Agenda Item: 4
CITY OF SANTA CLARITA
AGENDA REPORT
NEW BUSINESS
CITY MANAGER APPROVAL:
DATE: June 14, 2022
SUBJECT: AWARD OF SOLID WASTE COLLECTION SERVICES FRANCHISE
AGREEMENT
DEPARTMENT: Neighborhood Services
PRESENTER: Darin Seegmiller
RECOMMENDED ACTION
City Council:
1. Adopt a resolution to approve the Agreement for the Provision of Residential and Commercial Garbage, Recyclable Materials and Organic Waste Collection Services with Burrtec Waste Industries, Inc., for residential and commercial garbage, recyclable materials, and organic waste collection services for a 10-year base term beginning on July 1, 2023, and ending on June 30, 2033.
2. Authorize the City Manager or designee to execute all documents, subject to City Attorney approval.
BACKGROUND
Current Solid Waste Franchise Agreements Expire June 30, 2023
The City of Santa Clarita (City) has two agreements for the regularly scheduled collection and processing of garbage, recyclables, and organic waste, providing services to approximately 49,100 residential accounts and approximately 2,000 commercial accounts. USA Waste of California Inc. dba Waste Management of Santa Clarita (WM of Santa Clarita), currently provides residential solid waste collection services, including multi-family properties, and Burrtec Waste Industries, Inc. (Burrtec), provides commercial solid waste collection services.
Both agreements will expire on June 30, 2023.
On April 27, 2021, the City Council approved a professional consulting services agreement with R3 Consulting Group Inc. (R3) to assist with negotiations of new solid waste franchise agreements for residential and commercial customers. From June to July 2021, City staff and R3
assessed the potential for negotiating extensions to the current agreements with WM and Burrtec in order to meet the requirements of Senate Bill (SB) 1383. City staff met with both service providers regarding the likely rate impact of extending the agreements and implementing programs and services for SB 1383 compliance. After the current residential waste hauler indicated the strong possibility of significant rate increases, the City decided it would not be in the best interest of Santa Clarita residents and businesses to negotiate a sole-source extension to the existing agreements, but to proceed with a competitive Request for Proposals (RFP) procurement process for new residential and commercial solid waste agreements. The City Council awarded, on September 28, 2021, an amendment to the contract with R3 to prepare, negotiate, implement an RFP process for new solid waste franchise agreements, and to continue work on SB1383 compliance.
Current Solid Waste Collection Services
Residential Cart Collection Service Programs - Single-family dwelling (SFD) service recipients in the City receive curbside carts for garbage, recyclable materials, and green waste. The following list details current services for SFD service recipients:
• Weekly curbside collection of garbage: 96-gallon carts standard, 64-gallon carts, and 32- gallon (Super Saver at a discounted rate) carts available • Weekly curbside collection of recyclable material
• Weekly curbside collection of green waste
• Manure collection
• Street Litter Cart Collection
• Four, on-call bulky waste collections per year; up to three items per collection • Stationary textile collection bin
• Holiday tree collection
Multi-family Collection Service Programs - Multi-family dwelling service recipients in the City receive weekly collection of bins for garbage, and bin or cart collection for recyclable material, both based on volumetric need. Green waste collection services must be offered by WM of Santa Clarita upon request.
Commercial Collection Service Programs - Commercial service recipients in the City receive carts or bins for garbage and recyclable material, based on volumetric need. Commercial collection service is provided to service recipients at least weekly, up to six times per week.
Currently, Burrtec must provide food and green waste collection upon request.
New Solid Waste Regulations
Since the existing agreements went into effect, the State has passed several laws that significantly affect the processing of garbage, recyclables, and organic waste. In 2011, the State adopted Assembly Bill (AB) 341, requiring all businesses to recycle and jurisdictions to implement a commercial recycling program. A goal of a 75 percent recycling diversion rate by 2020 was established by AB341. Adopted in 2014, AB1826, requires jurisdictions to implement a waste recycling program to divert organic waste collected from businesses and multi-family dwellings, from the landfill.
In 2016, SB1383 was passed, which was designed to keep organic waste out of the landfills, requiring a state-wide target of a 50 percent reduction in organic waste disposal by 2020 and 75 percent by 2025. These regulations went into effect January 1, 2022. Jurisdictions are required, under SB1383, to provide organics services to all residents and businesses, establish an edible food recovery program, procure recyclable and recovered organic products, secure access to organics recycling capacity, monitor compliance, and conduct enforcement.
