COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

1. Receive the Franchise Agreement Selection Committee recommendation to enter into exclusive negotiations with Recology San Benito County for a new Franchise Agreement for collection of recyclables, organics, and solid waste.

2. Adopt Resolution, approving the Franchise Agreement Selection Committee recommendation to enter into exclusive negotiations with Recology San Benito County for a new Franchise Agreement for collection of recyclables, organics, and solid waste;

3. Authorize the Chair to sign the Resolution.

4. Appointing a contract negotiations team consisting of the Selection Committee and Kevin McCarthy who serves as the technical lead for the Franchise RFP process.

SBC FILE NUMBER: 142

RESOLUTION NO: 2018-15

Summary

The Franchise Agreement Selection Committee consisting of County CAO Ray Espinosa, Hollister City Manager Bill Avera, and San Juan Bautista City Manager Michaele LaForge recommend entering into exclusive negotiations with Recology San Benito County for a new Franchise Agreement for Collection of Recyclables, Organics, and Solid Waste. This recommendation is based on a review of the Franchise RFP Evaluation Committee Report dated March 22, 2018 (see Attachment A) and holding three meetings with members of the Evaluation Committee. The Selection Committee recommendation is based on the following rationale:

• Recology proposed the lowest residential rates
• Recology, as the incumbent service provider with an existing corporation yard and extensive knowledge of existing routes and customers, has the simplest implementation and transition plan for rollout of the new collection services; this translates to the lowest risk of any significant issues arising during the transition
• Recology has a strong track record of delivering quality customer service and significant, positive engagement with and support for local community organizations

The final negotiated Franchise Agreement, including final proposed solid waste and organics rates, will be brought back to each Regional Agency (RA) Member for consideration for approval. The expected start date for the new franchised collection services is November 1, 2018 subject to each RA Member approving a short-term extension to the existing Franchise Agreement from July 1, 2018 to October 31, 2018 to enable sufficient time for the transition of new services. This short-term extension will be brought forward for approval by each RA Member at an upcoming meeting.

Residential and commercial ratepayers will experience an increase in solid waste rates compared to current rates, though residential rates will be lower, for the majority of ratepayers, than the forecasted solid waste rates under the current Franchise Agreement. Information on proposed rates can be found in Attachment A, Tables P-3, P-6, and P-7.

Background

A joint meeting of the RA Members was held on March 22, 2018 to hear a presentation on the Evaluation Committee Report findings and discuss next steps in the Franchise Agreement contractor selection process. The meeting was attended by all five County Supervisors, Hollister Mayor Velazquez and Council Member Klauer, and San Juan Bautista Council Members Boch and Freeman.

The Franchise Agreement Ad Hoc Committee heard a similar presentation on March 8, 2018. This meeting was attended by Board Chair Botelho, Board Vice-Chair Muenzer, Hollister Council Member Klauer, and San Juan Bautista Mayor West and Council Member Boch. Extensive question and answer occurred at each meeting along with public comment. Each of the three firms submitting proposals in response the RFP were also given time to make a brief presentation at the March 22, 2018 joint RA Member meeting.

The County as lead agency for the Regional Agency completes several waste management requirements on behalf of the RA Members to meet state mandates including administering a single Franchise Agreement for all three RA Members. A Cost Sharing Agreement details the cost management structure for the RA; these costs are outside of the General Fund and separately managed. Implementation of the new Franchise Agreement will include two new fees, an AB 939 fee and a household hazardous waste (HHW) fee, that will cover AB 939 program and HHW program costs for the RA Members.  

Proposal Evaluation Process

On August 29, 2017 the RA released the Collection Services RFP.  By the November 14, 2017 deadline, the RA received three (3) responsive proposals from companies capable and qualified to provide the collection services described in the RFP. The proposers are: 

•  GreenWaste Recovery (GWR)
•  Recology San Benito County
•  RJR Resource Recovery* (RJR RR) (i.e., RJR Recycling, Atlas Disposal, and Garden City Sanitation)

*This new firm was created for the purposes of responding to this RFP. The firm is one-third owned by each of the companies listed above.

The Franchise Agreement Ad hoc Committee approved the formation of an Evaluation Committee to review each of the submitted proposals. The Regional Agency’s Evaluation Committee consisted of: San Benito County staff (Louie Valdez), a representative from another solid waste JPA – Salinas Valley Solid Waste Authority General Manager/CAO (Patrick Mathews), Integrated Waste Management Program Manager (contract staff) Kathleen Gallagher, and County Integrated Waste Management Technical Expertise Kevin McCarthy (contract staff). 

It is recommended that the Board of Supervisors:

1. Adopt Resolution, approving the Franchise Agreement Selection Committee recommendation to enter into exclusive negotiations with Recology San Benito County for a new Franchise Agreement for collection of recyclables, organics, and solid waste

contingent upon the following items being addressed during negotiations:

•  Incorporating into the Franchise Agreement enhanced performance standards and liquidated damages related to meeting diversion requirements
•  Recology developing a detailed commercial recycling outreach plan to thoroughly outline how they will increase commercial diversion from the current commercial diversion rate of 6% and include two additional Recycling Outreach Coordinators in year 1 only of the contract at no cost to the ratepayers.
•  Recology modifying its proposed rates to reduce the commercial customer subsidy of residential customers while still maintaining the lowest proposed residential rates (for each of the three Regional Agency Members) compared to GWR and RJR RR
• Recology agreeing to implement operational changes to reduce the carbon footprint of its proposed collection/hauling operations

If the above items are not successfully negotiated between the parties then the Selection Committee would then recommend bringing the item back to each board to determine whether to terminate negotiations with Recology and enter into exclusive negotiations with GWR.

2. Appointing a contract negotiations team consisting of the Selection Committee and Kevin McCarthy who serves as the technical lead for the Franchise RFP process.

3. Authorize the Chair to sign the Resolution.