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DATE:
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SUBJECT:
COUNCIL AGENDA REPORT
February 10, 2005
MEETING DATE:'2/22/05
STUDY SESSION
MAYOR AND TOWN COUNCIL
DEBRA J. FIGONE, TOWN MANAGER
INFORMATIONAL REPORT ON WEST VALL SOLID WASTE
MANAGEMENT AUTHORITY BOARD PROCESS FOR COLLECTION
AND DISPOSAL CONTRACT PROCUREMENT, AND RATE
ADJUSTMENTS
RECOMMENDATION:
For information only.
BACKGROUND:
The Town contracts for solid waste collection and disposal services through the West Valley Solid
Waste Management Authority (Authority), a j oint powers agency consisting of the following member
municipalities: Town of Los Gatos, City of Campbell, City of Monte Sereno, and City of Saratoga.
The Authority was formed in 1997, at which time all four municipalities assigned their refuse
collection, disposal, residential curbside recycling collection, and residential yard waste collection
agreements to the new Authority. In consequence, the Authority now holds contracts with Green
Valley Disposal Company to provide these services. It is the Authority's role to manage the
contracts and the services provided under them, including monitoring service levels, setting
residential and commercial collection rates, and negotiating new contracts as appropriate.
The Authority is staffed by a contract Executive Director, Scott Hobson of Hilton Farnkopf &
Hobson, LLC. The Authority Board of Directors includes one Council representative from each
agency; Councilmember Glickman is the Los Gatos Boardmember.
DISCUSSION:
The purpose of this report is to provide information on the Authority's process for procuring new
PREPARED BY: Regina A. Fal or of Community Services "~w
N:\CSD\TCRPTS\SWM contracts rates ss.wpd
Reviewed by: Assistant Town Manager Town Attorney Clerk Administrator
Finance Community Development Revised: 2/10/05 10:54 am
Reformatted: 5/30/02
PAGE 2.
MAYOR AND TOWN COUNCIL
SUBJECT: INFORMATIONAL REPORT ON WEST VALLEY SOLID WASTE
MANAGEMENT AUTHORITY BOARD
February 10, 2005
waste collection and disposal contracts, and for adjusting residential and commercial collection
service rates. Executive Director Hobson will be present at the Council study session to verbally
present this information, and to answer any questions.
Contract Procurement Process
Attached (Attachment 1) is an agenda report from the most recent Authority Board meeting, which
provides background information and strategy regarding the procurement of new collection and
disposal contracts. As shown in the first attachment to that report, the Authority currently holds a
number of contracts under which collection, disposal, recycling, and yard waste services are provided
to local residents and businesses. All of these contracts have been negotiated to terminate on
February 28, 2007. Due to the complexity of the issues involved, the Authority must begin now in
order to have new contracts in place for March 2007.
At its February 3 meeting, the Authority Board approved the following process, as outlined in
Attachment 1:
Appoint a Board subcommittee to manage the contract procurement process
Negotiate on a sole-source basis with Guadalupe Rubbish and Disposal Company for landfill
disposal services
Obtain competitive proposals for waste collection, recycling, and yard waste services through
a Request for Proposals process
Rate Adjustment Process
The Authority contracts with Green Valley Disposal Company to provide waste collection services
to Los Gatos residents and businesses under the Refuse Collection Services Agreement. This
agreement states the services that are to be provided, and outlines a process for setting the rates for
those services. Under the agreement, Green Valley may submit a rate adjustment request to the
Authority by March 1 of each year, for new rates effective July 1. The Authority then adopts the
rates for Los Gatos residents and businesses.
Collection rates for Los Gatos were last adjusted in February 1995, previous to the existence of the
Authority. Adjustments requested by Green Valley for 1996 received extensive review by the Town
and the other West Valley cities, in order to achieve fair and reasonable rates. In response, Green
Valley sued the cities collectively for breach of contract. The negotiated settlement resulted in the
formation of the Authority, and anew Refuse Collection Services Agreement for each municipality.
The favorable terms of the new Refuse Collection Agreement resulted in a small surplus of revenues
over expenses for the first few years, which were used to offset increasing costs in subsequent years.
However, these funds have now been substantially depleted. The Authority expects a rate
adjustment request to be submitted by Green Valley this March 1. The request will be brought to
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: INFORMATIONAL REPORT ON WEST VALLEY SOLID WASTE
MANAGEMENT AUTHORITY BOARD
February 10, 2005
Council at its April 18 meeting, in 'order for Council to provide direction to its Authority
representative, Councilmember Glickman. The Authority Board will take action on the rate request
at a public hearing scheduled for May 5. If approved, new commercial rates would be effective July
1, and new residential rates would be effective August 1.
