City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Mike Willett, Public Works Director
MEETING DATE: December 5, 2023
ITEM NO: 6.4
SUBJECT: Adopt Resolution No. 2023-56 and Approve Addendum No. 3 to the Street Sweeping Services Agreement with Sweeping Corp of America (SCA), CA, LLC, for a Five-Year Extension for Continued City-Wide Street Sweeping Services, Beginning July 1, 2023, through June 30, 2028, and Authorizing the Finance Department to Adjust the Fiscal Year 2023- 24 Budget
RECOMMENDATION
Motion to Adopt Resolution No. 2023-56 and Approve Addendum No. 3 to the Street Sweeping Contract Services Agreement with Sweeping Corp of America for a five-year extension for continued City-wide street sweeping services, beginning July 1, 2023, through June 30, 2028, and authorizing the Finance Department to adjust the Fiscal Year 2023-24 Budget.
BACKGROUND
The City contracts commercial and residential street sweeping services to Sweeping Corp of America from Milpitas, CA. Residential routes are swept weekly and downtown streets are swept daily. Because the existing agreement was set to expire on June 30, 2023, the City negotiated Addendum No. 2 to the street sweeping services agreement, and on June 6, 2023, the City Council authorized staff to execute a five-year contract extension. Given the current economic climate, with inflation and the increased cost of doing business, City staff recommended, and Council approved, a 10% contract renewal increase.
After City Council approval, City staff sent the agreement to the Contractor for signature. Upon receipt, the Contractor noted a separate 5.3% Consumer Price Index (CPI) increase that was requested during negotiations and supported by City staff, but not included in the City Council approved contract extension. The CPI increase was not included in the June 6, 2023, staff report, or contract documents the City Council considered for approval. This item is an attempt to remedy the error from June 6, 2023, and bring to the City Council for consideration the version of the agreement negotiated in good faith with the Contractor and supported by City staff.
ANALYSIS
For the increase, City staff has requested the Contractor provide Global Positioning System (GPS) Tracking in their sweepers. The purpose of GPS in the sweepers is so that City staff can review completed routes as well as confirm certain standards are met, such as: maximum allowable speeds and “water on” criteria. The Contractor has agreed to this additional condition.
Sweeping Corp of America has reviewed Attachment B, Contract Addendum No. 3, and committed to extending the existing contract for five more years, according to the conditions below, and providing the City with the same level of weekly street service.
The terms included in Addendum No.3 are as follows:
1. Initial Increase: Year-1 includes a 5.3% CPI increase and a 10% contract renewal increase. The proposed contract renewal increase offsets the CONTRACTOR burden of costs of service having no CPI increases in years 3-5 of the prior contract in addition to the most recent inflationary impacts on business.
2. The maximum fees to be charged by the CONTRACTOR set forth in years 1 through 5 for Addendum No. 3 are listed below. Year-1, the CONTRACTOR shall charge no greater than the maximum rate as provided in item 3. In years 2 through 5, the CITY will adjust the maximum fee under this addendum to reflect annual changes in the Consumer Price Index (CPI) for the SF-Bay Area statistical area. Such adjustments shall not exceed five percent (5%) per year. The adjustment shall become effective on the anniversary of the Effective Date and be based on the previous twelve-month index analysis. Years 2-5 of the proposed fees below include a 5% maximum CPI increase. Should actual CPI in year 2-5 be lower than 5%, the lower CPI increase will be applied.
3. Year-1, increase the current service cost by 5.3% CPI increase and 10% contract renewal increase, effective July 1, 2023, from $181,380.48 per year ($15,115.04 per month) to $210,093.01 per year ($17,507.75 per month).
4. Year-2, increase the service cost by a maximum 5% CPI, effective July 1, 2024, from $210,093.01 per year ($17,507.75 per month) to $220,597.66 per year ($18,383.14 per month).
5. Year-3, increase the service cost by a maximum 5% CPI, effective July 1, 2025, from $220,597.66 per year ($18,383.14 per month) to $231,627.54 per year ($19,302.30 per month).
6. Year-4, increase the service cost by a maximum 5% CPI, effective July 1, 2026, from $231,627.54 per year ($19,302.30 per month) to $243,208.92 per year ($20,267.41 per month).
7. Year-5, increase the service cost by a maximum 5% CPI, effective July 1, 2027, from $243,208.92 per year ($20,267.41 per month) to $255,369.37 per year ($21,280.78 per month).
