HomeMy WebLinkAboutStaff Report 4539
City of Palo Alto (ID # 4539)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 6/3/2014
City of Palo Alto Page 1
Summary Title: Street Sweeping Cost Savings and Efficiencies Plan
Title: Approval of Staff Plan That Would Reduce Costs and Increase
Efficiencies by Contracting for Certain Street Sweeping Services and by
Reducing the Frequency of Sweeping in Residential A reas to Every Other
Week During the Non -leaf Season
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that the Finance Committee recommend the City Council
approve the following next steps in staff’s recommended Street Sweeping
Efficiency and Cost Savings Plan:
1. Reduce the street sweeping frequency for Residential and
Light/Commercial areas to every other week during the non-leaf season;
and
2. In response to the City’s recent Request for Proposals (RFP), negotiate and
develop an agreement with the apparent successful street sweeping
proposer, Contract Sweeping Services, and return to the City Council for a
contract award and a related Budget Amendment Ordinance.
Executive Summary
On February 4, 2014, Staff issued a Request for Proposals (RFP), and now
recommends reducing street sweeping frequency and contracting out a major
portion of the City’s street sweeping and debris management operation. The
sweeping frequency would remain the same in the University Avenue and
California Avenue areas (3 times per week), as well as El Camino (weekly), and
would be reduced from weekly to every-other-week in residential and light
commercial areas during the non-leaf season. Contracting out a major portion of
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the street sweeping operation and reducing its frequency in this way would save
approximately $649,000 per year by eliminating seven Full Time Equivalent
positions (FTEs) and associated non-salary funding and removing street sweeping
equipment from the City fleet. Additionally, savings will be realized in future
years through reduced pension and healthcare costs.
Because the cost of the Street Sweeping Program is budgeted primarily in the
Refuse Fund, the cost savings would help reduce the need for larger future Refuse
Rate increases for our residential and commercial customers. Potentially
displaced street sweeping personnel have been offered and are receiving cross-
training that would help them qualify for open positions within the City.
Additionally, Contract Sweeping Services is amenable to interviewing and
potentially hiring up to four of the displaced sweeping personnel.
Background
Currently, the City performs all of its street sweeping and sweeper debris handling
operations with in-house staff and equipment. Residential/light commercial areas
are swept weekly year-round and the University/California Avenue areas (i.e. the
Parking District areas) are swept 3 times per week year-round. El Camino is swept
weekly under an agreement with Caltrans. The estimated cost to conduct these
operations is approximately $1.4 million per year. Most of these costs are funded
within the Refuse Fund, with a portion funded from the University Avenue and
California Avenue Parking Permit Funds. Based on 2012 survey results received by
the City’s Administrative Services Department, Palo Alto sweeps its streets more
frequently than any of the neighboring cities that were surveyed. Most of the
cities surveyed are swept every other week on average during the year with some
exceptions for the large retail/commercial areas.
On March 19, 2013, staff met with the Finance Committee to present options for
reducing costs in the City’s street sweeping operation (Staff Report No. 3483).
Staff’s options included both reducing the frequency of street sweeping during
the non-leaf season and utilizing outside contractors. All options dealt with the
portion of the program that involves large street sweepers working on regular
routes. Staff targeted this element of the program because it is much more
amenable to analysis and utilizing outside contracts. The Finance Committee
directed staff to perform an every other week street sweeping pilot program to
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test the feasibility of reducing the frequency of sweeping in residential/light
commercial areas to every other week during the non-leaf season.
On December 9, 2013, staff returned to the Finance Committee (Staff Report No.
4128) and presented an updated efficiency and cost savings plan and the results
of the every other week sweeping pilot. The pilot results demonstrated that the
City could reduce the frequency of sweeping in the residential/light commercial
areas to every other week during non-leaf season without adverse impacts to the
public or the environment. At the meeting on December 9, staff explained that
the next steps in the efficiency and cost savings plan was to develop and issue a
RFP for street sweeping services that could confirm the expected cost savings.
The Finance Committee unanimously approved the efficiency and cost savings
plan and directed staff to add the option of a phased-in implementation into the
RFP in order to mitigate any potential layoffs of current employees. The Finance
Committee also directed staff that when proposals are evaluated, consideration
should be given to those contractors who would be willing to hire any displaced
City employees. The Finance Committee also directed staff to obtain Council
approval for the issuance of the RFP.
Some highlights of the efficiency and cost savings plan are:
1 Continue sweeping Downtown/California Avenue three (3) times per
week. Contract for this work.
