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Home My WebLink About18 - Terminating a Non-Exclusive Franchise Agreement for Commercial Solid Waste - PowerPointWP � �►��FOR �P TERMINATION OF NON-EXCLUSIVE FRANCHISE AGREEMENT WITH KEY DISPOSAL & RECYCLING, INC. FOR COMMERCIAL SOLID WASTE Public Works Department May 28, 2024 Item No. 18 CITY CORRECTIVE ACTION PLAN WITH CALRECYCLE • Three -container system (trash, recycling, and organics) implementation required per commercial generator • Haulers required to work with clients to implement source separation and to divert material from landfills KEY DISPOSAL'S RECENT OPERATING HISTORY 2020 - City initiated Franchise termination due to missing collision avoidance 2020 to 2023 - July 2022 - New application submitted - November 2022 - Council approved application and Franchise - August 2023 - Franchise Agreement executed Delay due to collision avoidance and insurance verification issues Q SEW Pp�T >� a U T ari C'q -IFORN�P FRANCHISE AGREEMENT COMPLIANCE RELEVANT PROVISIONS Eh&quirement Section 6 Diversion and Disposal of Municipal Solid Waste, Recyclable Materials, Food Scrap and Green Waste Section 8 Franchisee's Application; Records; Audits Section 12 AB 341 Recycling Program for Commercial Premises and Multifamily Dwellings Section 13 AB 1826 Food Scrap Diversion Program for Commercial Premises Section 14 AB 1826 Commercial and Multifamily Green Waste and Wood Waste Collection Program Exhibit E Required Tasks for Implementation of Diversion Programs Q��WPO�T � D � n cq�/FORN�P 4 CITY'S EFFORTS TO IMPLEMENT FRANCHISE AGREEMENT SOURCE SEPARATION REQUIREMENTS September 22, 2023 - Disposal location(s) not provided, requested. - Implementation plan requested. October 2, 2023 - Quarterly Meeting - Warned of enforcement action for reporting and customer education deficiencies. November 16, 2023 - City requested disposal locations - second time. Key provided inconclusive response. December 21-28, 2023 - Implementation update and 0 "111 °��m requested. Key indicated in U ? ari educational outreach efforts progress. CITY'S EFFORTS TO IMPLEMENT FRANCHISE AGREEMENT SOURCE SEPARATION REQUIREMENTS (CONTYD) January 10, 2024 - Quarterly Meeting - Reiteration of CAP requirements and to document outreach efforts. Key agrees to do so. January 29, 2024 - City requested efforts made to identify mixed waste MRF. - Key responded with unrelated information. February 13, 2024 - Insurance was non -compliant per Ebix. - Refuse Code Enforcement conducted external site inspection; recycling container not present. Q SEW Pp�T >� a U � T ari C'q -IFORN�P NOTICE OF DEFAULT (NOD) &NOTICE OF INTENT TO TERMINATE FRANCHISE Section 23 of the Franchise: Authorizes Public Works Director to provide written notice of default with an opportunity to cure: February 26, 2024 - Refuse Manager conducted site inspection and identified regression. - City issued NOD after inspection with compliance deadline of March 8, 2024. March 8, 2024 - NOD correction deadline. Key supplied three of seven deliverables. - City issued Notice of Intent to Terminate pursuant to Section 12.63.140 of the NBMC. March 13, 2024 Q SEW Pp�T @m - City responded to NOD submission with determination. H n U � T ari COMPLIANCE STEPS FOLLOWING CITY COUNCIL MEETING March 25, 2024 - Key issues letter to Council March 26, 2024 - City Council Meeting - City introduced ordinance to terminate Key Disposal - City Council granted Key compliance extension to April 9t" March 27, 2024 - Key submitted the compliant insurance information April 1-3, 2024 - City met with Key Disposal w/ five tasks: • Task 1 - Identify a mixed -waste recovery facility for utilization through 2024 (Completed) • Task 2 - Conduct a waste characterization audit and supply report • Task 3 - Customer outreach to educate and ensure diversion in place • Task 4 - Develop an implementation plan to place external source separated containers and to assist the commercial business with internal source separation • Task 5 — Submit Exhibit E Report (Required Tasks for Implementation of Diversion Programs) COMPLIANCE STEPS FOLLOWING CITY