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SR-103007-3A~~ ;tYof City Council Report Santa Monica City Council Meeting: October 30, 2007 Agenda Item: To: Mayor and City Council From: P. Lamont Ewell, City Manager Subject: Review of Responses to Solid Waste Request for Proposals to Provide Commercial Collection and Transfer and Disposal Services Recommended Action City Manager recommends that the City Council: 1) receive the attached Solid Waste Request for Proposal Evaluation Reports for commercial collection and transfer & disposal services; 2) direct staff to proceed with developing an implementation plan for commercial collection; and 3) based on the Evaluation Committee's initial analysis, direct staff to engage in formal discussions with private firms to further the evaluation of the alternative combination of services as referenced as Alternative A & C below. Executive Summary Over the past two years, the City has been engaged in a multi-year review of solid waste operations. This review resulted in the development of two Requests for Proposals, issued on January 22, 2007 for 1) Commercial Collection Services; and 2) Transfer, Recycling and Disposal Services. 1 The evaluation process and results are detailed in the attached evaluation reports for each Request for Proposal (RFP). The Evaluation Committee ranked the City of Santa Monica Solid Waste Management Division as the best responder for both services. However, it is further suggested that a review should be conducted to determine possible savings that could be achieved through a partnership with a combination of one or more private firms for Transfer Services for Recycling and Disposal. The resulting direction from this process could have impacts on the Solid Waste fund and rates for the next fifteen years, if the full term articulated in the RFP were awarded. The effect will vary depending on which service option is selected, which provider is selected and the results of any negotiations. Discussion Background On October 25, 2005, the City embarked on atwo-phased professional services agreement with Gershman, Brinkner & Bratton, Inc. (GBB). Phase I included conducting an operational and financial analysis to assist the City in determining base line revenue and expenditure data. On April 25, 2006,. City Council authorized Phase II of the project, which was the development of Request for Proposals to test the market for (a) commercial collection services, and (2) transfer, recycling and disposal services. During the development of the Request for Proposals (RFP), GBB worked with an inter departmental team comprised of the Directors of Finance and Environmental and Public 2 Works Management, the Assistant City Manager, Assistant to the City Manager for Management Services and a Senior Budget Analyst. The committee also held occasional meetings with the Council sub-committee, comprised of Council Member Ken Genser and Mayor Pro Tempore Herb Katz. The RFP was developed to explore all potential service delivery options, resulting in a broad document that would provide choices and options for the evaluation team and Council. The RFP development process included a "Pre-RFP Meeting" on November 26, 2006 that was noticed to all known service providers in Los Angeles County and was attended by representatives from all major companies that do business in Santa Monica. The RFP was issued on January 22, 2007. Mandatory proposer meetings were held on February 6 for commercial collection, transfer and disposal services and on March 20 for roll-off services. Evaluation Process The Evaluation Committee was comprised of a diverse group that could provide an independent review of the proposals. The team was led by the Assistant City Manager and included the Finance Director, an environmental community representative, a business community representative, aformer Executive Director of Orange County Sanitation District, who was also the former City Manager in Pasadena, and an independent Solid Waste consultant from northern California. The evaluation team reviewed each proposal and interviewed proposers on July 30, August 1, 2007 and August 29, 2007. 3 The attached Evaluation Reports detail the process and the resulting recommendation. A summary of each Request for Proposal is provided below. Commercial Collection The Commercial Collection RFP requested proposals to collect refuse, recyclables and food waste from commercial establishments in three sectors of the City; Downtown/Main Street, Outside Downtown/Main Street or Citywide. Options included one entity providing the service or a private company competing with the City. Roll off service was covered under a distinct option of this RFP. The RFP articulated the goals as follows: • provide efficient and cost effective service; • utilize competition to ensure that services are market-driven; • maximize recycling opportunities; • achieve a diversion goal of seventy percent; • increase aesthetics and cleanliness of set out areas; • reduce the number of collection vehicles thereby reducing traffic congestion; and • reduce air pollution and the emission of greenhouse gases. A total of seven companies submitted responses to the Request for Proposals for Commercial Collection of Solid Waste. Of those, five companies, Allied Waste Services, Athens Services, City of Santa Monica Solid Waste Management Division, Consolidated Disposal Services and Southern California Disposal submitted proposals for all commercial collection services. Looney Bins and Interior Removal Specialist responded only to provide roll off service. 4 The Evaluation Committee had extensive discussions as to whether a closed market or managed competition would best meet the goals of the City. The Evaluation Committee recognized that there are several companies that currently provide commercial collection in Santa Monica, resulting in multiple trucks circulating in a relatively small service area and in alleys shared by pedestrians and other traffic. After balancing the traffic impacts and environmental considerations against the notion of a managed competition, the Evaluation Committee saw no benefit to increasing the number of trucks. They further concluded that a closed market limited to one entity would best meet the majority of the goals of the RFP due to the reduction in traffic, trucks and the ability to best control the manner in which the waste stream is set out to help maximize diversion. They further concluded that roll off was best left open and competitive. The operation of the. roll off service require bins to generally be delivered one at a time in a manner that can not be on a regular route, the industry as a whole achieves high diversion rates and the City's demolition permit could be used to provide limits or policies to achieve the City's goals without closing the market. Based on a comprehensive evaluation process, the Evaluation Committee recommends the City of Santa Monica's Solid Waste Management Division as the best entity to meet the goals of the RFP and therefore to provide commercial collection services citywide. The recommendation is based on the following: 5 The proposal was the lowest overall cost; history and commitment to alternative fuels, specifically natural gas required by the RFP and allowed under the Air Quality Management District regulations Ability to respond to changing goals and conditions; • City-located yard The extensive collection network within the City. Next Steps for Commercial Collection Staff request Council provide direction on next steps which could include directing staff to proceed with developing a plan for the City, as best proposer, to provide all commercial collection services, as recommended by the Evaluation Committee. Alternatives for Commercial Collection Following its review of the Evaluation Report, Council could: 1) Direct staff to proceed with negotiations with Athens Services, Inc., as the second ranked proposer for downtown or citywide services; or 2) Direct staff to pursue an option leading to competition between Athens, as the second ranked proposer and the City. 6 Transfer & Disposal Services The Transfer & Disposal Services Request for Proposals requested proposals to provide transfer and disposal services under one of four options: 1) At a non-City Yard site. 2) At an improved City Yard facility for city-only material. 3) At an improved City Yard facility for city and a private partner's material. 4) At an improved City Yard facility for the City and another City partner. The RFP articulated the goals of the City as follows: • Receive services that keep the City "clean & green;" • Create equitable rates across customer groups; • Provide efficient and cost-effective transfer services; • Utilize competition to ensure transfer services are market driven; • Enter into long-term contracts to achieve secure arrangements and predictable costs; and • Manage, recycle and dispose of materials within applicable laws. Athens Services, Inc., the City of Santa Monica Solid Waste Management Division and Southern California Disposal submitted responses to provide all transfer services and varying degrees of materials recovery and sorting. Downtown Diversion and Allan Company proposed to provide one element of the services requested. Upon extensive review by the Evaluation Committee unanimously concludes that that the City of Santa Monica Solid Waste Management Division's proposal provided the best combination of price and service to meet the evaluation criteria when considering one proposer to provide all services. 7 The Evaluation Committee also recognized that two principal considerations should be given while Council considers its next steps: 1) It is important for the City to maintain its solid waste permit. The permit is a valuable asset in the City's ability to meet the transfer and disposal needs for decades to come, long after the fifteen year term in the RFP. 2) The best opportunity to meet the goals of the RFP and to have the most valuable economic impact on the operation is to operate a Materials Recovery Facility (MRF) at the City Yard site. A MRF will help the City achieve the highest possible diversion rate and provides the opportunity to maximize the value of recovered materials. While the three companies that proposed to operate facilities at the City Yard provided some degree of MRF, the committee felt that a larger MRF could better meet the goals of the City. During its review with each entity, the Evaluation Committee discussed how the company would handle continuation of service if it were to experience labor unrest. Some of the companies were unionized, others were not. Each company, however, provided good responses indicating the ability to maintain service at the contracted levels. The committee also recognized that the service being provided by the City of Santa Monica Solid Waste Management Division gave Council the greatest control over potential labor issues. Next Steps for Transfer & Disposal Services Staff request that Council provide direction on the next steps associated with the Request for Proposals for Transfer & Disposal Services. Direct staff to implement the Evaluation Committee's recommendation and proceed with developing a plan for the City, as best proposer, to provide transfer & disposal services. This recommendation was based on the following: 8 • It presented the combination of price and services that overall best meets the City's evaluation criteria when considering one proposer to receive for all Services. • Provides the Council with the greatest control over labor and operational issue, virtually guaranteeing non-interruption of service and the ability to change to meet Council's goals. Best preserves the ability for the City to retain its Solid Waste permit, which the Evaluation Committee believes is a valuable asset to -best manage the City's solid waste stream for decades to come. Alternatives for Transfer & Disposal Services Following its review of the Evaluation Report, Council could also elect to direct staff to proceed with negotiations with multiple companies to provide transfer & disposal services. Options identified by the Evaluation Committee include: a. The City and Allan Company as the best proposals to provide transfer and disposal services and the best proposal for recycling services. This option appears that it may best meet the goals of the RFP by providing additional recycling services onsite; b. Private transfer facility and private recycling facility. This option would include Allan Company and either Athens Services, Inc. or Southern California Disposal. It is not known what interest those companies would have in working within a joint operation and this option does not provide the City with as many tools to modify the program over time or manage the waste stream. Under this option, the City would maintain its permit by contracting to provide a MRF on City-owned land; c. City and two private companies. This option could draw on the services of multiple companies while still meeting the goals of the RFP. The City could receive and process materials to a private recycling facility and to a private transfer facility. It is not known what interest Athens Services, Inc. 9 or Southern California Disposal would have in such an arrangement. This option provides the City better flexibility than option B to meet future changing needs but not as much flexibility as option A. Budget/Financial Impact There are no fiscal impacts associated with this item at this time. The fiscal impacts will be determined based on Council's direction. Prepared by: Donald Patterson, Assistant to the City Manager for Management Services and Forwarded to Council: Ewell Attachments: Commercial Collection Evaluation Report Transfer & Disposal Evaluation Report 10 PROPOSAL EVALUATION REPORT I`~~ C~ OFFICE OF THE CITY MANAGER CONTRACT SERVICES FOR: COLLECTION OF COMMERCIAL SOLID WASTE October 23, 2007 PROPOSAL EVALUATION REPORT FOR COLLECTION OF COMMERCIAL SOLID WASTE RFP 2007-201-O1 Table of Contents Pace 1.0 Introduction to Procurement Process ................................................. ......................1 1.1 Overview of the Process ........................................................ ......................1 1.2 Project Timetable ................................................................... .....:................1 1.3 Purpose/Objective .................................................................. ......................1 1.4 Services Requested by City ................................................... ......................2 1.5 Evaluation Methodology ........................................................ ......................3 2.0 Evaluation of Proposals ..................................................................... ......................3 2.1 Proposal Evaluation Team ...........................:.......................... .....................3 2.2 Proposal Evaluation Factors ................................................... .....................4 2.3 Procedure for Evaluating Proposals ........................................ .....................5 3.0 Overview of Proposals ........................................................................ .....................6 3.1 Proposal Summary .................................................................. .....................6 3.2 Proposal Cost Summary .......................................................... .....................8 4.0 Completeness/Compliance Review .................................................... ...................11 5.0 Capability, Capacity, Financial Strength and Experience .................. ...................11 6.0 Comprehensiveness and Feasibility of Business Plan ........................ ...................12 6.1 Allied ....................................................................................... ...................12 6.2 Athens ..................................................................................... ...................12 6.3 Consolidated ......................................:.................................... ...................12 6.4 SWMD .................................................................................... ..................:13 6.5 IRS ...................................................................:...................... ...................13 6.6 Looney .................................................................................... ...................13 6.7 SCD ......................................................................................... ...................13 7.0 Evaluation Results, Rankings and Recommendations ........................ ...................14 7.1 Allied ....................................................................................... ...................15 7.2 Athens .........................................................................:........... ...................15 7.3 Consolidated ........................................................................... ...................15 7.4 SWMD .................................................................................... ...................16 7.5 IRS .......................................................................................... ...................16 7.6 Looney ......................................:............................................. ...................16 7.7 SCD ......................................................................................... ...................17 i Commercial Collection Evaluation Report 1.0 Introduction to Procurement Process 1.1 Overview of the Process The City of Santa Monica ("City") invited Proposers to submit a response to a Request for Proposals ("RFP") for Collection of Commercial Solid Waste issued on January 23, 2007. The RFP requested that any firm that felt it was qualified could submit technical proposals, qualifications and cost proposals in the form requested in the RFP. All proposals received by the specified due date and time would be evaluated. Under this process, an award, if made, would be made to the best Proposer whose Proposal is most advantageous to City, taking into consideration criteria set forth in the RFP. 1.2 Project Timetable The following timetable sets forth the key events in the RFP process. RFP Event RFP Issued Mandatory Pre-Proposal Conference First Addendum Issued Second Addendum Issued Mandatory Pre-Proposal Conference for Roll Off Service Third Addendum Issued Fourth Addendum Issued Fifth Addendum Issued Proposal Due Date Convene Oral Presentations - 1st round Convene Oral Presentations - 2"d round Recommendations Presented to City Council for Approval 1.3 Purpose/Objective Date January 22, 2007 February 6, 2007 March 9, 2007 March 19, 2007 March 20, 2007 Apri16, 2007 Apri16, 2007 Apri16, 2007 May 4, 2007 July 31 & August 1, 2007 August 29, 2007 October 30, 2007 The City has a number of goals that it wants to achieve as a result of this RFP. These goals include: 1. Provide efficient and cost-effective Commercial Collection Services to all business establishments in the City; 2. Utilize competition to ensure that the commercial establishments have Commercial Collection Services that are market driven; 3. Maximize the opportunities for recycling by businesses and commercial facilities and thereby increase their contribution to the City's diversion as mandated by AB939; 4. Achieve the sustainability goal of 70 percent diversion; 5. Increase the cleanliness and aesthetics of the municipal solid waste (MSW) set- out areas and containers; October 23, 2007 Commercial Collection Evaluation Report 6. Reduce the number of individual collection vehicles providing MSW Commercial collection service in the City and thereby reduce traffic congestion, particulazly in the Downtown District/Main Street; and 7. Reduce air pollution and the emission of greenhouse gases. To achieve these goals, the revised City commercial collection system will depend on establishing and following implementation criteria based on the goals including: • Automation of lifting and emptying containers where practical; • Incorporation of waste and recycling containers in building and area design; • Optimizing route structures utilizing geographic information system (GIS) based computer routing software; • Maximum recovery of recyclable materials; • Right sizing of service through container selection and collection frequency; • Use of compressed natural gas (CNG) or liquefied natural gas (LNG) fuel; and • Increasing the education of waste "best practices" for the commercial sector. 