HomeMy WebLinkAbout20 - Residential Solid Waste and Recycling Franchise Update to Comply with State Organics Recycling MandatesQ �EwPpRT
CITY OF
O �
z NEWPORT BEACH
<,FORN'P City Council Staff Report
November 24, 2020
Agenda Item No. 20
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
PREPARED BY: Micah O. Martin, Deputy Director, Public Works,
mmartin@newportbeachca.gov
PHONE: 949-644-3059
TITLE: Residential Solid Waste and Recycling Franchise Update to Comply
with State Organics Recycling Mandates - Request for Council Action
on Franchise Extension Options
ABSTRACT:
The City currently has two residential waste hauling contracts with CR&R Incorporated
(CR&R). The first contract is known as the City Contract (C-5649), which expires on
March 31, 2021 and can be extended for up to 36 months by providing written notice at
least 90 days in advance. The second contract, known as the Newport Coast Contract
(C-3942), just entered into a fourth automatic one-year term extension and ultimately
expires on October 1, 2022, unless written notice is provided at least 180 days in advance
of the final term extension.
Recent and pending changes to state law now require that the City make modifications
and adjustments to the means and methods as to how the City's residential waste
contractor collects, processes and disposes of residential waste, including recyclables
and organic green and food waste material. In order to meet and remain compliant with
these new state laws and mandates, the City can either negotiate amendments to the
current CR&R contracts and billing rates, or the City could choose to issue an RFP to all
qualified waste hauling companies and implement an entirely new and consolidated
residential waste hauling contract. Staff has presented a detailed discussion regarding
this topic at the City Council Study Session earlier this evening and is now requesting
formal City Council direction as to how best to proceed forward with contracting for and
providing residential solid waste collection services.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act
(CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines
because this action will not result in a physical change to the environment, directly
or indirectly; and
20-1
Residential Solid Waste and Recycling Franchise Update to Comply with
State Organics Recycling Mandates - Request for Council Action on
Franchise Extension Options
November 24, 2020
Page 2
b) Undertake one of the following actions:
1) Provide written notice to CR&R Incorporated of intent to exercise franchise
extension on the City Residential Solid Waste Collection & Recycling Contract (C-
5649) to a new ending date of October 1, 2021 in order to continue negotiations
with the intent to process an amendment to consolidate both current contracts (City
and Newport Coast) into the City Residential Solid Waste Collection & Recycling
Service contract (C-5649); or
2) Provide written notice to CR&R Incorporated of intent to exercise franchise
extension on the City Residential Solid Waste Collection & Recycling Contract (C-
5649) to a new ending date of October 1, 2021, and direct staff to prepare and
issue an RFP to solicit competitive bids for a fully compliant Citywide Residential
Solid Waste Collection & Recycling Services beginning November 1, 2021; or
3) Provide another alternative direction to staff.
FUNDING REQUIREMENTS:
Services for Residential Solid Waste Collection & Recycling under the City Contract
(C-5649) are expensed to the Residential Refuse Collection Account No. 0108051-
851006 at an annual cost of approximately $4.2 million. Services under the Newport
Coast Contract (C-3942) are expensed to the Newport Coast Refuse Services Account
No. 0108051-811014 at an annual cost of approximately $750,000.
In order to obtain compliance with current state law, staff anticipates a potential increase
in residential refuse collection and processing cost of between 30 percent to 50 percent
depending on the current contract negotiations with CR&R and/or the formal contract
bidding process.
DISCUSSION:
Currently, there are two primary waste hauling contracts for the residential areas within
the City, both of which are serviced by CR&R as discussed above. The City Contract has
been in place since November 2013, when CR&R was selected after a competitive
procurement process to take over the formerly City operated residential refuse collection
operation. This City Contract terminates on March 31, 2021 but may be extended on a
month-to-month basis for up to 36 months by providing CR&R 90 days advanced written
notice. The Newport Coast Contract has been in place since 2007. This contract renews
on an annual basis with a final expiration date of October 1, 2022. Following the
October 1, 2022, date there are no further term extensions available on the Newport
Coast franchise.
20-2
Residential Solid Waste and Recycling Franchise Update to Comply with
State Organics Recycling Mandates - Request for Council Action on
Franchise Extension Options
November 24, 2020
Page 3
CR&R receives compensation for residential collection in the amount of approximately
$5 million per year (a per household monthly cost of approximately $13.63 for the Newport
Coast Contract and $15.55 for the City Contract). Under Section 6.04.140 of the Newport
Beach Municipal Code, residents are not charged for residential refuse collection service,
and thus this entire contracted cost for service is paid for out of the City's General Fund.
However, households located in the City Contract area pay a Recycling Fee to help
partially offset the costs of state -mandated recycling programs. The Recycling Fee was
last adjusted in 2009 to its current rate of $3.00 per residential unit per month, and
currently only the households located in the City Contract area pay this recycling fee.
State Assembly Bill 939, passed in 1989, requires the City divert at least 50 percent of its
waste away from the landfills or face monetary penalties of up to $10,000 per day. Recent
legislation, including Assembly Bill 1594 and Senate Bill 1383, also now require cities to
provide residential organic waste recycling services, which include programs to collect
food scraps and landscaping waste. The implementation date for this program must
occur on or before January 1, 2022. Currently, CR&R's two franchises only require them
to provide trash services to all residents. Recycling service is provided to any resident
who requests it. The City currently has a rate of 75 percent of residents participating in
the recycling program. CR&R originally provided pricing for a two -cart, wet -dry recycling
program that would capture and recycle organics in its original contract proposal
submitted in 2013, and thus there is an option in the current contract to expand to a full
two -cart collection system. However, citing changes in market conditions, elimination of
green waste for use as Alternative Daily Cover at landfills, and regulatory compliance
shifts, CR&R has advised it is no longer able to offer two -cart wet -dry organics recycling
service and has suggested a three -cart recycling program. The three -cart recycling
program would add a third green cart in which residents would be instructed to place co -
collected landscaping waste and food scraps into this green collection cart. Staff has met
with CR&R on several occasions to discuss the organics recycling requirements and has
been negotiating pricing from CR&R to provide a three -cart organics recycling program
to residents to comply with state recycling mandates.
