Camarillo City Council
AGENDA REPORT
Date: January 22, 2025
To: Honorable Mayor and City Councilmembers
From: Greg Ramirez, City Manager
Submitted by: Carmen Nichols, Assistant City Manager
Subject: Restated Franchise Agreement for Solid Waste Handling Services with E.J. Harrison & Sons, Inc.
BACKGROUND
The City has a Franchise Agreement with E. J. Harrison & Sons, Inc. (EJH), the Contractor, for Solid Waste Handling Services, with an initial term effective August 1, 2014 through June 30, 2024, and one five-year extension based on meeting the Agreement’s performance conditions and two discretionary five-year extensions. Under this Agreement, EJH is granted the exclusive right to provide services for the collection, disposal, and recycling of residential and commercial solid waste handling services within the City limits. On June 10, 2022, EJH requested a five-year contract extension which was approved by the City Council on February 22, 2023, extending the Franchise Agreement through June 30, 2029, with two five-year extensions remaining.
State requirements under Senate Bill 1383 – Short Lived Climate Pollutants – Organics (SB 1383) have impacted regulations and guidelines for processing solid waste, recycling, and organics materials. To comply with SB 1383, the City adopted Ordinance 1184 – Regulating Mandatory Organic Waste Disposal Reduction on November 12, 2021.
Due to the extension and the implementation of SB 1383, it became necessary to update the Franchise Agreement language and solid waste program requirements to comply with all CalRecycle state mandates.
Staff consulted with the City Attorney’s office who proposed an Amended and Restated Franchise Agreement (Restated Agreement) to consolidate existing contract amendments and update outdated provisions. The proposed Restated Agreement reflects the proposed negotiated terms agreed upon by the City and EJH (Attachment 1).
Subsequently, the Utilities Committee reviewed a draft of the Restated Agreement on July 23, August 28, September 12, October 15, and December 11, 2024. During these
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DISCUSSION
Staff conducted a comprehensive review of the City’s residential and commercial franchise agreement terms, rate structure, and service levels. In addition, staff reviewed the City’s contracted services and franchise fees and compared them to neighboring cities, including the County of Ventura. Staff used the results of this analysis to identify key provisions that required revision to align with the City’s industry standard and state mandates and consolidated all updates to the draft Restated Agreement based on feedback provided by the Utilities Committee. The Committee’s input and feedback were reviewed and incorporated into the final draft Restated Agreement (Attachment 2).
The proposed Restated Agreement provides for the service levels and Contractor responsibilities consistent with the City’s Ordinance and SB 1383 compliance.
Additionally, the proposed Agreement eliminates obsolete language and enhances specific residential services and added value to some existing services. Consideration was given to the increased operation costs and investments in local infrastructure made by the Contractor to support the services required by the Agreement per state mandates.
With the assistance of the City’s solid waste consultant, Solid Waste Solutions, Inc. (SWS), staff met with EJH and negotiated the terms and provisions in the proposed Agreement. Four key areas presented by the City to the EJH, included:
Incorporate the roles and responsibilities of the Contractor per state mandates on SB 1383 and provide a minimum service level supporting the City’s organics food recycling program.
Restructure service levels based on community needs and enhance services in specific areas, such as free mulch (organic material) for the use and benefit of the City and/or residents, add two (2) additional Single-family Dwellings bulky item collections for up to four collections annually, and added Multi-family Dwellings bulky item collections equal to one half of the total number of residential units (Ex:
if the MFD has ten (10) units, they will receive five (5) free on-call pickups per calendar year).
Transition of residential service billing and service calls to EJH to improve customer experience by providing direct support to the customer.
In response to the City’s proposal, EJH requested consideration of its capital investments and growing costs for local infrastructure, equipment, and materials to service the City of Camarillo and other local jurisdictions for the collection, disposal, processing, and recycling of residential and commercial solid waste including recycling mandates and increased negotiated personnel costs and other service costs. Key areas presented by EJH to the City included:
meetings, the Committee provided staff with feedback on proposed revisions to the Agreement.
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Consumer Price Index (CPI) Adjustment Rate formula to increase from 80% of the CPI published by the United States Department of Labor, Bureau of Labor Statistics for the Los Angeles, Long Beach, and Anaheim County area, to 100%.
Retain revenue related to residential service billing, when transitioned. Extension of term for an automatic 10-year period, with satisfactory performance of agreement provisions.
