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Home My WebLink About13 - Residential Solid Waste and Recycling Franchise Update to Comply with State Organics Recycling Mandates - PowerPointfees January 26, 2021 Item No. 13 RESIDENTIAL REFUSE COLLECTION CONTRACT -j City Council Meeting January 26, 2021 Item No. 13 Changing Laws Regarding Solid Waste Collection, Recycling and Disposal Past and near-term changes in State mandates are requiring adjustments to our refuse collection operations, as well as increasing program costs. AB 1826 AB 1594 �I 'el kRt Will require all homes and businesses to recycle organic waste by Jan 1, 2022 0000 Mandatory Landfill AB 341 commercial alternative daily cover organics no longer AB 939 Mandatory recycling by considered commercial 2020; goal of diversion in 50% recycling recycling by 50% reduction 2020 requirement 2012; State in organics by 2000 or up goal of 75% disposal by to $10K/day diversion by 2020 fines 2020 _ .. �I 'el kRt Will require all homes and businesses to recycle organic waste by Jan 1, 2022 0000 •••• Recycling - Where We Stand Today Overall Recycling (50% required by 2020) /_1:9'1'] Commercial Recycling (Goal of 75% diversion by 2020) AB 341 Commercial Organics (Goal of 50% reduction by 2020) AB 1826 Organic Recycling (Req. Residential by 2022) SB 1383 62% equivalent diversion rate (5.7 lbs. per person per day in 2019) 89% participation rate in 2019 45% participation rate in 2019 • Source separation at the curb • Need to modify residential refuse contracts ✓ Municipal Code update ✓ Franchise Agreement update ✓ Compliance reporting • Enforcement ✓ Municipal Code update ✓ Franchise Agreement update • Compliance reporting • Enforcement On Track to expand organics • Need to modify residential recycling to multi -family & refuse contracts to 3 -Cart residential properties system • Update Municipal Code Citywide Residential Refuse Collection City Residential Refuse Collection is currently performed under Two Separate Franchises, both with CR&R Inc. Map of Residential Hauling Contracts Santa Ana Heights Santa Ana Heights residential ❑ service provided by CR&R via Costa Mesa Sanitation District. flee Coast Residential Refuse San. AnaH ,hrs City & tiew or Beach City of Newport Beach City of Newport Beach residential refuse and recycling services provided by CR&R 2 Newport Coast Residential Refuse Coll Newport Coast refuse and recycling service provided by CRBR. Newport City (Contract initiated 2013) Extended to Oct 1, 2021 Newport Coast (Contract initiated 2007) Expires Oct 1, 2022 Map of Residential Hauling Contracts Santa Ana Heights Santa Ana Heights residential ❑ service provided by CR&R via Costa Mesa Sanitation District. flee Coast Residential Refuse San. AnaH ,hrs City & tiew or Beach City of Newport Beach City of Newport Beach residential refuse and recycling services provided by CR&R 2 Newport Coast Residential Refuse Coll Newport Coast refuse and recycling service provided by CRBR. Citywide Residential Refuse Collection Current 2 -Cart Collection System • Voluntary Blue -Lid Recycling Cart is processed at a `Clean' MRF* • Black -Lid Trash Cart is processed at a `Dirty' MRF* • 73% of Total Households participating in voluntary Blue -Lid Recycling Cart • Dry Residential Recycle Diversion Rate: 43% *MRF — Material Recovery Facility Program Trends Impacting Citywide Residential Refuse Collection • Split Commercial/Residential Franchise system • Space constrained areas • Option of Dirty MRF processing is being phased out and will no longer be available • Unlimited Refuse Services available to Residents • More regulatory emphasis on program implementation of curbside source separation • Higher diversion percentages being required by new State mandates • Required implementation of residential organics collection 0000 (3 -Cart System) Citywide Residential Refuse Collection Program Additions Needed to Accommodate Changes in State Law City Must Now: • Implement Higher Level Diversion Programs to Comply with AB 939 / SB 1383 (i.e. use of Clean MRF's rather then Dirty MRF's) • Maintain an overall 50% Plus on City Recycling Diversion Rate • Residents Must now `Source -Separate' their Green Waste and Food Waste into a third, New Green Cart to comply with State Mandates included in SB 1383 (January 1, 2022) sees City Council Solid Waste Working Group Established in Nov 2018 Objective: Review and Improve citywide refuse program compliance and reduce both program cost and impacts to residents through incorporation of new or improved collection and processing methods or technologies Areas of Review and Update: Non -Exclusive Commercial Franchise Agreement Update Municipal Code Update City Facilities Refuse Contracts (beaches, streets/parks, facilities ❑ Residential Collection Contracts ❑ Compliance