SR-03-18-2014-3FCity Council Meeting: March 18, 2014
Agenda Item: 3® F
To: Mayor and City Council
From: Martin Pastucha, Director of Public Works
Subject: Second Agreement Modification with Cedarwood- Young, Inc. d /b /a Allan
Company for Recycling Processing Services and First Agreement
Modification with Southern California Disposal for Transfer and Hauling
Services
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a second modification to
service agreement 9012 (CCS) with Cedarwood- Young, Inc. d /b /a Allan Company
to reflect changes in the scope of services outlined in this report.
2. Authorize the City Manager to negotiate and execute a first modification to service
agreement 9011 (CCS) with Southern California Disposal to reflect changes in the
operation outlined in this report.
Executive Summary
In November 2008, Allan Company entered into a service agreement with the City to
provide recycling processing services for the City's recycling collections operations as
well as operate a drop -off recycling facility within the City limits open to the public. An
integral part of the agreement was for Allan Company to operate the proposed
Resource Recovery Center to be built by the City.
In November 2008, Southern California Disposal entered into a service agreement with
the City to provide transfer and hauling services of the City's mixed waste, green waste,
food waste, construction and demolition debris, street sweeping and other acceptable
materials. As part of the agreement, Southern California Disposal would operate the
proposed Self -Haul Facility to be constructed as part of the proposed Resource
Recovery Center.
In December 2011, staff recommended that the Resource Recovery Center and the
Self -Haul Facility not be constructed due to operational and cost issues, and that
Council direct staff to develop a new material processing plan with Allan Company and
Southern California Disposal.
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The Allan Company service agreement included transitional provisions pending the
completed construction of the new facility. Allan Company is currently operating under
the transitional requirements of the service agreement, which are not representative of
the current operating environment. The Southern California Disposal Agreement is
pending authorization to negotiate a modification to the existing service agreement.
Staff is recommending that Council authorize the City Manager to negotiate
modifications to both agreements in order to reflect changes in current operating
services with both contractors and to continue to negotiate terms of a new processing
plan.
Background
On November 25, 2008, Council approved a public /private partnership with Allan
Company. The service agreement included processing of all recyclable materials
collected curbside, the continuation of a buy back center and a 24 hour drop off area for
recyclable materials. During the transitional period, the operation would continue in the
existing location (Santa Monica Community Recycling Center) and move to the new
Resource Recovery Center after it was constructed. In February 2010, the first
modification to the service agreement was issued modifying the hours of operation on
Saturdays.
On November 25, 2008, Council approved a public /private partnership with Southern
California Disposal. This service agreement included the transfer and hauling services
of the City's mixed waste, green waste, food waste, construction and demolition debris,
street sweeping and other acceptable materials.
On December 6, 2011, Council approved staff's recommendation to cancel the design
and construction of the Resource Recovery Center and the Self -Haul Facility at the City
Yards due to costly construction estimates and operational issues, and directed staff to
develop a new materials processing plan in conjunction with Allan Company and
Southern California Disposal.
Discussion
Allan Company's existing service agreement is not in full effect until a notice to proceed
is issued. This notice would have been issued after the Resource Recovery Center was
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fully operational (construction cancelled in December 2011). During the transitional
period (between execution and the notice to proceed), Allan Company has continued to
provide recycling services under the former operations agreement 6053 (CCS).
Allan Company Agreement Modification
The modification to Allan Company's existing agreement would include but not limited to
the following options:
• Per Ton Rate Increase: Allan Company would continue to pay the City a per ton
rate of $35.00 per ton for all commingled recycled materials collected curbside
and delivered to Allan Company for processing, representing an increase from
the base contract rate of $27.50 per ton. The $35.00 per ton rate for mixed
recyclable materials would increase effective January 1St of each year in
accordance with percentage increases, if any, in the Consumer Price Index as
published at www.bls.gov /cpi for the Los Angeles- Riverside - Orange area, and
shall mean the percentage increase in the cost of living index as measured by
the Consumers Price Index for All Urban Consumers, less Energy for the 12
month period November to November of the prior year.
• Electronic Waste: Allan Company would pay the City market value for electronic
waste materials. Allan Company agrees to collect all electronic waste from the
City and the residents of Santa Monica at no charge. For the purposes of this
amendment, Electronic Waste shall include, but not be limited to: computers,
televisions, DVD players, VCR's, computer and electronic peripherals, fax
machines, scanners, printers, gaming controls, and other electronic equipment
containing a circuit board or power cord. The City would accept the current
market value price being offered to the public for eligible electronic waste as set
by Allan Company's posted door price. Allan Company agrees to accept any and
all electronic waste materials received from City sponsored electronics waste
collection events and pay the City posted door price for these materials. The City
agrees that Allan Company can select its own electronic waste recycler for city
generated electronic wastes that conform to City criteria.
