADVANTAGES Requires customers to businesses? haulers are equipped to provide this service. Hauler would provide and maintain customer trash containers Could increase hauler efficiency when combined with automation. dramatically alter their waste disposal practices Additional program costs. Multiple collection vehicles for various waste streams. Requires considerable public information/education effort by the City and the hauler. Solid waste recycling services would be offered to selected multi-family locations and businesses. Provides all residents an opportunity to recycle 5. Should franchise fees be collected from residential customers and/or should franchise fees be increased? Any increase would further diversify the City general fund revenue sources. An increase could compensate the City for impacts to streets related to solid waste collection activities. Could provide funding for additional public information/education and to promote community recycling. An increase would result in minor additional cost to solid waste customers. The current fee will continue on commercial customers only. HFH and staff recommend that the City Council adopt a conservative strategy to insure that the City meets the 50% diversion mandate. HFH and staff believe that any adopted program should maximize the opportunity to achieve and exceed the 50% diversion mandate. Specifically, HFH and staff propose that the City approve a solid waste program that includes the following key components: 1. A single contract for all City solid waste services. Justification: Limited staff resources are available to support contract administration. An additional contract would limit the ability of the City to hold any contractor responsible for City compliance with AB-939. In addition, the different programs and contractors could confuse residents/business owners. Solid waste collection and disposal cost savings to either the residential sector or business sector may not be realized due to the loss of routing and service efficiencies. 2. Automate residential routes and selected commercial accounts. . Justification: Automation is the utilization of a mechanical load collection system on waste collection vehicles. Use of this system generally requires the use of special carts that can be manipulated by the loader system. Use of the equipment speeds waste collection because the driver does not have to step from the vehicle at each collection point. Cost savings are realized by the hauler due to reduced worker compensation claims and because routes can be scheduled more efficiently. Implementation of automated collection could provide significant hauler savings over the current manual collection method. Automation could also offset increased costs associated the implementation of any recycling option. .. Implement a three-cart source separation program for residents and selected commercial accounts. Justification: HFH and staff believe that any program less than a three-cart source separation program is not likely to achieve the State's 50% diversion mandate. In his 1998 report to the City, .Dr. Eugene Tseng of UCLA, a well-known and resp6cted authority on solid waste, concluded that yard waste accounted for approximately 25% of the community's residential waste volume by weight. Recovery of all' residential green waste material and a significant amount of other recyclables materials would be required for year 2000 dompliance. A three-cart system, requires customers to separate waste into one of three carts provided by the hauler; one for green waste, one for general refuse and another for mixed recyclables (glass, newspapers, plastic, etc.). Staff would require the hauler to be responsive to customer requirements (space limitations, sizing, type) when issuing carts. Additionally, some multi-family and commercial accounts would be offered the opportunity to participate in source separation at no additional charge, prOvided they have room for extra bins or carts. While a three-cart program is a significant change for City residents, Staff would work with the hauler to be as accommodating to customers as possible while insuring that the program maximizes the City's likelihood to achieve the 50% diversion rate, reduce the City's need to process waste through an expensive material recovery facility and demonstrate to the State a sincere and gOod faith effort to reduce the landfilling of waste for the entire term of the new contract. 4. Apply a 2% franchise fee to residential accounts that recovers City solid waste administration and compliance costs. Justification: The current 2% franchise fee is well below the 5-15% range of fees charged to by other cities in Orange County. Additionally, the current fee is applied only to commercial accounts, thereby creating a structural rate disparity between commercial and residential rates. The current fee is not sufficient to recover City franchise administration and compliance costs, does not compensate the City for impacts to City streets caused by heavy solid waste vehicles or provide the City with funding to support or advocate community recycling. Staff estimates that approximately $150,000 annually is required to support administrative and compliance costs. A fee. higher than 2% for commercial and residential accounts would be required to support community recycling efforts, provide community education and compensate the City for impacts to streets. From a legal perspective, there is no limitation on the fee level. A summary of the residential service options prepared by HFH is provided as Attachment B. The City Council is requested to provide direction to staff regarding these key issues. This will permit HFH and staff complete a draft set of bid specifications. When the draft bid specifications are completed, staff will circulate the document to all potential bidders for comments regarding technical wording. Staff will then modify the bid documents in accordance with City Council policy direction and return to the City Council for formal approval of the bid specifications. A project schedule is provided as Attachment C. T(~ D. Serlet Public Works Director Senior Management Analyst, Public Works Department Attachments ATTACHMENT A TUSTIN CITY CODE SOLID WASTE COLLECTION 40o3 4333 CONTtLiCTS FOR REMOVAL AUTHORIZED The Council may enter into contracts for the collection and disposal of solid waste mate- rial, and may establish such rules for the regulation thereof as ft may from time to time deem best and necessary. The terms, as set forth in Part 4, shall be the minimum terms of any contract, approved by the City Council. At least every seven (7) years City contracts for the collection and disposal of solid waste and for the collection of recyclable material shall be competitively bid in accordance with California Public Contracts Code Section 20162 et seq. This requirement shall apply upon the termination of each City contract for the collection and disposal of solid waste material that is in effect as of the date of this Ordinance No. 1130. (Ord. ~'o. 540; Ord. No. 1130, Sec. 2, 11-8-94) ATTACHMENT B ATTACHMENT C