City Council
Report
City Council Meeting: March 10, 2026
Agenda Item: 4.A
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Resource Recovery & Recycling
Subject: Award RFP# 452 to Potential Industries, Inc for Recyclable Material Processing Services
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of Categorical Exemptions pursuant to Sections 15301 (Existing Facilities) and 15308 (Class 8 Actions for Protection of Environment) of the California Environmental Quality Act (CEQA) Guidelines;
2. Award RFP# 452 to Potential Industries, Inc. for the processing and marketing of the City’s recyclable materials for the Public Works Department; and
3. Authorize the City Manager to negotiate and execute an agreement with Potential Industries, Inc., in an amount not to exceed $3,337,952 (including a $865,395 contingency for five years, with one-additional five-year renewal option in the amount of $3,884,000, on the same terms and conditions) for a total amount not to exceed $7,221,952 over a 10-year period, with future year funding contingent on Council budget approval.
Summary
The City of Santa Monica (City) annually generates approximately 11,500 tons (23 million pounds) of recyclable materials, which are sent to a contracted recycling processing facility in the Southern California region. To continue meeting the Santa Monica Realignment Plan’s strategic objective of Achieving Safe Neighborhoods and Clean Streets and to uphold public health, it is necessary to provide the uninterrupted, efficient, and safe collection of recyclable materials. Staff recommends awarding RFP #452 and executing a contract with Potential Industries, Inc., as the best contractor to process and market the City’s recyclable materials. Because the daily capacity of these facilities is highly regulated and the region continues to expand housing and other 2 of 5
development, it is unlikely that new recycling facilities will be established in or near densely populated areas. All municipalities and haulers send their recyclable materials to the same few facilities in the region; therefore, it is prudent to secure capacity and pricing through a ten-year contract.
Discussion
The City’s Resource Recovery and Recycling (RRR) Division provides solid waste management services for residents and businesses as a part of Santa Monica’s threestream curbside collection program: recyclable materials (blue container), organics such as food scraps and yard waste (green container), and landfill trash (black container).
Additionally, to increase the quantity of materials diverted from landfills and to comply with California regulations, the City Council has adopted several ordinances over the years mandating the recycling of recyclables, organics, and construction and demolition materials.
RRR staff collect recyclable materials that residents and businesses place in blue recycling containers. RRR then transports these materials to a transfer station. From there, the transfer station hauls the materials to a regional recyclable processing facility, where the materials are sorted for contamination, baled, and shipped to buyers. A recyclable processing facility has the footprint, capacity, equipment, and expertise needed to process and market such materials.
Similar to other types of facilities in the solid waste industry such as landfills, recycling facilities are heavily regulated by the State with stringent environmental compliance requirements, including a daily allowable maximum tonnage limit that each facility can accept per day. Moreover, due to the strict regulatory requirements, the State rarely issues new permits to new recycling facilities. As a result, there are only a handful of recycling facilities in the region, and all nearby municipalities and haulers compete to use the same limited capacity. A longer-term contract locks in the City’s ability to secure the tonnage capacity needed to keep these materials flowing out of Santa Monica. 3 of 5
Procurement staff approves of the longer contract term, as it also helps to stabilize pricing over a longer period.
Vendor Selection
Bidder Recommendation
Best Qualified Firm Potential Industries, Inc.
Evaluation Criteria Experience, value added/breadth of service, cost of services/cost control, and stability/references.
Municipal Code SMMC 2.24.190
RFPs Received
American
Reclamation
Arakelian
Enterprises, Inc.
Potential
Industries, Inc.
Waste Management
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
10/13/2025 City's Online
Bidding Site Santa Monica Daily Press 28 11/17/2025
Justification to Award
An evaluation committee of RRR staff reviewed the four responses received. Potential Industries, Inc. is the best-qualified vendor to process and market the City’s collected recyclable materials. This recommendation is based on Potential Industries, Inc.’s experience in specializing solely in the recyclables industry as a recyclable materials processing and marketing firm, standout reference check results, competitive pricing, and evaluation of their work product, communications, placing them above all other firms.
Environmental Review
The proposed contract for recyclable materials processing and marketing services is categorically exempt from the California Environmental Quality Act (CEQA) under Sections 15301 and 15308. Section 15301 of the CEQA State Guidelines provides Class 1 (Existing Facilities) exemption for projects that consist of the operation, repair, maintenance, leasing, licensing, permitting, or minor alteration of existing public or 4 of 5
private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of the existing or former use. The proposed contract would not result in any modifications to existing recyclable materials processing facilities.
Recyclable materials processing and marketing services currently exist, and the proposed contract would not expand or materially change existing recycling facilities.
The selected vendor will be required to comply with existing recycling regulations and terms of the agreement and provide similar services to those currently being required and provided. Therefore, the project is categorically exempt as set forth in Section 15301 of the CEQA State Guidelines.
The project is also exempt pursuant to Section 15308 of the CEQA Guidelines. Section 15308 (Class 8 Actions for Protection of Environment) exempts actions taken by a regulatory agency, as authorized by state and local ordinances, to assure the maintenance, restoration, enhancement, or protection of the environment where the regulatory process involves procedures for the protection of the environment. The proposed contract would ensure City compliance with recyclable material processing regulations for the protection of the environment including:
• Integrated Waste Management Act (IWMA) of 1989 requires cities to permit and regulate solid waste handling
• Assembly Bill 341 (2011) requires both businesses that generate four cubic yards or more of solid waste and multi-family projects with five units or more to participate in a recycling program
• City’s Zero Waste Plan (Updated 2019) provides an environmental policy framework to guide the City on its path to achieving zero waste The recyclable materials processing and marketing services vendor must comply with both state and local regulations for disposal of waste and ensure the protection of the environment. Therefore, the project is categorically exempt as set forth in Section 15308 of the CEQA State Guidelines.
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Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Resource Recovery and Recycling Fund to award an agreement with Potential Industries, Inc., for recyclable materials processing and marketing services.
Contract Request
FY 2025-26
Request Amount Future Years Department Account # Total Contract Amount $107,065 $7,114,887 54500002.523010 $7,221,952
Future year funding is contingent on Council budget approval.
Prepared By: Ryan Kraemer, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Attachment A Potential Industries, Inc. Oaks Initiative Form B. Attachment B Potential Industries, Inc. Levine Act Form