Loading...
HomeMy WebLinkAboutSS4 - Solid Waste Franchise AgreementsQ �EvuFpRT CITY OF NEWPORT EACH City Council Staff Report July 12, 2016 Agenda Item No. SS4 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Mike Pisani, Municipal Operations Director - 949-644-3055, mpisani@newportbeachca.gov PREPARED BY: Mike Pisani, Municipal Operations Director PHONE: 949-644-3055 TITLE: Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste, AB1826 ABSTRACT: The City currently franchises 33 waste haulers to collect residential, commercial and construction/demolition waste. The City has had an open non-exclusive franchise for commercial and construction/demolition waste since 1997. The City's 33 franchises expire in March 2017. We seek the Council's direction on the future structure of the franchise agreements. Additionally, changes in State law related to solid waste practices and reporting require new agreements and possible changes to the Municipal Code. Residential waste hauling is provided by a single waste hauler (CR&R) and is not part of this discussion. RECOMMENDATION: Provide direction on the method of franchising solid waste haulers effective March 2017. Options include: a) The City issuing new Non -Exclusive Solid Waste Franchises and amending the agreements in order to comply with current State requirements. b) Reserving the City's future rights to limit franchises and give the franchisees the required five-year notice of our possible intent to limit franchises. This does not require the City to decide right now to move to an exclusive or more limited franchise system, but it allows staff and Council to consider it in the future. Before the expiration date, we would have to extend our existing franchises, but this option would provide an opportunity to make sure the agreements have the necessary regulations to allow the City to meet State goals and requirements. This could include districts in areas where commercial and residential properties are in close proximity to each other. SS4-1 Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste July 12, 2016 Page 2 FUNDING REQUIREMENTS: There is no fiscal impact related to the discussion of this item. Moving to a more limited franchise system is not likely to have a different revenue impact than the current system, although a more limited system may have less administrative costs. DISCUSSION: The Municipal Operations Department is responsible for managing compliance with State solid waste regulations for the City. The waste stream consists of residential, commercial, or construction / demolition waste. Because all commercial franchises are up for renewal in March 2017, this is the time to review both the ordinance and franchise agreements to insure that the haulers are meeting the State's requirements and to provide staff with additional tools for non- compliant haulers. This report examines some of the current and future issues with waste collection in Newport Beach, and provides alternatives to our current franchise system. Non -Exclusive Franchises The City has had a Non -Exclusive Franchise system since 1997. The existing franchisees were issued between 2007 and 2015. All franchises expire on March 1, 2017. Under our system, customers may choose an authorized franchisee that meets their solid waste service needs. There are currently 33 haulers franchised to work in the City. Only eight (8) perform recurring services (i.e. picking up commercial bins on a regularly scheduled basis) and 25 contract for specific services on an irregular basis, typically construction roll -off and demolition services. Approximately half of the haulers work in the City at least quarterly, and the others maintain franchises to allow them to work here when projects arise. Currently each Non -Exclusive Franchisee, in addition to meeting State requirements, is required to meet City requirements delineated in the franchise agreement. Each franchise requires the hauler to recycle 55% of the material collected each month. This allows the City to reach the State -mandated waste goals. The State calculates each city's disposal target (the amount deposited in landfills) in terms of pounds per person per day (ppd), and is based on population. The City's goal is less than 9.6 ppd. In 2014, the most recent year that records are available, the City's disposal rate was 6.7 ppd. This amount equates to over 107,000 tons of City -generated solid waste deposited in landfills each year. Historically, in 2007, the City's disposal rate was 7.8 ppd, and in the depths of the recession in 2009, it was 5.5 ppd. SS4-2 Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste July 12, 2016 Page 3 What Works Well with the Svstem? The City has been successfully managing the franchisees since 1997. Under this system, businesses and property managers in the City benefit by open competition in waste hauling services. They have a choice who they do business with and can receive competitive pricing. Waste haulers are required to dump waste in Orange County landfills. In return, the City's franchised haulers (like franchised haulers from every Orange County city) receive a preferred tipping rate of $32.36 per ton, while non- franchised haulers pay $56.90. This is a benefit to both the haulers and the business community as the reduced rate keeps costs down. This system benefits the City because of the franchise fees paid by the waste haulers. Each hauler pays a 16% fee based on their revenues generated within Newport Beach (10.5% into the General Fund, 5.5% into the Environmental Liability Fund). This generates over $1.6 million per year in revenue. What are the Downsides of the Svstem? While the current system works well there are two major downsides. The first relates to locations throughout the city where residential and commercial properties share alleys or are in close proximity to each other. This creates a situation where multiple trash trucks travel down the city's narrow streets and alleys multiple times per day, creating additional noise and disruption in the neighborhoods. This issue is most pronounced in the alleys bordering Marine Avenue on Balboa Island, in the Newport and Balboa Pier areas, and along East Coast Highway in Corona del Mar. Monitoring and managing State mandates has created an administrative burden for staff. The reporting requirements and enforcement of State regulations is burdensome for the haulers and is more difficult due to the number of haulers. The City must track and report the activity of all haulers and then confirm with the State and businesses that the hauler is reporting accurately. Mandatory Commercial Recycling and Organics Diversion CalRecycle is the State agency that regulates solid waste and places significant responsibilities on local agencies to implement comprehensive recycling programs including mandatory commercial recycling and organics recycling. Since 2012, commercial businesses generating over four cubic yards of solid waste per week and multi -family complexes of five or more units have been required to have a recycling program in place. Most of the haulers