COUNTY ADMINISTRATION OFFICE - R. ESPINOSA

Approval of New Franchise Agreement with Recology San Benito County for Collection of Recyclables, Organics, and Solid Waste and Issuance of Proposition 218 Notice for Proposed Maximum Allowable Rates.

SBC FILE NUMBER: 142

Summary

Staff recommends approval of the new Franchise Agreement (see Attachment A) with Recology San Benito County for Collection of Recyclables, Organics, and Solid Waste with the contract commencing November 1, 2018. Attachment F3 to the Agreement details the maximum collection rates for rate year one (i.e., November 1, 2018 – June 30, 2019). The staff recommendation is also for Board approval of the issuance of a Proposition 218 notice of the proposed rate increases effective November 1, 2018 and to hold a hearing for the proposed rate increase 45 days or more after this notice is received by the affected rate payers. That hearing is scheduled for October 9, 2018 (1^st mtg in October). Once such a hearing has been held and the new rates have been approved, Recology will put the new rates into the next billing cycle which would begin on November 1, 2018.

Conditions of Approval and Other Items

Regional Agency staff through negotiations with Recology addressed all conditions of approval included in Board Resolution 2018-15 as follows:

• Incorporated into the Franchise Agreement enhanced performance standards and liquidated damages related to meeting diversion requirements. Specifically, new liquidated damages (see Attachment G of the Agreement) were added that addressed: “Failure to Perform Technical Assistance: Recycling Assessments as detailed in Attachment B8-A;” and “Failure to Perform Public Education and Outreach Tasks.”  The Agreement already has financial incentives and disincentives (see Attachment G of the Agreement) related to the diversion performance guarantee for meeting and exceeding overall measured diversion of 45%.
• Recology developed a detailed Commercial Recycling and Organics Outreach Plan (see Attachment F6 of the Agreement) to thoroughly outline how they will increase commercial diversion from the current commercial diversion rate of 6% and included two additional Recycling Outreach Coordinators in year 1 only of the contract at no cost to the ratepayers.
• Recology modified its proposed rates (see Attachment F3 to the Agreement) 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. The revised commercial rate increases have been reduced by 20-35% due to the offsetting rate revenue from increased residential rates so that the rates reflect the cost of providing services. Recology’s commercial organics rates have also been reduced significantly to bring them closer in line with GWR’s proposed rates. See Attachment C for Recology’s final costs and rates.
• Recology agreed to implement operational changes to reduce the carbon footprint of its proposed collection/hauling operations, notably through switching from CNG fueled vehicles to collection vehicles that run on renewable diesel. Renewable diesel significantly reduces greenhouse gas emissions and Recology’s carbon footprint. Recology also agreed (see Section 5.13.D of the Agreement) after rate year one to “provide emissions data, a description of Contractor’s carbon footprint, and a description of Contractor’s activities both planned and implemented to reduce its carbon footprint for the previous rate period.”
• Recology will provide periodic diversion updates to all RA Member governing bodies during the first year of the Agreement. The Agreement already has detailed quarterly and annual reporting requirements (see Attachment D of the Agreement) related to diversion and other operational and customer service performance metrics.
• Recology agreed to set-up a temporary local office in the City of Hollister for the first year of the Agreement.  This local office space will serve as the workspace for the Waste Zero staff. Also, all capital purchases will be invoiced through this local office, so sales tax benefits will accrue locally.

Regional Agency staff through negotiations with Recology also addressed previously identified contract exceptions taken by Recology; incorporated RA Member feedback on final franchise and other fee amounts; and final scope of services that include commercial and multi-family organics services and use of renewable diesel fuel. This last item resulted in a reduction in Recology’s cost of services by $94,575. Recology also increased its forecasted year 1 overall diversion rate from 45.1% to 46.5%.