2 Continue weekly cleaning of parking lots, bike paths, dead-ends and
downtown sidewalks. Continue using in-house staff and existing
contracts to complete this work.
3 Reduce sweeping frequency to every other week during non-leaf season
(except for Downtown/California Avenue areas and El Camino Real).
4 Contract for the main street sweeping operation (i.e. street sweeping
performed by the large sweepers).
5 Contract for materials management (i.e. hauling leaf litter/debris to
SMaRT).
6 Require the successful contractor to obtain an encroachment permit from
Caltrans to continue sweeping El Camino Real weekly.
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7 Manage emergency responses with both in-house and contractor
resources (traffic accidents, water main leaks, large rain events etc.).
Comparison - Staffing and Equipment Cost Savings Plan
Staff Current
Program
Efficiency and
Cost Savings
Plan
Staffing
Reduction
Lead Heavy Equipment
Operator
1 0 -1 FTE
Heavy Equipment
Operator
1 0 -1 FTE
Street Sweeper Operators 7 2 -5 FTE
Street Maintenance
Assistants
2 2 0
Total Staff 11 4 -7 FTE
Equipment Current
Program
Proposed
Program
Equipment
Reduction
Large Street Sweepers 7 2 -5 large
sweepers
Parking Lot Sweeper 1 1 0
Large Leaf Trucks (for
picking up and hauling
debris)
2 0 -2 large trucks
Green Machines (small
sweepers used to clean
sidewalks and bike paths)
3 3 0
Small Dump Truck 1 1 0
Total Equipment 14 7 -7
Discussion
On February 3, 2014, staff received Council’s approval for the issuance of the
sweeping RFP (Staff Report No. 4337). An RFP for Street Sweeping Services was
distributed to qualified street sweeper contractors on February 4, 2014.
Contractors had six weeks to review the RFP and submit proposals to the City.
Proposals were received from two qualified contractors on March 18, 2014. A
summary of their proposals is included below.
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Summary of Proposal Process
Proposal Name/Number
RFP Number 152971 For Professional
Services – Street Sweeping
Total Days to Respond to RFP 42
Number of Firms at Pre-Proposal Meeting 7
Number of Proposals Received 2
Proposal Price Range *$598,661.20 – $1,231,238
*Note: Fee proposal before minor scope of work modifications, and adding 10%
contingency.
Of the two proposals received, staff unanimously selected Contract Sweeping
Services as the preferred proposer due mainly to the large cost difference. A local
company, Contract Sweeping Services currently sweeps many cities similar to Palo
Alto. Some of their other contracts include Cupertino, Foster City, San Carlos,
Saratoga, Menlo Park, and East Palo Alto. Staff has checked references that
Contract Sweeping Services provided in their proposal. All of the references
provided positive reviews for the services provided by Contract Sweeping
Services.
Both of the proposals that were submitted indicated that a five-year term would
be the minimum term of the agreement that they would accept. Contract
Sweeping staff explained that the extended length of the contract would give
adequate time to depreciate their capital investment in the equipment required
for the operation. In discussions with similarly sized cities, it was determined that
a five-year term, or a longer term in some instances, offered both sides an
advantage. All of the cities that staff spoke with which had similar size and
complexity of the proposed operation had contracts in place of at least five years.
Both proposers stated that a five-year contract was necessary due to the initial
investment, and the complexity of the operation in Palo Alto.
Phasing
Staff included in the RFP an option for a one-year phasing plan as directed by the
Finance Committee. After review of the proposals and vetting of the issues
involved, staff recommends not phasing the street sweeping operation. If the City
were to phase-in the contractor for one year (assuming that the contractor would
sweep half of the City’s curb miles):
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The City would not realize a $649,000 cost savings during the first full year
of the contract;
Contracting for only half the routes would be challenging from a
coordination and logistical perspective. See examples of phasing challenges
below.
Some of the environmental benefits listed below would not be realized
during the year of phasing.
Examples of Phasing-In Challenges
1) Managing two workgroups during the leaf season would be challenging. This
is the busiest and most time intensive season of the year for the Public
Works manager who handles a high volume of leaf season calls/complaints
during this time. The manager may not have the amount of time needed to
focus on and work with the new contractor’s staff on leaf season
acclimation, as well as the typical challenges presented with a new sweeping
contract.
