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SR-080522-8B~~ ;Yo; City Council Report Santa Monica City Council Meeting: May 22, 2008 Agenda Item: To: Mayor and City Council From: P. Lamont Ewell, City Manager Subject: .Public/Private Partnership for Transfer and Recycling Services Recommended Action Staff recommends that Council: 1) provide input and conceptually .approve a public/private partnership with Southern California Disposal for transfer services and Cedarwood-Young Company dba Allan Company for recycling services; and 2) authorize the City Manager to negotiate and execute a modification to agreement 8524 (CCS) with Gershman, Brickner &Bratton, Inc. Executive Summary Over the past three years, the City has been engaged in a multi-year. review of solid waste operations. One of the results of this review was the issuance of a Request for Proposals to provide transfer, recycling and disposal services. On October 30, 2007, Council reviewed -the results of an extensive request for proposals-process to provide transfer and recycling services for municipal solid waste. At that time, Council directed staff to explore two options, one whereby the City provided transfer services and one in which a private company would provide transfer services. In both options, Allan would provide recycling services. Since that time, staff has held extensive discussions with SCD and Allan to explore the potential of a public/private partnership. Those discussions have led to a concept proposal that provides for SCD to provide transfer services and Allan would provide recycling services in the area of the City Yard currently occupied by the City's Transfer Station, the current Allan site,- the Hanson Aggregate site and SCD land. The cost of this option is subject to further negotiations and will be finalized during the next stage of negotiations if Council approves the partnership .concept. An additional amount not. to exceed $25,000 is needed for Gershman, Brickner & Bratton, Inc. for work already completed to finalize the Preliminary Term Sheet. 1 Discussion Transfer/Recycling/Disposal Services Staff has been meeting with SCD and Allan for the past seven months to develop a concept for apublic/private partnership. Following extensive discussions, the City, Allan and SCD have agreed to preliminary terms and conditions for the partnership, which is presented for Council review and approval. The concept envisions an integrated facility on City and SCD land whereby SCD provides transfer services in an expanded transfer station and operates a self haul area on City land and Allan provides recycling services (see Attachment A). During this time, staff also explored the benefits of a public/private .partnership with Allan and SCD as compared to the City providing transfer services. Advantages to both approaches are: 1) City retains control of the processing and disposal of solid waste generated in the City. 2) The City retains ownership of a solid waste facility permit. 3) City will make a significant capital investment on its land. 4) Solid waste and recycling processing are confined to area of the City where this land use has a long history. 5) Maximum use of alternative fuel vehicles will be achieved. 6) Will assist the City in achieving 70% recycling (measured by California Integrated Waste Management Board methodology). 7) City will have on-line, real time access to all quantity data for recycling and solid waste materials. 8) City will receive a share of recycling revenue from single stream recycling. Advantages of the City/Allan/SCD Partnership are: 1) Makes maximum use of the existing local facilities. 2) Avoids duplication of transfer capability. 3) At a minimum, provides asemi-enclosed recycling processing facility which reduces environmental impacts. 2 4) Reduces total capital investment required by City. 5) City will retain ownership of all improvements located on city property. 6) Recycling operation receives and processes .selected commercial waste loads to recover recyclables. 7) Lower cost per ton transferred. . 8) City may, if it chooses, receive a Host Fee for all non-City waste transferred. Advantage of City transfer and Allan recycling are: 1) City operates the transfer function using City staff, increasing control over the entire waste stream. 2) Simpler administrative arrangements, only one operational service contract. 