Loading...
HomeMy WebLinkAboutStaff Report 373-07TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER OCTOBER 29, 2007 APPROVAL OF STAFF City of Palo Alto City Manager’s Report 12 DEPARTMENT: PUBLIC WORKS CMR:373:07 RECOMMENDATIONS FOR THE DEVELOPMENT OF THE REQUEST FOR PROPOSALS FOR THE NEW SOLID WASTE AND RECYCLING COLLECTION AND PROCESSING SERVICES RECOMMENDATION Staff recommends that Council approve the twelve recommendations in the development of the Request for Proposals (RFP) for the new solid waste and recycling collection and processing services. BACKGROUND The Palo Alto Sanitation Company (PASCO) has been collecting and transporting solid waste within the City of Palo Alto since 1951 and has been collecting and processing recyclable materials since 1978. PASCO initially operated under an "evergreen" contract that was renewed every year. In November 1998, PASCO was formally acquired by USA Waste of California (a Waste Management Company), and in August 1999, Council approved a new agreement for PASCO starting on September 1, 1999 for a term of up to ten years. The agreement is in effect until June 30, 2009. In 2006, the Director of Public Works created a cross-departmental committee to oversee the procurement process for a new solid waste and recycling services agreement. The committee includes staff from the City Manager’s Office, Administrative Services, Planning, Public Works, and Utilities Departments, and the City Manager’s Office. The City Attorney’s Office and the City Auditor are advisors to the committee. In March 2007, Council approved a contract with HF&H Consultants (HF&H), a consulting firm specializing in solid waste and recycling procurement processes, t-[F&H’s scope of work includes: ¯ CMR:373:07 ¯Evaluate and develop recommendations on the type of agreement, compensation methodology and term best suited for the City of Palo Alto. ¯Incorporate the goals of the Zero Waste Operational Plan into the RFP. ¯Develop drafts and final copies of the RFP package and supporting documentation for the draft agreement and establish evaluation criteria. Assist in the evaluation of proposals, costs, and interview process. Page 1 of 7 The procurement process is expected to begin in January 2008, with July 2008 as the projected date for awarding a new contract, with services beginning July 1, 2009. This solicitation and award timeline has been developed to allow adequate time to implement a new contract and for consideration of project requirements such as a project-level environmental review under the California Environmental Quality Act (CEQA). The key milestones and dates are included in the project timeline (Attachment A). Adding to the complexity of the procurement timeline and process are the Zero Waste Operational Plan, the closure of the City landfill, and the City’s contractual commitments with the Sunnyvale Materials Recovery and Transfer (SMART) Station and the Kirby Canyon Landfill. Zero Waste Operational Plan In September 2007, City Council approved a tiered approach for the continuing review, approval, and implementation of the Zero Waste Operational Plan. This included evaluating as part of the upcoming waste hauling RFP process the addition of five programs. The five programs include: ¯Organics - divert food scraps, compostables, untreated wood and other compostables for all sectors of the community. ¯Single-stream materials - expand the type of materials currently being accepted. ¯Bulky item collection - enhance the existing bulky item reuse and recycling program. ¯Construction and demolition materials (C&D) diversion - divert all C&D debris boxes to a local C&D debris processor. Commercial recycling - provide recycling service to all commercial customers. City Landfill The City’s landfill is estimated to reach fill capacity in 2011. the State is anticipated in 2013. The final closure approval from SMART Station The City is in partnership with the Cities of Mountain View and Sunnyvale for the operation of the Sunnyvale Materials Recovery and Transfer (SMART) Station. The SMART Station disposes of waste at the Kirby Canyon landfill. The City Memorandum of Understanding with Sunnyvale and Mountain View to use the SMART Station will terminate on October 15, 2021. Kirby Canyon Landfill Palo Alto’s agreement with Waste Management Inc. to use Kirby Canyon landfill provides for delivery of specific annual tonnages of solid waste with per-ton put-or-pay payments to be made to Waste Management for each ton that falls short of the annual tonnage commitment. This commitment to the Kirby Canyon Landfill will remain in effect until 2021. At the Council Study Session on October 1, 2007, staff provided an overview of the upcoming procurement process for the new solid waste hauling and recycling contract; highlighted key policy issues relating to the new contract, and presented the challenges, options and preliminary approach to the key RFP components related to services, facilities and the agreement. CMR:373:07 Page 2 of 7 DISCUSSION This report focuses on three major components of the upcoming RFP for the new solid waste and recycling service: services, facilities and certain agreement terms. A more comprehensive list of options organized by major issue, together with their related advantages and disadvantages can be found in Attachment B. Staff will incorporate Council direction on these recommendations into the draft RFP, which is scheduled for Council review on December 17, 2007. At the review on December 17th, staff will also propose a prioritization/weighting structure to guide the evaluation of responses. Service Components: Recommendation #1:In order to allow Council to evaluate cost with the zero waste operational plan recommendations, structure the RFP to include baseline services with itemized zero waste services and other service innovations as proposal options. The RFP will solicit separate pricing for baseline services, zero waste services, and innovation. The baseline services represent the current