Administrative
Report
H.13., File # 22-5245 Meeting Date: 1/17/2023
To: MAYOR AND CITY COUNCIL
From: TED SEMAAN, PUBLIC WORKS DIRECTOR
TITLE
APPROVE AN AGREEMENT WITH HF&H CONSULTANTS FOR SOLID WASTE COMPLIANCE AUDIT SERVICES TO BE REIMBURSED BY ARAKELIAN ENTERPRISES, INC., DBA ATHENS SERVICES INC., FOR AN AMOUNT NOT TO EXCEED $61,505
ADOPT BY 4/5THS VOTE AND BY TITLE ONLY RESOLUTION NO. CC-2301-007, A RESOLUTION
OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, AUTHORIZING A 2022-2023 FISCAL YEAR BUDGET MODIFICATION TO APPROPRIATE $61,505 FROM THE CITY SOLID WASTE FUND TO THE CITY PUBLIC WORKS DEPARTMENT 2022-2023 FISCAL YEAR
OPERATING BUDGET, SOLID WASTE DIVISION CONTRACTS AND PROFESSIONAL SERVICES ACCOUNT TO PAY FOR A COMPLIANCE AUDIT OF THE CITY’S SOLID WASTE HANDLING
SERVICES CONTRACTOR
EXECUTIVE SUMMARY
The City is currently in year four of a nine-year solid waste handling services agreement with Arakelian Enterprises, Inc. DBA Athens Services. The agreement expires June 30, 2028. The City has the option to extend the term monthly for up to 24 months. Section 7.2.6 of the Agreement allows for biennial, hauler-funded, compliance audits. The audits are intended to ensure compliance with the terms of the contract, accuracy of customer service levels and billing, fee payments, gross receipts, tonnage and verification of diversion rates. The last audit was conducted in FY 2016-17.
Staff proposes engaging the services of HF&H Consultants (HF&H) to conduct a compliance audit for services conducted in calendar years 2021 and 2022 (2022 data availability permitting). If approved, the audit is expected to be complete within six to nine months, and a report will be delivered to City Council by fall 2023. The consultant costs are incorporated into the Agreement with Athens Services.
All HF&H consultant invoices related to this project will be submitted to Athens Services for reimbursement once the project is completed. HF&H will work at the City’s sole despite the source of funding.
BACKGROUND
Hauler-funded audits are incorporated into the City’s solid waste handling services agreement with Athens Services and are considered an industry management best practice. HF&H has assisted the City in prior audits and contract negotiations with Athens Services and has a deep understanding of the contract, hauler obligations and solid waste legislation, as well as the everchanging State mandated requirements.
H.13., File # 22-5245 Meeting Date: 1/17/2023
The objectives of the proposed compliance audit are as follows:
· Confirm the City’s Waste Contractor accurately billed a sample of commercial and multi-family customers for a recent month, in accordance with the City’s approved rate schedule based on service-level information reported by the Waste Contractor. · Confirm the Waste Contractor accurately paid City fees in calendar year 2021. · Confirm the Waste Contractor accurately reported tonnage to the City for calendar year 2021. · Compile and summarize data on return trip charges, bin re-delivery fees and bin overage cleanup fees assessed on a monthly basis during 2022.
· Confirm the Waste Contractor achieved the minimum 41% diversion rate for processing solid waste collected from bin customers, City-sponsored events, and all other refuse not composted or otherwise processed, in accordance with the Amended Appendix I, Section I.5 of the solid waste handling services agreement during calendar years 2021 and 2022. · Confirm the Waste Contractor diverted a minimum of 75% of all waste collected under the Solid Waste Handling Services Agreement, in accordance with the Amended Appendix I, Section I.6 during calendar years 2021 and 2022. Determine what portion of diversion credit related to materials was transformed.