2) If two work groups (City and Contractor) worked together for a one-year
phasing period, then the Contractor and the City would need to share dump
locations for sweeper debris management. Residents at these limited
locations would be subjected to twice the amount of noise as vehicles from
both work groups managed the debris and may lose parking spaces in front
of their homes. The City’s debris management operation is incompatible
with the apparent successful proposer’s method. Therefore, the operations
would be in each other’s way at these dump locations.
3) Complaints – It would be challenging to follow up and reconcile complaints
with two workgroups performing same function.
4) Debris management equipment is very old and likely in need of costly repair
work in the near future. Spending a significant amount of time and money
repairing these vehicles at this juncture is not cost effective if we can
contract the same services at a decreased cost to the City. Another year
operating our debris management equipment will also significantly lower its
resale value.
5) City employees could leave without any warning due to the perceived lack
of job security and the City would need to give the Contractor lead time to
staff up to take on the additional routes. The City could not expect the
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contractor to be able to take over that route right away. This would lead to
routes not being completed.
The Contract Sweeping Services proposal stated that they would like to interview
and potentially hire up to 4 street sweeper operator staff. Interviewing affected
City staff does not guarantee that the contractor would hire affected staff but the
contractor did express a need for more sweeper operators if they were to be
awarded this job.
Environmental Benefits
There are environmental benefits with the reduced frequency every other week
sweeping during the non-leaf season. The City would realize a 22% reduction of
greenhouse gas emissions per year equaling approximately 37 metric tons CO2
emissions per year (See Attachment A for Greenhouse Gas Calculations).
Another potential benefit is the possible reduction of other air pollutants based
on the fact that Contract Sweeping Services plans to use brand new PM10
compliant sweepers. These clean diesel sweepers are subject to stringent air
quality regulations, and are tested to be up to three times cleaner than sweepers
that comply with federal air quality standards.
The contractor stated that they will not collect sweeper debris in piles on the
street during the approximate 8 months of the non-leaf season. They will drive
the sweepers directly to the Sunnyvale Materials Recovery and Transfer Station
(SMaRT). This would be a great improvement for the City in terms of wind-blown
litter/loose debris reaching storm drains, creeks and the bay.
Street sweeping is an effective trash control measure that can reduce 80 to 99
percent of trash on the streets. In addition, street sweeping reduces sediments
that may contain pollutants such as heavy metals, which can have water quality
impacts when washed down storm drains. Therefore, reducing street sweeping
frequency may have a water quality effect related to levels of trash and heavy
metals; however, since the reduction in frequency is limited to residential/light
commercial areas where there is little trash as well as to summer months when
rain is unlikely, this potential impact is insignificant.
Staffing Impact
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If street sweeping is ‘contracted out’ as recommended by staff, then there are
seven FTE positions that would be eliminated. Currently, only five of those
positions are filled, as two vacancies resulted from employees moving to other
positions in the City. Staff has already offered all potentially displaced employees
ample time to cross-train in different positions, and to attempt to ensure that
these employees are not laid off. As mentioned above, Contract Sweeping
Services has indicated a willingness to interview and potentially hire up to four
potentially laid-off employees at a wage that is comparable to their current
salaries in Palo Alto.
Resource Impact
As described throughout this report, two significant changes are being proposed
to the street sweeping program. First is a reduction in the frequency of street
sweeping services, to every other week during the non-leaf season in residential
and light/commercial areas. The pilot results demonstrated that the City could
reduce the frequency of sweeping in the residential/light commercial areas to
every other week during non-leaf season without adverse impacts to the public or
the environment. Making this change permanent would result in anticipated
savings of approximately $87,000 in the Refuse Fund, and would not result in the
elimination of positions. The City lacks the flexibility to add or reduce the crew
size in order to ramp up for the leaf season (November-February) and would need
to be fully staffed year round in order to accommodate that workload. The
anticipated savings of $87,000 would be from the result of reduced fuel
consumption, vehicle maintenance, and vehicle replacement charges. Partially
offsetting the savings would be reduced parking citation revenue. The changes
are outlined in the following table:
Savings from reducing the frequency of street sweeping services
provided by In-house City Staff and Equipment
Category Projected Savings
Fuel $17,000
Vehicle Maintenance $36,000
Vehicle Replacement $71,000
Reduced citation revenue ($37,000)
Total $87,000
The savings figures are based on an estimated 22% reduction in the number of
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curb miles swept each year. This reduction would result in reduced fuel expenses
and vehicle maintenance expenses. With a reduction in the annual utilization of
the vehicles and equipment for this program, it is assumed that replacements will
not be needed as frequently as they are currently, which would result in a
reduced set-aside for vehicle replacement through the annual Vehicle Fund
internal service fund replacement charge.
