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HomeMy WebLinkAbout4.5 Waste Management Extend Agmt or 19 82 STAFF REPORT CITY CLERK ` CITY COUNCIL File #600-40 DATE: April 7, 2015 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager " SUBJECT: Extension of the Disposal Service Agreement with Waste Management of Alameda County, Inc. Prepared by Roger Bradley, Assistant to the City Manager EXECUTIVE SUMMARY: The City Council will consider extending the contract term within the Disposal Service Agreement with Waste Management of Alameda County for solid waste disposal services at the Altamont Landfill. The proposed extended term will be for a single period of ten years and terminate on June 30, 2025. Additionally, the proposed contract extension includes the adoption of a per-ton disposal fee for each year of the extended term. FINANCIAL IMPACT: The proposed contract extension includes a per-ton fee that will be assessed upon Amador Valley Industries (AVI) for the cost of disposing the solid waste collected within the City of Dublin. The per-ton fee is a pass through charge that AVI recovers through the rates assessed upon Dublin residents and businesses. While the proposed fees will increase over the extended term, the cost of the increase is a minor portion of the overall cost of services. Staff currently estimates that the cost increase for the average residential customer will increase approximately $0.07 per month in the first year RECOMMENDATION: Staff recommends that the City Council adopt the Resolution Approving the First Amendment to the Disposal Service Agreement with Waste Management of Alameda County, Inc. DESCRIPTION: The City's current agreement with Waste Management of Alameda County (WM) for solid waste disposal service at the Altamont Landfill is set to expire on June 30, 2015. The current agreement was executed upon the completion of a formal bidding process in January of 2005. The agreement in its current form provides an option to extend the agreement term for a period of up to 10 years. As a result, Staff has engaged WM to determine the potential for extending the agreement term. Page 1 of 3 ITEM NO. 4.5 In response, WM has presented, and Staff has evaluated, a proposed extension term of 10 years. In addition to the term, the current agreement requires that any extension also include the negotiation of new disposal fees at the landfill. Currently, Amador Valley Industries (AVI) pays a per-ton charge for the disposal of the solid waste is collects within the City of Dublin. AVI is required to take all solid waste collected within the City of Dublin to the Altamont Landfill. Aggregating all the solid waste collected within the City and guaranteeing its delivery to a single landfill allows the City to negotiate lower disposal charges at the landfill. The current contractor per-ton charge is $15.70, and the City delivers approximately 24,000 tons of solid waste to the landfill on an annual basis, for a total annual contract value of approximately $374,000. (There are per-ton governmental fees assessed on solid waste disposal at the landfill, but as those costs are not governed by this contract, they are not evaluated herein.) Initially, WM had proposed a large increase in the first year (28%) and a minimum of a 3% increase every year thereafter, depending upon the consumer price index, due to increasing cost of services. However, WM was open to Staff's request to phase in the increase over the life of the extended period, instead of the larger increase in the first year. Thus, as is seen in the table below, the proposed disposal rates for the extended term have a percent increase that diminishes on an annual basis. This has a few advantages. First, it allows for a known rate change each year, creating greater certainty in the City's annual rate adjustment process. Second, it mitigates the cost impact on the Dublin ratepayer, especially those that might be on fixed incomes, allowing them to adjust to the increase gradually. Finally, it saves money. Under the proposed rates below, the ratepayer will save more the $300,000 over the life of the agreement as residents and business will be paying less during the earlier years within the agreement as opposed to a large increase in the first year. Proposed Contractor Disposal Service Rates Agreement Year Rate Increase Increase FY 14/15 Rate $15.70 - Year 1 $16.80 7.00% Year 2 $17.92 6.70% Year 3 $19.07 6.40% Year 4 $20.24 6.10% Year 5 $21.39 5.70% Year 6 $22.51 5.25% Year 7 $23.64 5.00% Year 8 $24.68 4.40% Year 9 $25.54 3.50% Year 10 $26.31 3.00% In conducting its review and analysis, Staff has compared the proposed rates with jurisdictions that have recently negotiated new disposal service agreements. In particular, the City of San Ramon completed an agreement with Republic Services at the Vasco Road Landfill, and Oakland has a new agreement with WM at the Altamont Landfill. A comparison of the City's proposed rates with these jurisdictions is presented