HomeMy WebLinkAboutReso 1999-19480 RESOLUTION NO. 19480
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA
VISTA APPROVING A RESOLUTION OF INTENTION TO
CONSIDER GRANTING A WASTE MANAGEMENT FRANCHISE
RENEWAL TO PACIFIC WASTE SERVICES UNTIL THE YEAR
2007 WITH AN OPTION TO EXTEND UNTIL THE YEAR 2015
SUBJECT TO SATISFACTORY PERFORMANCE (WITH
POTENTIAL ADDITIONAL EXTENSIONS AT CITY'S OPTION
UNTIL THE YEAR 2031 ) AND SETTING A PUBLIC HEARING TO
CONSIDER SAME FOR JUNE 22, 1999
WHEREAS, on August 11, 1998, the City granted a renewal Solid Waste Disposal and
Recycling Franchise ("Franchise") to Allied Waste Systems, dba Pacific Waste Services
("Pacific"); and
WHEREAS, City staff and Pacific have negotiated the terms and conditions for a
Franchise extension; and
WHEREAS, the following represents a summary of the terms and conditions for the
proposed Franchise extension with Pacific:
1. Term.
The initial term of the Franchise shall commence on July 1,1999 and shall expire on June 30,
2007. The initial term may be extended by either party on the same terms and conditions
until June 30, 2015, provided that the City Manager reasonably determines that Pacific (a)
has satisfactorily performed under the Franchise, (b) is then in full compliance with all
Franchise terms, and (c) has the ability to satisfactorily perform its Franchise obligations
throughout the 8 year extension. The City, in its sole discretion, shall have two additional
options to extend the Franchise on the same terms and conditions. The first option shall
extend the term until June 30, 2023. The second option shall extend the term for an
additional 8 years; provided, however, Pacific shall have the right to terminate the franchise
earlier if and when the Otay Landfill reaches its capacity. Pacific may not exercise its early
termination right prior to June 30, 2028.
2. Franchise Fees.
a. Percentage of Gross Receipts.
In consideration of City's grant of the Franchise, Pacific shall pay to the City during the
first year of the Franchise a franchise fee in an amount equal to eight percent of
Pacific's "gross receipts." Commencing on July 1,2000, and thereafter, the franchise
fee shall be increased to ten percent of Pacific's gross receipts.
b. Additional Fixed Annual Payments.
As additional consideration for the grant of the Franchise, in addition to the above-
described franchise fee increase, Pacific shall make a payment of ~618,000 to the City
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in the first fiscal year of the agreement. That payment shall increase annually by three
per cent per year and continue through the term and any extensions of the agreement.
3. Free Disposal.
Pacific shall provide the City with annual free disposal for City crews and/or subcontractors
on City business for up to five percent of the City's "all generators" total disposal tonnage
for the previous calendar year. Any Green Waste delivered to ORW by City crews or
subcontractors shall he applied to and fall under the five percent per year limit. To the extent
the City exceeds its annual five percent allowance it will pay the Chula Vista disposal rate
with respect to the excess. The rate is currently $30 per ton, but shall be adjusted in
accordance with the terms of the agreed upon rate schedules. Compost fees for excess
Green Waste shall be set under contract with ORW or its successor.
4. Free Service to City Facilities.
Pacific agrees to provide the City with free solid waste, yard waste and recycling services at
all City facilities during the term of the agreement. The City shall pay for Roll-off service (or
similar such temporary services) requested by the City. The disposal tonnage for Roll-off and
other such temporary services requested by the City shall accrue against the City annual five
percent disposal allowance.
5. Operational Issues.
The major adjustments to operational terms and conditions in the current agreement are:
· Pacific shall start residential service at 7 a.m. instead of 6 a.m.