The change to every other week sweeping will prevent weekly sweeping per the
permanently posted No Parking on Sweep Day signs in the Downtown North
neighborhood during non-leaf season. Sweeping in this neighborhood per the No
Parking on Sweep Day signs will resume for leaf season, October thru February. It
is estimated the citation revenue loss for non-leaf season period would be
approximately $37,000 in the General Fund.
The second change proposed for this program is to cease providing street
sweeping services by City staff and contract for this service, at the reduced
frequency described above. Outsourcing the regular street sweeping operations
would save approximately $649,000, across all funds, per year as shown in the
following table.
Annual Cost Estimates for the street sweeping operation with reduced
frequency (Affected Staff and Equipment)
Current Costs
In-house
Outsourced
and Reduced
Frequency
Savings
(all funds)
City Equipment Costs
Fuel $79,000 $4,000 $75,000
Maintenance/Repair $164,000 $4,000 $160,000
Vehicle Replacement $321,000 $57,000 $264,000
Subtotal $564,000 $65,000 $499,000
Personnel Costs (with benefits)
(1) Lead Heavy Equipment
Operator
$137,000 0
(1) Heavy Equipment Operator $128,000 0
(5) Street Sweeper Operators $566,000 0
Associated Non-Salary Expenses
(Uniforms, Supplies, etc.) $19,000 0
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Subtotal $850,000 $0 $850,000
Contractor Costs
Sweeping fee - 17,272 curb miles
@ $28.35 /mile.
$490,000
Debris management fee – 2,500
tons per year @ $28.00 per ton
$70,000
Unscheduled Service 500 hours @
$65.00 per hour
$33,000
Emergency Service (as requested) $10,000
Contract Contingency @ 10% $60,000
Subtotal $663,000 ($663,000)
Parking Citation Revenue ($55,000) ($18,000) ($37,000)
Total Annual Net Costs $1,359,000 $710,000 $649,000
Other cost impacts which are not included in cost comparison above:
1) Existing eqipment could be salvaged at auction. A preliminary estimate
shows that the equipment would be sold for over $400,000. These one-
time funds would be returned to the Refuse Enterprise Fund that ultimately
has funded the purchase of this equipment.
2) Some indirect allocated charges, such as General Fund cost allocation plan,
which spreads the cost of the City’s administrative functions across the
organization, could be reduced. These changes are difficult to quantify,
however, as the annual charges are dependent upon many factors, such as
the level of support provided to each fund/department, the overall budget
for each department and fund, and the number of positions in each
department and fund. As a result, these savings are not included in the
anticipated ongoing savings amount of $649,000.
3) Pension and long term retirement health costs would be reduced by the
elimination of seven full time positions. These costs are not included in the
savings amount, as it is difficult to predict with any level of certainty these
cost avoidance figures.
Notes
1) Fuel and Maintenance costs estimated using an average of costs per
equipment from FY12, FY13 and FY14 (projected).
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2) Vehicle replacement costs represent the estimated replacement charge
necessary to replace equipment every seven years.
3) The assumption is that the City would retain two sweepers that could be
operated by the two Sweeping Operators that are proposed to be retained
for part time sweeping of permanently posted areas and use in problem
areas as needed. As a result of the reduced utilization for the remaining
sweepers, the annual replacement allocation could be reduced, as
reflected in the table above.
4) Personnel costs are based on the 2014 approved pay increases, inclusive of
benefit costs
Timeline and Next Steps
If approved by the Finance Committee, staff would return to Council in August
2014 to present this item to the full Council. At this time, staff would have a
contract drafted and ready to be executed. Contract Sweeping Services would
begin their sweeping on or around September 30, 2014. The implementation
timeline is listed below:
Negotiate and develop street sweeping contract (July 31, 2014);
Current crew cross-training and opportunities to move potentially into
vacant positions (continuous);
Finalize and determine exact budget and operational impacts (July 31,
2014);
Council approval of street sweeping agreement (August 18, 2014);
Notice to Proceed (August 22, 2014);
Contractor begins work (September 30, 2014).
Environmental Review:
Outsourcing the street sweeping operation is not a project under the California
Environmental Quality Act (CEQA). The reduction of sweeping from weekly to
every other week in residential/light commercial areas during the non-leaf season
is not expected to generate significant impacts to the environment. Most
neighboring cities sweep less frequently than Palo Alto and the Regional Water
Quality Control Board has stated that residential areas are not a large generator
of litter. The City’s recent every other week pilot project showed no significant
adverse affects to the environment. Positive environmental impacts are expected
such as:
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Less impacts to roadway surfaces because of less frequent sweeping;
The contractor will not generate leaf piles throughout the City during the
non-leaf season, thereby decreasing wind blown debris;
The contractor would utilize new sweeping equipment with lower air
quality emissions; and
Less sweeping means less environmental impacts to noise, traffic
congestion, vehicle emissions, etc.