Parties met several times to discuss key areas and arrived at a mutual agreement on the proposed revisions, pending City Council approval.
Implementation
Requirements set by CalRecycle have been completed or are in process to be completed within specified deadlines. An example of new initiatives created by SB 1383 that have been completed or are underway include: 1) provide organic waste collection services to all residents and businesses, 2) establish a contamination monitoring program for collection containers, and 3) the replacement of new standardized bin colors which must be completed by 2036. The illustration below identifies the change:
Upon approval by the City Council, implementation of any service changes regulated by the agreement, will begin immediately, with some provisions to be completed during the contract year or a specified time frame.
Annual Rate increase
Per the City’s agreement with EJH, an annual rate adjustment may include up to 80% of the CPI, capped at a 4% maximum (Section 12.3.1). Additionally, cost increases for tipping fees related to landfill and waste disposal are included in trash rates. Staff evaluates each rate adjustment to ensure compliance with the contract and confirms EJH’s satisfactory performance. Rate increases are finalized through written acceptance
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by the City Manager after review by the City’s solid waste consultant to ensure comparability with other cities, considering Camarillo’s service levels.
Over the past three years, only tipping fee adjustments have impacted rates, as EJH has not requested a Consumer Price Index (CPI) increase during this period. A rate increase was implemented effective July 1, 2024, following a thorough review by the City, one is not expected until July 2025.
A summary of CPI rates for the previous five (5) years are shown below:
CPI Rate (100%) CPI Max (80%) CPI Increase
FY 2020/21 3.129% 2.50% 0%
FY 2021/22 1.246% 1% 0%
FY 2022/23 4.924% 4% 0%
FY 2023/24 7.1% 4% 0%
FY 2024/25 3.071% 2.72% 2.72%
Consideration was given to the Contractor’s increasing negotiated labor costs to a key request for amending the CPI adjustment to 100% of the CPI. To continue managing future rate increases, the parties agreed to maintain a 4% rate increase maximum. All other aspects of this section remain the same.
Customer Service Billing
The transition of residential service billing and primary customer service responsibilities to EJH is expected to be completed by June 30, 2025. While billing activities will primarily be managed by EJH, the City will maintain a level of customer service and oversight of EJH’s performance. To offset these oversight costs, the City will partially retain customer service fee revenue.
The Customer Service Fee for residential customers is currently $1.44 per account. As part of the new transition, EJH will remit two-thirds (2/3) of all collected Gross Receipts from Residential Solid Waste Handling Services to the City. The City's revenue from the current Customer Service Fee of $1.44 per residential account will be reduced by one- third (1/3) to reflect the transition of primary customer service responsibilities to EJH. This reduction aligns with the modified service structure where EJH will assume primary customer service duties while the City maintains oversight responsibilities. Notices will be provided to customers by both the City and EJH leading up to the transition.
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Minimum Service Levels
CalRecycle mandates all jurisdictions providing solid waste and recycling services to implement an organic food recycling program. Under the current Agreement, EJH is responsible for managing this program and ensuring compliance by providing the necessary services. To meet these requirements, EJH has been working closely with residential and commercial customers, offering resources, education, and public outreach.
For single-family residences, organic food waste is disposed of in “green-waste” (Organics) bins, which also accommodate landscape waste such as grass clippings, leaves, and small twigs. However, under SB 1383 compliance and the City's agreement with EJH, all residential customers will be required to maintain a minimum three-bin service level (trash, recycling, and organics), regardless of previous opt-out status. This standardization affects approximately 1,000 single-family residences that previously did not have green waste bins. The minimum service rate will be based on the customer's existing trash bin size, with organic waste collection now mandatory for proper food and yard waste disposal compliance (Exhibit B of the Agreement).
Additional significant provisions worth highlighting are discussed below:
Section 2.2.1 Exclusive Franchise
Original Franchise Agreement
Under the Original Agreement, Source Separated Organics Recycling is not within the scope of exclusive contracted services to be provided by the Contractor.
Restated Franchise Agreement
Section 2.2.1 d. Source Separated Organics Waste generated at Residential Premises and Commercial Premises requires Source Separated Organics Service as a minimum service for all Customers.