The passage of SB619 in late 2021 allowed jurisdictions to adopt a resolution and submit a plan to CalRecycle called a Notice of Intent to Comply (NOIC). The NOIC indicated intent to comply with SB1383 regulations to avoid penalties imposed by CalRecycle. With City’s franchise agreements expiring and the RFP process underway for a new franchise agreement, the City Council adopted Resolution 22-4 on February 8, 2022, approving submission of a NOIC. The NOIC was submitted to CalRecycle allowing the City time to complete a competitive procurement process and select service provider(s) that will implement many of the SB1383 required programs beginning July 1, 2023.
Community Input Regarding Solid Waste Services
In order to prepare for the City’s procurement process and to better understand community needs, staff created an online survey to obtain community feedback on residential garbage and recycling services. The survey was available on GreenSantaClarita.com and on the main City website from October 5, 2021, to November 5, 2021. Paper copies were available upon request.
The City received 790 responses from the community. The survey results highlighted residents’ priorities, including potential for improvement in customer service, room for improvement in the quality of service being provided, and a focus on competitive customer rates, with the following specific ratings:
• Level of customer service was rated at a 3.2 out of 5.0 • Service provided by waste service provider was rated at a 3.7 out of 5.0 • Cost of garbage and recycling service was rated 34 percent as excellent or good, 44 percent as fair, and 22 percent as below average or poor
Competitive Request for Proposals (RFP) Procurement Process
Staff and R3 met with the City Council Waste Diversion Recycling Committee (Committee) on January 18, 2022. The Committee provided feedback on the RFP process and desired services, following which, staff proceeded to issue the RFP for the City’s solid waste collection service franchise agreements.
On January 25, 2022, the City Council amended the Santa Clarita Municipal Code Chapter 15.44 to adopt many of the regulations imposed by SB1383. At the time, it was anticipated that many programs mandated by SB1383 would need to be implemented by the City’s solid waste service provider, as described in the NOIC submitted to CalRecycle. These programs have been included in the proposed agreement.
ANALYSIS
New Solid Waste Agreement
The new Agreement for the Provision of Residential and Commercial Garbage, Recyclable Materials and Organic Waste Collection Services (Agreement) was developed to preserve and maintain priority services currently provided to the City’s residents and businesses, while addressing the many challenges related to recent regulatory changes.
The Agreement was designed to allow the City to award both residential and commercial services to one proposer or to consider the possibility of awarding separate agreements for residential and commercial services. A draft Agreement was provided by R3 to address regulatory requirements, such as AB1826 and SB1383, and modernize the City’s overall solid waste agreement framework, including the following key considerations:
• Expanding organics collection services to meet the requirements of SB1383 • Updating container colors and labeling to meet the requirements of SB1383 (grey for garbage, blue for recycling, green for organics) • Providing expanded education and outreach programs and services • Providing reports of customer subscriptions to determine compliance with SB1383 requirements
• Updating processing and diversion requirements
• Providing for the procurement of recovered organic materials as required by SB1383 • Providing detailed tracking and reporting for SB1383 compliance
The new Agreement includes bundled services (garbage, recycling, and organic waste) for all residential, multi-family, and commercial customers to achieve SB1383 compliance. All prior services provided to residents and business are maintained, with the following key provisions included in the new Agreement:
• 10-year base term beginning on July 1, 2023, and up to two extensions of five years each • New SB1383 services
o Bundled rates, including minimum recycling and organics services, for all customers and green/organic containers to include collection of food waste o Carts and painted bins to meet SB1383 color and labeling requirements o Residential kitchen food waste pails
o Outreach and education ($75,000 per year provided by the selected contractor) o Manure to be processed as organic waste
o Route audits
o Contamination monitoring
o Reporting
o Mulch or compost delivery to support procurement requirements o Support for edible food recovery program
• New or expanded services
o Collection of extra residential cardboard that do not fit into recycling containers o Move-in/move-out residential collection service for flattened cardboard boxes o Residential home compost bins (up to 500/year provided by contractor) o Carpet and mattress recycling
o Code enforcement clean-up services (up to 60 roll-off collections per year) o Document shredding drop-off events (four per year)
• Billing and fees
o Procurement reimbursement of $300,000 (one-time due 30 days after contract is signed)
o Franchise fee payments of 10%
o Marketing and Sales of Recyclable Materials ($5.50/ton) o Administrative Fee of $300,000 per year
o SB1383 Program Cost Contribution of $130,000 per year o Advertising and Outreach Contribution of $20,000 per year o Annual Consumer Price Index (CPI) rate adjustments begin in January 2025 with a cap and a floor, and subject to the Santa Clarita Valley Rate Cap • Other terms, conditions and services, not limited to:
o Use of Chiquita Canyon Landfill for solid waste disposal o Use of the Conservation Station/Rent-a-Bin for recyclables and organics o Use of a customer service call center located within City limits o Use of low-carbon LNG, CNG, hydrogen, or electric vehicles
Proposal Evaluation Process
The RFP schedule was developed to provide the chosen waste hauler(s) with the time necessary to secure the assets and resources needed to begin servicing the City on July 1, 2023.