service levels for garbage, recycling, composting and C&D debris. The zero waste services include the five additional or expanded services for organics, single stream materials, reuse and recycling bulky item collection, C&D recycling, and commercial recycling. The innovation section of the service package would allow proposers to present other services not required in the RFP which they believe could advance the City’s diversion goals. The recommendation requires that the cost for individual zero waste services be itemized and separated from baseline services, which will provide Council with the ability to choose services according to both cost and diversion impact. Recommendation #2:To minimize future garbage collection cost, make curbside garbage collection the standard, with an option for backyard/side yard collection with additional fee. Currently, the standard garbage collection for the City of Palo Alto is backyard/side yard, resulting in PASCO manually collecting the material using two workers on each route. Residents provide their own 32-gallon garbage can. The standard collection for recycling and yard trimmings is curbside collection in carts. The City is unique in offering the backyard/side yard as a standard service for garbage and is one of the last cities in California to offer this high level of service. In 2005, the City began offering carts for curbside garbage collection. The optional curbside garbage cart became popular and demand for it continues to increase. It is estimated that 33 percent of residential customers are currently using a City-provided garbage cart instead of a can. In addition, there are residents using a can for their garbage and taking it to the curb for collection. As a result, it is estimated that approximately 45 percent of residents are currently taking their garbage cart or can to the curb. Eliminating backyard!side yard collection as the standard would result in cost savings, while still giving residents the ability to obtain this service at an additional charge. The City will continue CMR:373:07 Page 3 of 7 to offer a backyard/side yard collection service for those residents that are medically unable to take their carts to the curb and for those residents who elect to pay for the additional service. The intent of both this recommendation and recommendation #3 is to create a standardized location and method for collection services, which would be required to be located at the curbside on public streets to the greatest extent feasible. That will enable the maximum utilization of automated or semi-automated collection equipment with a resultant savings in labor costs and consequential rate minimiTation. Recommendation #3:To minimize future collection cost on private streets and alleys, require that the base service be defined as collecting all solid waste items on public street frontages (curbside), and that proposers submit a separate bid price to service homes on private streets or alleys. Collection on private streets and alleyways is an issue in most communities. It accounts for less than 10 percent of Palo Alto customers. There are currently 16 locations where residential garbage is picked up from the alleyway by a standard collection vehicle instead of backyard!side yard or curbside service while the recyclables and green waste are picked up at curbside. PASCO also provides non-standard collection services to seven private streets or driveways by sending a smaller vehicle to collect the materials. It is projected that there are an additional six development sites currently under construction or going through a permit process that may not be accessible to a standard collection vehicle. Currently, PASCO can only charge customers rates that are approved by Council through the rate schedules. The current rate for servicing private streets is typically an additional surcharge rate of $845.76 annually. These rates are inclusive of costs for driver, equipment, fuel, and depreciation. The recommendation would provide a more accurate cost for the non-standard collection services and would create a reasonable rate for customers with the private streets. This cost could be avoided by having the resident take both refuse and recyclables to the street frontage (curbside). Recommendation #4:To minimize labor issues relating to retention of existing PASCO employees and avoidance of wage disputes, encourage new service provider to retain qualified, productive existing PASCO employees and to pay wages at levels equivalent to existing wages. One of the labor issues for the new agreement will be the retention of existing PASCO employees who have a long work history in the City. Adding to the complexity is that PASCO is currently a non-union operation but pays union equivalent wages. To promote worker equity issues and to ensure that non-unionized organizations will not be given an unintended preference in the proposal process, staff recommends structuring the RFP to provide a preference for retention of PASCO workers and payment of union equivalent wages. CMR:373:07 Page 4 of 7 Key Facility Components: Recommendation #5:Require service provider to find operation yard within the region. Allow service provider to utilize a portion of the Geng Road site as a staging area. It is estimated that the service provider will need between 2.5 and 3 acres of space for its operations, consisting of facilities for its collection vehicles, equipment repair, a customer service office, container storage, maintenance operations, and an employee operations yard. While there are certain economies to co-locating these operations, they also can be located at different sites and do not all need to be located in Palo Alto. PASCO’s operational yard is currently located at 2000 Geng Road and it is approximately 1.9 acres. It appears that approximately one acre of the current site is considered parkland, and may have use restrictions following termination of the PASCO contract and!or cessation of the landfill. A portion of the Geng