Specifically, staff has requested CR&R include the following program parameters in its
cost proposal for an updated Residential Solid Waste Collection & Recycling Program in
order to comply with state mandates and implementation timelines:
1. The expansion of the existing blue recycling dry cart program to the remaining,
non -participating households in the City (approx. 7,300 households).
2. The provision of a third, organics cart to all households (in addition to a waste cart
and blue recycling cart).
3. The provision of two full-time recycling coordinators (employed by CR&R) for 18
months to provide outreach and education to residents that will incorporate the
new collection cart system and reduce the contamination of materials per SB 1383
requirements and ensure full participation.
20-3
Residential Solid Waste and Recycling Franchise Update to Comply with
State Organics Recycling Mandates - Request for Council Action on
Franchise Extension Options
November 24, 2020
Page 4
4. Extensive auditing and monitoring of contamination by CR&R staff, as required by
state law.
Additionally, the City Council Working Group has also been looking at ways to improve
efficiency and incorporate new collection and processing technologies in an effort to
reduce both program cost and impacts to resident. With that direction, staff has asked
CR&R to provide pricing assuming that the City's policy limits the number of `free' trash
carts provided to residents to one trash, recycle and organics cart per household and that
all waste and recycling material would have to be placed within the appropriate provided
collection carts - `containerized' (i.e. the hauler would no longer collect waste placed on
streets or alleyways outside of trash cans) so as to further automize the collection
process. Similarly, the City asked CR&R to provide cost projections that consolidated
bulky item pick-up service to up to five specific collection pick-ups (with up to five items
each) per household per year. Currently, residents are allowed unlimited trash, recycling,
and bulky collection service at no charge.
Finally, to ensure safe and efficient collection services, the City has requested that
CR&R's proposal include:
1. Review and optimization of collection routes with the merging of the two current
collection contracts.
2. Maintaining an average fleet age of 7 -years, with no trucks older than 10 years, for
all collection vehicles in service in the City;
3. New collection trucks to service the organics routes; and
4. The use of new split -body trucks to collect trash and organics in a single -pass in
space constrained neighborhoods to reduce truck traffic and minimize negative
impacts.
CR&R submitted an initial cost proposal, which included the program elements noted
above, on October 16, 2020. CR&R's initial cost proposal showed an increase of over 60
percent, or over $10 per household per month, to provide the program parameters
requested. This would increase the City's total annual payments to CR&R by over $3
million. The City sent a letter response to CR&R on November 5, 2020 indicating the
proposed cost of providing residential organics services was far higher than anticipated.
This letter was accompanied by 17 requests for additional information and supporting
documentation of CR&Rs pricing assumptions. On November 9, 2020, the City and
CR&R met to discuss the proposal further and to review the questions the City provided
CR&R. The City and CR&R agreed that further discussion was needed to arrive at a cost
that was acceptable to the City. Both CR&R and the City acknowledged that some key
data that will impact pricing, such as resident participation rates, green waste volumes,
and driver productivity, will not be known until after the program is implemented.
20-4
Residential Solid Waste and Recycling Franchise Update to Comply with
State Organics Recycling Mandates - Request for Council Action on
Franchise Extension Options
November 24, 2020
Page 5
To ensure that the City does not overpay or underpay CR&R for the organics recycling
program, both parties agreed that the option of an annual cost reconciliation process
could be included in the contract, where payments to CR&R by the City will be increased
or decreased based on actual amount of material processed by CR&R. The City
requested its consultant, EcoNomics, to work directly with CR&R to further refine key
assumptions driving program costs and to develop a reconciliation process. These
discussions are ongoing and will require additional analysis to refine assumptions, verify
financial claims, conduct waste characterizations to verify projected organics contribution
rates, and to develop cost reconciliation methods. At the end of the cost factors analysis
and discussion, a determination on the likelihood of a satisfactory reduction in the price
of CR&R's October 16, 2020 proposal can be made. Assuming that a sufficient range of
reduction in the costs is agreed upon, it is anticipated that the development of:
• Cost reconciliation methods;
• Contract language to describe the exact process; and,
• The provision of an exact Scope of Services of the performance duties and
requirements to be placed within an amended contract with CR&R will take place
in the following time period of December 2020 through March of 2021.
In order to finalize negotiations with CR&R and maintain trash services, staff recommends
amending the City Contract with CR&R to extend the contract expiration date to October
1, 2021, which would then match the next available termination date to the Newport Coast
Contract.
In the alternative, should the on-going contract negotiations fail to yield a desirable
outcome in the very near term, staff would then recommend issuing an RFP and soliciting
bids to provide Citywide fully state compliant residential refuse collection and recycling
service. Since the City Contract expires in March 2021, staff recommends extending the
City Contract for up to six months in order to avoid interruptions in service to Newport
Beach residents while the City completes the RFP selection process and awards the final
contract.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
20-5
Residential Solid Waste and Recycling Franchise Update to Comply with
State Organics Recycling Mandates - Request for Council Action on
Franchise Extension Options
November 24, 2020
Page 6
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
None
20-6