· Confirm the Waste Contractor delivered a sufficient number of tons to a waste-to-energy facility for the City to receive 13,000 tons of diversion credit per year in accordance with Section 5.5.5 of the solid waste handling services agreement during calendar year 2021. · Summarize the status of compliance with SB 1383 for commercial organics recycling based on the data reported in the Electronic Annual Report submitted in 2022.
In order to meet the identified audit objectives, the Consultant shall perform the following services:
· Develop an audit plan and review relevant background documents, including but not limited to, the franchise agreement, current rate schedule and the waste contractor’s periodic reports to the City.
· Prepare a data and document request for information, including but not limited to, gross receipts, invoices, billing data for certain charges, tonnage disposal records and related records, which shall be submitted by the Waste Contractor and/or the City in advance of testing.
· Perform billing testing on a sample from a recent month to confirm the Waste Contractor accurately billed commercial and multi-family customers in accordance with the approved rate schedule based on the Waste Contractor’s reported service-level information. For the test month, select a sample of customers and confirm that the monthly amount billed reconciles to the amount in the City-approved rate schedule for the service level reported in the Waste Contractor’s billing system.
· Perform an electronic comparison of the billing schedules obtained to the rate schedule. This shall determine systemic variances in what is billed versus what is allowed per the rate schedule.
· Request a listing, on a monthly basis, of the return trip charges, bin re-delivery fees, and bin overage cleanup fees assessed during 2022. Test the listings ensuring any such fees included on the tested invoices under Objective 1 are included in the listings. · Determine whether the waste contractor has complied with certain processing and diversion
H.13., File # 22-5245 Meeting Date: 1/17/2023
requirements as described in Section I.A of this Exhibit “A”. · Calculate the portion of diversion credit related to materials transformed. · Perform testing to ensure that all fees due to the City were paid accurately, timely, and in full, including the following:
§ Recycle Ranger Funding
§ Recyclables Rebate
§ Solid Waste Vehicle Road Impact Reimbursement
§ AB 939 fee
§ Administration Fee
§ Household Hazardous Waste Fee as collected by the Waste Contractor and remitted to the City
· In the event the fee calculation includes the count of multi-family units serviced, limit procedures to ensure the waste contractor used the appropriate fee calculation methodology and that the per-unit fee rate is accurate, as required in the solid waste handling services agreement. Consultant will not test the count of multi-family units. · Summarize the status of compliance with SB 1383 for commercial organics recycling based on the data reported in the Electronic Annual report submitted in 2022. · Review source documents provided by the Waste Contractor in order to verify compliance with requirements as stated in Section I of this Exhibit “A”. · Receive documents electronically and participate in a virtual screen-sharing meeting to validate certain support records maintained in the waste contractor’s system to corroborate the information reported to the City.
· Prepare a draft report summarizing the study findings. · Review written comments submitted by the City. It will be City’s responsibility to consolidate comments from various reviewers at the City into a single list of written comments. · Incorporate a written response from the Waste Contractor on the findings into the final report. · Discuss the report’s findings with City staff via virtual meeting upon City’s request.
Upon completion of the work, staff will prepare a report for City Council review. It is anticipated that the report will come back to Council by fall 2023. All consultant invoices will be submitted to Athens Services for reimbursement once the project is complete.
Given evolving legislation and requirements associated with solid waste, recycling and organics in the State, it is critical that the City monitor services received and determine that all contract and legislation obligations are being meet. HF&H’s deep knowledge of the industry, State regulations, the City and the current solid waste Agreement will allow for a timely and thorough completion of the compliance audit. Staff recommends approving the agreement with HF&H Consultants to conduct the proposed compliance audit.
COORDINATION
Public Works coordinated this report with the City Attorney’s Office and Finance Department.
FISCAL IMPACT
All costs incurred by the City’s Solid Waste Fund will be reimbursed by Athens Services at the conclusion of the project.
H.13., File # 22-5245 Meeting Date: 1/17/2023
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agmt - HF&H Consultants, Inc.
· Reso - Authorizing FY 2022-23 Budget Modification
· Insurance - HF&H Consultants, Inc.