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HomeMy WebLinkAbout0329.094, . June 23. 1994 THB HONORABLE CITY COUNCIl, Palo Alto, California 16 Approval nf Aml"!noment #'1 to Contl.'a..s::t. __ ~_....A.fi~1.t.h ___ J?,a.l.Q.......Al.t..g SanitatiQn Company for Refuge CoJ lecLl'UL1ilUl BCCyrl iOg !U!..L'llcea Members of the Council: Report in Brie! This report recommends that Council approve and Hutho:r.lze the MaYO't" to ',"l:l(eGl.lte the seventh annual Arr,endlf,ent to the Cor."':!)en8<1.tion section of the existing contl."act with Palo Alto Sanitation Co;r.pany (PASCO) fOl." :cefuse collection and reeyel ing sel.-vices. 7his <3rr.endrr,ent will set the compensation to be received by PASCO dUl:ing fiscal year 1994-95. Background The present cont.ract with PASCO prov1dt!B for reflJGC collection services, residential and comme'tcial recyclillg~ public r.ocaptacle emptying and operation of the Recycling Cent~r" 'Tho contl.'act provides for PASCO to receive a percentage of the rchlOo· fund revenue for its services. This amendment. No, 7, is ito the master contract which was approved by Co~mcil in 198'1. The master contract. between the City ~nc\ PAS('O cotaplishes the basis by which PASCO I s compensation will 00 detel"mlned. The annual amendments ·provide for the review of the tlpcoming year I e:: PASCO budget and calculation of specific compeneat ion paged upon thOA€­ master contra.ct provisions. This yearts l".~eview was condu(::-ted consistent with not only those contractual provisions and historical precedents, but also with consideJ:"ation for those preliminary recommendations in the PASCO a·udit being conducted by the City 1\l.lditor's office that can be included in this review, Staff from both the Public Worko and Finance Departments have revic'N'ed PASCOls proposed bHdget in the manner proposed by those recommendations and have set next yearls - 1 - i I j J o o compensation based on such review. The r-esultE:l of the xevi~w of PASCOla budget are included in the report. Tliis contruct amendment represents an extension of the PASCO contract on its ,present terms and conditione. The contl"act will thus be -continued through 1994-95 on the same basia as it has exist~d during 1993-94. ISsues raised in the draft audit will be responded to by staff during August of tllis year. The contract requires that p~co be notified of any contractual changes at least six months prim:.' to the effective date of the agreement. 1\8 g1Jch, PASCO will be notified of any contractual changes rcsul ting from the audit by December. 31, 1994. These changes will oocome effective then with the 1995-96 contract. The contents of this reportr including the potential timing for implementat.ion of specific recommendations, have been discussed with the City Auditor, Am.endrrl,en.L to Cootract. The contract between the City and PASCO has a provlslon which allows for an annual review and renegotiation of the percentage of revenue payment. Staff 'n practice has been to meet with PASCO. and provide for the revision of percentage of revenue payment through a contract amendment approved by the City ('ouncil. This process allowB for a ~ore detailed eV<lluation of PASCO's budget and operating cost effects on the subsequent Gi..ty refuse fund budget forecast. City staff has carefully analyzed PASCO's cost data to ensure that. requested funds for FY 1994-95 are reasonable, and that PASCO vehicle replacement plans are prudent. Finance staff worked closely with Public Norka 'staff in reviewing the PASCO budget submittal. Budget and Accounting staff spent in excess of 80 hou:t:s reviewing the budget, the result of which was r among other things, a reduction of $9'J I 969 in val'ious line items in the P1\SCO submittal, For the purpose of rat.e setting for next fiscal year and PASCO profits, the pre-tax rate of return on undepreciated fixed asset~ has been targeted at 5 percent, Any pre-tax profit exceeding 8 percent will be divided equally with the City. The City 1 s shan~ o( any pre~tax"profit will be credited against the succeeding year's revenue ),:equirement for PASCO, CMR, 329 ,94 -2- .. \ ," \ r o If PASCO ..... ere to receive more profit than the agreed rate of return in any particular fiscal year, the disallowed excess would be applied as an offset to the following year1s revenue requirement; and the percentage of refuse service billing paid to PASCO ~'I'Ould be reduced, This ensures against PASCO receiving excessive profits. Includ~d in the calculation of the percellt.age to PASCO is a credit to the City of Palo Alto of $22,258, representing the amount paid to PASCO in 1992-93 that is in excess of the 8 percent profit cap. PASCOla total budget for 1994-95 is projected to be $7,306,000. including $1,441,000 of directly billed revenue. After adjustments for revenue from sale of equipment, credit from 1992-93 excess earnings, and inclusion of the targeted return, total payments to PASCO for 1994 -9S are projected at $6,077.397. ']'hat is $500,000 above the cun'ent year projected actual payments. The increaoe is proposed to pay for a full year. of refUse hauling to the Sunnyvale SN'aRT atation cmd the addition of two staff by PASCO to meet routine demands and support increased cardboard and commercial white paper rf!.cycling. The targeted 5 percent rate of retut"n on undepreciated fixed assets equates to a projected $339,827 in ea:rnings for PASCO during 1994 -95. 