1.4 Services Requested by City The City requested proposals from private service providers for collection of Acceptable Material, including refuse, recyclable materials, cardboard, and food waste from the commercial establishments in three (3) Commercial Collection Areas of the City as follows: I . Downtown District/Main Street; 2. Outside of Downtown District/Main Street; and/or 3. Entire City of Santa Monica, combination of Option 1 and Option 2. The City also requested proposals on the collection of Construction and Demolition (C7D) waste (Roll Off bins). 1.4.1 Proposal Options Proposers could propose to supply Commercial Collection services in the City under one of seven (7) options described below: 1. Single service provider for Downtown District/Main Street - either a private service provider or the City's Solid Waste Management Division (SWMD); 2. Two service providers for Downtown District/Main Street -both one private service provider and SWMD competing for accounts; 3. Single service provider for commercial establishments outside of the Downtown District/Main Street - either a private service provider or S WMD; 4. Two service providers for commercial establishments outside of the Downtown District/Main Street -both one private service provider and SWMD competing for accounts; 5. Option No. 1 and No. 3 combined; October 23, 2007 Commercial Collection Evaluation Report 6. Option No. 2 and No. 4 combined; and 7. Single service provider for roll-off bins in the City of Santa Monica -either a private service provider or SWMD. Proposer could propose to collect Acceptable Materials from commercial establishments under one option, any group of options and/or all options. 1.5 Evaluation Methodology The RFP specified that the City may choose not to select any proposal if that is in the best interest of the City and its ratepayers, and continue with existing transfer and disposal services performed by the City. An award, if made, will be made to the best Proposers) whose proposal is most advantageous to the City, taking into consideration the other factors set forth in the RFP. The Evaluation Committee evaluated all proposals simultaneously in order to determine which was in the best interest of the City. 2.0 Evaluation of Proposals 2.1 Proposal Evaluation Team An Evaluation Committee appointed by the Office of the City Manager evaluated the Proposals and made a recommendation to the City Manager. The Evaluation Committee included: Chair: • Gordon Anderson, City of Santa Monica, Assistant City Manager Members: • Carol Swindell, City of Santa Monica, Finance Director • Jim Greco, California Waste Associates • Don McIntyre, Urban Affairs Consultant • Erik Neandross, Representative from the Task Force on the Environment Andrew Thomas, Bayside District Corporation An Advisory Panel assisted the Evaluation Committee in their evaluation of the proposals and included: Don Patterson, City of Santa Monica, Assistant to the City Manager for Management Services ^ Annette Morales, City of Santa Monica, Principal Budget Analyst • Harvey Gershman, Gershman, Brickner, & Bratton, Inc. (GBB) Frank Bernheisel, GBB Lois Clarke, GBB Each Evaluation Committee and Advisory Panel member was required to sign a statement certifying that he or she had no conflict of interest that would preclude participation in the evaluation and conduct the evaluation in a confidential manner. October 23, 2007 Commercial Collection Evaluation Report Deputy City Attorney, Eriko Matsumoto, also participated as one of the advisors in certain aspects of the process. 2.2 Proposal Evaluation Factors The factors to be considered in the evaluation of Proposals are listed below and include the criteria set forth in the City of Santa Monica Municipal Code 2.24.072, except "bidder" has been replaced with "Proposer." 1. Price • Total cost proposed for services • Best cost to City and ratepayers • Other economic benefits to City (e.g., jobs, taxes, etc.) 2. The quality of the material or services offered • Comprehensiveness • Feasibility and quality of the business plan • Responsiveness to the information required by the RFP 3. The ability, capacity and skill of the Proposer to perform or provide the material or services • Management team • Qualifications • Approach, technical solutions, and feasibility • Transition plan • The .capacity of the Proposer to perform the contract or provide the service promptly, within the time specified, and without delay or interference • Able to produce the required outcomes in a timely manner • Current capability with permitting agencies • History with permitting agencies • Current capability of performance and vehicle and facility maintenance • History of performance and vehicle and facility maintenance 4. The sufficiency of the Proposer's financial resources • Capacity, financial strength, and ability to obtain bonding and insurance • Good financial standing with City and/or other government contracts • Proposal bond provided • The character, integrity, reputation, judgment, training, experience and efficiency of the Proposer • Financial ability to provide the services throughout the duration of the Contract • References • Experience in providing services of similar size and scope • History of customer service and as an employer • Commitment to fair and sound working conditions for its employees October 23, 2007 Commercial Collection Evaluation Repor[ • Current on all licenses and contractual requirements, if any, with the City and/or other government contracts • History of performance measures and benchmarking • History of litigation 5. The ability of the Proposer to provide such future maintenance or service as may be needed 6. Any other factor which will further the intent set forth in Section 608 of the City Charter Environmental compliance Environmental stewardship Ability to minimize environmental impacts (e.g., minimize air pollution, minimize traffic impacts, provide highest and best use of materials) 2.3 Procedure for Evaluating Proposals The City first examined proposals to eliminate those that were clearly non-responsive to the stated requirements. Proposers were evaluated based upon the responses provided in the Proposal and in the other documents, if any, that Proposers were required to submit with the completed Proposal. In a measure to maintain confidentiality of sensitive materials, financial information was submitted by the Proposer as a separate bound attachment and clearly identified as financial information to the City. The City's Finance Department was responsible for evaluating the sufficiency of the Proposer's financial resources. All of the Proposers were given the same bidding information, requests for clarification and the equal opportunity for an interview. Notices and information was posted on the City's website at http://www.smaov.net/cmo/solid waste/index.htm throughout the process. Proposers were notified when a new notice was posted via e-mail. The Evaluation Committee members were each provided with their own set of proposals and other supplemental information submitted by Proposers in response to clarification questions and provided at or after the interviews with Proposers during the course of the evaluation process. The Evaluation Committee members met at various times during the course of the evaluation process to provide input, discuss proposals and review supplemental information. The Evaluation Committee also participated in the interview process. During the Interview both the Evaluation Committee and Advisory Panel asked questions. Following the interviews with the Proposers, additional information was received by e- mail and distributed to the Evaluation Committee. The information was evaluated and discussed. A final consensus scoring was completed, and the Evaluation Committee October 23, 2007 Commercial Collection Evaluation Report developed and reached consensus on the recommendations included herein this Evaluation Report. 3.0 Overview of Proposals Proposals from a total of seven firms were received as a result of RFP #2007-201-01. These firms were: • Allied Waste Services (Allied) • Athens Services (Athens) • City of Santa Monica, Solid Waste Management Division (SWMD) • Consolidated Disposal Service (Consolidated) • Downtown Diversion (Downtown) • IRS • Southern California Disposal (SCD) The key elements ofeach proposal are summarized in Section 3.1. 3.1 Proposal Summary Five Proposers submitted proposals that addressed all the services requested by the City and two Proposers submitted proposal only for Option 7. These are described in the following paragraphs. Proposers for All Commercial Services Allied -Allied proposed on all seven collection service options for all materials as described in Section 1.4. They proposed to use their 5.5-acre base yard located at 14905 S. San Pedro Street in Gardena where they have a complete facility including maintenance. This is 20 miles from the City Yazd. Allied would fuel their CNG vehicles at the Clean Energy Plant on Stewart Street in Santa Monica. They proposed awet/dry collection approach with food waste collected in biodegradable bags as approaches to increase diversion. Allied proposed $1.9 million to purchase the required trucks for the full City option (Option 5). The implementation would be complete in four months after contract signing. No franchise fee was proposed. Athens -Athens proposed on all seven collection service options for all materials as described in Section 1.4. They proposed to use their 2-acre base yard located at 900 S. Maple Avenue, City of Montebello. This is 28 miles from the City Yazd. Athens would fuel their LNG vehicles at the LA Sanitation District fueling station at Puente Hills. They proposed separate and intensive collection for corrugated and food waste combined with dry waste processing as approaches to increase diversion. Athens indicated that awarding both collection and transfer and disposal to them would maximize diversion, and they would move their base yard to the City Yard facility. Athens proposed $2.0 million to purchase the required trucks for the full City option (Option 5). The implementation October 23, 2007 Commercial Collection Evaluation Report would be complete in 6 to 8 months after contract signing based on the options awarded to Athens. Athens pricing includes a 10 percent franchise fee and a 2 percent administrative fee. Athens also offered an additional rate reduction or City fee of 5% for Options 5 and 6 if the City selects Athens for the exclusive franchise collection and the development and operation of the transfer station. Consolidated -Consolidated proposed on all seven collection service options for all materials as described in Section 1.4. They proposed to use their 4-acre base yard located at 1449 W. Rosecrans Avenue in Gardena, where they have a complete facility including maintenance, and their North Long Beach facility would be used to maintain roll-off containers. The Gardena facility is 21 miles from the City Yard. Consolidated would fuel their LNG vehicles at their proposed Bel Art fueling station in North Long Beach or a third-party station. Consolidated did not propose to purchase the City's equipment. They proposed targeting larger businesses with commingled collection and a separate food waste collection as approaches to increase diversion. Consolidated proposed $3.7 million to purchase the required trucks for the full City option (Option 5). The implementation would be complete in 8 months after contract signing depending upon options awarded. No specific franchise fee was proposed, but Consolidated indicated that this was a negotiable item. SWMD -SWMD proposed on four of the seven services (Options 1, 3, 5 and 7) for all materials as described in Section 1.4, however, their proposal was silent on the final disposition of materials. They proposed to utilize the facility at the City Yard and use the current fueling station, which they stated was of sufficient size to accommodate the expansion. SWMD indicated that increases in diversion would be achieved by a public information and outreach program targeted toward individual accounts regarding triple bottom line benefits and economics of increased recycling. They also identified other diversion options to consider but did not include it in the pricing. The options included potential emerging technologies, rate strategies, public education opportunities, mandatory recycling, and other potential zero waste strategies. SWMD proposed to individually identify customers that do not recycle for educational contacts by supervisors. Also, the new utility billing system would be used to tailor information about each customer for better recycling education. SWMD proposed $871,000 to purchase the required trucks for the full City option (Option 5). The implementation would be complete in 16 months after contract signing. SWMD did not offer a franchise fee. SCD -SCD proposed on all seven collection service options as described in Section 1.4. They proposed using their existing base yard on Delaware Street in Santa Monica where they perform their own maintenance. SCD proposed using Biodiesel trucks in their proposal and later modified this that they would comply with the CNG requirement. During their interview, SCD indicated that they have applied for a grant for 10 CNG trucks and would fuel their CNG vehicles at the Clean Energy Plant on Stewart Street in Santa Monica. They proposed an intensive program of source separation and collection including food waste as well as a "dirty MRF" as approaches to increase diversion. SCD October 23, 2007 7 Commercial Collection Evaluation Report proposed $2.0 million to purchase the required trucks for the full City option (Option 5). The implementation would be complete in 12 months after contract signing. A franchise fee of 10 percent was proposed; however, it is not clear whether it is included in the prices proposed. As a result, the cost analysis addresses this by presenting the franchise fee in and not in. The inclusion or exclusion of the franchise fee did not have an impact on the final ranking of SCD. In addition, should SCD be awarded the transfer services contract and the commercial collections, SCD would be willing to reduce all collection rates by an additional 5%. Proposers for C&D Roll-Off Collection Services Only Two Proposers addressed only a single specialized material in their proposal, and they are discussed below. Looney -Looney proposed on only Option 7 for the collection of only the C&D and other materials using roll-off boxes. Looney is a sister company to Downtown Diversion and East Side Diversion and proposed to utilize their facility at 2424 E. Olympic Street in Los Angeles as their base yard. This is 15 miles from the City Yard. Looney guaranteed a 76 percent recycling rate for the C&D materials processed with the residue disposed of at the City-approved facility. For fueling, Looney would set up accounts at SoCalGas in Santa Monica and ERG/L.A. in Los Angeles. Looney proposed $422,000 to purchase the required trucks for Option 7. The implementation would be complete immediately after contract signing. No franchise fee was proposed. IRS -IRS proposed on only Option 7 for the collection of only the (C&D) and other materials using roll-off boxes. They proposed to utilize their 7.1-acre facility located at 9309 Royo Ave, in South Gate, as their base yard, 25 miles from the City Yard. IRS guaranteed a 76 percent recycling rate for the C&D materials processed with the residue disposed of at the City-approved facility. IRS proposed using the City LNG fueling facility at City Yard as their fueling point. IRS proposed $657,000 to purchase the required trucks for Option 7. The implementation would be six months after contract signing. No franchise fee was proposed. 3.2 Proposal Cost Summary The costs for the seven proposals for commercial collection are summarized in Table 1. In computing the net present values shown in Table 1, a number of assumptions were made, as follows: • The Annualized Net Present Value represents the City's cost for one year. • Annualized Net Present Value is the Net Present Value divided by the length of the contract. • The Net Present Value is the total cost, in current dollars, to the City over the length of the contract. • The total cost includes the Proposer's pricing. • Positive cash flow is money paid by the City to the Proposer. October 23, 2007 Commercial Collection Evaluation Report • Negative cash flow is money paid by the Proposer to the City. • Proposer's pricing is based on SWMD's current set out of bins for approximately 700 of the City's accounts, scaled up to the entire number of accounts (approximately 2,100) in the City. • For purposes of comparison for Options 2, 4, and 6, SWMD's pricing is assumed to be half the pricing in Options 1, 3, and 5, respectively. • NA =not applicable because IRS and Looney bid only on Option 7: Roll-Off. • Athens pricing is reduced by 10% franchise fee. • Since SWMD was not provided financial assistance from the City Finance Department, a more detailed financial review of SWMD's proposal was conducted. The financial review concluded that overhead administrative costs were low. SWMD agreed to adjust their costs accordingly and is reflected below. October 23, 2007 Commercial Collection Evaluation Report TABLE 1 PROPOSAL COST SUMMARY Annualized Net Present Value of Proposer's Price to the Cit ro oser Option 1: Downtown, 1 Provider Option 2: Downtown, 2 Providers Option 3: Outside Downtown, 1 Provider Option 4: Outside Downtown, 2 Providers Option 5: Entire City, 1 Provider Option 6: Entire City, 2 Providers Option 7: Roll-Off Allied $2,199,659 $1,099,829 $2,199,659 $1,099,829 $4,399,317 $2,199,659 $284,174 Athens $2,168,486 $1,084,243 $2,016,514 $1,008,257 $4,033,027 $2,016,514 $290,310 SWMD* $1,334,935 $667,467 $1,368,911 $684,455 $2,711,521 $1,355,760 $294,906 Consolidated $3,422,358 $1,711,179 $3,152,586 $1,576,293 $6,305,173 $3,152,586 $336,741 IRS NA NA NA NA NA NA $280,333 Loone NA NA NA NA NA NA $234,336 SCD** $2,093,165 $1,046,582 $2,093,165 $1,046,582 $4,186,330 $2,093,165 $319,674 *SWMD initially used overhead burdens that were adjusted upward by the Finance Department. The higher overheads are reflected in Table 1. SWMD also used productivity factors deemed too high to reasonably reflect budgetary costs and are adjusted in Table 2 to show the potential impact. ** It was not clear whether the 10 % franchise fee is included in SCD's costs; if included, their revised net costs have been computed and are shown in Table 2. TABLE 2 ADJUSTED PROPOSAL COST SUMMARIES FOR SWMD AND SCD Option 3: Option 4: Option 1: Option 2: Outside Outside Option 5: Option 6: Downtown, Downtown, Downtown, Downtown, Entire City, Entire City, Option 7: Proposer 1 Provider 2 Providers 1 Provider 2 Providers 1 Provider 2 Providers Roil-Off SWMD* $1,940,216 $970,108 $2,053,366 $1,026,683 $4,067,281 $2,033,641 $294,906 SCD'* $ 1,902,877 $ 951,439 $ 1,902,877 $ 951,439 $ 3,805,754 $ 1,902,877 $ 308,037 October 23, 2007 10 Commercial Collection Evaluation Report 4.0 Completeness/Compliance Review The completeness/compliance review resulted in the determination that none of the omissions were considered significant enough to require rejection; however, requests for information were sent in writing to clarify submissions. 