COUNCIL MEETING (CONTD.) April 9, 2024 - Council Meeting - City requested Council approval for compliance extension to May 14th . April 11, 2024 - Key conducted requested waste characterization audit in Pico Rivera for Task 2. City staff present to monitor. April 24, 2024 - No deliverables provided and no substantial update for Task 2. - City requested Task 2 report by end of business, and remaining deliverables due end of business April 26. - Key submitted incomplete resubmission by April 26. Q SEW PO > a U � T ari Task 2 report. City requested WASTE CHARACTERIZATION AUDIT RESULTS Prior to waste audit, Key Disposal indicated only restroom trash in waste stream Observation shows mainly divertible & recyclable materials Recyclable Examples: • Cardboard • Plastics and Metallics 10 COMPLIANCE STEPS FOLLOWING APRI L 9 CONTINUANCE April 26, 2024 - Key Disposal & Recycling, Inc. supplied partial response by deadline; resolving Tasks 2 and 5. April 29, 2024 - City reviewed. Two of five items still incomplete; • Task 1 - Identify a mixed -waste recovery facility for utilization through 2024 (Complete) • Task 2 - Conduct a waste characterization audit and supply report (Complete) • Task 3 - Customer outreach (Incomplete. City communicated with store's Logistics/Fulfillment Supervisor for verification.) • Task 4 - Develop an implementation plan to place external source separated containers and to assist the commercial business with internal source separation (Incomplete) • Task 5 — Submit Exhibit E Report (Complete) Q SEW PO >� a U T ari C'q -IFORN�P COMPLIANCE STEPS BETWEEN APRI L 29 AND MAY 14 April 29, 2024 to May 14, 2024 • Tasks 3 and 4 - Incomplete by April 26 deadline. • City issued Determination on April 29. • Key submitted additional information on May 10. • Key issued letter to City on May 13. - Task 3 - Customer Outreach - Complete on May 14 through City communication with store's Logistics/Fulfillment Supervisor. - Task 4 - Develop an implementation plan for external source separated containers and assist client with internal source separation o Incomplete by April 26. Partial completion through May 10 submission MAY 14 TO MAY 28 May 14, 2024 - City presented: • Task 3 incomplete as Key did not supply 2023 backhaul tonnage. - City acknowledges this was completed. • Task 4 - Written documentation of attempts between Key and client to implement: o a source separation program for interior containers. Not received, but deemed complete as verified with store. o a recycling program that includes and external container Not received. Key issued letter on May 28, 2024. ON -GOING CITY CONCERNS • City has been working toward franchise compliance with Key Disposal since November 2022. ■ Franchise Agreement was executed almost one year later. • Key is one hauler with one account in the City - which has taken an extraordinary amount of time and resources to get to marginal compliance. • Contrary to what Key believes/states in their letter's, Key is fully responsible for client implementation; no assignment to another party(s) for overall compliance. • Based on history, Staff has little confidence in continued compliance without ongoing review and intervention • Prior to City intervention, this image is a sample of what likely was continually being landfilled. After December 31, 2024, this may happen again. AUTHORITY TO TERMINATE • Section 12.63.140 (Termination) of NBMC authorizes the City Council to terminate a franchise if it finds the franchisee has failed to comply with, or to do anything required of the franchisee by this chapter, or that franchisee has violated any provision of the ordinance granting the franchise. Section 23 (Suspension; Termination; Appeal) authorizes termination of the Franchise Agreement. • Due to a long and continual struggle to gain compliance with the Franchise with still incomplete required tasks; and inconsistencies, staff again recommends termination. 15 RECOMMENDATIONS: • Conduct hearing to consider termination of franchise agreement for Key Disposal & Recycling, Inc. • Introduce Ordinance 2024- and pass to second reading on June 11, 2024.