'The percentage of the total refuse fund customer sales revenues to be pa id to PASCO will be decreased from 31.02 to 29.58 percent for FY 1994-95. Bnvi nmmfmtaJ...Aa..a.eSsment The amendment to Contract No. 4688 fOr compensation purposes is not a project under the California Environmental Quality Act. Recommendation Staff recommends that Council approve and authorize the Mayor to execute Amendment No. 7 to Contract No. 4688" to provide "for revised compensation to the Palo Alto Sanitation Company (PASCO) under the contract" for refuse collection and recycling' services .. effective July 1, 1994. Respectfully submitted, MICHAEL H. MILLBR Deputy Director, Public ~lorks Operations -3- .. . . ' I I I " !. : ,. OLSNN S. ~08BRTS Director of Public Works Aww2'~ JUNE FLRJoI I NO City M-9:oaget· Attachment: Amendment "7 o -4- AKENDlIBm' NO. 1 TO CONTRACT lIO. 4688 DJmoJSBN 'I'll!! CITY OF PALO IUlro AND PALO ALTO SANITATION COHP~~ FOR COLLECTION AND TRANSPORTATION OF R&PUSB PRODUCED AND ACCU>!ULJ'<T&O IN TII1l CITY . PISCIJ, \'BAA" 1994-1995 THIS AMENDHBNT to Contract No. 4600 is made and "ntel'oct into this day of .... ' 1994. by and between the GIT1 OF PAW AI.:ro:--a munlclpai-co'q;o-rat1on of Calif9rnia, hereillafter referred t,o as 'Cl'1''(t -and PALO ALto SANITATION" CCMPANY~ a corporation organi zed lindc'l' the laws of tho State of California. hereinaftet' referred to as ·COtrfR!\t1'ORIIi; ~mgREA.<). Coatt'act. NO. 46.88 r.-as previously '):ltck:"ed ir.t_o between CITY and CON'l'RAC'f'OR, under ... ·hich C'QNTRf:lCTOR provides certain specified scnrice-s for the collec(:ion and tl."ansportation of refuse produced 01" accUffi"\llated in CITY: and WHSRFAS, the pat"tics desire to modify said contract ao set forth below; NOW, THRREFORE~ ill conDidel'atioll of their mutual covenants, tho pal.,ties hereto ,agr.ee that Cora ract No. 46B& shall be amended as follo'o'!'B:; ~. Section 9 is amended to read as follows: "9, COMPENSATION As full and complete co~pen8ation for the services to be provided by COlftRACTOR hereunder, CITY shall pay CONTR~CTOR a. fOllow.: Effective the, first billing cycle of July, 1994, with respect to the revenue derived each calendar month h:om CITY refuse service r~tes described in Section a above, CITY shall compute and pay to COnfRAC'I'OR. on or before the tenth of. the followlllg month, an amount equal to ']').;enty Nine and Fifty Right hundredths percent (29.S8\) of revenu~ billed under reCuse rate sch~:dules~ less any liquidated dama.ges assessed unde:t· Section 5(c) (3) of. the refuse collection 1 ,,',', o specific:ations. With respect to the revenu-:! derived each calendar month from the CITY collection bin rental described in Section 8 above, CITY shall comput~ and pay CON1'RACTOR on or before the tenth of the following mCH)th an amQUnt equal to ninety-five percent !95t) of revenue billed \mder refuse rate schedules for such collection bins. CONTRACTOR shall credit CITY with six percent (6t) of gross revenues of CONTRACTOR# derived (ro.., activities associated with Qt" arising from this contract, but which ~I'e not per~ormed within tho scope of this contract (such as but not limited to po:r:tions of the cleaning operation). CITY is authoriz.ed to deduct such credit from the payments due CONTRACTOR in the next succeeding year. Accounts and records from said activities shall be rtade availah,l e to CITY concurrently with the A,...mual FinanCial Statements supplied pursuant to Section 'I above. Prom the above payment arnounts, CITY may deduct liquidated damages assessed CONTRACTOR under Section 34 of this contract. Annually, on or before Decernl)er 31, CITY or CONTRACTOR by 'Written not tee olle to the other may :n:~quest a review and renegotiat.ion of the percentage Of revenue payment. My renegotiated payment amounts, any pel.'centage of revenue payment adjustments or any other renegotiated items shall be' included in a letter of understanding which includes the formula of calculations used to determine percentage of payments, and will not become effective until July 1 the following year . . ~..o.N......Z. Except as llerein modified, all othar- pl"ovisions of, including the exhibits and amendments [,0, Contract No. 4688 shall re'main in full force and effect. SECTION 3. The Council of the-City of Palo Alto fillds that this amendment to Contract No. 4669 is not a project. under the requirements of the California Environmental Quality Act and, therefore, no environmental assessment is necessary. 2 O'''.ctIo., •• N .... ''~<O \ .. ,',' \> .. .. . -. . _. -. c. _ ._'.'_'~ ___ """'-'""'_""""" __ ". AmendnlE!nt IN WI-TNBSS WHEREOF, the part:i.es hereto have executed this the day' and year first above written. APPROVED: -Ma--y-o-r---------------------------- ATl'BST: City Clerk APPROVED AS TO FORM: Senior. Asst. City Attorney Assistant City Manager Qirector of Finance Risk Manager APPROVED AS TO CONTENT: Director of Public Works 3 I, r .