On January 27, 2022, the RFP was published with a March 24, 2022, deadline for proposal submissions. Subsequently, through addenda, the proposal submission deadline was extended through April 7, 2022. Proposals were received from the following three entities:
1. Arakelian Enterprises, Inc. dba Athens Services
2. Burrtec Waste Industries, Inc.
3. USA Waste of California, Inc. dba Waste Management of Santa Clarita
All three proposals passed an initial Pass/Fail review to check for completeness and compliance with the proposal requirements. The proposals were then reviewed by the seven-member evaluation team, which consisted of City and R3 staff, between April 8 and April 20. Proposals were reviewed and scored based on qualifications, technical approach, sustainability, and service rates.
The evaluation team met on April 21 and 26, to rank the proposals (Table 1), and on April 28 to rank the interviews (Table 2). The overall ranking placed Burrtec in first, Athens in second, and WM in third as shown in Table 3.
Table 1: Proposal Evaluation Scores
Total
Points
Initial Evaluation Criteria Athens Burrtec WM
30 Total Qualifications 26 28 25
30 Total Technical Approach 22 27 21
20 Total Sustainability 17 16 18
20 Total Service Recipient Rates 12 17 4
100 INITIAL EVALUATION SCORE 77 88 68
Table 2: Interview Evaluation Scores
Total
Points
Presentation Rating Criteria Athens Burrtec WM
5 Introduction - Impression/Professionalism 5 3 3
10 Overall Quality/Organization of Presentation 10 7 8
25 Understanding of Collection Agreement & Potential Issues 17 23 15 25 Familiarity with SB1383 & Solid Waste Industry Challenges 18 22 17 15 Quality/Experience of Solid Waste Services Provided 15 13 12 15 Coordination of Staff/Customer Service 12 14 12
5 Knowledge of the Santa Clarita Valley 3 5 5
100 INTERVIEW EVALUATION SCORE 80 87 72
Table 3: Final Evaluation Team Consensus Scoring
Evaluation Criteria Athens Burrtec WM
Proposed Evaluation 77 88 68
Interview Score 80 87 72
FINAL EVALUATION TEAM CONSENSUS SCORE 157 175 140
The evaluation team recommended proceeding to negotiate an Agreement with Burrtec for both residential and commercial services based on key differentiating factors, including but not limited to:
• Santa Clarita Call Center: Burrtec proposed a sufficiently staffed customer call center located in the City. An in-City call Center was not proposed by WM of Santa Clarita.
Athens proposed an in-City call Center, but the low number of customer service representatives did not appear to be sufficient for the level of activity in the City.
• Use of local Rent-a-Bin facility: Burrtec committed to use the City’s designated solid waste facilities and demonstrated value by proactively partnering with Rent-a-Bin. Waste Management of Santa Clarita also committed to the use Rent-a-Bin but did not demonstrate a partnership approach. Athens proposed use of its own facilities outside of the City.
• Residential Rates: Burrtec proposed the lowest overall residential rates and did not
propose changes to the Santa Clarita Valley Rate Cap (Rate Cap). Waste Management of Santa Clarita proposed the highest residential rates and changes to the Rate Cap that would limit its applicability to the City’s rates. Athens proposed residential rates were overall slightly higher than Burrtec. Athens proposed removal of the Rate Cap and declined to keep rates fixed through the end of 2024, as required by the RFP. Athens proposed rates also required the award of both the residential and commercial services.
