Item Number: 16
City Council / Board of Directors
Written Communications
Meeting of: August 19, 2025
Submitted By:
Doug Mathews, Director of Public Works and Water
Subject:
Amendment No. 4 to the First Amended, Consolidated and Restated Exclusive Franchise Agreement between the City of Victorville (City) and Victorville Disposal, Inc. for Solid Waste Refuse and Waste Diversion (Recycling) Services
Recommendation:
That the Honorable City Council:
(1) Adopt Resolution No. 25-062, amending the Fiscal Year 2025-2026 annual budget; (2) Approve Amendment No. 4 to the First Amended, Consolidated and Restated Exclusive Franchise Agreement between the City of Victorville and Victorville Disposal, Inc. for Solid Waste Refuse and Waste Diversion (Recycling) Services; (3) Authorize the City Manager to make non-substantive changes and clarifications to the Amendment No. 4; and
(4) Authorize the Mayor to execute Amendment No. 4.
Fiscal Impact:
In accordance with the recommended actions for this item, an account string will be created under Fund 120 – Alternative Fuels for the buyout provision of $276,000, as listed in Amendment No. 4 and included as part of Resolution No. 25-062 (Attachment A).
These funds will be accounted for under the following account string:
1200010-47415-70788 – Fueling Stations General, Settlement Proceeds, Burrtec CNG Settlement
The buyout amount will escalate each year by the same CPI the Franchise Agreement escalates at, pursuant to Article 10.06 of the original agreement.
Staff are working to complete a full analysis of the Alternative Fuels operation. Any further related revenue or expense adjustments will be included as part of the mid-year budget update.
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Strategic Plan Goal:
This item aligns with Goal A, Financial Sustainability. By approving this contract amendment, the City ensures a guaranteed revenue source for Fund 120, and a reduction in expenses for the City’s franchise waste hauler. The City’s CNG facilities will have more capacity to take on new customers, with lower wait times, given the reduction in trash trucks needing fuel while having an ongoing funding source to support Alternative Fuel operations.
Background:
In response to California Assembly Bill 939 (AB 939) which was adopted in 1989, the City found it was necessary to partner with a waste hauling entity to ensure the City was in full compliance with waste related requirements as adopted by the State.
On October 20, 2009, the First Amended, Consolidated, and Restated Exclusive Franchise Agreement (Agreement) with Victorville Disposal, Inc. for the provision of solid waste, refuse, and recycling services (Attachment D) was adopted. This Agreement modernized the City's franchise terms to align with evolving State waste diversion requirements, while also establishing operational standards to support efficient service delivery, fiscal responsibility, and customer satisfaction.
As part of the operational provisions of the Agreement, Section 7.02(c) requires Victorville Disposal to purchase compressed natural gas (CNG) exclusively from the City's CNG fueling stations located on D Street and McArt Blvd., if Victorville Disposal uses CNG equipment for their operation. This requirement was included to maximize the use of City- owned infrastructure, promote centralized fueling operations, and help reduce the impact of fixed costs to the City’s CNG rates.
On September 9, 2014, Amendment No. 1 to the Agreement (Attachment E) was executed to incorporate Household Hazardous Waste (HHW) Collection Center staffing services.
In 2016, California Senate Bill (SB) 1383 was enacted and established a state-wide goal to reduce the amount of organic waste sent to landfills by 75% by 2025 as compared to 2014 levels. SB 1383 regulations were finalized in late 2020 and imposed numerous requirements on jurisdictions, including but not limited to: implementing organics diversion programs for residential and commercial waste generators; adopting an enforceable ordinance mandating organics recycling; implementing outreach and education, container contamination minimization, and inspection and enforcement programs; procuring recovered organic waste products (e.g. compost/mulch, etc.) in quantities specified by CalRecycle; taking enforcement actions such as issuing notices of violation and citations to those not complying with organics diversion mandates; and creating and maintaining an “implementation record” to document the jurisdiction’s SB 1383 programs.
In July 2018, the City Council approved Amendment No. 2 to the Agreement (Attachment F) and incorporated new commercial organics recycling services and contractor 4 2
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compensation for those new services needed to comply with California Assembly Bill (AB) 1826 (Mandatory Commercial Organics Recycling). Amendment No. 2 also made changes regarding franchise and other fees, and the index used to calculate the annual consumer price index adjustment to the contractor service rates.
During 2018, through the Solid Waste and Recycling rate study process, the City became aware of a rate setting issue related to Article 7.02 of the Agreement for Victorville Disposal for CNG pricing. There was no methodology established in the Agreement to ensure CNG was being priced competitively at market rates. In response, the City and Victorville Disposal agreed to use the Clean Cities Alternative Fuel Price Report (Report), published by the Alternative Fuels Data Center as the pricing index for CNG.
