City of Chino
CA

Staff Report

Consideration of a contract with USA Waste of California, Inc., for refuse and recycling services.

Information

Department:Public Works DepartmentSponsors:
Category:Report

Attachments

  1. Printout
  2. USA Waste of CA Exhibit 1 (This file has not yet been converted to a viewable format)
  3. WM Contract
  4. Exhibit D

Budget String

Revenue: Expenditure: Transfer In: Transfer Out:

Body

BACKGROUND

The City Council entered into an amended and restated contract with USA Waste of California, Inc. (Waste Management) for refuse and recycling services on January 1, 2012.  The term of the contract is seven-years with a three-year evergreen. The evergreen ensures that the term of the contract remains at a minimum of three-years indefinitely unless the City Council takes action to terminate the renewal provision in the contract.

On November 3, 2015, the City Council moved to terminate the renewal provision in the contract invoking the term balance of three-years.  Subsequently, the Solid Waste Committee (appointed Council members), directed staff to prepare a presentation for a public workshop to evaluate the City's current contract with Waste Management.  The workshop was held on February 21, 2017.  Staff's presentation included a discussion on long-term disposal options, liability protection, legislation, service offerings and a rate analysis. The Council then directed the Solid Waste Committee (Committee) to meet with Waste Management for the purpose to negotiate a new contract for integrated waste management services and to include compliance with new legislation, incentivized programs, and street sweeping.

 

ISSUES/ANALYSIS

The Committee and Waste Management, in good faith, negotiated a new proposed contract, which includes over $15 Million in contributions for City programs and capital improvements.  The new programs and services recommended by the Committee will be included as part of the proposed contract, which provides solutions to unfunded mandates imposed by the State, enhances existing programs, and provides significant financial savings to the City and its customers.  The new enhancements are as follows:


New Term

The term is fifteen-years, commencing on January 1, 2018 and expiring at the close of business on December 31, 2033.  By mutual agreement, the contract may be extended for an additional five-years.  The new term is necessary in protecting the interests of the City and Waste Management, as it allows enough time for the hauler to amortize equipment.  Additionally, Waste Management will be contributing over a $1 Million in annual contributions for programs and projects that would otherwise be charged to the General Fund, the Sanitation Fund, and or the customer.  The cost savings over the term of the agreement is over $15 Million and is detailed in Exhibit 1.


Disposal

The City has two (2) viable options for disposal: 1) Mid Valley Landfill located in Rialto, San Bernardino County and 2) El Sobrante Landfill, located in the unincorporated area of Riverside County.

City staff met with the County of San Bernardino (County) to explore the idea of a Waste Delivery Agreement (WDA) for a reduced rate of $37.00 per ton, which is the negotiated rate for the County’s WDA Cities.  The WDA would require the City to exclusively utilize the Mid-Valley Landfill for a set term. 

Due to the distance of both landfills (which are equidistant to the City) a hauler would need several additional trucks to maintain the level of service currently provided if they were to direct haul to either landfill.  Currently, Chino’s refuse is hauled to a transfer station in Pomona (6 miles away) where it is off-loaded and transferred into larger trucks and then hauled to the El Sobrante Landfill.  The $37.00 per ton WDA rate does not include a transfer fee.  However, the tipping fee at El Sobrante (effective July 1, 2017) is $43.16 and is inclusive of all costs associated with transfer and disposal.  The Committee negotiated with Waste Management to reduce the transfer charge by $6.16, bringing the new per ton rate for El Sobrante Landfill to $37.00 for residential customers exclusively.  Consequently, this reduces the single-family residential rate by $.66 from $24.99 to $24.33 if the contract is approved.  The City of Chino has the second lowest rate in the County as outlined in Exhibit 1.

Additionally, El Sobrante Landfill was expanded to provide decades of additional capacity, which ensures a stable disposal location for Chino's refuse for the proposed term of the agreement and beyond.  The City is fully indemnified under the terms of the Comprehensive Environmental Responsibility Compensation and Liability Act (CERLA) for past and future use of El Sobrante Landfill. 


Capital Projects Alley/Street Program

Waste Management will contribute $562,000 annually (for the term of the contract) toward the City’s capital projects.  This will augment costs for the City’s annual Street and Alley Rehabilitation projects that are funded from the General Fund and the Sanitation Fund.  The annual payment will be escalated by the McGraw-Hill Construction Cost Index annually.  


Street Sweeping

Waste Management will provide street sweeping services to the City at no additional cost.  Currently, the City contracts services with Athens Waste for roughly $350,000 per year.  The fees collected through the monthly billing from customers completely off-set the cost for this contract.  Waste Management estimates that the value of these street sweeping services is $300,000 annually and will equate to an additional cost savings of $2.34 per month per residential household.     


Bi-Annual Citywide Cleanup Events

Waste Management will host two (2) bi-annual cleanup events for Chino residents at various locations.  Waste Management will coordinate the logistics, equipment, staff and outreach.  The City has taken the lead on these events in the past, but is unable to accommodate the event due to growth in participation, and volumes of materials collected


Bi-Annual Newsletter

Waste Management will provide a one-page newsletter to be distributed annually in residential water billing.  Waste Management will advertise programs offered such as SHARPS, bulky item collections, and updates on recycling programs.  The City will use the reverse side of the newsletter to advertise City programs and events.


Commercial/Roll-Off Billing

Waste Management proposes to assume responsibility for all commercial and roll-off collection services.  The City would continue billing for residential services, and the City would retain the billing fee of 2.85% on billed revenue for all lines of business. 

The transition for commercial and roll-off service would be easy to implement and a seamless change.  Waste Management handling commercial accounts would increase the City’s ability to meet State mandates and increase commercial diversion results.  This would be accomplished by providing additional information to customers regarding services offered to comply with AB 341 (Commercial and Multi Family Recycling) and AB1826 (Organics Recycling).

Conclusion

All existing programs provided under the current contract (as outlined in Exhibit 1) are included as part of the proposed contract.  Waste Management has provided exceptional services to the community with less than 1% error for all services offered.  Additionally, Waste Management has and will continue its efforts as a community partner to the City and its local non-profits.  The proposed contract will reduce the single-family utility billing by $3.00 per month ($0.66 refuse/recycling and $2.34 street sweeping) for residential customers.  It should be noted that the City’s rates are competitive, and considered some of the lowest county-wide.  Waste Management will continue its efforts in meeting State mandated requirements for waste diversion programs and facilitate the City in meeting goals for annual reporting purposes.  Lastly, Waste Management will contribute $1 Million annually in incentivized programs by providing street sweeping services, valued at $300,000 annually, and an Alley/Street Program annual payment in the amount of $562,000.  The reduced tipping fee of $37.00 per ton for residential customers will provide an annual savings of $138,000 through the term of the contract.  This equates to $15 Million in contributions as well as a reduction in the residential billing over the life of the contract.

Therefore, the Committee is recommending that the City Council approve the new waste services contract with Waste Management for a 15-year term, and authorize the City Manager to execute all necessary documents on behalf of the City. 

 

 

Meeting History

May 16, 2017 7:00 PM Video City Council Regular Meeting
draft Draft
RESULT:APPROVED [4 TO 1]
MOVER:Glenn Duncan, Council Member
SECONDER:Tom Haughey, Mayor Pro Tem
AYES:Gary George, Eunice M. Ulloa, Glenn Duncan, Tom Haughey
NAYS:Earl C. Elrod