This does not meet the City’s expectation that proposers provide stand-alone rates that would allow the City to separately award the residential and commercial services to different proposers.
• Commercial Rates: Burrtec proposed the lowest overall commercial rates. Waste Management of Santa Clarita proposed the highest commercial rates and proposed changes to the Rate Cap that would limit its applicability to the City’s rates. Athens proposed commercial rates were overall higher than Burrtec, and lower than WM of Santa Clarita. Athens proposed removal of the Rate Cap and declined to keep rates fixed through the end of 2024, as required by the RFP. Athens proposed rates also required award of both the residential and commercial services. This does not meet the City’s expectation that proposers provide stand-alone rates that would allow the City to separately award the residential and commercial services to different proposers.
A comparative table of the most common monthly rates for residential and commercial customers is provided below. It should be noted that the proposed rates would not take effect until July 1, 2023, and that the City required no adjustments to proposed rates until January 1, 2025.
Table 4: Summary Comparison of Common Monthly Rates
Service Approved
22/23
Rates
Athens
Proposed
Burrtec
Proposed
WM
Proposed
Basic residential cart service (96-
gallon garbage, 96-gallon recycling,
96-gallon organics)
$26.31* $29.20 $28.92 $55.38
Basic commercial bundle (3-yard
garbage, 3-yard recycling, 64-gallon
organics; once per week collection)
$263.13** $434.02 $346.10 $463.73
* Current rate does not include SB1383 compliant organics collection service. ** Rate shown includes separate charge for 64-gallon organics collection service.
Upon commencement of the Agreement, residents will have the opportunity to evaluate service needs and customize sizes of carts and bins to their specific needs. In addition, multi-family and commercial properties may adjust container sizes and service days to their specific needs and potentially defray cost increases.
Negotiation Outcomes and Recommended Contract Award
After completion of the evaluation and scoring process, City and R3 met to negotiate a final
Agreement with Burrtec inclusive of both residential and commercial services.
A negotiation meeting was held on May 16, 2022, during which staff and R3 confirmed that Burrtec is ready, willing, and able to perform services at proposed rates; able to procure and receive required equipment by the start of new services on July 1, 2023; and accept the Rate Cap for residential rates.
Burrtec’s proposal requested a limited number of changes to the draft Agreement, including proposed revisions to the annual rate adjustment methodology. Staff and R3 negotiated with Burrtec to decline Burrtec’s proposed revisions to the annual rate adjustment methodology, and retain the Rate Cap for residential services. The annual cap to CPI adjustment will be set at 4 percent with a carryforward, the City’s current agreements have a 5 percent cap with a carryforward, and the proposed 32-gallon and 64-gallon bundled residential rates will be reduced by $1.20 per month.
It is staff’s and R3’s assessment that Burrtec demonstrated the best overall approach to meet the City’s needs, including its approach to customer service and willingness to agree to the City’s terms and conditions in the RFP and draft Agreement. While WM of Santa Clarita and Athens both demonstrated an ability to provide the requested services, both took exception to many requirements in the draft Agreement that staff found restrictive. Waste Management of Santa Clarita’s approach to customer service, while technologically advanced, did not meet the City’s expectations as outlined in the RFP. Specifically, WM of Santa Clarita took exception to the City’s diversion requirements, vehicle and equipment requirements, liquidated damages, requirements for a local customer service call center, and the Rate Cap. Athens’ exceptions to the draft Agreement included removal of the Rate Cap, the City’s requirement to propose no rate increases through 2024, the City’s ability to select stand-alone service providers for residential and commercial services, and other proposed revisions.
ALTERNATIVE ACTION
Other action as determined by City Council.
FISCAL IMPACT
No additional funding requested. Cost of consultant to assist with RFP and evaluation process was included in the adopted FY 2021-22 Solid Waste Fund Budget and will be reimbursed by Burrtec upon execution of the agreement. Associated staff time was included in the adopted FY 2021-22 and FY 2022-23 Solid Waste budgets.
ATTACHMENTS
Resolution
Final Draft Burrtec Agreement 05-31-2022 (available in the City Clerk's Reading File) Burrtec Proposal (available in the City Clerk's Reading File) Request for Proposals ES 21-22-16 (available in the City Clerk's Reading File)