5.0 Capability, Capacity, Financial Strength and Experience 5.1 Evaluation Requirements -Qualifications and Background As presented in the RFP, Proposers were evaluated on the basis of their demonstrated competence to undertake and provide each and every component of the Commercial Collection Services at the desired levels of quality, timeliness and cost effectiveness. The following dimensions of Proposer qualifications were indicated in the RFP as key parameters for the competency review: Corporate Profile -Does the Proposer have the necessary expertise and available resources to provide commercial collection services? Does the Proposer have experienced managers available to lead the proposed project successfully? What kind of corporate infrastructure exists within the Proposer to support this project? Proposer Experience -What is the quality and quantity of experience of the Proposer in commercial. collection services? For what duration, how recently and with what success? Financial Stren¢th - Has the Proposer ever declared bankruptcy or failed to meet a financial obligation for past projects? The insurability, bondability, short-term funding capability and general financial strength of the Proposer were considered. What is the credit strength of the Guarantor and what limitations on liability has the Guarantor imposed? Contractual, Re uQ latory and Legal - YVhat have been the environmental and safety records of the Proposer on previous collection contracts? Has the Proposer and/or any of their respective representatives ever failed to complete a previous collection contract, faced significant legal claims against it, or committed any criminal offenses? Qualifications Evaluation The Evaluation Team reviewed the Proposals received in response to its RFP with respect to the criteria outlined above. In reviewing the Qualifications submittals, the minimum requirements. and "dimensions checklist" presented above were used to track the team information in general and experience in general. The Committee concluded that all seven Proposers appear qualified. October 23, 2007 11 Commercial Collection Evaluation Report Financial Capability -The City's Department of Finance reviewed the confidential financial information provided by Proposers and made the scoring for each Proposer. In its review, the Department of Finance looked for financial indicators that could constrain the Proposer from implementing the proposed facilities, equipment, and services. While some Proposers had greater financial strength than others, none of the Proposers was deemed incapable of providing the service based on the financial information provided. 6.0 Comprehensiveness and Feasibility of Business Plan 6.1 Allied In their proposal, Allied showed the ability to provide current and future services. They aze a national company with lazge technical and financial resources. Allied currently serves over 200 commercial establishments in Santa Monica. Qualifications showed experience in local market. The first impression of their pricing seemed high. The business plan left concerns on the part of the Evaluation Committee with their fleet fueling and transition plans. Allied's proposal gave the impression that they were not being aggressive for business and did not take into account City sustainability goals. 6.2 Athens Athens' proposal was somewhat limited on detailed operational information. However, the proposal demonstrated that the company had a keen interest in doing work in Santa Monica. They were prepared to take over service at a higher level than other Proposers and showed creativity in approach to reaching the 70 percent goal by proposing processing commercial waste to recover recyclables. They believe that they could achieve 80% diversion in Santa Monica. Although Athens is not national, it is a noted regional company and there is no question about their ability to provide service. They report to be the lazgest recycler in L.A. County and currently provide collection services in Santa Monica. Athens proposed a 10 percent franchise fee. Their base yard is a good distance from Santa Monica, resulting in a long drive with trucks on the freeway. Athens stated that they would move Santa Monica collection base yard to their new facility in the City if they were awarded contracts resulting from both the commercial and transfer services procurements. 6.3 Consolidated Consolidated has the highest pricing of the Proposers. Their proposal conveyed a very cautious approach to making a commitment and had the highest truck costs. However, they did fully address the detail of their alternative fuel use. Consolidated is part of Republic, the third largest national solid waste firm. They have familiarity with Solid Waste and are capable of providing good service. Their proposal did no tpresent a very detailed plan. Consolidated did not propose to equip trucks with GPS units. October 23, 2007 12 Commercial Collection Evaluation Report 6.4 SWMD S WMD knows the territory and currently services 720 accounts with business establishments. They are most likely to meet City's sustainability goals and do so without being forced. S WMD communicated the responsibility of AB 939 placed on the City and showed that in their proposal. They know customer base in the City well. Their base yard is located here reducing travel and environmental impact. SWMD placed heavy emphasis on public information and their role in meeting the goals. They have the ability to respond. Pricing appears low and SWMD had the lowest truck purchase cost. They did not propose to equip trucks with GPS units. The SWMD summarized the current customer information program which would be enhanced by supervisor delivery of recycling information to individual customers and the use of the City's new utility billing system for individualized information. In reviewing the SWMD proposal the Committee questioned the overhead charges incorporated into the SWMD prices as well as productivity factors that could result in higher costs. . 6.5 IRS IRS delivered a proposal with less detail than others, but still met minimum criteria. They are already working in Santa Monica and are achieving high diversion rates. Their proposal focused on work primarily with contractors, not municipalities. IRS indicated that permitting is not complete on their facility. They have won awards, including one from SWANA. IRS is already achieving 70 percent diversion. 6.6 Looney Looney's proposal was less impressive than others. They are already working in Santa Monica. Looney has been recognized by the NRDC and other groups by receipt of awards. Looney is already achieving 70 percent diversion. However, their yard is in downtown Los Angeles, some distance from Santa Monica resulting in a high level of truck miles. 6.7 SCD SCD's proposal was not as concise and focused as other proposals. The company is a small operation and gave the impression that they may not have the expansion capability of larger companies, and their depth of management appeared less than other proposers. Their facilities are located in the City of Santa Monica which gives them local knowledge and compact logistic routes. This saves on traffic and pollution. They placed an emphasis on bio-diesel and their commitment to LNG/CNG was clarified and found acceptable. SCD currently services 200 commercial accounts in Santa Monica. SCD mentioned a franchise fee of 10 percent. SCD's response was not clear whether their proposed service prices had the 10 percent franchise fee payments inside or outside the charges to the City. The cost evaluation was conducted both ways, with the franchise fee assumed to be in their service charges treated as a footnote in the tables that follow re: cost analysis and overall evaluation rankings. October 23, 2007 13 Commercial Collection Evaluation Report 7.0 Evaluation Results, Rankings and Recommendations The evaluation of the seven proposals received as a result of RFP #2001-201-01 was conducted using the procedure described in Section 2. As discussed in Section 2, the Evaluation Committee developed specific questions for each of the Proposers to clarify their submissions. The responses to the questions and additional clarifying discussions were held during the individual interviews. Several additional clarifying questions were identified for each Proposer. The responses were received and reviewed by the Evaluation Committee prior to determining its final consensus scoring. The criteria and weights used in the evaluation of the proposals are shown in Table 2. The weights shown were not shared with the Evaluation Committee prior to scoring or the Proposers prior to issuance of this report. The final consensus scoring was developed and is shown in Table 3. TABLE 2 PROPOSAL EVALUATION CRITERIA AND WEIGHTING Criteria Weight (%) 1. Price 40 2. Quality of the service offered 15 3. Ability, capacity, and skill of the Proposer to perform or 15 provide the services 4. Sufficiency of the Proposer's financial resources 15 5. Ability of the Proposer to provide such future maintenance or pass/Fail service as may be needed 6. Any other factor which will further the intent set forth in 15 Section 608 of the City Charter TABLE 3 MATRIX OF FINAL SCORING Proposer Weighted Score Rank All Collection Services S WMD 9.29 1 Athens 7.78 2 Allied 7.24 3 SCD 6.74 4 Consolidated 6.63 5 Roll-Off Collection Services Looney 5.93 Not Applicable IRS 4.52 Not Applicable October 23, 2007 14 Commercial Collection Evaluation Report Summary comments. from the Evaluation Committee for each Proposer are presented below. The financial evaluation was based on a limited review of submitted data. A more rigorous financial evaluation will be required of the selected entity or entities. 7.1 Allied • Reliable cost, cost changes would be reflected in contract changes. • Meet or exceed diversion requirements. • Would complete route audits to determine most efficient deployment. • Routine daily inspections. • Well established company. • Did not demonstrate strong commitment to alternative fuels. • Well written proposal, interview lacked enthusiasm. • Demonstrated knowledge of AB939. • Didn't seem to understand the potential volume of food waste. • Could do the job, but seemed more reactive than proactive. • Large publicly traded company with strong ability to finance operation. 7.2 Athens • Proposed costs are on the high side; discount offered if awarded both. • Reliable numbers, cost changes would be reflected in contract modifications. • Very good understanding of AB939. • Demonstrated awareness of various diversion strategies through work in other cities. • Fine reputation within the region and industry. • Demonstrated commitment to alternative fuels not as strong as others. • Excellent management team. • Current yard facility remote. • Offered highest franchise fee (up to 12%). • Routes computer generated for efficiency, GPS tracked trucks. • Really demonstrated that they wanted to work with the City, brought the "A" Team to the interview. • Thorough proposal. • Firm is a large regional provider with ability finance needed capital. 7.3 Consolidated • Highest costs. • Had the most caveats and exceptions to the RFP. • Remote yard. • Can hire and gear up quickly. • Solid training program. October 23, 2007 15 Commercial Collection Evaluation Repor[ • Interview lacked enthusiasm. • Demonstrated knowledge of AB939. • Noteworthy company reputation and experience, well qualified. • Costly, but reliable. Future cost changes would be reflected in contract modifications. • Want to start before 7:00 am and was non-committal about 100% alternative fuels. • Commitment to diversion not as strong. • Interview was not as impressive as written proposal. • Consolidated is owned by Republic, a large, publicly traded company with generally strong financial condition. 7.4 SWMD • Lowest cost as proposed; concerned that proposed cost too low, and with adjustments, proposed increase costs significantly. • Best ability to provide service at cost indicated and to respond to cost changes. • Very committed to sustainability goals and alternative fuels. • No additional freeway driving needed. • Have great team, experience and knowledge of the City. • Well thought out proposal and business plan. • Committed to CNG fleet. Qualified management team. Some concern about number of current vacancies. • Represented labor force, well treated and experienced. • Already provide majority of collection in City between residential/multi- family and commercial, incremental increase. • Excellent knowledge of AB 939. Greatest ability to respond to changes, no contract modifications required. • Local yard, progressive with alternative fuel equipment. • Stated an ultimate goal of 100% diversion. • City is able to finance debt and can adjust rates to cover operating costs 7.5 IRS • Questions about permit status and capacity. Bid depends on granting of permit. • Small company, this would be an expansion of current focus. • Great plans for the future, but light on experience and resources. • Small company appears to have ability to finance needed capital. • Company is small and there is a concern about their ability to gear up. 7.6 Looney Proactive and good experience with construction and demolition debris recycling. October 23, 2007 16 Commercial Collection Evaluation Report • Well regarded in industry. • Currently has 75% diversion rate. Achieved 90% with Santa Monica Natural Resources Defense Council Building. • Demonstrated good employee training and hiring program. • At their interview, criticized City for potentially closing the roll-off services market in the City. • Business plan focused on construction and demolition. • Small company appears to have ability to finance needed capital. 7.7 SCD • Cost second lowest. Low confidence in ability to maintain costs. Cost changes would be reflected in future contract modifications. • Local presence and yard. Limited need to travel far with trucks. • Separate pricing for food and wet waste. • Offered franchise fee up to 10%. • Good training program, anti-drug program, community involvement. • Has sizable commercial operation in Santa Monica. • Management Team, not as strong as other companies. • Strong consultant team. • Small company, limited experience. • Experience in Biodiesel, but not CNG or LNG. • Small family-run company appears to have ability to finance needed capital. Recommendations The Evaluation Committee unanimously agreed on the following recommendations for Transfer and Disposal Services: 1) The Committee recommends that Option 5, commercial collection throughout the entire City, should be awarded to the Solid Waste Management Division of the City. The S WMD best meets all of the City's evaluation criteria and has proposed the overall best proposal to the City. Additionally, this option This option provides the Council with the greatest control over labor and operational issues, virtually guaranteeing non-interruption of service and the ability to change to meet Council's goals. 2) The collection of C&D roll-off boxes, Option 7, should not be awarded to any proposer and the current open market system retained. The mandatory recycling requirement should be raised to 70 percent and the bond level raised, if necessary, to attain the 70 percent. Additionally, requirements for LNG/CNG fuels should be imposed on trucks used for this service in the City. October 23, 2007 17 Commercial Collection Evaluation Report Additional Committee Thoughts Option 1 through 4 -These options, collection of commercial waste in a portion of the City, should not be awarded to any proposer. There is no advantage to the City in the divided approach: (1) the prices are the same for all options, (2) the environmental impact is higher than for the full City options, (3) accountability, especially for the Downtown is lessened and (4) the administrative effort and cost to the City will be higher. Option 6 -This option, where the S WMD and a private service provider provide commercial collection services throughout the entire City is not recommended since it is contrary to most of the City's stated objectives in the RFP. October 23, 2007 18 PROPOSAL EVALUATION REPORT ~1~~1 ~~~ ~~~~ OFFICE OF THE CITY MANAGER CONTRACT SERVICES FOR: TRANSFER SERVICES FOR RECYCLING AND DISPOSAL October 23, 2007 PROPOSAL EVALUATION REPORT FOR TRANSFER SERVICES FOR RECYCLING and DISPOSAL RFP 2007-201-02 Table of Contents Page 1.0 Introduction to Procurement Process ................................................. ......................2 1.1 Overview of the Process ........................................................ ......................2 1.2 Project Timetable ................................................................... ......................2 1.3 Purpose/Objective .................................................................. ......................2 1.4 Services Requested by City ................................................... ......................3 1.5 Evaluation Methodology ........................................................ ......................5 2.0 Evaluation of Proposals ................:.................................................... ......................5 2.1 Proposal Evaluation Committee ............................................ ......................5 2.2 Proposal Evaluation Factors .................................................. ......................6 2.3 Procedure for Evaluating Proposals ....................................... ......................7 3.0 Overview of Proposals ....................................................................... ......................8 3.1 Proposal Summaries ............................................................... ......................8 3.2 .Proposal Cost Summary ......................................................... ......................9 4.0 Completeness/Compliance Review ................................................... ....................13 5.0 Capability, Capacity, Financial Strength and Experience ................. ....................13 6.0 Comprehensiveness and Feasibility of Business Plan ....................... ....................14 6.1 Allan ....................................................................................... ....................14 6.2 Athens .................................................................................... ....................14 6.3 SWMD .......:........................................................................... ....................14 6.4 Downtown .......................................................................:...... ....................14 6.5 SCD ........................................................................................ ....................15 7.0 Evaluation Results, Rankings and Recommendations ....................... ....................15 7.1 Allan ....................................................................................... ....................16 7.2 Athens .................................................................................... ....................16 7.3 SWMD ................................................................................... ....................17 7.4 Downtown .............................................................................. ....................17 7.5 SCD ........................................................................................ ....................17 October 23, 2007 i Transfer Services Evaluation Report 1.0 Introduction to Procurement Process 1.1 Overview of the Process The City of Santa Monica ("City") invited Proposers to submit responses to a Request for Proposals ("RFP") for Transfer Services for Recycling and Disposal issued on January 22, 2007. The RFP requested that any firm that felt it was qualified could submit technical proposals, qualifications, and cost proposals in the form requested in the RFP. All proposals received by the specified due date and time would be evaluated. Under this process, an award, if made, is to be made to the best Proposer whose Proposal is most advantageous to City, taking into consideration criteria set forth in the RFP. 1.2 Project Timetable The following timetable sets forth the key events in the RFP process. RFP Event Date RFP Issued January 22, 2007 Mandatory Pre-Proposal Conference February 6, 2007 First Addendum Issued March 9, 2007 Second Addendum Issued March 19; 2007 Third Addendum Issued Apri16, 2007 Proposal Due Date May 4, 2007 Convene Oral Presentations - ls` round July 31 & August 1, 2007 Convene Oral Presentations - 2"d round August 29, 2007 Recommendations Presented to City Council for Approval October 30, 2007 1.3 Purpose/Objective The City has a number of goals it wants to achieve as a result of this RFP and for the duration of the resulting Contract to provide the highest level of Transfer Services in the most economical and environmentally sustainable manner possible. These goals include: • Receive service that keeps City "clean & green;" o Achieve a 70% diversion rate by 2010; o Minimize impacts on community and environment; o Assist in the furtherance of long-term sustainability goals for the City, its residents and businesses; • Create equitable rates across customer groups; • Provide efficient and cost-effective Transfer Services; • Utilize competition to ensure that Transfer Services are market driven; • Enter into long-term contracts with public/private service providers for secure arrangements and predictable costs; and • Manage, recycle, and dispose of materials in compliance with Applicable Laws. October 23, 2007 Transfer Services Evaluation Report 1.4 Services Requested by City The City solicited a variety of proposals for a wide range of solid waste transfer Scenarios and Services briefly described below. Proposers were allowed to respond to one Scenario, or a combination of different Scenarios, or all of the Scenarios. Proposers were also allowed to respond to one Service, or a combination of Services, or all of the Services listed within each Scenario. The City acknowledged the complexity of the wide range of Scenarios and Services, but the intention was to maximize the potential for the City to receive the best Proposals possible. Available scenarios for proposers to respond to were: 1.4.1 Scenario 1: At Non-City Yard Site(s) Provide City with Transfer Services using anon-City Yard site(s) provided by the Proposer. The site(s) maybe owned by the Proposer or other entity but not the City. The Proposer will be responsible for all construction, operations, and management.. The Acceptable Material processed under this Scenario shall be limited solely to that generated and collected in the City of Santa Monica. This does not preclude Proposer from processing materials from other jurisdictions at its Transfer Facility. Services for Scenario 1 include: o Service B -Operations of Transfer Facility; o Service C - Transportation of Materials from Transfer Facility to City- approved Processing Facility; and/or o Service D -Recycling and/or Disposal of Acceptable Materials. 1.4.2 Scenario 2: At Improved City Transfer Facility for City Only Provide City with improved Transfer Services using the City-owned City Yard property. The Acceptable Material processed under this Scenario shall be limited solely to that generated and collected in the City of Santa Monica. The City will assume ownership of the City Yard Transfer Facility at a time convenient to the City. This could be at the completion of construction or at the end of the operations contract, with the intent of creating a public/private partnership that would maximize benefits to the City and its ratepayers. Services for Scenario 2 include: o Service A -Design and construction of a Transfer Facility at City Yard; o Service B -Operations of Transfer Facility; o Service C - Transportation of Materials from Transfer Facility to City- approved Processing Facility; and/or o Service D -Recycling and/or Disposal of Acceptable Materials. October 23, 200'7 Transfer Services Evaluation Report 1.4.3 Scenario 3: At Improved City Transfer Facility for City and Private Partner Provide City with improved Transfer Services using the City-owned City Yard property. The Acceptable Material processed under this Scenario shall be limited to that generated and collected in the City of Santa Monica and that collected and delivered by the private firm selected as the City's partner for this Scenario. The City will assume ownership of the City Yard Transfer Facility at a time convenient to the City. This could be at the completion of construction or at the end of the operations contract, with the intent of creating a public/private partnership that would maximize benefits to the City and its ratepayers. Services for Scenario 3 include: o Service A -Design and construction of a Transfer Facility at City Yard; o Service B -Operations of Transfer Facility; o Service C - Transportation of Materials from Transfer Facility to City- approved Processing Facility; and/or o Service D -Recycling and/or Disposal of Acceptable Materials. 1.4.4 Scenario' 4: At Improved City Transfer Facility for City and Another City Partner Provide City with improved Transfer Services using the City-owned City Yard property. The Acceptable Material processed under this Scenario shall be limited to that generated and collected in the City of Santa Monica and that collected and delivered by another municipality or its designated contractor(s) selected as the City's partner for this Scenario. The City will assume ownership of the City Yard Transfer Facility at a time convenient to the City. This could be at the completion of construction or at the end of the operations contract, with the intent of creating apublic/private partnership that would maximize benefits to the City and its ratepayers. Services for Scenario 4 include: o Service A -Design and construction of a Transfer Facility at City Yard; o Service B -Operations of Transfer Facility; o Service C - Transportation of Materials from Transfer Facility to City- approved Processing Facility; and/or o Service D -Recycling and/or Disposal of Acceptable Materials. The Acceptable Materials managed by these services include but are not limited to: residential and commercial refuse, source-separated recyclable materials, yard waste, construction and demolition waste (C&D), and bulk items. These materials will be collected by the City and/or a City contractor from single-family residences, multi-family residences, and commercial establishments and/or may be delivered by contractors and citizens. October 23, 2007 Transfer Services Evaluation Report 1.5 Evaluafion Methodology The RFP specified that the City may choose not to select any proposal if that is in the best interest of the City and its ratepayers, and continue with existing transfer and disposal services performed by the City. An award, if made, will be made to the best Proposers) whose proposal is most advantageous to the City, taking into consideration the other factors set forth in the RFP. The Evaluation Committee evaluated all proposals simultaneously in order to determine which was in the best interest of the City. 2.0 Evaluation of Proposals 2.1 Proposal Evaluation Committee An Evaluation Committee appointed by the Office of the City Manager evaluated the Proposals and made a recommendation to the City Manager. The Evaluation Committee included: Chair: Gordon Anderson, City of Santa Monica, Assistant City Manager Members: Carol Swindell, City of Santa Monica, Finance Director • Jim Greco, California Waste Associates ^ Don McIntyre, Urban Affairs Consultant ^ Erik Neandross, Representative from the Task Force on the Environment ^ Andrew Thomas, Bayside District Corporation An Advisory Panel assisted the Evaluation Committee in their evaluation of the proposals and included: ^ Don Patterson, City of Santa Monica, Assistant to the City Manager for Management Services Annette Morales, City of Santa Monica, Principal Budget Analyst ^ Harvey Gershman, Gershman, Brickner, & Bratton, Ina (GBB) ^ Frank Bernheisel, GBB Lois Clarke, GBB Each Evaluation Committee and Advisory Panel member was required to sign a statement certifying that he or she had no conflict of interest that would preclude participation in the evaluation and conduct the evaluation in a confidential manner. Deputy City Attorney, Eriko Matsumoto, also participated as one of the advisors in certain aspects of the process. October 23, 2007 Transfer Services Evaluation Report 2.2 Proposal Evaluation Factors The factors to be considered in the evaluation of Proposals are listed below and include the criteria set forth in the City of Santa Monica Municipal Code 2.24.072, except "bidder" has been replaced with "Proposer." 1. Price • Total cost proposed for services • Best cost to City and ratepayers • Other economic benefits to City (e.g., jobs, taxes, etc.) 2. The quality of the material or services offered • Comprehensiveness • Feasibility and quality of the business plan • Responsiveness to the information required by the RFP The ability, capacity and skill of the Proposer to perform or provide the material or services • Management team • Qualifications • Approach, technical solutions, and feasibility • Transition plan • The capacity of the Proposer to perform the contract or provide the service promptly, within the time specified, and without delay or interference • Ability to produce the required outcomes in a timely manner • Current capability with permitting agencies • History with permitting agencies • Current capability of performance and vehicle and facility maintenance • History of performance and vehicle and facility maintenance The sufficiency of the Proposer's financial resources • Capacity, financial strength, and ability to obtain bonding and insurance • Good financial standing with City and/or other government contracts • Proposal bond provided • The character, integrity, reputation, judgment, training, experience and efficiency of the Proposer • Financial ability to provide the services throughout the duration of the Contract • References • Experience in providing services of similar size and scope • History of customer service and as an employer • Commitment to fair and sound working conditions for its employees • Current on all licenses and contractual requirements, if any, with the City and/or other government contracts October 23, 2007 Transfer Services Evaluation Report • History of performance measures and benchmarking • History of litigation 5. The ability of the Proposer to provide such future maintenance or service as may be needed 6. Any other factor which will further the intent set forth in Section 608 of the City Charter • Environmental compliance • Environmental stewardship • Ability to minimize environmental impacts (e.g., minimize air pollution, minimize traffic impacts, provide highest and best use of materials) 2.3 Procedure for Evaluating Proposals The City first examined proposals to eliminate those that were clearly non-responsive to the stated requirements. Proposers were evaluated based upon the responses provided in the Proposal and in the other documents, if any, that Proposers were required to submit with the completed Proposal. In a measure to maintain confidentiality of sensitive materials, financial information was submitted by the Proposer as a separate bound attachment and clearly identified as financial information to the City. The City's Finance Department was responsible for evaluating the sufficiency of the Proposer's financial resources. All of the Proposers were given the same bidding information, requests for clarification and the equal opportunity for an interview. Notices and information was posted on the City's website at http://wwwsm~ov.net/cmo/solid waste/index.htm throughout the process. Proposers were notified when a new notice was posted via e-mail. The Evaluation Committee members were each provided with their own set of proposals and other supplemental information submitted by Proposers in response to clarification questions and provided at or after the interviews with Proposers during the course of the evaluation process. The Evaluation Committee members met at various times during the course of the evaluation process to provide input, discuss proposals and review supplemental information. The Evaluation Committee also participated in the interview process. Daring the Interview both the Evaluation Committee and Advisory Panel asked questions. Following the interviews with the Proposers, additional information was received by e- mail and distributed to the Evaluation Committee. The information was evaluated and discussed. A final consensus scoring was completed, and the Evaluation Committee October 23, 2007 Transfer Services Evaluation Report developed and reached consensus on the recommendations included herein this Evaluation Report. 3.0 Overview of Proposals Proposals from five firms were received as a result of RFP #2007-201-02. These firms were: • Allan Company (Allan) • Athens Services (Athens) • City of Santa Monica; Solid Waste Management Division (SWMD) • Downtown Diversion (Downtown) • Southern California Disposal (SCD) The key elements of each proposal are summarized in Section 3.1. 3.1 Proposal Summaries Three Proposers submitted proposals that addressed all the services requested by the City. Two Proposers addressed only a single service requested by the City. These are described below. Pronosers for All Transfer Services Athens -Athens proposed on all four services for all materials as described in Section 1.4. They proposed to build a facility on the City Yard property using 3.88 acres and with all processes in an 82,000 squaze foot building costing $13 million. Athens guaranteed an 80 percent recycling rate for the materials processed with the residue disposed of at the City-approved disposal facilities. This diversion rate would be achieved by processing the mixed waste materials to recover additional recyclable materials. The implementation would be complete in 30 months after contract signing. Athens did not guarantee a revenue sharing but offered a $1.00 per ton host community fee on all City tons. They also proposed to manage disaster debris for $15 per ton. SWMD -SWMD proposed on all four services for all materials as described in Section 1.4. They proposed to build a facility on the City Yard property using 3.88 acres and with all processes in a 20,000 square foot building costing $5.6 million. SWMD did not" guarantee a recycling rate for the materials processed with the residue disposed of at the City-approved disposal facilities and their proposal was silent on the final disposition of materials. The implementation would be complete in 32 months after contract signing between SWMD and City. SWMD did not guarantee a revenue sharing but stated that all market revenue would go to the City. SWMD did not propose a host community fee. They did not propose specifically to manage disaster debris. SCD -SCD proposed on all four services for all materials as described in Section 1.4 under six different options. They were the only Proposer for Scenario 1 and proposed using their existing transfer station on Delawaze Street in the City. Their other five October 23, 2007 Transfer Services Evaluation Repor[ options proposed to build additional facilities on the City Yard or other City property. Two of their options are described here. Option 2 uses 0.4 acre of City-owned property and 0.8 acre of SCD property with the transfer operation in the existing building of 9,600 square feet, with all processing taking place off site. A separate drop-off site was proposed on SCD-owned property off Delaware at the junction of High Place. SCD guaranteed a 32 percent recycling rate for the materials processed with the residue disposed of at the City-approved disposal facilities. The implementation would be complete in 18 months after contract signing. SCD did not guarantee a revenue shazing, instead offered 100% of the market risk revenue, currently estimated by SCD at $35 to $40 per ton and a $1.00 per ton host community fee on landfilled waste only. Option 5 uses 1.8 acres of City-owned property and 1.0 acre of SCD property and with all processing operation in the 9,600 squaze foot existing building and a new building totaling 38,000 squaze feet with a capital cost of $7.9 million. A separate drop-off site was proposed on SCD-owned property off Delawaze at the junction of High Place. SCD guaranteed a 35 to 50 percent recycling rate for the materials processed with the residue disposed of at the City-approved disposal facilities. The implementation would be complete in 24 months after contract signing. SCD offered a guaranteed revenue sharing of $0.50 per ton and offered a market risk revenue sharing of 50 percent of the revenue over $130 per ton, and a $1.00 host community fee on waste landfilled. Proposers for Processine Service Only Allan -Allan proposed on only Service A for design and construction and Service D for the processing and disposal of only the recyclable materials. They proposed to build a recycling processing facility costing $2.1 million on the City Yard property using 1.2 acres and assuming that no building was required. They were willing to put the equipment in a building if the City requested. Allan guaranteed an 88 percent recycling rate for the materials processed with the residue disposed of at the City transfer facility. Residue would be sent to the City transfer facility. The implementation would be complete in four to six months after contract signing. Allan guaranteed a revenue of $30 per ton on single stream material (excluding building costs), a market risk revenue sharing of 50 percent of the total stream value over $135 per ton, and a $3.50 host community fee. Downtown -Downtown proposed on only Service D for the processing and disposal of only the construction and demolition (C&D) materials. They proposed to utilize their facility at 2424 E. Olympic Street in Los Angeles which consists of five acres and enclosed processing. Downtown guaranteed a 76 percent recycling rate for the C&D materials processed with the residue disposed of at the City-approved facility. The implementation would be complete immediately after contract signing. 