3) No non-City waste at City utilized facilities. Summary of Site Operations Materials Recycling Facility (MRF) The MRF would be operated by Allan and located in the general vicinity of the current existing transfer station. The facility will, at a minimum, be semi-enclosed pre- engineered metal building housing a sorting line and processing equipment to separate and recover the various commodities from curbside recycling and commercial mixed recycling. The material will be combined with recyclables received from the self haul, buy back and drop off areas for sale and transport to processors. The MRF will also receive designated select commercial loads, those commercial collection loads that are identified to contain greater than 50% clean recyclable materials, for sorting and processing. Buy Back and Recycling Drop Off Center Allan will operate buy back and recycling drop off areas on an area immediately next to the MRF on -land currently occupied by Allan's facility and a portion of the Hanson Aggregate site. The Buy Back Center will provide scales and drop off areas for those who wish to redeem the California Redemption Value (CRV) from their recyclable. 3 goods. The drop off Center will be located between the. Buy Back Center and the Self Haul area, providing a location for those who wish to drop off recyclable material twenty four hours aday/seven days a week without redeeming the CRV. Household Hazardous Waste The City will move its Household Hazardous Waste Facility (HHW) to an area integrated to the Drop Off Center and Self Haul area to provide cone-stop location for the public to dispose of unwanted materials. Transfer Station Under the proposed partnership, SCD will expand their current transfer station to accommodate the additional City tonnage, The primary area of expansion is to the northerly direction of their current facility into a currently vacant lot that is SCD-owned. The expanded transfer station will, at a minimum, be asemi-enclosed facility with an expanded tipping floor and added transfer capability. The facility will also have a separate, enclosed, food waste transfer capability. SCD would process and transfer all municipal solid waste, green waste, food waste, construction and demolition material and any residual from the Allan-operated MRF: General Business Points The City, Allan and SCD have agreed on preliminary terms for the proposed partnership. Below are the significant points:. 1. The term will be for 15 years with three optional 5 year terms. 2. Both SCD. and Allan will continue to be able to process non-Santa. Monica generated tonnage up to their permit limits (as they do today). In both cases, Santa Monica generated material will have processing priority. 3. The City will manage the overall development and implementation process for the facilities and infrastructure improvements that are to be on its property, and SCD will manage the overall development and implementation for the facilities and infrastructure improvements on its property. The work involved includes the design, permitting, construction, financing and acceptance testing. Each party will be responsible for its own capital to pay for improvements on its property; 4 however, Allan will be responsible to supply equipment and rolling stock related to work and is responsible for its own capital. The City and SCD will provide design input to each other's improvements on SCD's property to ensure an integrated facility. 4. The City will be responsible for the collection of waste and. recyclable materials generated. and set out for collection from all residences (single family and multi- family) and commercial, business, institutional and governmental establishments in the City: The City and private haulers can contract directly with a resident or business for open top roll-off containers. The City will deliver any waste and recyclable materials collected by the City to either Allan or SCD. The City will make commercially reasonable efforts for the collection of clean source separated Recyclables from all of its customers: In the event that source separation of recyclables is not practical from commercial customers, the City will cause for the collection of food waste and other organics from select commercial customers and create separate routes for the collection of remaining mixed waste so that it can be processed for recycling by Allan at the MRF. It will be the objective to cause for such these separately routed loads to have no less than 50 percent recyclable content. 