Prior to the Council meeting on August 18, staff will work with staff from the
City’s Attorney Office and Planning and Community Environment Department to
confirm that the program changes would be exempt from CEQA.
Attachments:
Attachment A - Final Method for CO2 Reduction Calculation (3) (DOCX)
Palo Alto Sweeping Program Carbon Dioxide Emissions Calculation
Method for Calculating CO2 Emissions Reduction
The City is in the preliminary stage of investigating program changes that would reduce the
frequency of street sweeping services. If the City were to reduce the frequency of sweeping,
then there would be a resulting reduction in carbon dioxide (CO2) emissions. This paper
documents the calculation of the reduction of CO2 emissions if sweeping frequencies are
reduced from once a week to once every two weeks from approximately mid-February through
mid-October (8-months, non-leaf season). If the City decides these frequency changes are
accepted and approved, Palo Alto will continue to maintain once per week frequency, during the
“leaf season” (4 months, approximately mid-October through mid-February).
The method documented below is an effort to identify factors in the calculation of this reduction
in CO2. This calculation is only an estimate based on the fuel usage of sweepers for calendar year
2013 and the reduction in curb miles if sweeping frequency changes are accepted and approved.
In order to estimate the current total of CO2 emissions from the vehicles of the street sweeping
program, we first retrieved fuel usage data for all sweepers. The City uses seven full time
sweepers to sweep weekly, five full time and two used as spares. Of those seven sweepers, four
use diesel fuel and three use compressed natural gas (CNG).
Sweeper Calendar Year 2013 Fuel Usage
Diesel Sweeper ID #
Gallons Diesel
CNG Sweeper ID# Standard Cubic Foot
4482
2,262
4483
546,074
4493
2,109
4485
365,975
4494
1,621
4422
652,465
4415
2,119
Total 8,110 1,564,514
CO2 emissions were calculated based on the 2013 fuel usage and uses as a reference EPA’s Direct
Emissions from Mobile Combustion Sources-Appendix B.
Total 2013 CO2 Emissions Calculation From Fuel Usage
Gallons (or Standard Cubic Foot-SCF) x Emission Factor (kg CO2
/gal or SCF)=1000 kg CO2 = Metric Tons CO2
Gallons Diesel or SCF Emission Factor1 Metric Tons CO2
8,110 gal X 10.15 kg CO2/gal = 82,317 Kg CO2
1,564,514 SCF X 0.054 kg CO2/SCF = 84,484 Kg CO2
Total CO2 Emissions = 167 Metric Tons
1. This calculation is based on EPA’s Direct Emissions from Mobile Combustion Sources-Appendix B
http://www.epa.gov/climateleadership/documents/resources/mobilesource_guidance.pdf and http://www.nat-g.com/why-cng/cng-
units-explained/.
Palo Alto Sweeping Program Carbon Dioxide Emissions Calculation
Using EPA’s emission factors for fuel types, 8,110 gallons diesel (diesel sweeper’s fuel) calculates
to 82,317 kg or 82.3 metric tons CO2 and 1,564,514 SCF CNG sweeper fuel calculates to 84,484
kg or 84.5 metric tons CO2. Combining these amounts and rounding up, the total CO2
emissions
for all sweeping activities for 2013 was 167 metric tons CO2
in Palo Alto’s current street
sweeping program.
CO2 Reduction Due to Sweeping Frequency Change
The reduction due to sweeping frequency change is calculated by assessing the reduction in curb
miles of those routes for which frequency will be reduced. It is estimated that in 2013, the
sweeping routes logged a total of 22,204 curb miles. After taking into account a proposed
reduction in frequency of the non-leaf season routes from once a week to once every two
weeks, the resulting change in mileage will be 17,272 curb miles, which calculates to a 22.2%
reduction.
167 metric tons CO2 emissions X 22.2% reduction (0.222) = 37 metric tons CO2 emissions per
year
Therefore, the total estimated reduction of CO2
emissions from a potential change in street
sweeping frequency, if accepted and approved, will be 37 metric tons per year.
Prepared by Sean Kennedy, P.E., 4/14/14