meet this requirement by taking the solid waste to a materials recovery facility (MRF) for processing recyclable materials out of the waste stream. While our non-exclusive franchise agreements also require recycling programs at every account, the State requires local agencies to provide CalRecycle with documentation of how this requirement is met at each location within the jurisdiction. SS4-3 Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste July 12, 2016 Page 4 Even though haulers are required to provide this data, it can often be difficult to get the information from them. In 2014, the Legislature passed AB 1826, which requires businesses generating a specific amount of organic waste to recycle this waste stream, thus diverting the material from landfills. By January 1, 2016, each jurisdiction was required to develop an organics recycling plan, and the City met this requirement. Organics are defined as green waste, wood waste, food waste, and food soaked paper. Businesses that generate eight (8) or more cubic yards of organic waste per week (approximately 21/2 normal commercial bins) were required to have an organics recycling program in place by April 1, 2016. Municipal Operations Department staff identified approximately 50 businesses in the city who fall under this requirement. They include large hotels, large full service restaurants, grocery stores, golf courses, and Hoag Hospital. Staff is currently working with solid waste haulers and businesses to ensure compliance with this regulation. The next deadline for organics occurs on January 1, 2017, when businesses generating four (4) or more cubic yards of organic waste per week will have to have a recycling program in place. That will include nearly all of the 400+ restaurants in the city; it will be a much more daunting task for staff to identify those businesses and verify compliance. Beginning in August of 2017, local agencies will be required to furnish CalRecycle with a list of the businesses in the city that are required to implement this program. The City must also identify how each business plans to meet this mandate. While organics diversion is State law, the solid waste industry is still in the process of developing ways to deal with this portion of the waste stream. Reuse of potential waste is usually the most cost effective way to handle the material. In many areas, restaurants are donating excess food to food pantries and outreach groups for the homeless, thus avoiding disposal costs. Alternatives to disposing of this waste stream include anaerobic digesters and treatment of the waste and processing at wastewater plants. Anaerobic digesters use the material to produce biogas, which can be used to generate electrical power or fuel natural gas powered vehicles. Unfortunately, these plants can be expensive to construct and often take a substantial amount of time for planning and permitting. Organic landscape waste is used for the manufacture of landscape products like mulch. Much of the green waste recovered from the residential waste stream is accepted at landfills as "alternative daily cover" (ADC), which is used to cover the day's disposal instead of dirt, and is not counted as landfilled tonnage. This exemption; however, expires in 2020. At that time, green waste will need to be handled through another process, or count as landfilled waste. What Does This Mean for Our Franchised Haulers and the City? SS4-4 Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste July 12, 2016 Page 5 Regulations will continue to change and the solid waste industry will need to invest in equipment and technology to process new waste streams. Each hauler will also be required to do extensive customer education to put these programs in place. There are economies of scale for these programs, and some haulers may choose to limit their customer base as they may not be able to meet State mandates. In addition, the City will be required to make sure each multi -family complex and business has appropriate recycling programs in place for dry waste and organics. In the next few months, staff will be evaluating our refuse ordinance to ensure we have adequate provisions for enforcement of the new recycling regulations on both haulers and businesses. Given the number of haulers, the management of these programs will continue to be administratively burdensome. Moving From Open or Non -Exclusive to Exclusive or Limited Franchise(s) Due to many of the concerns described above, such as multiple trash vehicles in neighborhoods, difficulties of jurisdictions to administer multiple hauling contracts, and new State requirements for recycling, many cities are moving from open or non- exclusive franchise systems to closed systems. Some of the larger cities that have moved to closed systems include Los Angeles, Pasadena, and San Jose. As an example, in 2011 the City of Los Angeles gave notice of its intent to move to an exclusive franchise system. Los Angeles staff divided the city into 11 districts ranging in size from 1,700 to over 9,000 accounts. Each district was bid out through the Request for Bids process. LA is now evaluating proposals and will be naming an exclusive solid waste provider for each district shortly. Newport Beach could consider creating one or two districts to help reduce the number of trash trucks travelling city streets and alleys in impacted areas while leaving the rest of the city open to all haulers who wish to franchise with the City (see Attachment A). This could be considered for commercial haulers while leaving the construction/demolition haulers on the open market in all areas of the city. Per State law, however, cities cannot reduce the number of solid waste franchises without significant notice. Section 49520 of the Public Resources Code states: "If a local agency has authorized, by franchise, contract, license, or permit, a solid waste enterprise to provide solid waste handling services and those services have been lawfully provided for more than three (3) previous years, the solid waste enterprise may continue to provide those services up to five (5) years after mailed notification to the solid waste enterprise by the local agency having jurisdiction that exclusive solid waste handling services are to be provided or authorized, unless the solid waste enterprise has an exclusive franchise or contract. SS4-5 Solid Waste Franchise Agreements for Commercial and Construction/Demolition Waste July 12, 2016 Page 6 If the solid waste enterprise has an exclusive franchise or contract, the solid waste enterprise shall continue to provide those services and shall be limited to the unexpired term of the contract or franchise or five (5) years, whichever is less." If the City Council feels this is an alternative worth examining at a future date, staff can place current haulers on notice of the City's intent to possibly limit solid waste haulers as early as 2021. 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. 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: Attachment A — Possible Closed -Franchise District Map SS4-6 W-18-m L A L. F