· Pacific will upon replacement convert all supervisor vehicles and on-site power
sources to a clean fuel source
· Pacific will subscribe to a California Green E source of electricity
· Pacific will develop and implement a pilot program to replace collection vehicles
with vehicles using a clean fuel source
· Pacific will produce and distribute its billing and other correspondence on post-
consumer content recycled paper
· Pacific will complete the color coding of residential and commercial solid waste
recycling and green waste bins by January 1, 2000
· Pacific will continue to provide each Chula Vista Small Generator Customer
with up to two free landfill and two free green waste passes per calendar year
· Pacific will complete the expansion of free mixed paper service to all
multifamily dwellings
· Pacific will continue to provide free rigid container service to all Chula Vista
hospitality businesses upon request
· Pacific will reduce the monthly per unit recycling rate for multi-family dwellings
of 9 units and less from approximately $1.50 per month to $0.74 per month
· Pacific's annual share of revenue from recycling profits will increase when the
State finds that the City has met or exceeded State mandated recycling goals
for the previous calendar year
· Pacific and City staff will develop an "Automated Variable Rate" program for
Council review as outlined in Section 6.d of this document that will reduce the
I I'
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monthly rate for approximately seventy-five percent of the City's residential and
small business customers, provide each customer with a sturdy cart with
wheels and lid that will help reduce litter, scavenging and injury to collection
personnel.
6. Rates.
a. In General.
Pacific's maximum allowable rates for Small Generators, Large Generators and
Industrial/Roll-Off ("General Service Rates") shall automatically increase each year
throughout the term of the Franchise as follows:
July 1, 1999 -July 1, 2002 50% of Annual CPI
July 1,2003 - Term and any extensions thereof 66.6% of Annual CPI
CPI means the San Diego Area Consumer Price Index for All Urban Consumers (all
items), published by the United States Department of Labor, Bureau of Labor Statistics,
for the latest twelve-month period for which statistics are available.
Notwithstanding the foregoing, at no time shall the Small Generator Rates exceed 90%
of the County average rate for such generators as published by SANDAG.
b. Market Adjustments.
Beginning July 1,2007, and at each 4 year interval thereafter throughout the Franchise
term, Pacific shall be eligible for a "market adjustment" to its then applicable maximum
General Service Rates, commercial mixed paper rates, and commercial green waste
rates. The maximum market adjustment(s) shall be up to ninety percent of the
corresponding San Diego County average rate(s) published by SANDAG. Beginning
July 1,2015, the maximum upward adjustment applicable to all Large Generator
Service Rates (excluding 3-yard bin or smaller/once per week service) shall be
increased to ninety-five percent of the corresponding San Diego Count average rate
published by SANDAG. Note: these market adjustment provisions in this Section 6.b
are intended to allow Pacific to make upward adjustments in rates. In no event shall
these market adjustment provisions require Pacific to reduce their maximum rates for
any service level./no downward adjustment) (less subsidies and levelized for local
fees)
c. Miscellaneous Equipment and Services Rates.
Miscellaneous equipment rental and service rates governed by the Franchise shall
remain fixed until June 30, 2006; provided, however, if the City has been notified by
the State that it has achieved the then in effect mandated diversion goal for any
calendar year prior to July 1, 2006, Pacific shall receive an increase in miscellaneous
service rates for that year equal to .666 percent of annual CPI effective as of the
following July 1. Commencing July 1, 2006, maximum miscellaneous service and
equipment rates shall automatically increase at the rate of .666 percent of annual CPI.
Miscellaneous equipment and service rates shall include all rates other than General
Service Rates, storage container rates and Iovo-lock rates.
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d. Most Favored Nation.
The most favored nation provision of the existing Franchise shall remain in substantial
effect except that the exclusion of Imperial Beach from the relevant marketplace shall
be deleted.
e. Variable Rate Structure.
The City agrees to work with Pacific Waste Services to develop a mutually agreeable
rate structure for Small Generator solid waste customers based on volumes of waste
generated and automated service ("Variable Rate Structure"). The Variable Rate
Structure shall, to the extent possible (1) establish new rates that do not increase
revenues above the then established corresponding revenue rate base, (2) give Pacific
the benefit of operational efficiencies, and (3) give City the benefit of avoided disposal.