It is expected that the three other member municipalities of the Authority will also have rate
adjustments effective this summer. The amount of these adjustments are not yet known, and will
differ by municipality, according to the municipalities' strategic use of surplus revenues and other
factors. More information about the rates of the other municipalities will be available for Council
at the April 18 meeting.
Town staff has developed a public information strategy to educate the community about the rate
request, and the potential for a rate increase. Information will be provided through Green Valley's
regular customer newsletter, the Town newsletter the "Los Gatos Vista," the Town's website, and
local media.
CONCLUSION:
The Town's representative to the Authority, Councilmember Glickman, will remain fully informed
about the contract procurement and rate adjustment processes, and will report back to the full
Council as warranted. The rate adjustment request will be brought to Council as an information item
at its April 18 meeting.
ENVIRONMENTAL ASSESSMENT:
The recommended action is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
No fiscal impact will result from the re^ommended action.
Attachments:
West Valley Solid Waste Management Authority agenda item; February 3, 2005
Distribution:
Scott Hobson, Hilton Farnkopf & Hobson, LLC
Attachment 1
AGENDA ITEM No.
MEETING DATE: FFU12TTARV.1 (In;
WEST VALLEY
SOLID WASTE MANAGEMENT
AUTHORITY
Date: January 25, 2005
AGENDA REPORT
To: West Valley Solid Waste Management Authority Board
From: Executive Director
Subject: Procurement Process
RECOMMENDED ACTION
Approve a procurement process for a disposal contract and a comprehensive collection
contract and establish a Board subcommittee for procurement process.
DISCUSSION
The purpose of this report is to:
■ provide some background information regarding collection and disposal
activity within the Member Agencies;
provide a summary of the current collection and disposal agreements; and,
■ recommend an approach and process for the procurement of new collection and
disposal services effective March 1, 2007.
Background
The following timeline summarizes a few of the major milestones in the history of 'the
relationship between Green Valley Disposal Company and the Member Agencies.
Summary Timeline
Pre-1990
1918 - Green Valley Disposal Company formed to collect slop from area restaurants to
feed pigs.
1920s-1930s - Company expanded to collect other garbage, which was disposed in a
landfill located at the present-day Vasona Park.
WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY AGENDA REPORT
Page 2of 6 February 3, 2005
1940s - Land purchased for the present-day Guadalupe Landfill.
1950s-1980s - Garbage collected from residents and businesses under informal year-to-
year agreements.
1983 - Company entered into formal, 20-year agreements with each of the Member
Agencies for collection and disposal of garbage.
Post-1990
1990 - Company awarded a 5-year curbside recycling collection agreement (separate,
yet identical agreements with each Member Agency) through a competitive
procurement process.
1995 - Company awarded a new 8-year curbside recycling collection agreement
(separate, yet identical agreements with each Member Agency) through a competitive
procurement process.
1995 - Company awarded an 8-year residential yard waste collection agreement
(separate, yet identical agreements with each Member Agency) through a competitive
procurement process.
1995 - Company sues Member Agencies for breach of contract over rate dispute.
1997 - Company and Member Agencies settle lawsuit, entering into new, 10-year
refuse collection and disposal agreements.
1997 - Member Agencies form the West Valley Solid Waste Management Authority
and assign their refuse collection, disposal, residential curbside recycling collection,
and residential yard waste collection agreements to the new Authority.
1999 - Member Agencies negotiate a 3-year, 8-month commercial mixed paper
collection agreement with Company.
2002 - Member Agencies extend the curbside recycling collection, residential yard
waste collection and commercial mixed paper collection agreements for four years in
exchange for adding all plastic containers, plastic film and household dry cell batteries
to the curbside recycling program and processing C&D drop boxes through the
Guadalupe C&D MRF.
As shown, GVDC has provided collection services to the Member Agencies for over
eight decades under a variety of informal and formal agreements.
WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY AGENDA REPORT
Page 3of 6 February 3, 2005
Current Agreements
When the Authority was formed in 1997, the Member Agencies assigned each of their
collection and disposal agreements to the Authority. Thus, the Authority is currently
responsible for 4 collection agreements, 4 disposal agreements, 4 recycling agreements,
and 4 yard waste collection agreements. Attachment 1, Agreement Summary, shows
that all of the current agreements have been negotiated to terminate on February 28,
2007. As shown in the Summary, the recycling agreements have been amended over
time to expand the collection services provided by GVDC.