Road site currently utilized by PASCO may be available to rent to a future provider for discrete operations. Utilizing a portion of the Geng Road site as a staging area would allow for some operations to be local thus facilitating quicker resolution of customer service issues. Since available property in the area is limited, identifying a portion of the Geng Road site for operational use will reduce the complexity for proposers. Providing a local staging area could reduce expenses for transportation. Recommendation #6:Utilize the existing City composting operation for yard trimmings as long as feasible (estimated to be 2011). The expanded organics program for the commercial sector (including food waste) will be processed at a regional facility starting in July 2009 with the new agreement. The recommendation reflects a desire to continue to utilize the City’s compost operation to the fullest. It implements a curbside organics program in 2009 for the commercial sector, which is two years earlier than proposed in the Zero Waste Operational Plan. The commercial sector has the potential to divert over 12,000 tons per year of expanded organic materials (food waste, compostable paper & untreated wood). Recommendation #7:Direct future service providers to collect and process single stream materials, rather than allowing proposers to bid other methods. The recommendation builds on the success of the current single stream recycling service that is highly accepted and utilized by the community. Recommendation #8:Require proposer to utilize C&D processors other than the SMART Station, which at a minimum recover 70% of the materials for reuse and/or recycling. Currently, the SMART Station recovers only 25% of materials for reuse and recycling. The recommendation is consistent with the Zero Waste Operational Plan recommendations and the City’s C&D ordinance requirements. It also would lead to an estimated increased diversion of 5,000 tons per year. CMR:373:07 Page 5 of 7 Key Agreement Components: Recommendation #9: Strive to create one contract for both collection Reserve option for separate processing contracts. and processing. Currently, the City has one contract for existing services minimizing the number of contracts for the City to administer. The recommendation increases flexibility in how processing facilities could be utilized. Recommendation #10:Continue with existing practice of exclusive agreement for solid waste and residential recyclables. The existing contract with PASCO is an exclusive agreement for solid waste and residential recyclables and non exclusive for commercial recyclables. The recommendation allows the City the greatest possible level of control over the waste stream. It will allow for increased accountability since the waste stream can be more closely monitored and reporting will be more comprehensive. The additional advantages to this recommendation are that the level of exclusivity may generate more interest and competition during the proposal process, which, with a cooperative and motivated contractor, these provisions could be more helpful in achieving Zero Waste goals. The service quality and impact on the community can be more closely regulated to increase accountability. Recommendation #11:Create a 12-year maximum term for the collection and hauling agreement such as an 8-year base term with the potential of up to four 1-year extensions, to be granted either singularly or cumulatively depending on circumstances at the time. The 12 year maximum term will have an end date of 2021, to coincide with SMART Station and Kirby Canyon Landfill agreements. This could lead to expanded opportunities for improved services and reduced costs in the next contractor selection process. The relatively short initial term may keep the contractor focused on its performance in order to obtain the extension, while enhancing the City’s ability to reward a successful contractor with an extension or to replace a poorly performing contractor. Recommendation #12:Negotiate a fixed price compensation agreement with specific annual index adjustments and fmancial incentives for diversion. The recommendation results in a compensation methodology that is simple, easy to predict and inexpensive to administer. It holds the contractor accountable for its key representations to the City. It is also consistent with City Auditor’s recommendation, on the April 2007 Audit of the Palo Alto Sanitation Company Contract, to simplify future contract administration. RESOURCE IMPACT Resource impacts will be evaluated as part of the RFP process. Staff will return in the summer of 2008 to Council, for a study session where staff will present RFP results, evaluation and costs for these new services. CMR:373:07 Page 6 of 7 POLICY IMPLICATIONS These recommendations are consistent with existing policies. ENVIRONMENTAL REVIEW This report is not a project for the purposes of the California Environmental Quality Act. The City will perform an environmental assessment in connection with the final award of the new contract. ATTACHMENTS Attachmem A: Project Timeline Attachment B: RFP Componem Options PREPARED BY:Russell Reiserer, Manager of Solid Waste Programs Paula Borges, Executive Assistant GLENN S. ROBERTS Director of.Public Works EMIL~-~SON Assistant City Manager CMR:373:07 Page 7 of 7 ATTACHMENT A New Solid Waste & Recycling Services Contract Project Timeline Key Items Council meeting - approve key elements in the RFP Release RFP Evaluation and interviews of proposers CEQA- project level environmental review Council study session (RFP results, evaluation, costs) Negotiate and finalize contract Council meeting to award contract New contract begins Date December 2007* January 2008 April - June 2008 January - June 2008 June 2008* June - July 2008 July 2008* July 2009 * Oppommities for Council involvement and!or direction CMR:373:07 Attachment A Page 1 of 1 ATTACHMENT B ;> 0 ~ c~N ~ ~0 0 0 0 °~"~ 0 o 0o 0o ¯¯¯ N 0o ¯@ © o Z~ © o o © ~o ~ ~ o ~’~C) °~’~o ~~o ¯¯¯¯¯ 0 0 0