City agrees to meet and confer with Pacific to develop performance milestones that
could result in Pacific sharing in the benefits of avoided disposal. The parties agree to
exercise their best efforts to develop and present the City Council such a Variable Rate
structure by no later than May 1, 2001, and sooner if possible. The final decision to
implement a Variable Rate Structure shall be at Council's sole discretion.
7. Legal Provisions.
a. Uncontrollable Circumstance.
The Franchise shall include language that excuses temporary non-performance in the
event of an "Uncontrollable Circumstance" (to be defined therein) provided that best
efforts are exercised to minimize the duration of such non-performance and to resume
full Franchise compliance as quickly as possible.
b. Liquidated Damages.
The liquidated damages Enforcement Summary is designed to give Pacific a financial
incentive to provide the Chula Vista residents and businesses with the highest possible
level of reliable service. The individual and cumulative financial impacts for each
occurrence have been reduced, however staff believes the current fines are sufficient
to encourage quality performance, and the connection to termination for cause
remains.
c. Mediation.
This section provides both parties with an opportunity to mediate all disputes
(excluding the imposition of liquidated damages) prior to commencing legal action.
d. Environmental Indemnity
Landfill and illegal disposal site costs have become an increasing liability to City's and
their generators. This section provides the City and its taxpayers with a significantly
greater level of protection from that liability than has been provided in the past. Pacific
(and its Affiliates) shall indemnify, defend and hold harmless the City from and against
any and all claims, losses, damages, liabilities and costs arising from the past, present
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or future existence or disposal of Municipal Solid Waste and the hazardous materials
it may contain at disposal sites to which
Pacific or its Affiliates have taken City Solid Waste, That coverage shall survive the
terms of this agreement and run with the extended life and maintenance of the
effected landfills.
8. Site Manager.
This section of the agreement is designed to assure that the City and the Chula Vista
ratepayers continue to benefit from a consistently high quality of management regardless of
the mergers and acquisitions that continue to take place in the solid waste industry. The City
shall have prior reasonable approval with respect to the appointment, transfer (except for
promotion) or termination (except for cause) of the general market manager for San Diego
County and the local operations manager responsible for the oversight and implementation of
the Franchise.
9. No Parking Signs.
City staff will submit for City Council consideration, and staff shall support, a program for the
posting of signs prohibiting parking on streets during trash collection days in new major
development areas within the City. City staff, including but not limited to Recycling Rangers,
shall support adherence to the program with public education and enforcement measures to
be developed and implemented in the City's sole discretion.
10. Other Provisions.
The Franchise shall contain such additional mutually agreed upon provisions that are
consistent with the terms hereof.
WHEREAS, in accordance with Section 1201 of the City Charter, the City Council shall
adopted a resolution declaring its intention to grant a franchise and shall schedule a public
hearing for the consideration of such grant.
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista does
hereby set a public hearing for 6:00 p.m, on June 22, 1999, in the Council Chambers, 276
Fourth Avenue, Chula Vista, Ca. at which the City Council intends to consider granting to
Pacific Waste Systems a Waste Management Franchise Renewal on the terms and conditions
set forth above.
BE IT FURTHER RESOLVED that the City Clerk is hereby authorized and directed to
publish, at least once within fifteen days after the passage of this resolution, and at least ten
days prior to the date of the hearing, appropriate notice of such hearing.
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Presented by Approved as to form by
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PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 8th day of June, 1999, by the following vote:
AYES: Councilmembers: Davis, Moot, Salas and Horton
NAYS: Councilmembers: None
ABSENT: Councilmembers: Padilia
ABSTAIN: Councilmembers: None
ATTEST:
Susan Bigelow, City Clerk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Susan Bigelow, City Clerk of Chula Vista, California, do hereby certify that the foregoing
Resolution No. 19480 was duly passed, approved, and adopted by the City Council at a
regular meeting of the Chula Vista City Council held on the 8'h day of June, 1999.
Executed this 8th day of June, 1999.
Susan Bigelow, City Clerk