Reporting Enforcement Resources •66• 8 City Council Solid Waste Working Group Current focus is on Citywide Residential Refuse Collection Contracts. Both Contracts with CR&R are approaching end of their terms. Looking at new Amendment now in order to: • Ensure City has Necessary Contract to Provide future Residential Refuse Collection and Disposal Services • Ensure Compliance with Current and Pending State Laws • Merge Current Two Contracts into One (Simplify Oversight, Management, Reporting; Improve Operation Efficiency Standardize Service Levels, and Reduce Cost) • Implement New or Improved Means and Methods • Manage and Minimize Program Cost • Minimize Impacts to Residents 0660 9 Proposed Collection/Processing Modifications egos Requested CR&R Pricing with Following Program Parameters: • Require Blue Recycling Carts and Source Separation for all Households (need 7,300 new carts to complete the program) • Expand to 3 -Cart Program for All Households in City with addition of New Green Organics Carts (Green Waste & Food) • Increase Automation. Will Require All Refuse Material be Placed within Carts for Pick -Up. (No more bags, boxes and other material left on ground outside the carts requiring manual pick-up) • Consolidated Bulky Item Pick -Up Service limited to up to five specific collection pick-ups (with up to five items each) per household per year (as opposed to unlimited bulky collections currently) Proposed Collection/Processing Modifications • Limiting `Free' Black Trash Carts to One 90 -gal per Household • Organic Material Processed at least Expensive Means Allowed (Composting, Digestion, other) • Includes 2 Full -Time CR&R Staff for 18 Months to provide Extensive Recycle and Organic Outreach including Door -to -Door Provision, outreach materials, and Required Contamination Monitoring • New Collection Trucks to Service the Organics Routes. • Require 7 -Year Average Collection Vehicle Age, with No Vehicle Over 10 -Years Old 0000 11 Proposed New Waste Collection Cart System 3 -Cart Option • Blue Recycling Cart for clean recyclables processed at a Clean MRF • Green Organics Cart for yard trimmings and food scraps processed at an Organics Processing Facility. — Smaller green carts for space constrained property areas • Black Trash Cart for everything else (trash) sent to Landfill • Increase in Overall Residential Diversion Rate/ Full program implementation •00• 12 0000 Refuse Contract Negotiations • Negotiation meetings between City and CR&R began June 2020 • Efforts focused on SB 1383 program development • Developed rate model to transparently build-up program costs • Received initial proposal from CR&R in September KIWI • Presented initial offer to Council on 11/24 and was directed to continue negotiations and refine proposal 0000 Refuse Contract Negotiations EcoNomics held 6 follow-up meetings with CR&R to further refine proposal Negotiation Meeting objectives: • Develop `best and final' rate with and without reconciliation process • Develop reconciliation framework to `true up' uncertain cost factors after 2 years of data ;O/Assess reasonableness of cost assumptions provided by CR&R Initial scoping of curbside programs, monitoring, outreach, and reporting requirements • To secure guaranteed organics processing capacity at composting facility with City retaining direction of flow control • Develop extensive SB 1383 -aligned monitoring and reporting components 0 Received best and final pricing on Dec 21, 2020 1910•10 Contract Uncertainties Impacting Costs • Per household contribution rate of organics • Productivity rates • expanded recycling route • number of households serviced per hour for new organics route, • Level of reduced MSW routes • Hourly operational costs and productivity for single -pass rear -loader in space constrained neighborhoods • Recoverability levels for recyclables collected on expanded recycling route and after extensive outreach Overview of Pricing Received from CUR Final Counterproposal -Submitted by CR&R on December 21, 2020. Option One: Fixed per equivalent household rate (City Paid) of $24.08 per month. 2% annual CPI adjustment. Fixed rate and will not require further contract negotiations. Option Two: Initial per equivalent household rate (City Paid) of $22.69 per month. 