3.2 Proposal Cost Summary The five Proposers' price proposals are summarized in Table 1. In computing the net present values shown in Table 1, a number of assumptions were made, as follows: October 23, 2007 9 Transfer Services Evaluation Report • The Annualized Net Present Value represents the City's cost for one year. • Annualized Net Present Value is the Net Present Value divided by the length of the contract: • The Net Present Value is the total cost to the City over the length of the contract. • The total cost includes the Proposer's pricing and expenses, bonuses, host fees, and revenues for the City. • Positive cash flow is money paid by the City to the Proposer. • Negative cash flow is money paid by the Proposer to the City. • Analyzed base case of 150,000 tons per year, per RFP. • Waste stream based on data from RFP, FY 2005-2006 Full Cost Accounting Model, and from City for 2006. • Service A is for Design and Construction and assumed to be amortized in the Proposer's rates. • Blended stream value for Revenue Sharing Not Guaranteed assumed at $165 per ton. In addition, some specific assumptions apply to individual Proposers, as follows: Allan • Recycling processing only on City property • Guaranteed $30 per ton on single stream (excluding building costs) • Recommend 50/50 split revenue when total blended stream value exceeds $135 per ton • $526,000 signing bonus • Host Fee of $3.50 per ton for recyclables delivered Athens • Treated hauling prices for recyclables and tires same as municipal solid waste (MSW) • Treated processing prices for recyclables same as MSW to SERRF • Treated processing prices for tires same as MSW to Puente • Host Fee of $1 per City ton delivered SWMD • Treated transfer station and haul of food waste and tires same as MS W • Assumed $60 per ton for material processing cost (Service D) • 100% of the Revenue Sharing Not Guaranteed was assumed at $165 per ton for blended recyclable stream. Downtown • C&D processing only on private property October 23, 2007 10 Transfer Services Evaluation Report SCD • Used Proposer's numbers for City acreage. • Host Fee of $1 per landfilled ton • Option 2: approximately $35 per ton revenue sharing • Option 5: guaranteed revenue sharing of $0.50 per ton and split in excess of $130 per ton • SCD's Annual Lease includes a correction of $0.84 per square foot per month rather than $0.81 per square foot per month proposed. • SCD's Annual Lease includes of City property, right of way as identified in proposal and response to comments. October 23, 2007 11 Transfer Services Evaluation Report TABLE 1 PROPOSAL COST SUMMARY Annualized N et Present Value of Pro oser's Price to the Cit ro oser Service A: Design & Construction of Transfer Facility 1st Year Bu out Service B: Operation of Transfer Facilit ervice C: Hauling of Material ervice D: Processing of Material Revenue from Purchase of City Equipment (1st Year Onl nnual Lease Revenue evenue Sharing Guaranteed Revenue Sharing Not Guaranteed Total without Service A 1st Year Bu out Allan $2,100,000 $0 $0 -$104,660 $0 $0 -$596,516 -$298,258 -$999,434 Athens $20,000,000 $3,619,833 $1,653,959 $4,623,586 -$20,175 -$1,492,525 $0 $0 $8,384,679 SWMD $5,614,427 $2,623,706 $1,521,692 $7,917,902 $0 -$1,492,525 $0 -$3,280,838 $7,289,938 Downtown NA $0 $0 $913,822 $0 $0 $0 $0 $913,822 SCD -Option 2 NA $2,046,925 $867,245 $4,737,126 $0 -$166,020 $0 -$695,935 $6,789,341 SCD -Option 5 $11,800,000 $1,725,801 $728,058 $3,941,771 -$14,009 -$685,788 -$9,942 -$347,968 $5,337,923 October 23, 2007 12 Transfer Services Evaluation Report 4.0 Completeness/Compliance Review The completeness/compliance review resulted in the determination that none of the omissions were considered significant enough to require rejection; however, requests for information were sent in writing to clarify submissions. 5.0 Capability, Capacity, Financial Strength and Experience 5.1 Evaluation Requirements -Qualifications and Background As presented in the RFP, Proposers were evaluated on the basis of their demonstrated competence to undertake and provide each and every component of the Transfer and Disposal Services at the desired levels of quality, timeliness and cost effectiveness. The following dimensions of Proposer qualifications were indicated in the RFP as key parameters for the competency review: Corporate Profile -Does the Proposer have the necessary expertise and available resources to provide the Transfer and Disposal Services? Does the Proposer have experienced managers available to lead the proposed project successfully? What kind of corporate infrastructure exists within the Proposer to support this project? Proposer Experience -What is the quality and quantity of experience of the Proposer in the pernutting, design, construction, operation and maintenance of transfer facilities, hauling, and recycling/disposal of solid waste? For what duration, how recently and with what success? Financial Strength -Has the Proposer ever declared bankruptcy or failed to meet a financial obligation for past projects? The insurability, bondability, short-term funding capability and general financial strength of the Proposer were considered. What is the credit strength of the Guarantor and what limitations on liability has the Guarantor imposed? Contractual, Re ug latory and Legal -What have been the environmental and safety records of the Proposer on previous projects? Has the Proposer and/or any of their respective representatives ever failed to complete a previous project, faced significant legal claims against it, or committed any criminal offenses? Qual~ations Evaluation The Evaluation Committee reviewed the Proposals received in response to its RFP with respect to the criteria outlined above. In reviewing the Qualifications submittals, the minimum requirements and "dimensions checklist" presented above were used to track the Committee information in general and experience in general. The Committee concluded that all five Proposers appear qualified. October 23, 2007 13 Transfer Services Evaluation Report Financial Capability- The City's Department of Finance reviewed the confidential financial information provided by Proposers and made the scoring for each Proposer. In its review, the Department of Finance looked for financial indicators that could constrain the Proposer from implementing the proposed facilities, equipment, and services. While some Proposers had greater financial strength than others, none of the Proposers was deemed incapable of providing the service based on the financial information provided. 6.0 Comprehensiveness and Feasibility of Business Plan 6.1 Allan Allan proposed on processing the source separated recyclable material and the overall quality of their proposal was poor. They have a long standing working relationship with City and local presence. Allan provides limited waste stream management, no food waste, no C&D. They have had a number of lawsuits, which they fully disclosed and appeaz to be minor. Allan's business plan is feasible. 6.2 Athens Athens provided the most comprehensive proposal for the largest facility. Their plans for a new facility committed to LEED Silver certified construction. Athens proposed a 500 ton per day facility where single stream recyclables would be hauled to a remote processor, mixed recyclables would be sorted on site and baled for market, and one load of food waste would be processed per day. For materials taken to landfill, transfer trucks would be weighed using wheeled scales. Athens was represented by a substantial management team and engineering subs with significant applicable experience. They have two other processing/transfer facilities of similar size with an additional one in development. Athens clearly shows depth of experience and had the most comprehensive plan. They were also the most expensive. Athens's business plan is feasible. 6.3 SWMD Their plan proposes to construct a new transfer facility with future expansion for a Materials Processing Facility (M12F) utilizing the land in City Yard with a LEED Silver certified building. The SWMD price was lower than that provided by Athens for a smaller operation. SWMD's business plan is feasible. SWMD is proposing a two level building to allow for top loading transfer trucks. Processing and disposal markets were not presented. 6.4 Downtown Downtown provided an intriguing plan to use non-City facility, which had both positive and negative aspects. They have limited disposal capabilities but deal with a limited waste stream. Downtown's business plan is feasible. October 23, 2007 14 Transfer Services Evaluation Report 6.5 SCD SCD is a local company with land and facilities adjacent to the City Yard. SCD also proposed several different facilities all anchored on their current transfer station and utilizing varying amounts of City land. They offered a land swap that was intriguing in one option. The use of City land and of c theproposed street closure was evaluated at the lease rate due to the difficulty of evaluating the land swap in the context of the RFP. All of SCD's business plans are feasible, option 2 and 5 were of most interest. Their current facility is LEA compliant with odor control and they have an existing hazardous waste protocol and operational and maintenance, driving, health and safety, and emergency manuals in place, which were provided in their proposal. This allows them to offer a quick start-up period. SCD proposes mixed waste recovery to increase diversion. Their proposal included letters from processors, though no conditions were identified. The SCD implementation team includes local subconsultants with valid and limited experience. 7.0 Evaluation Results, Rankings and Recommendations Evaluations of the five proposals received as a result of RFP #2001-201-02 were conducted using the procedure described in Section 2. As discussed in Section 2, the Evaluation Committee developed specific questions for each of the Proposers to clarify their submissions. The responses to the questions and additional clarifying discussions were held during the individual interviews. Several additional clarifying questions were identified for each Proposer. The responses were received and reviewed by the Evaluation Committee prior to determining its final consensus scoring. The criteria and weights used in the evaluation of the proposals are shown in Table 2. The weights shown were not shared with the Evaluation Committee prior to scoring or the Proposers prior to issuance of this report. The final consensus scoring was developed and is shown in Table 3 along with the final ranking. TABLE 2 PROPOSAL EVALUATION CRITERIA AND WEIGHTING Criteria Weight (%) 1. Price 40 2. Quality of the service offered 15 3. Ability,. capacity, and skill of the Proposer to perform or provide the services 15 4. Sufficiency of the Proposer's financial resources 15 5. Ability of the Proposer to provide such future pass/Fail maintenance or service as may be needed 6. Any other factor which will further the intent set forth 15 in Section 608 of the City Charter October 23, 2007 15 Transfer Services Evaluation Report TABLE 3 MATRIX OF FINAL RANHING Proposer Weighted Score Rank All Transfer Services SWMD 7.94 1 Athens 6.94 2 SCD 6.75 3 Special Material Processing Services Downtown 5.83 Not Applicable Allan 4.80 Not Applicable Summary comments from the Evaluation Committee for each Proposer are presented below. The financial evaluation was based on a limited review of submitted data. A more rigorous financial evaluation will be required of the selected entity or entities. 7.1 Allan • Showed awareness of AB 939, but was fuzzy regarding details for diversion rate measurements. • Business services are limited to conventional recyclables processing and marketing. • Does not provide food waste or C&D debris diversion services. • Details lacked in written proposal were provided in interview. Has local presence, experience working with City and a good reputation. • Expressed negative comments about natural gas trucks during interview, currently use owner/operator trucks, which are often old polluting diesel trucks. Requires 60,000 square feet if at City Yards. • Medium sized company with ability finance needed capital. 7.2 Athens • Committed to LEED Silver facility • Demonstrated understanding and commitment to meeting City's "green" needs. • Demonstrated through knowledge of AB939 diversion requirements. • Facility is largest and most expensive proposal with 80% diversion goal. • Some minor re-designs of the proposed facility would be needed. • Presented very well; written proposal was enhanced by the interview. • Very good business plan to implement a noteworthy Materials Recycling Facility. October 23, 2007 16 Transfer Services Evaluation Report • Excellent technical proposal. • Firm is a large regional provider with ability to finance needed capital. 7.3 SWMD • Very good understanding of AB939 diversion requirements and measurement methodology. Strong commitment to sustainability goals. Apparently strong management team. • Technical proposal good, but not great. Strong local presence. • Best ability to respond to innovation and policy changes. • Committed to highest level of diversion. • Committed to LEED Silver. • Facility footprint smaller than Athens, will not sort at the facility. • No experience developing a transfer facility. However, the City has extensive experience constructing and managing large capital projects. Clearly want the work. • Would have to work with Culver City in interim. • Identified a goal of 100% diversion. • City is able to finance debt and can adjust rates to cover operating costs. 7.4 Downtown • Limited services provided. • Good team and proposal for C&D. • Basic knowledge of AB939 requirements. Appear to be innovative in C&D area. • Facility located far from Santa Monica resulting in many truck miles. • Small company appears to have ability to finance needed capital. 7.5 SCD • Local company with a local presence. Least intensive land use, with use of existing neighboring facility. Interesting land swap options. • Assembled an acceptable team of consultants. • Multiple plans offered interesting alternatives and options, written proposal lacked details, not as developed as others, interview much better. • Demonstrated knowledge of AB939 requirements. • Written proposal offered a laundry list of potential options, seemed to be more reactive than proactive. • Small family-run company appears to have ability to finance needed capital. October 23, 2007 17 Transfer Services Evaluation Report Recommendations The Evaluation Committee unanimously agreed on the following recommendations for Transfer Services: 1) Scenario 2: At Improved City Transfer Facility for City Only material best meets the goals of the Request for Proposals. SWMD's proposal was thought to provide the best combination of price and services and overall best meet the City's evaluation criteria when considering one proposer to receive for all Services. This option provides the Council with the greatest control over labor and operational issues, virtually guaranteeing non-interruption of service and the ability to change to meet Council's goals 2) It is important for the City to maintain its solid waste permit. The permit is a valuable asset in the City's ability to meet the transfer and disposal needs for decades to come, long after the fifteen year term in the RFP. 3) The best opportunity to meet the goals of the RFP and to have the most valuable economic impact on the operation is to operate a Materials Recovery Facility (MRF) at the City Yard site. A MRF will help the City achieve the highest possible diversion rate and provides the opportunity to maximize the value of recovered materials. While the three companies that proposed to operate facilities at the City Yard provided some degree of on site processing, the committee felt that a larger MRF could better meet the goals of the City. Although the unanimous recommendation is stated above, the Evaluation Committee further suggested that the City Council may consider alternative approaches to the delivery of Transfer Services. When examining the major component activities: drop off, materials recovery, and transfer, the Evaluation Committee noted that there may be a combination of providers and services that may meet the needs of the City and could lower the overall costs to the City ratepayers, especially through the maximization of a on Materials Recovery Facility (MRF) on iste. Options include: A) City and Private Recvcline Facility Under Option A, SWMD could provide transfer and disposal services and incorporate a MRF onsite to maximize recycling. Because Allan Company proposed the most cost-effective recycling, the facility with the best diversion rate and provides proven marketing ability with revenue sharing, an option is to incorporate Allan Company for processing the recyclables with a SWMD Facility for all other services. October 23, 2007 18 Transfer Services Evaluation Report B) Private Transfer Facility Operator and Private Recyclin Fe acility Another option for consideration could be the same as option A but instead of the City, a private transfer facility operator on a private site or on City yard property. Council could authorize negotiating with Athens Services and Southern California Disposal to provide the services not covered by Allan. C: City and two Private Companies. If this option is considered, it could draw on the services of multiple entities. The SWMD would be responsible for receiving and sorting the materials, one private company would process recyclables and another private company could be contracted to provide transfer services. Under all options, the facility would be constructed in a manner that preserves the City's Solid Waste permit. Under all options, it is recommended that the Council keep all proposals open and authorize negotiations with the selected Proposers using the submitted proposals as a starting point for negotiations. Notwithstanding these alternatives options for consideration, it is the unanimous recommendation of the Evaluation Committee for the City of Santa Monica's Soid Waste Management Division to be granted, as the best bidder, the transfer services for recycling and disposal. October 23, 2007 19 Athens Services Waste Collection•Recycling•Transfer•Disposal•Street Sweeping October 30, Mr. P. Lamont Ewell City Manager .City of Santa Monica 1685 Main Street Santa Monica, CA 90401 RE: Review of Responses to Solid Waste RFP's to Provide CommerciaFCollection and Transfer and Disposal Services Dear Mr. Ewell: 14048 Valley Blvd. P.O. Box 60009 City of Industry, CA 91716-0009 Fax (626) 330.4686 (626)3363636 Athens Services has reviewed the City Council Meeting Agenda report and Evaluation Committee Reports on the referenced items. We offer this letter as clarification to the presentation of our proposal in response to both commercial collectiorrservices and our proposed development of a Materials Recovery Facility at the City's yard. Athens is very interested in providing our proposed services to the City of Santa Monica and we are pleased to see that our innovative programs,services,and facility development were well received by the Evaluation Committee. We responded to the City's stated goals of progressive waste reduction and environmentally sustainability and stewardship. We recognize that the City expects to be a leader on ehVironmental issues and ouf proposal reflected that commitment. The staff recommendation seems to rely heavily on being the cheapest provider of services. Athens believes you can have both. By direction to staff, the City Council cart select the alternatives provided in the staff recommendations and work vvith both the City's Solid Waste Management Department. (SWMD) and Athens. The following points help clarify the differences of services and costs of SWMD and Athens: Commercial Collection Services 1. Athens proposed comprehensive commercial collection programs including commercial recycling and food waste along with an innovative web based customer-education and outreach program. These programs would put Santa Monica back imthe forefront of recycling diversion programs. ewen:nae,ml Page 2 October 30, 2007 2. Athens was listed as "proposed costs are on the high side'. However, Athens is lower than SWMD and all other Contractors for the two key Options 5 and 6, wherein the selection is for one provider or split between one Contractor and City. Exhibit 1(attached) shows the comparison as shown in the Evaluation Report. The SWMD-used incorrect assumptions in their "bid" and the City "adjusted" those numbers to bring to reality. Athens is the lower cost, however, the scoririg was based on those earlier and incorrect numbers submitted by SWMD. 3. The rates proposed by Athens are 16% lower than the SWMD current rates to the City customers. This also includes an additional 10% franchise fee payment to the City. Exhibit 2, (attached) shows the rate comparison. Transfer Services for Recycling and Disposal 1. Athens offered programs and processing to move the City of Santa Monica to 80% AB 939 diversion; well in excess of the 70% goal 2. Athens proposed astate-of-the-industry, Materials Recovery Facility at the proposed City yard that fully encloses all operations with strict environmental controls. Facility would be 82,000 square feet compared to SWMD's proposal for. 20,000 square feet. SWMD's proposal does not include any sorting for diversion. 