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Home My WebLink AboutReceive Report on Refuse Collection Franchise Agreement Nego APPROVED 3-0 TINGT AS EM -0) TO, UT'ap-12t P= City of Huntington Beach CITY P1 46 sI6A1 tt i7 vti! f3E/ 4LF DF ME CF�UUNTV Cp��o`V C 117 File #: 19-531 MEETING DATE: 5/6/2019 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Travis K. Hopkins, PE, Director of Public Works Subject: Receive Report on Refuse Collection Franchise Agreement Negotiations with Rainbow Disposal Company Inc./Republic Services, and Consider Issuing a Notice of Termination of Annual Extension of the Agreement Statement of Issue: Mayor Peterson and Mayor Pro Tem Semeta submitted a Council Member item at the April 1st, 2019 City Council meeting recommending the City Council direct the City Manager to prepare a letter issuing Rainbow Disposal Company Inc./Republic Services a Notice of Termination of Annual Extension of the Franchise Agreement and present to City Council at the next scheduled meeting. After review and discussion, the City Council directed the City Manager to prepare the written notification to Rainbow Disposal Company Inc./Republic Services of the Notice of Termination and return at the May 6th City Council Meeting for approval. Additionally, the City Council amended the action to request information on the current status of negotiations, differences in programs and processes, an update on the status of recyclable material, and how the cancellation clause affects residents. Financial Impact: There is no immediate financial impact from this action. Any financial impact will occur at conclusion of the franchise agreement term, 18 years from the issuance of a Notice of Termination of Annual Extension from the City. Recommended Action: Approve the issuance of the Notice of Termination of Annual Extension letter to Rainbow Disposal Company Inc./Republic Services, converting the franchise agreement to a 15-year fixed term with a 3 -year notice period. Alternative Action(s): • Do not approve the issuance of the Notice of Termination of Annual Extension. The Agreement will continue in its current form and proceed under the current agreement or continue to negotiate an City of Huntington Beach Page 1 of 3 Printed on 5/1/2019 powereg4 Leg star TM File #: 19-531 MEETING DATE: 5/6/2019 updated agreement. Analysis: Rainbow/Republic Services has been the exclusive provider of solid waste (refuse) collection services in Huntington Beach since the late 1950's. City Council approved the current Agreement on July 17, 2006, following negotiations between Rainbow/Republic and the city for the implementation of automated residential collection service. On May 15, 2017, the City Council formed an Ad Hoc Council Committee to review the Agreement with Rainbow, now a division of Republic Services. The purpose of the Ad Hoc Committee was to review the terms of the Agreement and identify items to consider in a negotiation for an updated Agreement. The Committee identified several key items in the Agreement and directed staff to negotiate for a revised Agreement with Rainbow/Republic. Key items considered in the negotiating process include: • Term of Agreement • Revenue enhancement from Franchise and Transfer Station Host fees • Index/Formula for annual rate calculation • Compliance with current legislation affecting recycling and disposal programs • Responsibilities and performance standards - clarify and define During the contract review there were several items that required resolution due to new regulation implementation required by CalRecycle including AB 1826 Mandatory Commercial Organics Recycling and other unresolved legal issues. Staff and Rainbow/Republic exchanged proposed changes and revisions of the Agreement. As of the most recent draft exchanged earlier this year, the parties had not reached a consensus on the key points, as summarized in attached table. At this point in time, the parties have not reached agreement on the major topics identified by the City Council Ad Hoc Committee. The existing term of the Agreement is 15 years and renews annually for a new 15-year term, automatically. Additionally, the termination provision of the Agreement provides for a 3-year notice period upon termination of the annual term renewal. This creates an 18-year actual contract term upon issuance of the notice. If the City issues the Notice, the effect would only terminate the automatic annual renewal extension and convert the Agreement to a fixed term, which will then continue for 18 years or until June 30, 2037 The residential and commercial collection and recycling services provided per the Agreement will continue for the fixed term. The elimination of export markets for recyclable commodity materials is projected to continue to have an effect on the solid waste industry overall. This will affect how our customers recycle in their curbside receptacles as markets for recyclable commodities shift over the next several years. A representative of Rainbow/Republic will be in attendance at the May 6th City Council Meeting to provide additional information on the changes of the world recycling market and impacts of those City of Huntington Beach Page 2 of 3 Printed on 5/1/2019 powered Leoistar Tr' File #: 19-531 MEETING DATE: 5/6/2019 changes. Environmental Status: This Request for Council Action involves a report on ongoing negotiations regarding the City's Refuse Franchise Agreement with Rainbow/Republic Services and consideration of a revision to the agreement that would modify the term of the agreement. This is an administrative action that will not result in any direct or reasonably foreseeable indirect physical changes to the environment, and as such, is not a project as defined in Section 15378 (b)(5) of the CEQA Guidelines. Strategic Plan Goal: Non-Applicable - Administrative