6. If reasonably practicable and consistent with existing permits; consents and other rights to operate, it will be the objective for Allan to floor inspect and separate these selected commercial loads for further processing, sorting, baling, and marketing. 7. The City will determine which loads are delivered to Allan. 8. The City may be responsible for the operation of the scales used to weigh City collected and City delivered Recyclables and select-loads at the facility operated by Allan. SCD will be responsible for the operation and mairitenance of all its scales, video monitoring system, and materials management database that serve the Transfer Station and Self-Haul area. The City will have the right to have afull- time supervisor in the scale house, along with live feeds from the video and materials database systems. The parties will work together to assure that any changes to records are done with the knowledge of the City. The City will ensure monitoring and participation in the scales, Materials Management Database, and video monitoring system that serve the Transfer Station and Self-Haul area will , not materially impact the efficient operations or wait times at the Transfer Station and Self-Haul area. 10. The City will be responsible for a Materials Management Database and video monitoring ofAllan-operated site(s); access to this information will be made 5 available to Allan on a live 24/7 basis. The Parties will also work together to establish protocols to assure that any changes to records are done with the current knowledge of the-City. 11. All deliveries will be through scales, except for those customers using the recycling drop-off areas on Delaware Avenue. The material and quantity data shall be entered into the Materials Management Database. 12. The City will design and build improvements on the City's property that include the drop off and buy-back. center, self-haul area, and materials recycling facility that includes transfer functionality sized to respond to the City of Santa Monica transfer needs, hereinafter called the "Recycling and Buy Back Complex." 13.Allan will provide design input, the necessary equipment, both fixed and mobile, and will be responsible for operation and maintenance of the completed complex for the Recycling and Buy Back Complex. 14. SCD will provide design input for the self-haul and Frank Street areas, and will be responsible for the operation and maintenance of these areas when complete. 15. SCD will design, build and operate the improvements to its Transfer Facility and haul waste materials off site to processor(s) and disposal locations as approved by the City: 16. SCD may seek to expand its current operations into Frank Street and a limited portion of the City Yard immediately east of Frank Street. 17.Allan will cooperate with the City in the appropriate aspects of this partnership project - at a minimum, the recycling aspects. 18.Attachment A Item 2.0 "Site Plan" presents a conceptual layout of generally where facilities and infrastructure improvements may be located.. It shows the City owned City Yard property with boundary lines, the City owned streets (Delaware Ave. and Frank. Street) and the SCD properties with boundary lines. SCD and Allan will each separately and independently lease City property utilized for the project for the duration of the Service Agreement. 19. Each party will advance required permits and/or permit modifications,. and all necessary regulatory approvals, in a parallel path as prudent and practicable. Permits for the Materials Recycling Facility, Buy-Back and the Drop-Off, and the Self-Haul area located on City property shall be continuously owned by the City. Permits for the Transfer Facility Station located on SCD property shall be continuously owhed by SCD. It may be possible to fast-track SCD permitting requirements as they may be deemed a modification. Additionally, each party will be expected to comply with the major provisions outlined in . the Request for Proposals, which includes insurance, indemnification, assisting in meeting the City's sustainable goals of 70% diversion and LEED silver designation on new buildings. Summary of Materials Responsibilities The following table presents materials and responsibilities for the various parties: Material Processing Functions ~ cat on Responsible MRF, buy Clean Recyclables back brdrop- Inspect, store, process, shipping Allan off Clean Recyclables from MRF, buy outside sources, including back or drop- Inspect, store, process, shipping Allan SCD off Select Commercial MSW for MRF Inspect, floor sort, load out Allan Recycling MRF residue Loadout MRF