3. Athens proposed a Materials Recovery Facility to specifically work with collection programs to achieve the 80% diversion. 4. Contrary to the Evaluation Committee's assertion, the Facility Permit would always be owned by the City of Santa Monica. Athens would be a Leasee and Operator. The City would always be in a position to take over the facility and would always have control of the permit. Exhibit 3 (attached) shows the CIWMB website information on the Facility Permit. Note the separate listings for Operator and Land Owner. Athens would propose that Operator would list City of Santa Monica and Athens. ewell.@r(eric} Page 3 October 30, 2007 Athens is committed to bringing our programs and environmental leadership to the City of-what is clearly a fair and apparently lower cost than all others. Athens will work with the City and SWMD to deploy innovative programs. in a unique partnership that will combine the best from each partner. We look forward to further discussions. Sincerely, Enc D. Herbert President Enclosures cc Honorary Mayor, Richard Bloom Honorary Mayor Pro Tem, Herb Katz Honorary Council Member, Ken Genser Honorary Council Member, Robert Holbrook Honorary Council Member, Kevin McKeown Honorary Council Member, Pam O'Connor Honorary Council Member, BobbyShriver ewen.~~ae.~a Exhibit 1 TABLE 1 PROPOSED COST SUMMARY Annualized Net Present Value of Proposer's Price to the City ro oser Option 1: Downtown, y provider Option 2: Downtown, 2 Providers Option 3: Outside Downtown, 1 provider Option 4: Outside Downtown, 2 Providers Option 5: Entire City, 1 provider Option 6: Entire City, 1 Provider Option 7: Roll Off Allied $2,199,659 $1,099,829 $2,199,659 $1,099,829 $4,399,317 $2,199,659 $284,174 Athens $2,168,486 $1,084,243 $2,016,514 $1,008,257 $4,033,027 $2,016,514 $290,310 SWMD* $1,334,935 $667,467 $1,368,911 $684,455 $2,711,521 $1,355,760 $294,906 Consolidated $3,422,358 $1,711,179 $3,152,586 $1,576,923 $6,305,173 $3,152,586 $336,741 IRS NA NA NA NA NA NA $280,333 Loone NA NA NA NA NA NA $234,336 SCD** $2,093,165 $1,046,582 $2,093,165 $1,046,582 $4,186,330 $2,093,165 $319,674 SWMD initially used overhead burdens that were adjusted upward by the Finance Department. The higher overheads are reflected in Table 1. SWMD also used productivity factors deemed too high to reasonabley reflect budgetary costs and are adjusted in Table 2 to show the potential impact. "It was not clear whether the 10% franchise fee is included in SCD's costs; if included, their revised net costs have been computed and are shown in Table 2. TABLE 2 ADJUSTED PROPOSAL COST SUMMARIES FOR SWMD AND SCD Option 1: Option 2: Option 3: Outside Option 4: Outside Option 5: Option 6: Option 7: Downtown, Downtown, Downtown Downtown, Entire City, Entire City, Roll Off Pro oser 1 Provider 2 Providers , 1 Provider 2 Providers ~ provider 1 Provider SWMD* $1,940,216 $970,108 $2,053,366 $1,026,683 $4,067,281 . $2,033,641 $294,906 SCD** $1,902,877 $951,439 $1,902,877 $951,439 $3,805,754 $1,902,877 $290,310 Exhibit 2 Athens vs. City Price Comparison 1-3yd Bin 1 Time per Week Form F.6a COLLECTION COST PROPOSAL OPTION 6 1 x per week 2x per week 3x per week 4x per week 5x per week 6x per week 7x per week Extra Pick u 3-Cu. Yd. Front-Load $110.23 $212.50 $314.77 $405.68 $507.95 $621.59 $746.59 $45.00 Container Exhibit 3 Solid Waste Facility Listing/Details Celliornia Home Facility/Site Summary Details Fot NIS laclllty, contact Lacal Entorteman[ AgepcY (LEA) below CIWMB Contact: William Merclniak Phone Number: (213) 620-2366 City of Santa Monica Transfer Station (19-AA-8088) Identification: Location: City Of Santa Monica 2500 Michigan Ave Santa Monica, CA 90404 Latitude: 34.0267 Longitude: -118.46882 GIS Confidence: Map US EPA FRS ID: Not Available Operator/Business City Of Santa Monica 2500 Michigan Ave Santa Monica, CA 90404 Phone: (310) 458-8221 Fax: Surrounding Land Use: Industrial, ResidentlalCOmmercial Permit Details: Current -Permit or FA Notification Issue Date: January 20, 3994 Unit Specifications: Data Dictionary Unit: OS Activity: Classification: CategoYY: Regulatory Status: Operational Status: 1)peratlOnal Type: Closure Date: Closure Tvpe: Waste Types: Page Updated Regularly Large Volume Transfer/Proc Facility Solitl Waste Facility Transfer/Processing Permiaetl ActNe Not Available Nol Available Not Available Mined municipal, Industrial Solid Waste Information Svstem fSW ISI. hlto://www.ciwmb.ca.aov/SW IS/ Skio Amerine. samerine@clwmb.ca.oov (9161 341.6322 X1996 2007 California Int rated W s e na a nt Bo rtl. All rl ht em Terms of Use/Privacy Integratetl Waste Management Board Local Enforcement Agency (LEA): County of Los Angeles Department of Health Services 5050 Commerce Dr Baldwin Park, CA 91706 Phone: (626) 430-5541 Fax: (626) 813-3022 Land Owner(s): City Of Santa Monica 2500 Michigan Ave Santa Monica CA 90404 Phone: (310) 458-8221 Fax: Inspection Frequency: Monthly Maz. Permined Throughput: 400.00 Tons/tlay Permittetl Capacity: 600 Tons Total Acreage: Contact: William Marclnlak Page 1 of 1 Page t of t Search Index Contact us Help Search New Facility InipE[rrpn Cnfarcengnt Mtl Ui Los Angeles County City of Santa Monica City Council Study Session. ~~ October 30, 2007 City of Santa Monica Council Study Session Presentation on Solid Waste Services Procurements By Harvey W. Gershman President Gershman, Brickner & Bratton, Inc. Solid Waste Management Consultants October 30, 2007 ~I Agenda Outline 1. Background 2. Proposals Received and Overview of Each Proposer 3. Evaluation of Proposals 4. Recommendations Gershman, Brickner & Bratton, Ina ~ .City of Santa Monica City Council Study Session October 30, 2007 ® Why These Procurements ~~°°'~ ~ Were Issued? • GBB Rate Analysis Report recommended: ;g = Short-term operational efficiencies Residential and Multi-family rate increase by more. than CPI - Commercial rates increase by no more than CPI to > remain competitive t - Greater rate increase if City wants to start building ' up an operating reserve fund • On April 25, 2006, City Council authorized development of the Request for Proposals (RFPs) The Solid Waste Subcommittee of the City Council provided guidance on both the GBB Rate Analysis Report and the scope bf the RFPs The Councilprovided into as well to the procurements at a study session on July 11, 2006 Gershman, Brickner & Bratton, Inc.. 2 City of Santa Monica City Council Study Session October 30, 2007 g ~/` Collection Procurement ~.n°°'~° % Highlights • Goals: /' - Provide efficient and cost-effective commercial collection services to all business establishments in the City; - Collect refuse, recyclable materials, cardboard, and ~ food waste from the commercial establishments so -'...,j~ that 70% diversion rate can be reached '; - Serve three (3) Commercial Collection Areas of the {; City as follows: `st Downtown DistrictlMain Street; s Outside bf Downtown DistricUMain Street; or • Entire City of Santa Monica, combination of two areas ~'~ identified above • Also, request proposals on the collection of Construcfion and Demohtlon waste (C&D) • Seven (7) proposals were submitted r Collection Procurement ~~°~~'~° Proposal.Options. - Any orAll 1. Single service provider for Downtown District/Main Street - either a private service provider or the City's Solid Waste t` Management Division (SWMD) 2. Two service providers for Downtown District/Main Street - ;7 both one private service provider and SWMD competing for accounts r 3. Single service provider for commercial establishments outside of the Downtown District/Main Street - either a private service i +s provider or SWMD. 4. Two service providers for commercial establishments outside of the Downtown District/Main Street -both one private = service provider and SWMD competing for accounts 5. Option No. 1 and No. 3 combined 6. Option No. 2 and No. 4 combined 7. Single service provider for roll-off bins in the City of Santa ° Monica - either a private service provider or SWMD Gershman, Brickner & Bretton, Ina 3 City of Santa Monica City Council Study Session October 30, 2007 ; 1" Transfer Services Highlights ~„~,~ /j • i~ Goals: - Achieve a 70% diversion rate by 2010 and long- (~ term sustainabilitygoals beyond 2010 j;~ - Minimize impacts on community and environment ;a - Provide efficient and cost-effective Transfer Services - Utilize competition to ensure that Transfer Services are market driven ''; - Enter into long-term contracts with public/private service providers for secure arrangements and predictable costs - Manage, recycle, and dispose of materials in compliance with Applicable Laws ' Five (5) proposals received Gershman, Brickner & Bratton, Inc. 4 City of Santa Monica City Council Study Session October 30, 2007 .Evaluation Committee ~°~°°'~' ~ ~ and Advisory Panel f~ J~ - Appointed by the Office of theCity Manager to ~~ evaluate the Proposals and make a recommendation to the City Manager - Evaluation Committee included representativesfrom the waste industry, local government, environmental task force, City business distract, Assistant City Manager, and City Finance Director - Advisory Panel assisted the Evaluation Committee and included representatives from the City Manager's and City Attorney's offices, Finance Department, and GBB - Both Evaluation Committee and Advisory Panel members signed a statement certifying there was no conflict of interest and would conduct the evaluation in a confidential manner s w ~ Evaluation Criteria "°°'~' ' and Weighting Criteria Weight (%) 1. Price 40 2. Quality of the service offered 15 3. Ability, capacity, antl skill of the Proposer to 15 perform or provide the services 4. Sufficiency of the Proposers financial resources 15 5. Ability of the Proposer to provide such future passlFail maintenahce pr service as may be needed 6. Any other factor which will further the intent set 15 forth,in Section 608 of the City Charter ,o Gershman, Brickner & Bratton, Inc. 5 City of Santa Monica City Council Study Session October 30, 2007 ~~ Scoring Sheet Used by wo ~~• ;~'~ Evaluation Committee Members ,~ Evaluation Process • Evaluation Committee first reviewed written proposals and determined 1st round of proposers to interview and later interviewed remaining proposers • Interview Format - Each given time to present their proposal - Predetermined questions were asked of each - Follow up questions based on specific responses - Responses documented and confirmed by each proposer to .insure accuracy in the responses • Evaluation Committee completed individual scoring sheets • Aggregate scoring was compiled by the Assistant to the City Manager • Evaluation Committee reviewed the aggregate scoring and reached consensus aspresented herein iz Gershman, Brickner & Bratton, Ina 6 ,_~ ®- City of Santa Monica City Council Study Session October 30, 2007 '~ ~.~ ~ Schedule ~ .~abfO:NUY~N1 j[ !£ ~ Non-Mandatory ' Pre-RFP Meeting November 30, 2006 ~ RFP Issued January 22, 2007 Mandatory Pre-Proposal February 6 and ,~ I Conferences March 2, 2007 • Amendments Issued March-April, 2007 • Due Date for Proposals May 4, 2007 • Oral Presentations July-August, 2007 • Recommendations Presented to City Council October 2007 13 Gershman, Brickner & Bratton, Inca 7 City of Santa Monica City Council Study Session October 30, 2007 %~ Commercial Collection '~'°~~°'~ ~~~ Services Proposers ;r AI(Collection Services: ^ Allied Waste Services (Allied) ^ Athens Services (Athens). ^ City of Santa Monica Solid Waste Management Division (SWMD) ^ Consolidated Disposal Service (Consolidated) ^ Southern California Disposal (SCD) Roll-off Collection Services Onlv: ^ interior Removal Specialists (IRS) ^ Looney Bins (Looney) 15 Allied -Collection a .„oo,~,. Evaluators' Comments • Reliable cost, cost changes would be reflected in contract changes • Meet or exceed diversion requirements • Would complete. route audits to determine most efficient deployment • Routine daily inspections • Well established company • Did not demonstrate strong commitment to alternative fuels • Well written proposal, interview lacked enthusiasm. • Demonstrated knowledge of AB939 • Didn't seem to understand the potential volume of food waste • Could do the job, but seemed more reactive than proactive • -Large publicly traded company with strong ability to finance operation ~s Gershman, Brickner & Bratton, Ina $ City of Santa Monica City Council Study Session October 30, 2007 ~ Athens -Collection , ' y Comments Evaluators u]4.o4m• 1 Proposed costsare on the high side; discount offered if awarded both ~ • Reliable numbers, cost changes would bereflected in contract modifications ~ Very good understanding of AB939 Demonstrated awareness of various diversion strategies through work in other cities ` , i Fine reputation within the region and industry , '~ Demonstrated commitment to alternative fuels not as strong as others ,f Excelent management team • Curtent yard facility remote - Offered highest franchise fee (up to 12%) - Routes computer generated for efficiency, GPS tracked trucks • Really demonstrated that they wanted to work with the City, brought the "A" Team tothe interview ° Thorough proposal Finn is a large regional provider with ability finance needed cepital n SWMD -Collection ~~-~~~~~ Evaluators' Comments • Lowest cost as proposed; concerned that proposed cost too low, and ~ with adjustments, proposed increase costs significantly ~ Best ability to provide service at cost indicated and to respond to cost changes • Very committed to sustainability goals and alternative fuels } No additional freeway driving needed ~~ Have great team, experience and knowledge of the City "? Well thought out proposal and business plan t~ Committed to CNG fleet. Qualified management team. Some concern about number of current vacancies ~''j ~ Represented labor force, well treated and experienced `;_ Already provide majority of collection in City between residentiaVmultifamity and commercial, incremental increase • Excellent knowledge of AB 939. Greatest ability to respond to changes, no contract modifications required Local yard, progressive with alternative fuel equipment • Stated an uKimate goal of 100%diversion _ ; City is able to finance debt and can adjust rates td cover operating _ costs ~a Gershman, Brickner & Bfatton, lna 9 City of Santa Monica City Council Study Session October 30; 2007 Consolidated -Collection a'°"°°'~ i~ Evaluators' Comments • Highest costs • Had the most caveats and exceptions to the RFP • Remote yard • Can hire and gear up quickly • .Solid training program • Interviewlacked enthusiasm .Demonstrated knowledge of AB939 • Noteworthy company reputation and experience, well qual~ed Costly, but reliable • future cost changes would bereflected in contract modhcetions • Want to start before 7:00 am and was non-committal abouY100% alternative fuels • Commitment to diversion not as strong • Interview was not as impressive as written proposal • Consolidated is owned by Republic, a large, publicly traded company with generally strong financial conddion is ~ - SCD -Collection w ~°°~~°'~ ~ Evaluators' Comments • Cost second lowest. Low confidence in ability to maintain costs. Cost changes would be reflected in future contract modifications ;~ Local presence and yard.. Limited need to travel far with trucks • Separate pricing for food and wet waste '.