Description of Change/Impact
In accordance with SB 1383 and City Ordinance 1184, Source Separated Organics Waste Service is added as part of the exclusive franchise service. In addition, the following new sections were also added to the Restated Agreement to align with this exclusive mandatory service:
Section 5.2.4 Single Family Dwelling Organics Cart Service Section 5.5.4 Multi-family Dwellings Organics Waste Bin/Cart Service Section 5.10.4 Commercial Organics Waste Bin Service
Section 4.5 Extension of Term
Original Franchise Agreement
Subsections 4.5.1 through 4.5.5 provide that any second or third extension of the Term Restated Solid Waste Franchise Agreement
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is subject to the City’s sole and absolute discretion and the City may deny any requested extension for any reason or for no reason.
Restated Franchise Agreement
Subsections 4.5.1 through 4.5.6 provide that only the third extension of the Term is subject to the City’s sole and absolute discretion and the City may deny any requested extension for any reason or for no reason.
Description of Change/Impact
A second extension of the Franchise Agreement will be based on EJH’s performance while a third extension will remain within the City’s sole and absolute discretion. Contract length is critical for EJH when seeking capital financing options, as lenders and investors value long term revenue commitments.
Section 12.3 – Consumer Price Index (CPI) Rate Adjustment Original Franchise Agreement
The Contractor may request a maximum annual CPI adjustment not to exceed 4% for the twelve month period ending in February each year, multiplied by 80% of the applicable amount (80% of the 4% max).
Restated Franchise Agreement
Beginning July 1, 2025, Contractor may request a maximum annual CPI adjustment not to exceed 4% for the twelve month period ending in February each year, multiplied by 100% (100% of the 4% max).
Description of Change/Impact
Beginning July 1, 2025, and each July 1st thereafter during the Term, the Contractor may request a maximum CPI adjustment calculated at 100% of the 4% max.
Exhibit B - Maximum Rate Schedule
Original Franchise Agreement
The maximum rate schedule, effective July 1st, is reviewed and updated annually to reflect any changes in service levels subject to CPI and/or tipping fee increases/decreases. Under the current agreement, Source Separated Organics Waste Services is not a mandated minimum service for Single Family Dwellings and Multi-family Dwellings. In addition, the Standard Residential Service level does include an option for customers to receive a 64-gallon solid waste bin.
Restated Franchise Agreement
The following service levels and rates are updated in the Restated Agreement:
Single-Family Dwellings: Minimum Service – Includes one 96-gallon Green/Organics Waste Cart at no additional cost to the customer.
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FISCAL IMPACT
The Restated Agreement is anticipated to reduce the City’s Customer Service Fee revenue by approximately one-third, resulting in an estimated reduction of revenue of $100,000. This adjustment aligns with the revenue stream with the City’s reduced service role while maintaining sufficient funding for oversight functions and remaining customer service responsibilities. Proposed budget adjustments will be included in the FY 2025/26 budget review.
CEQA DETERMINATIONS
Environmental Review
Pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3), extending the Franchise Agreement between the City of Camarillo and E.J. Harrison & Sons, Inc. for an additional five years is exempt from CEQA as it can been seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The activity does not have a significant impact on the environment because there is no change in the existing operations of solid waste collection services in the City.
Single-Family Dwellings: Standard Service-1 – New service level that allows customers to receive one 64-gallon solid waste cart.
Multi-family Dwellings and Commercial Premises: Organics Waste Bin/Cart Service – Mandatory minimum services.
Description of Change/Impact
The Maximum Rate Schedule reflects the 2024 Residential and Commercial increases, effective July 1, 2024. In addition, all service levels include Source Separated Organics Waste Services as a mandatory minimum service.
Community Outreach and Education
The City, in collaboration with EJH, will conduct a comprehensive community outreach campaign to inform residents and businesses about the proposed changes in waste collection services. This campaign will include direct communications, educational materials, and public engagement initiatives to ensure customers understand the new service requirements, the proper handling of organic waste, and the benefits of compliance with state mandates. Outreach efforts will be tailored to address specific customer needs.
The Utilities Committee provided an extensive review and provided guidance regarding the proposed Restated Agreement. At the last committee meeting, they accepted the revisions and recommend review and approval by the City Council.
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RECOMMENDATION
Authorize the City Manager to execute Agreement No. 2014-59L for Solid Waste Handling Services with E.J. Harrison & Sons, Inc.
ATTACHMENTS
1. Draft Amended and Restated Solid Waste Franchise Agreement (CC 2014-59L)
2. Draft Amended and Restated Solid Waste Franchise Agreement (redline edits) REFERENCE MATERIALS – AVAILABLE FOR REVIEW AT CITY HALL None.