Inspect, floor sort, load out Allan MRF residue Hauling MRF jailer spotting, hauling, disposal SCD MSW from City and self- ransfer Inspect, load out, haul SCD haulers Station alk up and auto traffic with Drop Off Site management and movement of recyclables materials Allan Self-haulers, walk up with buy Buy Back raffic control; buy back payments;. Allan back materials Center hauling to MRF djacent to raffic control; unloading, inspection, HHW Buy Back orting; packing; shipping; record City Center keepin Green waste and Food Waste ransfer Inspect load out haul SCD rom City Station , , Green waste from Self- Self Haul Inspect load out haul SCD. Haulers rea , , C&D from City ransfer Station Inspect, load out, haul SCD C&D from Self-Haulers Se lf Haul- Inspect, load out, haul SCD e 7 Contract Modification The contract with GBB was fully expended as of late March 2008. In order to finalize the preliminary agreement between the City, Allan and SCD, GBB continued to meet with and negotiate with all parties. GBB also was asked to come to Council to present the preliminary term agreement to Council, as the City's lead negotiator. These final task related to the completion of a preliminary term sheet caused GBB to exceed their contractual authority. This seventh modification will bring the three-year total for GBB to .five hundred seventy three thousand dollars ($573,000).. Based on Council direction, staff will be negotiating with GBB regarding future involvement of the firm. It is. anticipated that staff will return in late June with an additional contract modification for GBB to continue to consult with the City regarding industry best practices and the final development of the public/private partnership. To date, GBB has completed Phase I of their engagement, which included the development of a comprehensive report on the operational and financial review which was presented to. Council at the March 14, 2006 Study Session. The study session resulted in GBB presenting a variety of recommendations to improve operational efficiencies and a detailed financial analysis. GBB was engaged to provide assistance and analysis related to the review of the Request for Proposals (RFP) responses to test alternative service delivery methods of commercial and transfer operations. GBB has also served as the lead City negotiator in developing the frame work presented herein of a public/private partnership with the City, Allan and SCD. Financial Impacts & Budget Actions The City has continued negotiations with .SCD and Allan regarding financial terms of the arrangement. These discussions and' finalization of .the terms will continue into the development of the final contractual document. The financial package and ultimate effect on ratepayers will be affected by the final cost of construction, the actual number of tons received from collecting all commercial waste in the City and the ability to successfully negotiated rates at designated disposal locations. The results of these 8 negotiations to date are that Allan proposes to provide the City an upfront payment of $526,000; revenue sharing of $30 per ton delivered and 50% of any. revenue received from the. sale of recycled material above $135 per ton; and a host community fee of $4.50 per ton an all material generated outside of Santa Monica. SCD and the City are currently assessing two scenarios, one which contemplates a service fee and a host fee paid to the City and one which contemplates only a service fee with a lower per ton charge. The currently discussed cost is $16.41 per ton with a $1 per ton host fee for non-Santa Monica generated material for a total per ton cost of $24.51 or $14.18 per ton with no host fee for a total per ton cost of $22.28. The second option does not account for potential revenue from the host fee, which would vary based on the number of non-Santa Monica .tons delivered to the SCD site. The Service Agreement will incorporate the selected fee structure, cost of improvements and tonnage from all commercial customers. SCD is also proposing to purchase City excess equipment for $213,600.00. Council will be presented with final cost information and its impact on rates in summer prior to approval of schematic designs. Funds for the contract amendment are available in account 27441.555060. Next Steps Anticipated key milestones are: Negotiate Service Agreement Final Cost & Contract Authorization Environmental Review & Permitting Project Financing Schematic Design to Council Design/Cohstruction/Acceptance Start of