~ Offered franchise fee up to 10% • -Good training program, anti-drug program, community 'i involvement • Has. sizable commercial operation in Santa Monica Management Team, not as strong as other companies • Strong consultant team Small company, limited experience • .Experience in Biodiesel, but not CNG or LNG ° Smalf family-run company appears to have ability to finance needed capital zo Gershman, Brickner & Bratton, Inc. 10 City of Santa Monica City Council Study Session October 30, 2007 9 IRS -Roll-Off Services Only ~°„°~~~ /f Evaluators' Comments • Questions about permit status and capacity. Bid depends on granting of permit • Small company, this would be an expansion of current focus • Greatplans for the future, but light on experience and resources • Small company appears to have ability to finance needed capital • Company is small and there is a concern about their ability to gear up z, Gershman, Brickner & Bratton, Inc: 11 City of Santa Monica City Council Study Session October 30, 2007 y n v„~,~; ~ Transfer Services Proposers All Transfer Services - Athens Services (Athens) - City of Santa Monica Solid Waste Management Division (SWMD) - Southern California Disposal. (SCD) Special Material Processing Services: - Allan Company (Allan) - Downtown Diversion (Downtown) 23 _ Athens -Transfer Services ' Comments Evaluators u,,,~,~ ~ • Committed to LEED Silver facility /~ Demonstrated understanding and commitment to 1 meeting City's "green" needs f AB939 h k l d d th D t t now e ge o emons ra roug e t diversion requirements • Facility is largest and most expensive proposal with i 80% diversion goal • Some minor re-designs of the proposed facility l would be needed- 'j Presented very well; written proposal was enhanced by the interview • very good business plan to implement a noteworthy Materials Recycling Facility Excellent technical proposal • ' Firm is a large regional provider with. ability to finance needed capital za Gershman, Brickner & Bratton, Ina 12 City of Santa Monica City Council Study Session October 30, 2007 Athens Transfer Services "v~~~~m Site Plan _. ~-a i ,~ ~ 25 'i Athens Transfer Services m~~,~ Site Plan Gershman, Brickner & Bratton, Inc. 13 City of Santa Monica City Council Study Session October 30, 2007 - SWMD -Transfer Services ~~~ Evaluators' Comments finnu 11°olna ~ ~; Very good understanding of AB939 diversiorrrequirements and measurement methodology. Strong commitment to ~~ sustainability goals. Apparently strong management team ~ Technical proposal good, but not great. Strong locel presence € Besf ability to respond to innovation and policy changes { Committed to highest level of diversion • Committed to LEED Silver • .Facility footprint smaller than Athens, will not sort at the `', facility • No experience developing a transfer facility. However, the City has extensive experience constructing and managing large capital projects. Clearly want the worK • Would have to work with Culver City in interim Identified a goal of 100% diversion City is able to finance debtand can adjust rates to cover operating costs z~ za Gershman, Brickner & Bratton, Ina 14 City of Santa Monica City Council Study Session October 30, 2007 SCD -Transfer Services °"~°'~ Evaluators' Comments ~~ Submitted 6options; Focus on Options2 & 5 • Local company with a local presence. Least intensive land use, with- use of existing neighboring facility: Interesting land swap options • Assembled an acceptable team of consultants ~l Multiple plans offered interesting alternatives and options, written proposal lacked details, not as '_; developed as others, interview much better ``~ Demonstrated knowledge of A6939 requirements • Written proposal offered a laundry list of potential options, seemed to be more reactive than proactive • Small family-run company appears to have ability to finance needed capital zs Gershman, Brickner & Bratton, Ina 15 City of Santa Monica City Council Study Session October 30, 2007 Allan -Recycling Processing Services Only u,~~~~ / Evaluators' Comments Showed awareness of A6 939, but was fuzzy regarding details for diversion rate measurements Business services are limited to conventional recyclables processing and marketing • Does not provide food waste or C&D debris diversion services Details lacked in written proposal were provided in interview. Has local presence, experience working with City and a good reputation • Expressed negative comments about natural gas trucks .during interview, currently use owner/operator trucks, which are often old polluting diesel trucks. Requires 60,000 square feet if at City Yards ; ; Medium sized company with ability finance needed capital 32 Gershman, Brickner & Bratton, Inc.. 16 City of Santa Monica City Council Study Session October 30, 2007 Allan Recycling Services Site Plan II I Yf KR'ky i F 7 '~ SN " ~' i ~,::~F~i ~ i fr I ~~`, 4 `-1 3 p _ ~ ~v P ^m- - > - ..~.~~-.--~- ; fi t ~ '~ eaEne .roan rr - - z' -- i -~ Downtown Disposal ~~••~~ C&D-Processing Services Only Evaluators' Comments • Limited services provided • Good team and proposal for C&D `E Basic knowledge of AB939 requirements. Appear to be innovative in C&D area ~ Facility located far from Santa Monica resulting in many truck miles • Small company appears to have ability to finance needed capital Gershman, Brickner & Bratton, Inc. 17 City of Santa Monica City Council Study Session October 3Q 2007. Commercial Collection Services Methodology for `Apples to Apples" Comparisons - Compared City's wst for one year using Annualized Net Present Value =Net Present Value divided by the length of the contract - Cost based on Proposer's pricing and SWMD's current set out of bins for approximately 700 of the City's accounts, scaled up to the entire number of accounts (approximately 2,100) in the City - For purposes of comparison for Options 2, 4; and 6, SWMD's pricing is assumed to be half the pricing in Optiohs 1, 3, and 5, respectively - Athens pricing reduced by 10% franchise fee - Since SWMD was not provided financial assistance from the -City Finance Department, a more detailed financial review of SWMD's proposal was conducted. The financial review concluded that overhead administrative costs were low. SWMD agreed to adjust their costs accordingly 36 Gershman, Brickner & Bratton, Ina ~ $ City of Santa Monica City Council Study Session October 30, 2007 Commercial Collection Services - "°°"°°'~' Firm by Firm Review of What They Proposed ~"l .;.itP -:.' f ~} b aV„..-i T"~S "St. ~-.'"` g si 3~.3'q `t l'u 'W , y'e' y$ ~ i'?y~ 0119? „. ~.. , n ~ T y. 4,: ~I ~X~ _ ma _ ~g~+vi-e._. .~. o-' 'C.rf z- -t.'s ..y.-,.. M =millions 37 Commercial Collection Services - °°~°°'~' Table.1 -Proposal Cost.Summary Gershman, Brickner & Bratton, Ino. 19 '9WMD inNally usetl oveikeatl burdens 1M1at were aalumtl upwaN Yry 1M1e Filaliw OepaNneM. TYw M1iglwr ovsareaas are raneeaM in TaWa t.9WMD a4to usetl pmtluckvily factors tlewam too M1igM1 to lusonably reflect Outlgetary costs antl ant aajusba in Table 2to aM1Ow iM1e polentlal ImpaR. kwas mtcwrwnemerme l0%frencgisefae is inGUtletl in$CD'3 male: ainclutletl,Meir revised cot costs luw Seen mmpumtl antl are ahowrt in Tabk 3. 38 City of Santa Monica City Council Study Session October 30, 2007 ~,,~ Commercial Collection Services. liana. auwkm• ` , Table 2 -Adjusted Proposal Cost.- Summaries For SWMD And SCD "SWMD initialty usetl oveaaatl bultlene Malwere atljumtl upward 6Y Un Fnance 08pafmMM. The bynaa Eveawtls are re(IecleE in Tate t. SWMD also used pmtlu[nvity tamors tleametl too M1ighto reuonably renec[ butlpetary roses antl anatljuaretl in TahN Tto snow ine pokmW Impact "hwas mt GeaawheNertlre t0 %fren[nASe fee is indutletl in SDD's eaa'K; if mcwtletl,meia revisetl net [oars nave been EEmpYfetluM am snownm rams T. 39 i~ Commercial Col%ction Services °M~'~ Evaluation Committee Ranking Gershman, Brickner & Bratton, Ina 20 City of Santa Monica City Council Study Session October 30, 2007 Commercial Collection ! uvu ilwlni Allied Athem C COw0iIE9fed SLD Avenge Weighte0 Averge Weighted Average WeigMetl Avenge WegMed Average Weightetl Pace 7.17 287 7.B3 3.13 9.67 3.87 5.00 2W 7.60 3.04 1 Dwliry 6.33 0.95 6.33 1.25 8.00 i.35. 8.50 0.98 6.33 0.95 Ability 8.83 7.02. 8.87 .1.30 8.87 - 1.30 7.17 7.08 6.33 0.95 Finanei9 70.00 1.50 7.00 1.05 9.00 1.35 10.00 7.50 5.00 0.75 r FWUre 8.83 0.00 7.fi7 0.00 9.00 0.00 7.W O.W 8.00 O.W OMer 6.00 0.90 7.00 1.05 9.50 1.43 7.20 1.08 4.00 1.05 }} F 734 7.78 819 8.83 6.74 .i IRS LOOne ;~ Avenge WegMed Average Weightetl ~~ 4.40 i.76 6.00 2.40 -~ 5.33 0.80 7.33 1.10 t x 4.87 0.70 6.17 0.93 3.W 0.45 3.00 0.45 3.83 0.00 8.77 O.W - ~ ~ 5.40 0.81 7.00 1.05 1.61 5.93 41 Y J~ ~ Transfer Services - °"~'~' Key Assumptions and Methodology - Compared City's cost for one year using Annualized Net Present Value =Net Present Value divided by the length of the contract - The total cost includes the Proposer's pricing and expenses, bonuses, host fees, and `•s revenues for base case of 150,000 tons per year, per RFP " - Service A is for Design and Construction and assumed to be amortized in the Proposer's rates ® - .Blended stream value for Revenue Sharing .Not Guaranteed assumed at $165 per ton 42 Gershman, Brickner & Bretton, Ina 21 -City of Santa Monica City Council StudyBession i October 30, 2007 Transfer Services -Firm by Firm Review of What They Proposed J Transfer Services Table 9 -Proposal Cost Summaries Gershman, Brickner & Bratton, Inc. 22 City of Santa Monica City Council Study Session October 30, 2007 ~ a Transfer & Disposal a Mo•Me• ao ! AMens Ci 80D '/ Aver{ge WeyMetl Avere9e WegMeS Avergie WegMetl Prior 5.50 220 ].00 2.80 ].50 3.00 Gualiy 8.33 1.25 86I 1.30 8.8] 1.00 Abi16y. 8.50 L28 8.00 1.20 8.50 0.98 Fiw~cial ].00 i.~ 8.00 1.35 5.00 0.)5 - FuWro 8.00 0.00 9.00 0.00 ].00 .0.00 ~'(' Otlvr ].80 1.1] 6.60 129. 6.80 t02 6.84 ].9d 6,]5' ' . ~ Downmwn alas ~_ ~ Avert9e WegMetl Avere9e WegMetl `,1 4.80 1.84. 580 232 t 4.80 OJ2 500 0.]5 5.20 0.]8 600 b.90 5.00 0.]5 ].00 1.05 4.4D 0.00 5.83 0.00 4]5 O.11 5.40 0.81 • l 0.80 SBb Gershman, Brickner & Bratton, Inc. Transfer Services -Ranking 23 City of Santa Monica City Council Study Session October 30, 2007 Commercial Services ~°~°~~ Recommendations `The Evaluation Committee unanimously agreed on the following recommendations for Collection Services: f 1) The Committee recommends that Option 5, commercial collection throughout the entire City, should be awarded to :~ the Solid Waste Management Division of the City. The jj SWMD best meets all of the CRy's evaluation criteria and. f has proposed the overall best proposal to the City. il ith t h C he ounc w Addtionally, this option provides t e greatest control over labor and operational issues, virtually '? ` guaranteeing non-interruption of service and the ability to , change to meet Council's goals 2) The collection of C&D roll-off boxes, Option 7, should not be awarded to any proposer and the current open market s stemtetained. The mandatory recycling regwrement should be raised to 70 percent and the bond level raised, if ° necessary, to attain the 70 percent. Additionally, requirements for LNG/CNG fuels should be imposed on trucks used for this service in the City." Gershman, Brickner & Bratton, Ina 24 City of Santa Monica City Council Study Session October 3Q 2007 Commercial Services v~~e,~, Recommendations (cont d) ,% "Additional Committee Thoughts Opton 1 through 4 -These options, collection of commercial waste in a portion of the City, should not be awarded to any proposer. There is no advantage to the City in the divided approach: (1) the prices are the same for all options, (2) the environmental impact is higher than for the full City options, (3) accountability, especially for the Downtown is lessened ':'t and (4) the administrative effort and cost to the City will be `~ higher ~ '~ Option 6 -This option, where the SWMD and a private service provider provide commercial collection services throughout the entire City is not recommended since it is contrary to most of the City's stated objectives in the RFP" 49 1 Gershman, Brickner & Bratton, Inca 25 City of Santa Monica City Council Study Session October30, 2007 Transfer Services Recommendations °The Evaluation Committee unanimously agreed on the following recommendations forTrensfer Services:. 7) Scenario 2: At Improved Ciry Transfer Facility for City Only material best meets. the goals of the Request for Proposals. S D's proposal was thought to prowde the bast combinabon of price antl services and overall best meet the City's evaluation criteria when considenngone proposer to receive for all Services. This opfion proviiJes the Council withthe greatest control over labor and operational issues, wrtually guaranteeing non-mtenuptiomof service antl the abildyto change to meet Council's goals 2) It is important for the City to maintain its solitl waste permit The permit is a valuable asset in the City's ability to meet the transfer antl tlisoosaf needs for decatles to come, long after the fifteen year tens. in the RFP 3) The best opportunity to meet the ggals of the RFP and to have the most valuable economic impact on the operation is to oCperate a Materials Recovery Facility (MRF) at the City Yartl site. A tv1RF will help the City achieve the highest possible diversion rate antl provides the opportunity to - mazimize the value of recovered materials. While the three companies that proposed to operate facilifies at the City Yard provitled same degree of on site processing, the committee felt that a larger MRF could better meet Ue goals of the City 51 '"" Evaluation Committee ~r~r~ Recommendation $ ® ~, ~-. Futl -~ $2 0 0 o a t~ © o 0 o a a 1O ~~ ~ /p swrno -G... 11 (RBCBIV08~$Or~l Ermgy Gershman, Brickner & Bratton, Inc. 26 City of Santa Monica Gity Council Study Session Octobt;r 30, 2007 Transfer Services Alternative Approach ~'w°'n~ ~ Potential Economic Opportunity of 53 ~,~. ,~ Transfer Services (cont'd) "The Evaluation Committee further suggested that the City Council may consider alternative approaches.... Options include: A) City and Private Recycling Facility: Under Option A, SWMDwuld provide transfer and disposal services and incorporate a MRF onsite to maximize recycing. Because Allan Company proposed the most cost-effective recycling, the facility with the best diversion rate and provides proven marketing ability with revenue sharing, an option is to incorporate Allan Company for processing the recyclables with a. SWMD Facility for all other services. B) Private Transfer Facility Operator and Private Recycling Facility: Another option for consideration could be the same as option A but instead of the City, a private transfer facility operator on a private site or on CiN yard property. Council could authorize negotiating with Athens ervices and Southern California Disposal to provide the services not wvered by Allan. C) City and two Private Companies: If this option is considered, it could draw on the services of multiple entities. The SWMD would be responsible for receiving andsorting the matedals, one private company would process recyGables and another private company could be contracted to provide transfer services. sa Gershman, Brickner & Bratton, Ina 27 City of Santa Monica City Council Study Session October 30, 2007 ® .Evaluation Committee Suggested Option A And City Manager Recommended Option#or ~~°~°°~~ r Further Review ~ ® ,~~ -~ 0 0 0 0 © o © o © o © o ---- --,~ -' SWMD iAllan ..gin,. sr (MRF) - u.~ 55 56 Gershman, Brickner & Bratton, Ina 28 City of Santa Monica City Council Study Session October 30, 2007 " Evaluation Committee Suggested Option C And City Manager Recommended Option for 'v~~e~m' ~~ Further Review e®e ~-~ aw Tianahr c~ fr^ k. 3 ® ~ ~ RecelveNSOMe o« IswenD) .~-;z r„~ :w e o e ~ Trenafier (Vrivata) ~. 57 v~ Discussion -Transfer Services Recommendations Gershman, Brickner & Bratton,.Inc. 29 City of Santa Monica City Council Study Session October 30, 2007 r .~16 r`r f~' Council Direction a,a b»nu Havlm~ • Accept the recommendations from the Evaluation Committee as submitted. • Accept the City Manager's recommendation: - Commercial Collection -develop implementation plan for the City SWMD to provide all commercial collection - Transfer Services -direct staff to engage in formal discussions with City SWMD and private firms to further evaluate Alternatives A and C • Provide other direction 69 `~ Impact of Recommends ions bane Nnvlaw `"" on Rate Payers To be completed after: ^ City Manager recommends next steps based on Council direction received tonight 60 Gershman, Brickner & Bratton, Inc. 30 City of Santa Monica City Council Study Session October 30, 2007 Gershman, Brickner & Bratton, Inc. 31 Thomas W. Erickson, MAI REAL ESTATE APPRAISER ~ CONSULTANT 909 79TH ST., SUITE B, SANTA MONICA, CA 90403 370/453-1978 . FAX 370/453-797D January 20, 2007 Ms. Donna Rickman Re: Market & Rental Values Resource Management Department Portion. of the City Yard City of Santa Monica Delaware Ade. & Frank St. 3223 Donald Douglas Loop So_ #2 Santa Monica Santa Monica, CA 90405 Job No. 1381 Dear Ms. Rickman: In accordance with your authorization I have undertaken and completed all necessary inspections,. investigations and analyses and have reached final market and rental-value estimates concerning the above referenced 4.15 acres portion of the City Yard. Based on my investigative efforts, L conclude that the current market value of the property, with the hypothetical condition that there is no-soils cohtamination and that the site is developable, based on the unit rate of $125 per sq. ft. of land area, is: $22,620,000 I further conclude that the current fair annual rental value of the property, again under the hypothetical condition that there is no soils contamination and that the site is developable, is: $1,696,500 This is a Complete Appraisal in a Restricted Use Appraisal Report format which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (c) of the Uniform Standards of Professional Appraisal Practice for a Restricted Use Appraisal Report: As .such, it does not present detailed narrative discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's .opinion of value. Supportin g documentation concerning .the data, reasoning, .and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and_for the intended use stated below. The appraiser is not responsib_7e for unauthorized use of this report. z CLIENT: The City of Santa Monica Resource Management Department APPRAISER: Thomas W. Erickson, MAI 909-B 19th Street Santa Monica, CA 90903 SCOPE OF WORK: The client requests "a restricted use appraisal report of a portion of the City Yard, zoned Ml and located on a landfill.. However, for the. appraisal, proceed on the basis that the property is developable, as is. The appraisal information will be used for internal and advisory purposes only." For each appraisal assignment, the appraiser must: (1)identify the problem. to be .solved; (2)determine and perform the scope of work necessary. to develop creditable assignment results; :and (3)disclose the scope of work in the report.. (1) This assignment involves estimating the current market value and the current rental value of the 4.15 acres property with the. hypothetical condition that there is no soils contamination and the- site is developable, as is, under the existing Ml industrial zone. (2) A physical drive-by inspection of the property was completed. Comparable, industrial zoned (Ml and LMSD) land sales in Santa Monica were obtained and inspected in the .field, and analyzed and compared to the subject, yielding an estimate of current market value. Ground rent rates of return were obtained and compared to the subject, yielding an estimate of the current annual rental value by multiplying the current market value of the land by this rate of return. PURPOSE OF THE APPRAISAL: The purpose of this appraisal is to provide my estimate of the subject's current market value and rental value as of January 20, 2007. Market value as used in this. report .is defined by the Uniform Standards of Professional - Appraisal Practice, 2006 Edition, page 194, as: "The most probable. price which a ,property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting- prudently, .knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is .the consummation of a sale as of a specified date and the passing of-title from seller to buyer under conditions whereby: (1) buyer and seller are. typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their own best interests; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for. the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." 