Solid Waste Rate Notice Process

While the Franchise Agreement was drafted and structured so that it is not subject to Proposition 218 or Proposition 26. in order to allow for maximum public input and participation, the County will follow the “majority protest” proceedings set forth in Proposition 218. Public notification (Attachment B) of the proposed maximum allowable rates will be mailed to property owners by July 31, 2018. This meets the required 45-day comment period prior to the public hearing scheduled for October 9, 2018. The notice will instruct property owners wishing to submit a written protest to submit their protest, along with their property’s Assessor’s Parcel Number (APN), and signature by mail or in person to the Office of the County Clerk. Statements of protest that include the above criteria will also be accepted at the public hearing. At the end of the October 9, 2018 public hearing, the County Clerk will tally and report the qualifying written protests. At this time the Board of Supervisors will certify that the written protests in opposition to the solid waste rate increase meet or donot meet the 50 percent protest threshold. "In accordance with Article XIIID, Section 6, of the California Constitution, a ‘majority protest’ exists if written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels". If a majority protest is not received, the Board of Supervisors may then approve adoption of the increased rates, which would allow Recology to charge rates up to the maximum approved rates. If a majority protest is received, the County cannot allow an increase in the rates, and the rates will remain unchanged.

Background

The County as lead agency for the Regional Agency completes many waste management requirements on behalf of the RA Members including administering a single Franchise Agreement for all three RA Members. A Cost Sharing Agreement details the cost management structure for the RA.

On April 17, 2018 the Board approved the Franchise Agreement Selection Committee (County CAO Ray Espinosa, Hollister City Manager Bill Avera, and San Juan Bautista City Manager Michaele LaForge) recommendation to enter into exclusive negotiations with Recology San Benito County for a new Franchise Agreement for Collection of Recyclables, Organics, and Solid Waste. This recommendation was based on a review of the Franchise RFP Evaluation Committee Report dated March 22, 2018 after holding three meetings with members of the Evaluation Committee.  

The RA Cost Sharing Agreement details the cost management structure for the RA; these costs are outside of the General Fund. The Ad hoc Committee approved the new Franchise Agreement and inclusion of an AB 939 fee and household hazardous waste (HHW) fee, to cover AB 939 program and HHW program costs for RA Members.  A small litter abatement fee will fund trash/litter abatement programs for storm water per state requirements.  Implementation of the new Franchise Agreement will increase franchise fees paid to the County from the current annual fees (2017 actual) of $121,704 to an estimated $188,610 in year 1 of the Agreement.

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.

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 were:

• 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 contract staff Kevin McCarthy. 

CEQA DETERMINATION:

The selection of a franchise hauler would constitute action to maintain and protect the environment by reducing  waste  disposed to the landfill and lessening the need for landfill expansion,  diverting material to recycling and composting at existing facilities, thereby reducing greenhouse gas emissions such as methane, and by running new collection vehicles on compressed natural gas or other more cleanly burning fuel to reduce pollutant emissions and improve air quality over existing conditions. The project would be consistent with County General Plan Policy PFS-7.5, a policy reviewed under the Plan’s certified EIR to increase waste diversion away from the landfill. It would partially involve the restructuring of charges by a public agency for meeting operating expenses and purchasing equipment. The project would diminish environmental damage that could occur without the project and would not simultaneously create new, different environmental impacts. For these reasons the project is categorically exempt from CEQA per §15061(b)(3), §15183, §15307, and  §15308, and statutorily exempt under §15273.

It is recommended that the Board of Supervisors:

1. Adopt Resolution 2018-  approving the new Franchise Agreement with Recology San Benito County for collection of recyclables, organics, and solid waste effective November 1, 2018.
2. Approve issuance of a notice of the proposed rate increases that will be effective November 1, 2018 and then hold a hearing for the proposed rate increase 45 days or more after this notice is received by the affected rate payers.
3. Authorize the Chair to sign the Resolution.
4. Direct staff not to execute the agreement the other RA members have also approved  the agreement.