Operations Summer 2008 Late Summer 2008 Summer -Fall 2008 Summer - Fa112008 Winter/Spring 2009 Fall 2008 -Spring 2011 Spring 2011 9 Alternatives Council could direct staff to pursue the original Option A from October 30,.2007, which was the City providing transfer services and Allan providing recycling services. This alternative would require a larger facility on City Yard land than currently envisioned; and require greater capital investment by the City. This option also would increase the total transfer capacity in the City Yard area, creating -the potential for additional non- Santa Monica materials being brought to the City. If this, or any alternative,. is selected, staff would return to Council for a concept approval in late Summer 2008. Prepared by: Donald Patterson, Assistant to the City Manager, Management Services Approved & Forwarded to Council: //~/`-~ , f_.. ~J P. mont Ewell City Manager Attachment: Conceptual Site Plan 10 ,~;~I ~, 11} -SOFT SYS-EM NI~F 3 I 4 0 0 I I f ~I I I I L BUYBACK CENTER I I{ I I[ I~ PARKING. .~at t ref; P^,t Ka` 3S r~ N I „~, , ...__ - l 14---~-_T31 C'_T rr _ . w `` 2 w Q ~4 EXPANLEp ~'"~k ;,,,, T; ~ TRANSFER ~ ~ ~ STAT ~ N ~ X_,`w I -~. . ;`~. ~.~ , ~~ I e _~~ ,'`~ < ~ ~ SITE .PLAN SGtE: I"-3D` e I ~ I 7 ;' w ~~~ •' P ~~~'~'~' f ~. ~.~ / T f / ? r ~- r'f ~" _ .Ll1,gQ. . ! ,r'~ ~..lt t P max` ` G y ~ aER. 1 f `k l i HHtAr ~ \ l i" ~ ~~. :~ / ` i~, V ~ ~ ~ / ,i f. 11 d ~ \ a, i S ~, l l~ sy-. \ .~w~ o ~ o (I ~ I I yo ~~ -' RE-tl5E _ ~' ~ ~ iCENTER _ \ t, FIRt LfiN- I I 111 I sPnlE 1 1 I I I I ~ <Y » GREEN _ y \Y?,S_ z SELF HAUL I T~PP1V~<'1R \ z' ni Ca I v: ~ e} ,uq a ' C&D. ~ ." M ~ I I y- ,u+ I RUCMt f'.4RKING ANQ srA~ Inc 1~ ~; FUTV~E ~T. COVNERGIAL `.... hIRF ~`'. 'IA. REDINGFON S~RUG~10 SANTA MONICA PRE SDC O TION 1 PLAN oN"~1Ne a. S°E"`E' RC,O~ WASTE RECOVERY O.t FO ~ TRANSFER STATION ~. L k ~' FlLENAME :OJC 'J1.deeg `aH4Yl ISSVE. JAE' DESCftInIDN PRpJEC( NJF16Ei X8556 _ SG4LE ' 1" 3D C-01 c C e A, J ~ ~ r~jooi/oo7 r~ E~HS ~vIxDNMENTAL cHaxz~x FIIGH SCHOOL Sducaeing OurFYdure Fie: li-8 May 22 Public /Private Partnership for Transfer and Recycling Services btayor and Gouncilmembers, On behalf of the fatuity and students of Environmental Charter High School (ECHS), I am pleased to writs this letter of support of the City Council entering into a partnership 4vith Southem Cai"rfornia Disposal & Recycling Company (SCD) far Trensfer Services. SDC has been a strong supporter of ECHS and its Green Ambassador Program which is a ycuth empowering youth program that focuses on environmental solutions. To demonstrate SCD's support of the Green Ambassadors and their mission, SCD sponsored the first Youth Environmental Leadership Summit in May 2007 at Crossroads School, where students from 13 local public and private schools attended to discuss solutions to environmental problems and to form a Green Youth Coalition. As most of the Council members know, SCD is a family-owned and operated company that has been located in Santa Monica since 1862 and has served the community for 46 Mears. Further, all of the officers of the company are long time residents of Santa Monica and have been supporters of numerous charities and community organizations. 6eside5 having an impeccable environmental record with regulatory agencies, SCD is a leader in the use of alternative fuels. For over a year now, SCD has been using 899.9 9iodiesel. Biodiesel significantly reduces serious air pollutants such as Carbon monoxide, hydrocarbons, and air toxins, while lessening our nation's dependency on fossil fuels. SGD is always looking for ways to lessen the company's carbon footprint and to that end the company is now using Biodiesel made from waste vegetable cil (WVO), which is fathered and processed here in Southern California. By using certified Biodiesel made from WVO, SCD significantly reduces the amount of resources required to produce the fbel, while at the same time truly recycling used cooking Cit. We know that Serifs Monica residents and business operators will receive the highest level of service from SCD while at the same time receiving a significant savings in expenditures. Pease support the environment by supporting this joint venture between the City and Southern Galfornia Disposal and Recycling. Sincerely, x~•~' ~. . ~ I~O~ ~~~~~ Green Ambassador Director ~ ' ~ Environmental Gharter High School `. ~~•' " • ~ •: j 18315 GREVIlLEAAVE. ~ • .. ~ ~~ ' ~ • IAWNDALE, CA 90260 ' .:. t. ~ loom MM/ q~rn nunuC Reference Amended Contract No. 8524 (CCS).