3 Rental value as used in this report is defined by the Appraisal Institute, in The Dictionary of Real Estate .Appraisal, Fourth Edition, page 176, as: "The most probable rent that a property should bring in a competitive and open market. reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessor and lessee each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee .under conditions whereby: (1) lessor and lessee are typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their -own best interests; (3) a reasonable time is allowed for exposure in the open market; (4) the rent payment is made in terms of cash in U.S. dollars, and is expressed as an amount per time period consistent with the payment schedule of the .lease contract;. and (5) the rental amount represents the normal consideration for the property leased unaffected by special fees or concessions granted by anyone associated with the transaction." INTENDED USE OF THE REPORT: For the client's internal and advisory purposes. INTEREST VALUED: The fee simple estate in and to the subject property. EFFECTIVE DATE OF VALUE: January 20, 2007. DATE OF REPORT: January 20, 2007. APPRAISAL DEVELOPMENT AND REPORTING PROCESS: Land sales data and ground rent rates of return for this appraisal were obtaihed by referencing the Combined L.A./Westside Multiple Listing Service, the- National Data- Collective, as well as discussions with Mr. Richard Garcia, commercial sales agent ahd ground lease expert with Marcus & Millichap Brokerage. All land sales utilized are in the Ci zoned industrial - either M1 like th Manufacturing and Studic District). A= located in neighborhoods that are super of non-annoying land uses. The subject residential use or artist lofts due to 1 uses; e.g. to the west is the offices Southern California Disposal and Recycl storage yard for the same company, an personal and ~~murercial disposal trucks.. y of Santa Monica and are subject, or LMSD (Light 1 six comparable sales are or to the subject in terms ' s location is not fit for he inharmonious surrounding and truck storage yard. for ng. To the south is a bin ~ the transfer station for 4 SUBJECT PROPRTY: General Location: Northerly elbow at the intersection of Delaware P,ve. and Frank St. Santa Monica, CA 90404 Lot Size.: Existing Use: 180,990 sq. ft. according to the supplied plot plan; or 4.15 acres. Portion of the City Yard used for recycling purposes. Use Reflected in the Appraisal: Redevelopment of the property with an industrial oriented use; but not combined with any residential uses. VALUATION: Direct Comparison Market Value: The six industrial zoned land sales utilized in this analysis are summarized below: (1) 1638 Euclid St. $3,250,000 22,500 sf April 19, 2006 Ml zone Deed #853919 {2) 2029 Olympic Bl. $3,500,000 18,060 sf Jan. 24, 2006 LMSD zone Deed #162273 (3) 1610 Colorado Av. $7,500,000 47,666 sf May 3, 2005 M1 zone Deed #1028644 (4) 1601 14th St 2.91 acres M1 zone (5) 1671 20th St 27,250 sf LMSD zone $18,500,000 Nov. 12, 2004 $3,400,000 May 21, 2004 Deed #1300186 $144/sf Current use is an auto storage .yard. $194/sf Proposed use is 65 unit SRO, 100% affordable. $157/sf Proposed use is 91 unit artist lofts. $146/sf Proposed use is for the expansion of a city park. $125/sf Proposed use is for artist lofts. (6} 3030 Nebraska Av. $19,000,000 $131/sf 3.34 acres March 31, 2004 Proposed use is multi- LMSD zone Deed #763218 family after a zone change. 5 VALUATION (Cont'd.): The sales indicate that there ias an economy of scale in the unit rates of larger parcels which sell at a lower price per sq. ft. than smaller parcels. Item 6 has one of the lowest unit rates and is the largest parcel at 3.34 acres. Conversely, Item 2 has the highest unit rate and has the smallest land size of the six sales. Due to the subject's very large size of 9.15 acres, its appropriate unit rate should be at the low end of the market range. Also, as previously mentioned, the subject's location is not conducive to residential use unlike most of the other sales. This is another factor that indicates an appropriate unit rate for the subject near the low end of the market range.. Item 1 is superior overall to the subject at $144 per sq. ft. due to the much smaller lot size and the superior lpcation. Item 2 is superior overall to the subject at $194 per sq. ft. due to the much smaller lot size and the superior location and superior proposed land use. .Item 3 is superior overall to the subject at .$157 .per. sq. ft_ due to the much smaller lot size and the superior location and superior proposed land use_ Item 4 is superior overall to the subject at $146 per sq. ft. due to its superior location. Item 5 is similar overall to the subject at $125 per sq. ft. due to the offsetting factors of a much smaller lot size and superior location. versus the much earlier date of sale in May 2004._ Ltem 6 is slightly superior to the subject at $131 per sq. ft. due to the superior location and superior proposed land use. Based on these comparisohs, the market indicates that the appropriate unit rate for the 4.15 acres subject property is $125 per sq. ft. of land area, yielding my final land value conclusion of.$22,620,000 (180,990 sq. ft. x $125 per sq. ft.). FAIR MARKET RENTAL VALUATION The rental value of the applying an appropriate value of the land, whic return on ground leases a subject property can be determined by rate of return to the- fee simple market h is concluded at $22,620,000. Rates of re from actual market data. RATE OF RETURN To estimate the appropriate property, the following ground ITEM & LOCATION LOT DATE SIZE rate of return for the subject lease data was .analyzed: INTENDED PERCENTAGE OF USE FEE LANDVALUE TERMS N0. i 7/2009 6,725 SF AUTO. SALES 7.E° OF $82/SF 5 YRS: 5810 VAN NliYS LOT NNN VAN NOYS 6 NO. 2. 10/2003 12, 980SF BE.ACPr 9. 0° OF $q5/SF 5 YRS. 16800P:C.A. RECREATION NNN PAC.. PALLS. NO. 3 2006 9 ACRES FOOD FOR LESS 8.Oi OF 20 YRS. E/of 710 Frwy. PRO- SUPERMARKET & COSTS + OPTIONS CARSON FORMA SATELLITESHOPS NNN NO. q 2006 VP.RIOUS RETAIL 8.0~ OF 20-YRS. VARIOUS FEE LAND + OPTIONS VALUE NNN The rates of return range from 7. 6% to 9.Oo. Item 1 has the lowest rate at 7.60 and has the smallest lot size and the highest price pes sq. ft. of fee land value. Typically, the higher the price per sq. ft. of the fee land, the lower the rate of return in determining the rental rate. This is true based oh this actual market data. Item 2 is an actual lease dated October 2003. with. the Bel Air Bay Club. The State-mandated rate of return is '9.Oo, but. the fee value of the land is only $45 per sq. ft. Again, a higher rate of return is associated with lower land value... Items 3 and 4 are data from Mr. Richard Garcia of Marcus & Millichap, commercial brokerage.. Mr. Garcia is an expert in ground leases and quotes 8.Oo to 9.Oo of fee land value as -appropriate rates in determining ground rent. Considering. the subject property's high fee land value of $125. per sq. ft., and based on this market data, I am estimating a 7.5% rate of return to be appropriate for the subject. ANNUAL RENT The ~~Formulated" Rent Analysis employs two .valuation components: fee simple land. value; and a market derived rate of return. These two components are imputed into a formula in order to yield an appropriate rental rate for the 4.15 acres subject property. The formula is as follows: FEE SIMPLE LAND VALUE X RATE OF RETURN = ANNUAL RENT Hence, the market derived. annual rent for the subject is: $22,620,000 X .075 _ $1,696,500 In conclusion, the fair market rental value for the 180,.940 sf subject property according to this Formulated Rent Analysis is: $1,.696,500 ASSUMPTIONS AND LIMITING CONDITIONS: 1. This report does not include detailed discussions of the .data, reasoning, and .analyses. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The information contained in .this report is specific to the needs of the client and for the intended use stated im this report. The appraiser is not responsible for unauthorized use of this report. 2. No responsibility is assumed for legal or title considerations. Title to the properties. is assumed to be good and marketable unless otherwise stated ih this xeport. 3: The property is appraised free and clear of any or all liens and encumbrances unless otherwise stated in this. report. 4. Responsible ownership-and competent property management are assumed unless otherwise stated in this report. 5. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 6. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist. the seader.in visualizing the property. 7. This appraisal is based on the hypothetical condition that there are no adverse effects from the underlying .landfill, and that the. property is developable in its as is condition. 8. It is assumed that. there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report. 9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in this appraisal report. 10. It is assumed that all required licenses, certificates of occupancy or other legislative or administrative authority from any local, state or national governmental, or private entity or .organization-have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 1 L. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless otherwise stated in this report. 8 CERTIFICATION: I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and. conclusions are limited only by the reported assumptions and limiting conditions, and are - my personal, unbiased professional analyses, opinions and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report and I have no personal interest or bias with respect to the parties involved. 9, My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause: of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event. 5. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. 6. My analyses, opinions, and conclusions were develdped, and this report .has been prepared in- conformity .with the Uniform Standards of Professional Appraisal Practice. 7. No one provided significant professional assistance to the person signing this report. 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized. representatives. 9. As of the' date of this report, I have completed the requirements of the continuing education program of the Appraisal Institute: 10. I, Thomas W. Erickson, am a Licensed and Certified General Real Estate Appraiser with. the State of California, Office of Real Estate Appraisers, Identification No. AG002373, valid until March 4, 2008. ' /. Thomas W. Erickson, MAI State Certification #AG002373 ® 10/30/2007 12:56 3104500506 WALLZN KRESS REISMAN WALLIN, KRESS, REISMAN & KRANITZ LAW OFFICES 2800 TWENTY-EIGHTH STREET, SUITE 315 SANTA MONICA, CALIFORNIA 90405-6205 TELEPHONE (310) 450-95R2 FAX (310) 450-0506 DESTINATION TO: FROM: DATE: (310) 394-2962 Maria Stewart, City Clerk City of Santa Monica Cary S. Reisman, Esq. October 30, 2007 PAGE 01/05 RE: Southern California Disposal and Recvclin¢ Bids for RFP #2007-201-01 and #2007-201-02 NO. OF PAGES (INCLUDING THIS ONE): 5 Letter dated October 3D, 2007 to P. Lamont Ewell from Cary S. Reisman, Esq. 10/,30120^7 12:56 3104500506 WALLIN KRESS REISMAN /05 flCT ~ 0 2007 ~Ff.1~E ~f~~ ~'T y rt c„N WALLIN, KRESS, REISMAN & KRANITZ, LLP~~~TQ ? "p~'y~Y`I LAW OFFICES CT .JD ~t~ py. ~j 2000 TWENTY-EIGHTH STREET, SUITE 315 ~ y f~1 y ~ ~~ VyJ ~~le~. eaf 1~ SANTA MOELE HON ELl310) 450-9502 06-6205 H! Fa CSIMILE (310) 450-0506 URGENT MATTER -OCTOBER 30, 2007 COUNCIL AGENDA October 30, 2007 VIA FAX and E-MAIL P. Lamont Ewell City Manager City of Santa Monica 1685 Main Street, Room 200 Santa Monica, CA 90401 Re: Southern California Disposal and Recycling Bids for RFP #2007-201-01 and #2007-201-02 Dear Mr. Ewell: We have been retained by Southern California Disposal and Recycling Company {BCD) in connection with SCD's Proposals to provide Commercial Collection and Transfer/Recycling/MRF services for the City of Santa Monica. Summar-Xof Concerns Our client is concerned that itsproposal for Commercial Collection has been misidentified and therefore mis-ranked. As will be shown below, when corrected, BCD's proposal is actually the lowest bid -lower even than the Santa Monica Solid Waste Division's (hereinafter "SWMD") bid.) Given that price comprises 40 percent of the bid evaluation ranking, it is hard to imagine that the SCD proposal would not have been at or near the top in the ranking in the Matrix Of Final Scoring as shown in Table 3, page 14, of the Proposal Evaluation Report of Contract Services for Collection of Commercial Solid Waste (hereuiafter "Commercial Collection Evaluation Report"). Another issue has to do with LEED Certification, which is required by the Transfer/MRF RFP. Although the Proposal Evaluation Report for Transfer, Recycling and Disposal services (herinafter "Transfer/MRF Evaluation Report")points out that SWMD and Athens are Although Table Z, page 10 of the Commercial Collection Evaluation Report offers a comparison of BCD's prices for Option 5 including the franchise fees, every other reference erroneously claims that it was unclear whether or not a franchise fee was included in the proposal and does not use the lower bid of SCD in the evaluation. QGF 3 0 2n®P 10/,3012007 12:56 3104500506 WALLIN KRESS REISMAN PAGE 03/05 WALLI N, KRESS, REISMAN & KRANITZ, LLP LAW OFFICES P. Lamont Ewell October 30, 2007 Page 2 committed to LEED Silver Certification, it does not identify that SCD has committed to the even higher LEED Gold Certification. By failing to mention the LEED certifrcation commitment of SCD at all, the report erroneously implies that SCD is not committed to any LEED certif cation. Commercial Collection Services Bid The City Manager Staff Report to the City Council and the Commercial Collection Evaluation Report state, in several places, that the bid from the SWMD is the lowest and that the 5CD bid is the second lowest. These conclusions are not correct and can only be achieved by failing to credit SCD with the 10 percent franchise fee offered in the SCD bid. Table 2, Page 10 of the Commercial Collection Evaluation Report does reflect the correct SCD bid, and in that table the SCD bid for Option 5 (the identified preferred option by the Evaluation Committee) is lower than the SWMD adjusted bid. But the Report does not use the bid amounts in this table to arrive at its conclusions, and incorrectly claims that the SWMD bid is the lowest while the SCD is the second lowest. Page 4 of the City Manager Staff Report to the City Council states, "the Evaluation Committee recommends the City of Santa Monica's Solid Waste Management Division as the best entity to meet the goals of the Commercial Collections RFP." The first bullet point reason given for this recommendation is that the SWMD "was the lowest overall cost." In the summary comments on page 16 of the Commercial Collection Evaluation Report, paragraph 7.4, the Report proclaims, in bullet point one, that the SWMD proposal is "The lowest cost as proposed." And at page 17 of the summary comments, in paragraph 7.7, bullet point one, it states that SCD is `'Cost second lowest." The Commercial Collection Evaluation Report cites in several places that it was not clear whether the 10 percent franchise fee was included in the prices SCD proposed. Although the Staff Report claims confusion as to whether the franchise fee was intended to be in addition to the fees charged the City, SCD always believed that the fee was, and had to be, included in the proposed price. In fact, if SCD's intent were to charge a separate line item 10%, it's pledge to reduce current collection rates by 5% would certainly seem to be an empty offer. No such thing was intended, and. SCD believed it was clear. The Executive Summary letter of the SCD bid for Commercial Collections dated May 4, 2007, to Donald Patterson, Assistant to the City Manager, from Luke Kardashian, President of SCD, stated "SCD is proposing a 10 % franchise fee on all monthly invoice amounts. In addition, should SCD be awarded the transfer services contract, the Company is willing to reduce all these collection rates an additional 5%." 10/30/2007 12:56 3104500506 WALLIN KRESS REISMAN PAGE 04!05 WALLIN, KRESS, REISMAN & KRANITZ, LLP LAW OFFICES P. Lamont Ewell October 30, 2007 Page 3 On July 10, 2007, Mr. Patterson sent a questionnaire to SCD. Question 10 asked whether airy franchise fees were included in the SCD proposal. Mike Matosian, Vice President of SCD, responded to Mr. Patterson that SCD was proposing a IO percent franchise fee in the bid and included an example. Mr. Matosian indicated "if SCD invoices the City for $100;000 in a given month, the franchise fee would be $10,000." In response to more follow up questions from Mr. Patterson, Milce Matosian sent a letter to Mr. Patterson on September 14, 2007 stating once again that there was a 10 percent franchise fee proposed by the SCD bid for Commercial Collections and once again gave the example of a $10,000 franchise fee on a bill of $100,000. If there had been any further uncertainty about this fee after the September 141etter, a specific question to that effect could have been posed, and Mr. Matosian or Mr. Kardaslian would have been pleased and able to give a rapid reply. In fact, a simple phone call, e-mail, or fax on this extremely important point would have been met with an answer within minutes. Because the "price" comprises 40% of the bid evaluation, and is the largest single factor, SCD believes that a corrected staff report and evaluation indicating that BCD's proposal was actually the least expensive would result is a significant increase in its evaluation ranking. More importantly, SCD feels that this is the only way the City Council and the community can make a well-informed decision about the true costs of the bids and what company will provide the community the most cost effective service. LEED Certification Issue The RFP for Transfer, Recycling and MRF (Material Recovery Facility) services require that the proposed Transfer Station and/or MRF be LEED (Leadership in Energy Environmental Design) Certified Silver at a minimum. The Proposal Transfer/NIKE Evaluation Report for the Transfer/Disposal/Recycling RFP notes, in bullet point one on page 16, regarding Athens' proposal that Athens is "Committed to LEED Silver facility." Similarly, for the S WMD proposal on page 17, the Report says "Committed to LEED Silver Facility." However, in evaluating the SCD proposal on page 17, the Report says nothing about LEED. If it had fully summarized the SCD proposal, the Report would have said that SCD is committed to LEED Gold certification as indicated in their proposal. Gold requires a greater degree of commitment to the environment and energy efficiency than silver, and is, of course more beneficial to the residents of our City. 10/30/2007 12:56 3104500506 WALLIN KRESS REISMAN PAGE 05105 WALLIN, KRESS, REISMAN & KRANITZ, LLP LqW OFFICES ' P. Lamont Ewell October 30, 2007 Page 4 Conclnsion SCD worked very hard to achieve bids that will provide excellent service to our community at a cost that will afford the City Council financial resources for other programs that are important to the residents. The owners and employees of SCD are extretneiy proud to be the lowest bidder for both RFPs and request that they be identified as such by a corrected City Manager Staff Report, and that this information be a part of the Staff presentation at the Council meeting and entered into the record. The owners and employees of SCD look forward to working with City Staff and the City Council to provided to the community the best commercial collection, transfer and recycling services possible. Very truly yours, .//J ``% ~ 1. ~ ~ Cary S~etsman CSR:Im cc: Southern California Disposal and Recycling Marsha Moutrie, Esq., City Attorney Eriko Matsumoto, Esq., Deputy City Attorney Maria Stewart, City Clerk