Procurement Approach, Scope, and Process
Proposed Approach
For reasons discussed below, I recommend that the Authority bifurcate the collection
and disposal procurement processes. A long-term disposal contract should be
negotiated on a sole-source basis with Guadalupe Rubbish and Disposal Company
(Waste Management). Then, a new comprehensive collection agreement should be
obtained through a competitive Request for Proposals. If the Authority is unable to
negotiate a satisfactory disposal agreement with GRDC, disposal services could be
added to the competitive RFP before it is issued.
Rationale for Sole Source Disposal Negotiations
The Authority is a significant customer for the Guadalupe landfill. According to reports
filed with the CIWMB, the Guadalupe landfill received approximately 184,000 tons in
2003. Of this total, the Authority contributed just over 41%. (The City of San Jose is
the largest single contributor, at just over 47%, but three-fourths of their material is
classified as "alternative daily cover," not disposal tons.) Due to the significance of the
Authority's annual tonnage, Waste Management should be motivated to retain the
Authority's tons. Further, including planned expansion at the landfill, Guadalupe has
sufficient capacity to provide long-term disposal services to the Authority.
Other Bay Area landfills would probably require a transfer station (at a significant capital
investment) to be located in or near the Authority's boundaries. Although there are a
number of landfills in the Bay Area, all are located farther from the Authority and most
do not have sufficient capacity to provide long-term disposal for the Authority. The
nearest landfill with sufficient long-term capacity, is Kirby Canyon, located between
San Jose and Morgan Hill, but it is also owned by Waste Management. Another
landfill with sufficient capacity is Allied Disposal's Ox Mountain landfill in San Mateo
County, but it would require a transfer station due to the haul distance. While these
and other landfills may be alternatives, they should be considered secondary to the
Guadalupe landfill in the Authority's "backyard."
WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY AGENDA REPORT
Page 4of 6 February 3, 2005
Rationale for a'Competitive Collection Request for Proposals
The Authority has a fiduciary responsibility to ensure that its ratepayers are receiving modern
services at market rates. Neither the Member Agencies nor the Authority has ever
sought competitive proposals for collection services. Over the last seven years of the
current agreement; collection and processing technologies have changed in significant
ways. Other competitive procurements in the Bay Area have resulted in significant
improvements in services, provided, reduction in collection rates, or both. In addition,
during the term of the current agreements, GVDC ownership has changed hands from
local, private owners to the largest publicly-traded waste collector in the world. The
expiration of the current agreements provides an opportunity to ensure that services
and rates reflect current market conditions.
The new collection, contract will likely require a significant capital investment. The'Board has
expressed an interest in making significant changes in collection and processing
methods, recyclable materials, and other services. In light of these desired changes;
GVDC will most likely be required to replace a significant portion of its collection
vehicles and make other capital investments. This increases the competitiveness of
other potential proposers since all haulers will be required to make a similar
investment in new capital.
There is likely to be significant competitive interest in the Authority's collection activity. By
separating the disposal contract from the collection contract, the Authority can "level
the playing field" for the collection contract and increase the number of companies that
can compete for the collection contract. Besides Waste Management, haulers that have
significant collection operations in the local area include Green Team, Norcal, Bay
Counties Waste Services, and Allied. In addition, Republic has proposed on a few
recent collection procurements.
Proposed Scope
Disposal Contract
The disposal, contract will include requirements for long-term disposal, processing of
C&D debris, and composting of food and yard waste. Detailed requirements will be
developed for approval bythe Board prior to the negotiations.
Collection Contract
The collection contract will include requirements for automated collection of refuse,
fully-commingled recyclables, and commingled food and yard waste. The Board will
have an opportunity to review the detailed scope of services, Request for Proposal, and
collection contract prior to its issuance.
WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY AGENDA REPORT
Page 5of 6 February 3, 2005
Proposed Process
Preliminary Schedule
Attachment 2 summarizes tentative dates and timeframes for both the proposed
disposal negotiations and the competitive collection services procurement. There are
several items worth noting:
■ The disposal negotiations are scheduled to begin in March and conclude by June
2005.
■ The collection services procurement will commence with the development of a
detailed scope of services in July 2005, with public input through a series of
workshops in August and September 2005. _
■ The Request for Proposals will be issued in December 2005, with proposals due
March 1, 2006.