8. Global Positioning System (GPS) Tracking - Within one year from the effective date of this agreement, the CONTRACTOR shall provide Global Positioning System Tracking in all street sweepers used to perform Patterson’s street sweeping services. A Global Positioning Systems that will enable the CITY of Patterson to view where the street sweepers are at all times via the Internet. The cost of the entire GPS System will be the sole responsibility of the CONTRACTOR and the system must be capable of the following:
a. The system shall be Internet based and the CONTRACTOR shall provide the CITY two (2) accounts to have full access to the site. b. The system shall be capable of gathering and reporting the following real time data; speed, direction, location on a map, address, distance traveled, brooms up or down, water on or off.
c. The sweepers’ path of travel shall be superimposed on a map. d. Generate daily reports of sweep activity including the items listed above. e. Maintaining the data for a period of 1-year, after which data will be provided to the CITY of Patterson to archive indefinitely.
9. Pro Rata Curb Mile Cost of Service - The purpose of defining the pro rata curb mile cost of service is so that New CITY Street can be added to the street sweeping schedule and the cost of service be adjusted proportionally. a. The Pro Rata Curb Mile Cost of Service is $16.71 per curb mile. b. See Exhibit-B for the way in which the CITY determined the Pro Rata Curb Mile Cost of Service for Year-1 of the agreement.
c. The Pro Rata Curb Mile Cost of Service shall be updated annually according to the effective year cost of service of the agreement and the average monthly curb mile total provided in Exhibit-B.
10. New CITY Streets - New streets may be added by the Director of Public Works or their designee during the term of this agreement. Such streets shall be added to the street sweeping schedule upon receipt of written notice by the CITY. The cost of service will be adjusted by the CITY according to the total curb miles added and multiplied by the Pro Rata Curb Mile Cost of Service according to the effective year cost of service.
11. The CITY will continue to bear responsibility for disposal and costs associated with street sweeper waste. Currently, the responsibility is accounted for in Addendum No. 1 and will continue with Addendum No. 3.
The agreement which expired on June 30, 2023, included two increases over the life of the term, the first and second years only. The prior five-year term included just one CPI increase. Over the last 10 years of service the contractor has received three CPI increases, therefore staff concur that the initial 10% contract renewal increase, 5.3% CPI increase, and CPI increases every year after with a maximum of 5% is reasonable. The proposed contract services agreement Addendum No. 2 would extend the term from July 1, 2023, through June 30, 2028. It is the opinion of staff that Sweeping Corp of America has been reliable under the current contract with minimal complaints received. All terms and conditions under the current agreement would remain in full force, except for the terms listed above, including maintaining the quality of service currently provided and as needed and emergency service calls.
FISCAL IMPACT
The adjusted monthly fee from City Councils June 6, 2023, is from $16,070.66 to $17,507.75.
Street Sweeping services are paid for through the Garbage Rates. Staff request Council authorize the Finance Department to adjust the Fiscal Year 2023-24 Budget, Garbage Fund (600-790).
INITIAL INCREASE
Increase Date % Increase Monthly Cost Annual Cost
Current $15,115.04 $181,380.48
CPI Increase 5.30% $15,916.14 $190,993.65
Renewal Increase 10.00% $17,507.75 $210,093.01
ADDENDUM NO. 2 YEARS 1-5
Increase Date % Increase Monthly Cost Annual Cost Per Curb Mile Year-1 1-Jul-23 See Above $17,507.75 $210,093.01 $16.71 Year-2 1-Jul-24 5.00% $18,383.14 $220,597.66 $17.54
Year-3 1-Jul-25 5.00% $19,302.30 $231,627.54 $18.42
Year-4 1-Jul-26 5.00% $20,267.41 $243,208.92 $19.34
Year-5 1-Jul-27 5.00% $21,280.78 $255,369.37 $20.31
Total Contract Value (Max. 5% CPI) $1,160,896.50
NOTE:
Year-1 includes a 5.3% CPI increase and a 10% contract renewal increase. The proposed contract renewal increase offsets contractors' burden of costs of service having no CPI increases in years 3-5 of the prior contract in addition to the most recent inflationary impacts on business.
Years 2-5 of the proposed budget above include a 5% maximum CPI increase. For the benefit of budgeting, a maximum 5% increase is shown. Should actual CPI in years 2-5 be lower than 5%, the lower CPI increase will be applied.
Pro Rata Curb Mile Cost of Service - The purpose of defining the pro rata curb mile cost of service is so that New City Streets can be added to the street sweeping schedule and the cost of service be adjusted proportionally. The Pro Rata Curb Mile Cost of Service in year-1 is $16.71 per curb mile. Cities in the region pay on average $26.00 per curb mile.
ATTACHMENTS
Attachment A: Approving Resolution
Attachment B: Contract Addendum No. 3