below. Page 2 of 3 San % $ Dublin Ramon Oakland Average Difference Difference 2016 $16.80 $23.44 $24.92 $24.18 -43.94% ($7.38) 2017 $17.92 $24.15 $25.67 $24.91 -38.99% ($6.99) 2018 $19.07 $24.87 $26.44 $25.65 -34.53% ($6.58) 2019 $20.24 $25.62 $27.23 $26.42 -30.55% ($6.18) 2020 $21.39 $26.39 $28.05 $27.22 -27.24% ($5.83) 2021 $22.51 $27.18 $28.89 $28.03 -24.54% ($5.52) 2022 $23.64 $27.99 $29.76 $28.87 -22.14% ($5.23) 2023 $24.68 $28.83 $30.65 $29.74 -20.50% ($5.06) 2024 $25.54 $29.70 $31.57 $30.63 -19.94% ($5.09) 2025 $26.31 $30.59 $32.51 $31.55 -19.92% ($5.24) *Rate increase for Oakland have been estimated at 3% annually, however, actual rates fluctuate on an annual basis depending on certain calculated indices and could be more or less than this amount. Based on the data gathered from these recent contract negotiations, Staff believes extending the agreement, rather than re-bidding the contract, provides the most value to the community. Therefore, Staff recommends that the City Council adopt the resolution approving the proposed contract amendment (Attachment 1). NOTICING REQUIREMENTS/PUBLIC OUTREACH: No noticing required. ATTACHMENTS: 1. Resolution Approving First Amendment to the Disposal Service Agreement between the City of Dublin and Waste Management of Alameda County, Inc., with the Amendment attached as Exhibit A Page 3 of 3 RESOLUTION NO. - 15 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING THE AGREEMENT BETWEEN THE CITY OF DUBLIN AND WASTE MANAGEENT OF ALAMEDA COUNTY, INC. FOR SOLID WASTE DISPOSAL SERVICES WHEREAS, Waste Management of Alameda County, Inc. and the City of Dublin entered into an agreement for solid waste disposal services commencing July 1, 2005; and WHEREAS, the current agreement will expire on June 30, 2015; and WHEREAS, the City of Dublin wishes to continue contracting for Solid Waste Disposal Services with Waste Management of Alameda County, Inc. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the agreement by and between the City of Dublin and Waste Management of Alameda County for Solid Waste Disposal Services as described in Exhibit A attached hereto and by reference made a part hereof. BE IT FURTHER RESOLVED that the City Manager be authorized to execute the agreement on behalf of the City of Dublin. PASSED, APPROVED AND ADOPTED this 7th day of April, 2015. AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: City Clerk ATTACHMENT 1 FIRST AMENDMENT TO THE DISPOSAL SERVICE AGREEMENT BETWEEN THE CITY OF DUBLIN AND WASTE MANAGEMENT OF ALAMEDA COUNTY, INC. This First Amendment to the Disposal Service Agreement, dated as of July 1, 2015 (the "Amendment") modifies and amends that certain "Disposal Service Agreement" between the City of Dublin ("CITY") and Waste Management of Alameda County, Inc. ("CONTRACTOR") dated January 12, 2005 (the "Agreement"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Agreement. Recitals WHEREAS, the Agreement sets forth the respective rights and obligations of the parties with respect to the Disposal of Solid Waste at the CONTRACTOR's Disposal Facility for solid waste collected within the CITY; and WHEREAS, the parties desire to amend the Agreement to extend the term (the "Extended Term") of the Agreement and establish the Disposal Element for the disposal of Solid Waste at the CONTRACTOR's Disposal Facility throughout the Extended Term; and WHEREAS, the CONTRACTOR had previously guaranteed the CITY permitted capacity at its Disposal Facility through the Initial Term, and upon execution of this Amendment, will guarantee permitted capacity at the Disposal Facility for the Extended Term for Disposal of Solid Waste generated in the CITY; and NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, CITY and CONTRACTOR hereby agree to amend the Agreement as follows: Section 1 . Article 2 is hereby amended to read as follows: 2.01 Term. The term of this Agreement shall be for a twenty (20) year period beginning July 1, 2005 and terminating on June 30, 2025. 2.02 Other Provisions. The CITY may, at the end of the term of this Agreement, either renegotiate the terms and conditions of the Agreement with CONTRACTOR or request proposals from qualified contractors to provide Disposal Services. If the term of this Agreement is extended, the compensation provisions of Article 5 shall be subject to negotiation. 