2% annual CPI adjustment for year 1 and year 2. Further negotiation in year three. Reconciliation rate includes cap of 5%. Projected reconciliation ceiling household rate of $26.31 per month. Both Options would have a contract term of 8 -years with one 2 -year extension option. •00• 1( 0000 Proposal Analysis Option One: Fixed Rate Pros: • Fair competitive market pricing within proximity to recently bid refuse rates of similar Orange County cities. • Fixed rate of $24.08 per residential unit with projected 2% CPI adjustment • Is not subject to change dependent upon contract cost uncertainties • Does not necessitate further negotiations or additional staff time and expense Cons: • Initial rate is not as low as initial reconciliation rate listed in Option Two 0000 Proposal Analysis Option Two: Reconciliation Rate Pros: • Initial rate of $22.69 per residential unit is lower • Only CPI adjustment for initial 2 years • Dependent upon household contribution rate of recyclables and organics Cons: • Negotiations will continue in year three through a reconciliation process • Subject to change based on contract uncertainties • Results in excessive costs associated with staff/consultant time • High risk of a larger rate increase in years 3 through 8. Program City Hauler Pre-program Monthly Rate Percent Organics Type Monthly Rate 7/l/2021* Change Processing Lake Forest (2013) 3 -cart CR&R $14.98 $17.10/$17.65 14-18% Compost/AD Mission Viejo (CR&R Proposed 3 -cart CR&R $17.46 $23.77 36% AD 2019) Mission Viejo (WM 2019 - 3 -cart WM $17.46 $23.45 34% AD selected) Mission Viejo (Republic 3 -cart Republi $17.46 $25.91 48% Proposed 2019) c San Juan Capistrano (2019) 3 -cart CR&R $19.95 $24.48 23% AD Tustin (2018) 3 -cart CR&R $18.03 $18.77/$20.11 4-10% Compost/AD OC Average $17.56 $21.40 22% Negotiated Pricing with CR&R - WITH $15.22 $22.69 49% COMPOST Reconciliation Negotiated Pricing with CR&R - WITHOUT $15.22 $24.08 58% COMPOST Reconciliation Average from Sample Comparison of Competitively Procured ' recent Pricing for Residential Organics Programs in OC ,FPs *Assumes 2% inflation adjustment in July 2021 Recommendation After extensive review and discussion of both options submitted by CR&R with the City Council Solid Waste Working Group, Consultant and staff Option One was found to be a fair competitive market price • Rate Is in close proximity to recent RFP refuse rates of similar Orange County cities. • This option would place the focus on the current necessary expansion and implementation of curbside recycling service to all households in the City rather than focusing on additional future negotiations via a complex reconciliation process. Option Two was determined to have too many uncertain variables associated with compliance, reconciliation of data, and further negotiations that had more risk of a larger rate increase in year three through eight. ➢ Staff recommends preparing a contract amendment with CR&R to provide one Citywide Residential Solid Waste Collection & Recycling Services •66• Citywide Residential Refuse Collection Current Contract Costs • Current Total contracts cost of approx. $4.9 million annually • Entire direct cost is paid for by the City's General Fund • Per Municipal Code 6.04.140: Residents are not directly charged for residential refuse. Current equivalent residential unit costs are: • Newport Coast: $13.63 per Residential Unit • City Contract: $15.55 per Residential Unit Citywide Residential Refuse Collection Summary of Proposed Contract Costs (Option 1) Term: 8 -year base term with 2 possible 1 -year extensions Year 1- $7.8 million (Option 1- no reconciliation - 58% increase) Year 10 - $9.3 million (includes annual 2% CPI adjustment) Current equivalent residential unit costs are: • Combined Initial Citywide Contract: $24.08 per Residential Unit Contract cost = 27,043 (Residential Units) X service cost of $24.08 ea. = Approx. $7,814,000 (Year 1) Citywide Residential Refuse Collection Recycling Services Fee (Item 14 on Agenda tonight) • Ordinance No. 90-6 establishing a Recycling Service Fee • Partially Recover costs incurred by the City in satisfying State mandated recycling requirements. • Currently $3.00 per Residential Unit • Currently generates Approx. $970,000 annual revenue • Currently Excludes Newport Coast and Santa Ana Heights • Proposed Fee increase, If approved, possible revenue increase of $1,361,000 to further help offset program cost. City's Options for Residential Refuse Service ❑ 1: Proceed with preparation of an amended Residential Solid Waste Franchise contract with CR&R to replace their two existing Residential Solid Waste Collection & Recycling Contracts (C-5649 & C-3942), beginning on October 1, 2021 at an initial baseline monthly rate of $24.08 per residential household, with an annual CPI adjustment, and a contract term of 8 -years with one 2 -year extension option; ❑ 2: Reject the amendment offer by CR&R and direct staff to proceed in preparing and issuing a Request for Proposals (RFP) for Residential Solid Waste Collection & Recycling Services; or ❑ 3: Provide alternative direction to staff Staff recommends preparing a contract amendment with CR&R to provide one Citywide Residential Solid Waste Collection & Recycling Services •00• 24 •00• Questions Your Public Works Department Protecting and Providing Quality Public Improvements and Services