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: Resolution to Authorize Contract Increase for Exclusive Franchise Agreement with Athens Services for Residential Refuse and Recycling Services and Provide Direction on Second Amendment Negotiations Meeting Date: February 21, 2023
RECOMMENDATION:
The City Council will consider approving a Resolution to:
Authorize a 9.57% contract increase for Athens for the 2022-2023 Fiscal Year, which equates to $86,383.53 from the current monthly rate of $78,839.36 under the existing residential waste hauling services agreement; and Authorize staff to negotiate terms for a Second Amendment to the Agreement with Athens Services to extend the term of the Agreement beyond the June 30, 2023 expiration date and/or other provisions; or Provide alternative direction to staff.
BACKGROUND:
The current exclusive franchise agreement for residential refuse and recycling services was entered into on July 1, 2014 to provide services to residential units and the City’s facilities. On October 16, 2018, the City approved a First Amendment to the Agreement between the City of Commerce and Calmet Services (Calmet), Inc. for residential and recycling services to extend the Agreement term by four years to June 30, 2023. On January 11, 2022, the City Council approved the Assignment of the Exclusive Franchise Agreement between the City and Calmet to Athens Services.
On April 12, 2022, the City received a letter from Calmet requesting a rate increase with the expectation that it would be implemented July 1, 2022. Due to the Athens assignment of Calmet around this same time and planned transition with potential changes to the requested rate increase, staff did not bring forth to Council an item for consideration until which time the rate adjustment could be discussed with Athens and substantiated.
Item #4 – Annual Contract Review of the Agreement specifically says:
This Agreement will be reviewed annually by City and Contractor during the term of the Agreement with respect to the service and rate structure. City and the Contractor will negotiate in good faith to reach an equitable adjustment in the service and/or contract rates. If an agreement cannot be reached that is mutually satisfactory to both parties, the City Council shall decide the matter and that decision shall be final.
Pursuant to provisions in Section 17 – “Compensation” of the Agreement, the initial rate adjustment requested exceeded the Agreement’s allowance of 5% per the Consumer Price Index. The Agreement also allows for an adjustment in tipping fees for disposal costs. The total requested increase to the residential rate is 9.57%, which equates to $86,383.53 from the current monthly rate of $78,839.36.
In addition, Athens submitted a letter to the City Manager on January 17, 2023 requesting an extension, staff is requesting the City Council’s approval to continue in engaging in those negotiation discussions to potentially bring an amendment to the agreement to the City Council in the near future.
ALTERNATIVES:
Approve staff recommendation, specifically:
Authorize a 9.57% contract increase for Athens for the 2022-2023 Fiscal Year, which equates to $86,383.53 from the current monthly rate of $78,839.36 under the existing residential waste hauling services agreement; and Authorize staff to negotiate terms for a Second Amendment to the Agreement with Athens Services to extend the term of the Agreement beyond the June 30, 2023 expiration date and/or other provisions; or Disapprove staff’s recommendation and provide alternative direction to staff.
FISCAL IMPACT:
The total requested increase to the residential rate is 9.57% (residential capped at 5% + disposal costs) retroactive to July 1, 2022, which equates to $86,383.53 per month from the current monthly rate of $78,839.36, an increase of $7,544.17 per month or $90,530.04 per year.
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:
Resolution Approving Recommendation #1. Recommendation #2 if approved, does not require a resolution.