2.03 Nothing in this Agreement shall be construed to provide a unilateral right in either CONTRACTOR or CITY for an extension of the term. Section 2. Section 4.02.2 is hereby amended to read as follows: 1 4.02.2 Additional Disposal Facility Permits. To assist the CITY in complying with the California Integrated Waste Management Act of 1989, CONTRACTOR shall endeavor to secure additional permits necessary to make available at all times twenty (20) years of Disposal capacity at the Disposal Facility for Solid Waste generated in CITY in accordance with Section 4.11 of this Agreement and sound Disposal Facility engineering and operating practices. Should CONTRACTOR reasonably conclude that it is no longer feasible to make available twenty (20) years of Disposal capacity and maintain Disposal rates pursuant to Exhibit 1, CONTRACTOR shall notify the CITY of its determination and provide all studies information and data which support CONTRACTOR's conclusion to the CITY. CITY shall review such support and CONTRACTOR shall promptly meet with the CITY to review the same and, thereupon, CONTRACTOR shall be relieved of its obligation in this regard. Nothing in this Agreement requires the CITY to issue a permit for, or take any other land use action related to, CONTRACTOR's Facility. The CITY retains its right and duty to act on any permit applications or environmental review documents submitted to it in connection with such expansion as it considers appropriate under Applicable Laws and policies independent of this Agreement. Section 3. Section 4.11 is hereby amended to read as follows: 4.11 Reservation of Disposal Capacity. CONTRACTOR shall guarantee its ability to accept and Dispose of all Solid Waste delivered to the Disposal Facility by the Collection Contractor for twenty (20) years from July 1 2005. CONTRACTOR shall be responsible for reasonably estimating the quantity of capacity that it shall be required to provide to Dispose of all Solid Waste generated in the CITY over the term of the Agreement. The CITY makes no representations and is under no obligation regarding the quantity or composition of the Solid Waste delivered to the Disposal Facility by the Collection Contractor. Section 4. Section 5.03 is hereby amended to read as follows: 5.03 Government Fees. The Disposal rate includes the following government fee elements: Agency Total Government Fee/Ton (a) California Integrated Waste Management Board (AB1220) Fee $1.40 (b) Local Enforcement Agency(ACSWMD) Fee $0.38 (c) Business License (County) Fee $0.95 2 (d) Alameda County "Measure D" Fee $8.23 (e) Alameda County Waste Management Authority Facilities Fee $4.34 f Alameda County Waste Management Authority Household ( ) Hazardous Waste Fee $2'15 (g) County Planning Department Fee $0.10 (h) County Open Space Fee $1.79 (i) County Transportation Fee $0.01 (j) Other Fee $0.03 Total Government Fee Elements* $19.38 *current fees as of January 1,2015,fees are subject to change as determined by the regulatory agencies. Section 5. Section 21.01 is hereby amended to read as follows: 21.01 Except as provided herein, whenever either party desires to give notice to the other, it must be given by written notice addressed to the party for whom it is intended at the place last specified and to the place for giving of notice in compliance with the provisions of this paragraph. For the present, the parties designate the following as the respective persons and places for giving of notice: As to the CITY: Roger Bradley Assistant to the City Manager 100 Civic Plaza Dublin, CA 94568 Telephone: (925) 833-6650 Fax: (925) 833-6651 Email: roger.bradley @dublin.ca.gov As to the CONTRACTOR: Barry Skolnick President Waste Management of Alameda County, Inc. 17298 th Avenue Oakland, CA 94603 Telephone: (510) 613-22112 Email: bskolnic @wm.com and a copy to: 3 District Manager Waste Management of Alameda County, Inc. 10840 Altamont Pass Road Livermore, CA 94550 Section 5. Exhibit 1 on Page 39 of the Agreement is hereby amended to read as follows: Exhibit 1 City of Dublin, CA DISPOSAL RATE PER TON Beginning Date of Disposal Element Disposal Total per Ton Agreement Year ($/ton) Government Fee Element Disposal Rate July 1, 2005 $12.76 $14.90 $27.66 July 1, 2006 $12.76 $15.02 $27.78 July 1, 2007 $13.02 $15.22 $28.24 July 1, 2008 $13.28 $15.52 $28.81 July 1, 2009 $13.54 $16.35 $29.89 July 1, 2010 $13.95 $18.94 $32.89 July 1, 2011 $14.37 $19.14 $33.51 July 1, 2012 $14.80 $19.22 $34.02 July 1, 2013 $15.24 $19.26 $34.50 July 1, 2014 $15.70 $19.26 $35.03 July 1, 2015 $16.80 $19.38* $36.18 July 1, 2016 $17.92 $19.38** $37.30 July 1, 2017 $19.07 $19.38** $38.45 July 1, 2018 $20.24 $19.38** $39.62 July 1, 2019 $21.39 $19.38** $40.77 July 1, 2020 $22.51 $19.38** $41.89 July 1, 2021 $23.64 $19.38** $43.02 July 1, 2022 $24.68 $19.38** $44.06 July 1, 2023 $25.54 $19.38** $44.92 July 1, 2024 $26.31 $19.38** $45.69 *Current fees as of January 1,2015,fees are subject to change as determined by the regulatory agencies. **Fees are adjusted periodically and this value will be changed to reflect current fees at the time of the contract price adjustment. 4 Section 6. In the event of a conflict between the Agreement and this Amendment, this Amendment will control. Except to the extent inconsistent with this Amendment, the Parties ratify and confirm all of the terms and conditions of the Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date and year first above written. CITY OF DUBLIN Dated: By: Christopher L. Foss City Manager Attest: By: Caroline Soto City Clerk APPROVED AS TO FORM: By: John D. Bakker City Attorney WASTE MANAGEMENT OF ALAMEDA COUNTY, INC. Dated: By: Its: . r- 5