• Scrap Metal and White Goods: Allan Company would continue to purchase
scrap metal and receive white goods from all sources. Allan Company would
continue to pay the City for scrap metals and white goods delivered by the City.
• Loose Plastics: Allan Company would continue to receive loose plastics (refuse
carts) from the City and the public. Allan Company would pay the City for scrap
plastics delivered by the City.
• Host Fee: Allan Company would pay the City a host fee in the amount of $2.00
per ton for each ton of recyclables processed and recovered by Allan Company's
Santa Monica operations regardless of the source of recyclables, subject to
annual escalation by the CPI.
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• Rent Increase: Allan Company would pay an annual rent increase for the
property leased at the City Yards for recycling processing operations. The
monthly lease payment shall be increased annually by a factor equal to the
difference in the Los - Angeles Riverside Orange County Consumer Price Index
for Wage Earners and Clerical Workers for the twelve month period November to
November of the prior fiscal year.
• Residual Trash Cost Recovery: The City would pay Allan Company for the
residual trash from City collected recyclable materials delivered to the Contractor
above a designated percentage threshold determined by both Allan Company
and the City on a quarterly basis.
• Transition Term: The City would negotiate the transition term of the existing
service agreement which would remain in effect until June 30, 2015 at which time
the City would propose to deliver a minimum of six months' notice to vacate
property if the City determines that the contract will not be renewed for another
term. If notice to vacate is not delivered by June 30, 2015, the City would
continue to deliver a minimum of six months' notice to vacate property on a
rolling six month calendar year until a definitive date is determined.
• Original Signing Bonus: Because the Resource Recovery Center was not
constructed, the City would refund the original signing bonus of $526,000 that
Allan Company contractor paid to the City upon execution of the original service
agreement less any costs that Allan Company has due and payable to the City
for annual rent increases and legacy trash costs.
Southern California Disposal Agreement Modification
Southern California Disposal's service agreement is not in full effect until a Notice to
Proceed is issued. This notice would have been issued after the Self -Haul Facility
(construction cancelled in December 2011) was fully operational. Beginning December
2011, the City closed its transfer station and began utilizing the services of Southern
California Disposal in accordance with the original service agreement. The modification
to the existing agreement would include but not limited to negotiating the new
processing plan and a notice to proceed. The Notice to Proceed would include the
following payment options in accordance with the original agreement as well as
additional service options:
• CPI increase effective January of Each Year: The annual CPI adjustment
shall be increased effective January 1St of each year in accordance with
percentage increases, if any, in the Consumer Price Index as published at
www.bls.gov /cpi for the Los Angeles- Riverside - Orange area, and shall mean the
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percentage increase in the cost of living index as measured by the Consumers
Price Index for All Urban Consumers, less Energy for the 12 month period
November to November of the prior year.
• Monitor Loads at Southern California Disposal: In addition, the City would
monitor a variety of loads tipped from the City's curbside collection program at
Southern California Disposal's Transfer Station to insure that the City is meeting
its disposal and recycling residual requirement with the City's approved
processing facilities. The approximate amount per ton for the residual trash is
$27.66 depending on the final disposal site and annual processing and disposal
fee adjustments at these various locations.
• Fuel Service Calculation: The City would negotiate the average fuel price, fuel
index multiple, hauling price fuel component and the base fuel rate. The monthly
surcharge fuel rate would adjust each month based on calculations determined
by both the City and Southern California Disposal.
Financial Impacts & Budget Actions
Financial impacts are unknown at this time pending negotiations of the new
agreements. However, the City may need to reimburse Allan Company a maximum of
$526,000 for the original signing bonus as a result of the negotiations because the
Resource Recovery Center was not constructed. The original signing bonus was not
spent and is available in the FY 2013 -14 operating budget in division 27441. Funds in
the amount of $526,000 to reimburse Allan Company are included in the FY 2013 -14
budget at account number 27441.555010.
Prepared by: Kim Braun, Resource Recovery & Recycling Manager
Approved:
Forwarded to Council:
Martin Pastucha Rod Gould
Director of Public Works City Manager
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Reference:
Amended Contract 9011 (CCS)
& 9012 (CCS)