Item Attachment(s): 1. Table 2. Notice of Termination of Annual Extension letter City of Huntington Beach Page 3 of 3 Printed on 5/1/2019 poweretQq•Legistar'' ITEM CITY RAINBOW/REPUBLIC ' STATUSk' TERM OF AGREEMENT 15 year fixed term 25 year fixed term No agreement COMMERCIAL FRANCHISE Increase from 5%to Increase from 5%to 15% No agreement FEE REVENUE 15% incrementally incrementally; all fees over 5 years; no pass- included in the rates charged through to customers to customers TRANSFER STATION HOST Increase from 2%; no Increase from 2%; with pass No agreement FEE REVENUE pass-through to through to customers; limit to customers; apply to transfer tonnage destined for all paid transfer disposal (no recyclable, station receipts organic, or subsequently diverted material) HAULER'S Simplify from current Simplify from current 3-part No agreement COMPENSATION — 3-part formula. Use formula. Minimum 3.5% RESIDENTIAL COLLECTION the LA-Long Beach- annual increase or apply Anaheim Consumer national Consumer Price Price Index for All Index for Water, Sewer and Urban Consumers Trash if greater HAULER'S Simplify from current Simplify from current 3-part No agreement. COMPENSATION — 3-part formula. Use formula. Minimum 3.5% COMMERCIAL the LA-Long Beach- annual increase or apply COLLECTION Anaheim Consumer national Consumer Price Price Index for All Index for Water, Sewer and Urban Consumers Trash if greater HAULER'S Include recycling Include recycling Tentative COMPENSATION — compensation in the compensation in the overall agreement RECYCLING overall compensation compensation and not a separate item as per current COMPLIANCE WITH Include compliance Increase rates for any change No agreement CURRENT LEGISLATION and diversion in law and include some FOR programs for all currently chaptered RECYCLING/DIVERSION currently chaptered legislation under the change legislation in law provision WATER QUALITY Continue current Change title of this program Tentative COMPLIANCE PAYMENT grant payment for to Street Maintenance agreement annual water quality Compliance Payment— compliance issues - continue payment at $190,000 plus annual $190,000 plus annual CPI CPI BULKY ITEMS— Maintain current 4 Reduce to 2 times per year of No agreement RESIDENTIAL times per year of up up to 10 items and $75 per to 10 items item charge for additional requests 407 '''' -.4 in?P'' City of Huntington Beach ,-,, .. . , ,--11-t, ,,, L .., l' - 2000 MAIN STREET CALIFORNIA 92648 '':, 444 1-, ! Erik Peterson i...40 ,," ‘ _-. May 6, 2019 Mr. Chris Kentopp, General Manager Rainbow Disposal Co., Inc. 17121 Nichols Lane Huntington Beach, CA 92647 RE: Notice of Termination of Annual Extension of Term Dear Mr. Kentopp: As provided in Paragraph 3(B) of the"Revised and Restated Refuse Collection and Disposal Services Franchise Agreement by and between the City of Huntington Beach and the Rainbow Disposal and Rainbow Transfer and Recycling Companies" (Agreement), the annual extension of the fifteen year term of the Agreement may be terminated by either party in their sole discretion, without cause, by notification in writing ("Notice of Termination of annual Extension"). By this letter the City is hereby terminating the annual extension effective three years from the day this notice is provided. The Agreement shall remain in effect for the balance of the fifteen year term, June 30, 2037, unless the Agreement is otherwise terminated as provided in the Agreement. Very truly yours, Erik Peterson, Mayor Manly,Australia TELEPHONE(714)538-5553 Anjo,Japan 408 FAX(714)536-5233 r..,, �,tTiurr CITY OF HUNTINGTON BEACH -k y 2000 MAIN STREET HUNTINGTON BEACH, CALIFORNIA 92648-2702 NCO V rf r)H . OFFICE OF THE CITY MANAGER FRED A. WILSON May 6. 2019 Mr. Chris Kentopp. General Manager Rainbow Disposal Co.. Inc. 17121 Nichols Lane Huntington Beach. CA 92647 RE: Notice of Termination of Annual Extension of Term Dear Mr. Kentopp: As provided in Paragraph 3(B)of the "Revised and Restated Refuse Collection and Disposal Services Franchise Agreement by and between the City of Huntington Beach and the Rainbow Disposal and Rainbow Transfer and Recycling Companies"(Agreement). the annual extension of the fifteen year term of the Agreement may he terminated by either party in their sole discretion, without cause. by notification in writing("Notice of Termination of annual Extension"). By this letter the City is hereby terminating the annual extension effective three years from the day this notice is provided. The Agreement shall remain in effect for the balance of the fifteen year term.June 30. 2037. unless the Agreement is otherwise terminated as provided in the Agreement.iSine ely. e A Wilson City Manager cc: Honorable Mayor and City Council Members Michael Gates. City Attorney Robin Estanislau. City Clerk Travis Hopkins. Director of Public Works Switzer, Donna From: Dombo, Johanna Sent: Monday, May 06, 2019 8:45 AM To: Agenda Comment Cc: Fikes, Cathy; CITY COUNCIL Subject: FW: Contract with Rainbow/Republic AGENDA COMMENT From: stephanie green<steffiehome@gmail.com> Sent: Friday, May 03, 2019 1:11 PM To:CITY COUNCIL<city.council@surfcity-hb.org> Subject:Contract with Rainbow/Republic Happy Friday; I am writing to you to express my support for ending the contract with Rainbow/Republic waste disposal. It is best practices to send out these large contracts every so often to get bids from other service providers. I believe it is in the best interest of the residents of HB to send a notification to terminate the contract. Please do not stick the next generation of HB residents without options to have other companies bid. It is time to make sure Republic has to fairly and openly bid for the HB contract. 15 years is plenty of notification to allow them to come up with a competitive bid that may save your residents some money. Thank you Stephanie Green •