CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Refuse Hauler Update
Meeting Date: February 21, 2023
RECOMMENDATION:
The City Council will consider receiving and filing a refuse hauler update and may also elect to provide direction to staff if it wishes to consider one of three options or provide alternative direction.
BACKGROUND:
Semi-Exclusive Franchise Agreements
In order to make services more efficient while still competitive and comply with State recycling mandates, the City Council authorized the establishment of a new commercial refuse management system in which a maximum of eight (8) refuse haulers were issued a semi-exclusive Agreement effective November 1, 2018 for a period of five (5) years. The agreements are due to expire on October 31, 2023 and allow for an extension of the original term by two additional two-year terms. At that time, Council expressed a desire to give smaller companies a chance and to also provide for more competitive commercial rates for businesses. Listed below are the current haulers under an agreement.
AAA Rubbish
Athens Services/Calmet Services
Haul Away Rubbish Service Company
NASA Services
Republic Services
Universal Waste Systems
Waste Management Company
Refuse haulers continue to work with the City by predominantly reporting their recycling tonnages to the City on a monthly basis as well as remaining current with payment of their 15% gross receipts hauler fees. Service continues uninterrupted and without complaint.
Business License Only
The remaining haulers not awarded a semi-exclusive agreement were allowed to operate for 5-years from the date of notification to the haulers, which was March 7, 2018 per Public Resources Code Section 49520. In order to continue operating under a business license until its expiration on March 7, 2023, the haulers needed to remain in good standing by complying with City and State regulations including reporting requirements. Of the original ten haulers, only four remain, namely American Reclamation, Key Disposal, GB Services and Angelus Western Paper Fibers.
On January 11, 2022, Council authorized the assignment of Calmet’s Agreement to Athens Services. Effective April 1, 2022, Athens notified the Commerce City Manager of its completed consummation of acquisition of assets formerly owned by Calmet and subsequently notified Calmet customers of their transition plan. Although, Athens is on the record as believing otherwise, it is not unreasonable for staff to opine that due to this consolidation, there are technically seven commercial haulers operating under a semi-exclusive agreement.
The City Council received a waste hauler update report on June 28, 2022 and deferred action on waste service agreements. At this time, staff believes it is imperative that the City Council provide direction as preparation of an RFP or agreements to extend with the existing franchised commercial haulers should be prepared. Staff request Council direction on the following options or for Council to provide alternative direction.
Option #1 – Extend Term of All Current Semi-exclusive Agreements Should Council prefer to remain with 7 semi-exclusive haulers and make no change, then the City would exercise the first of its two-year options to extend the semi-exclusive franchise agreements for two additional years.
Option #2 – Release a new RFP and Reduce the Number of Waste Haulers Under Semi-Exclusive or Exclusive Agreements Effective November 1, 2023 This option would allow City staff to explore other mechanisms for providing service, including one potential mode that would allow the City to further reduce the number of haulers which would lead to improved oversight and environmental reporting in working more closely with a reduced number of haulers. It may also maximize the collection of franchise fees. These are concepts that City staff needs to explore further, and will do so if the City Council is desirous of this option. If the City Council opts to authorize an RFP, staff asks that Council provide a preference for the total number of haulers that City Council would like to service the City. Staff envisions 3-4 haulers and potentially exploring a concept where haulers bid on zones. This would mean that the City would play a role in establishing the rates but it would also make it more difficult for rogue haulers to service accounts in the City without complying with environmental mandates and/or the City’s fees.
Option #1 and #2 are both options that staff recommends that the City Council seriously consider. Option #3 was proposed by one of the waste haulers and while they are a fine company, the proposal represents a radical shift from the City’s model and is not recommended by staff.
Option #3 – Exclusive Franchise Agreement with One Waste Hauler Athens submitted a letter to the City Manager on January 17, 2023 (attached). As the letter indicates, Athens would like to service the City of Commerce as their exclusive franchise hauler and offering compliance with CalRecycle’s SB1383 legislation which requires jurisdictions throughout California to reduce organic/food waste disposal to 75% by 2025 by disposing of all residential and recycling waste at their Material Recovery Facilities (MRF).
Athens is offering regulatory compliance with this law and the State’s original AB 939 recycling law in exchange for an exclusive 10 year residential refuse and recycling services agreement. Athens is further offering to cover the cost of residential services if they are provided with an exclusive commercial hauler agreement. Athens plans to increase rates to $38.55 (an additional $5.70 per residential customer) to cover the cost of the residential recycling programs and not increase the new rate again during the contractual term.
Currently, the following represents the total number of customers for each semi-exclusive hauler operating in the City of Commerce:
Athens (277) and CalMet (2,615)
AAA Rubbish (202)
Waste Management (174)
Republic Services (112)
Haul Away Rubbish (72)
NASA Services (57)
Universal Waste Systems (24)
Those haulers with business licenses expiring on March 7, 2023 are Key Disposal (59), GB Services (46) and American Reclamation (14). Angelus Western Paper Fibers’ business license expires on March 28, 2023 and they have not reported the number of customers they service to the City.
Depending on Council’s direction and preferences, staff may return to Council with a follow-up report and recommendation for action.
ALTERNATIVES:
1. Receive and file the hauler update report and provide direction to staff on Option 1.
2. Receive and file the hauler update report and provide direction to staff on Option 2.
3. Receive and file the hauler update report and provide direction to staff on Option 3.
4. Receive and file the hauler update report and provide alternative direction to staff.
FISCAL IMPACT:
There is no fiscal impact to receiving and filing a hauler update report and providing direction to staff at this time.
RELATIONSHIP TO STRATEGIC GOALS:
The agenda item relates to the 2016 Strategic Plan
Community Quality of Life
Guiding Principle #5:
Foster environmentally conscious initiatives and continue to identify and develop city codes that support a clean, well-maintained, sustainable community.
Respectfully submitted: Edgar P. Cisneros, City Manager Prepared by: Gina Nila, Department of Public Works
Reviewed by: Vilko Domic, Assistant City Manager
Approved as to form: Noel Tapia, City Attorney
Attachment:
Semi-Exclusive Commercial Franchise Agreement Template
Athens Services Letter to City Manager
Athens Material Recovery Facilities (MRF) Use Agreement