Memorialized in a letter dated October 16, 2018 (Attachment H) from the City to Victorville Disposal, the City committed to annually reviewing CNG rates based upon the report issued in December of each year with an effective date of July 1st and notifying Victorville Disposal of any changes to their CNG rate.
On January 16, 2024, the City Council approved Amendment No. 3 to the Agreement (Attachment G). The Amendment included updates for the new organics’ diversion programs mandated by SB 1383. This included a residential curbside organics collection (green cart) program, in addition to establishing an "implementation record," procurement of recovered organic waste products, outreach and education programs, and a container contamination minimization program. Additional revisions to the franchise agreement also included clarifications to operation of the City's household hazardous waste collection and recycling drop-off center, and the development of a program to recycle construction and demolition material (C&D material).
The City, alongside Victorville Disposal, have successfully been running the residential organic’s program over the last year. In addition, Victorville Disposal has made progress on constructing infrastructure needed to process C&D material and has started the permitting process.
Discussion:
Victorville Disposal and the City meet regularly to ensure smooth and fiscally responsible refuse and recycling services. Recently, Victorville Disposal reached out to begin discussions on building a slow-fill CNG station at their facility to increase efficiency and decrease expenses. With this proposed change, trash trucks will be able to slow-fill overnight, versus having downtime at a CNG station every day for fueling at one of the City’s facilities. This will help minimize operational costs that are incorporated into the City’s rates for services provided by Victorville Disposal, and will also reduce wait times for the public (as Victorville Disposal will only need to use the City’s CNG fueling stations occasionally for fast-fill fueling).
Recognizing the operational advantages, the City agreed to consider modifying Article
7.02 – Vehicles of the Agreement to allow Victorville Disposal to use their own CNG facility to fuel their vehicles. City staff proceeded to conduct an analysis of the customer base and sales metrics for the City’s CNG stations, understanding that Victorville Disposal was 4 2
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one of the largest customers and there would be significant impacts to Fund 120 – Alternative Fuels with Victorville Disposal no longer using the CNG stations. Discussions ensued between the entities to reach a consensus on proposed changes to Article 7.02 that would meet the needs of both parties, resulting in an agreed upon annual buyout provision.
With this new provision, Victorville Disposal will be able to utilize their facilities to fuel their vehicles overnight, increasing efficiency by providing additional staff hours during the day to provide service to residents and businesses for hauling, processing, and disposal of trash, recycling, and organics. The annual buyout will also help with the impact to the City’s fixed cost component of the CNG rate that will be spread over a smaller customer base because of this change. Thus, Amendment No. 4 to the Agreement is being proposed to update Article 7.02 – Vehicles as it relates to CNG.
The proposed Amendment No. 4 to the Franchise Agreement (Attachment B) incorporates the following changes outlined below:
1. Section 7.02 Vehicles, subsection c: adding language to the section to allow Victorville Disposal to establish permanent vehicle fueling alternative to City fueling facilities; Victorville Disposal agrees to compensate the City at a rate of Two Hundred Seventy-Six Thousand Dollars ($276,000) annually per fiscal year to offset the lost revenue generated at City fueling facilities, which will be known as the Annual Buyout.
The Annual Buyout will increase each fiscal year by the same Consumer Price Index (CPI) formula listed in Article 10.06 – Annual Formula-Based Compensation Adjustment effective July 1 of each year, beginning on July 1, 2026. The increase is calculated using the Los Angeles-Riverside-Orange Counties CPI based upon the twelve (12) month mean average change. This buyout will be in place as long as the City offers CNG fueling methods consistent with State mandated emissions compliance requirements.
Additionally, if Victorville Disposal finds it necessary to make any incidental CNG purchases at one of the City’s CNG facilities, they will be doing so at the rate charged to all retail customers with the understanding that said rate is not subject to a market rate comparison.
The proposed amendment reflects a shift toward operational flexibility and supports both parties in pursuing cost-effective and sustainable business practices, while preserving the integrity of the franchise relationship.
Staff recommends that the City Council adopt Resolution No. 25-062, approve Amendment No. 4 to the Franchise Agreement, allow the City Manager to make non- substantive changes to the amendment and authorize the Mayor to execute the aforementioned amendment.
Staff is available for any questions the Council may have. 4 2
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Prepared By:
Mel Krejckant, Public Works and Water Administrative Manager Benjamin Lucha, Environmental Programs Manager
Attachments: A. Resolution No. 25-062
B. Amendment No. 4 to the Franchise Agreement (clean copy) C. Amendment No. 4 to the Franchise Agreement (blackline copy) D. 2009 - First Amended, Consolidated and Restated Exclusive Franchise Agreement
E. 2014 - Amendment No. 1 to the Franchise Agreement
F. 2018 - Amendment No. 2 to the Franchise Agreement
G. 2024 - Amendment No. 3 to the Franchise Agreement
H. CNG Pricing Letter – Dated October 16, 2018