■ A final collection contract will be executed in July 2006, giving the winning
proposer 8 months to order equipment and perform other transition activities.
■ During 2005 and the first half of 2006, the Board will hold several Special Board
Meetings in addition to the Regular Board Meetings to review progress and,
approve intermediate documents associated with the procurement.
Other Process Considerations
There are a few other items related to the process that warrant discussion:
The new contracts will be executed by the Authority, in accordance with the
joint Powers Agreement. Thus, any workshops or meetings with the Member
Agencies' Councils will be for informational purposes only - Councils will not
be asked to approve the final contracts.
■ Proposers will be invited to. present their proposals to the Board so that Board
members will have the opportunity to ask questions directly of the proposers.
Proposers will be asked to not contact Board members during the process and
Board members will be asked to report any contact with potential proposers to
the full Board.
Proposed Board Subcommittee
As noted above, the procurement process will take almost 18 months. During that
time, Authority staff, Member Agency staff, and HF&H consultants will meet regularly
to discuss progress, review draft documents, and negotiate agreements for full Board
WEST VALLEY SOLID WASTE MANAGEMENT AUTHORITY AGENDA REPORT
Page 6of 6 February 3, 2005
approval. Due to the number of meetings and activities that must be completed during
this time, I recommend that a subcommittee of the Board be formed to periodically
meet with the staff and consultants to monitor the process and review draft
documents. The subcommittee would streamline the process and lessen the burden on
the full Board throughout the process. Other Board members will be provided
detailed updates on the progress of the procurement at the Regular and Special Board
meetings in 2005 and 2006.
DOCUMENTS ATTACHED
Attachment 1 Agreement Summary
Attachment 2 - Preliminary Procurement Schedule
FISCAL IMPACT
None.
L. Scott Hobson
Executive Director
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Attachment 2
West Valley Solid Waste Management Authority
Solid Waste and Recycling Services Procurement
Process Timeline
Orange = PAC meetings
Green. = Authority Board meetings
Blue = Negotiation milestones
Red = "Red letter" days (contract execution, RFP issuance)
2005
Review proposed schedule and process for landfill contract negotiations.
Appoint negotiation team members.
February Landfill Negotiations
HFI Procurement Specialists will prepare draft disposal agreement for
negotiations.
February 15 Campbell City Council Workshop
Provide background information on rest Valley Solid Waste Management
Authority, and summarize existing contracts. Discuss approach and prods
for landfill, collection, and recycling contracts.
February 16 Saratoga City Council Meeting
Provide background information on West Valley Solid Waste Management
Authorit34 and summarize existing contracts. Discuss approach and process
for landfill, collections, and recycling contracts.
February 22 Los (Gatos Town Council Workshop
Provide background information on West Valley Solid Waste Management
C:\DOCi7MaUS AND SE=GS\L. SCOTT HOBSONIMY DOCZ 7MENTSWMCL=S\W VSWMA\BOARD MEETIDtGS\2-3-05
BOARD MEETING\3 2005-06 CONTRACTS TIMELINE ATTACHMENT.DOC
Authority, and summarize existing contracts. Discuss approach and process
for landfill, collection, and recycling contracts.. Give overview of history of
collection rate adjustments, and of upcoming rate adjustment process.
February 22 Monte Sereno City Council Meeting
Provide background information on West Valley Solid Waste Management
Authority, and summarize existing contracts. Discuss approach and process
for landfill, collection, and recycling contracts.
March Y Special Authority Board Meeting
Board reviews and approves draft disposal agreement or summary of key
rights and obligations.
March Landfill Negotiations
Negotiation Team will commence bi-weekly negotiations with Waste
Management.
April Landfill Negotiations
Negotiation Team continues bi-weekly negotiations with Waste Management.
April 7 PAC Meeting
Review packet for May 5 Authority Board meeting, status of landfill
negotiations,
May Landfill Negotiations
Negotiation Team continues bi-weekly negotiations with Waste Management.
May 5 Authority Board Meeting
Board approves new collection rates, effective July 1a
June 2 Special Authority Board Meeting
Board reviews and approves negotiated disposal agreement.
C:\DOCUMENPS AND SETTINGS\L. SCOTT HOBSON\MY DOCUMENTS\7HRRCLIENTS\WVSWMA\BOARD MEETINCXS\2-3-05
BOARD WETING\3-2005-06 CONTRACTS TaELINE-ATTACHMENT.DOC
June 2 Execute Waste Disposal Contract
On behalf of WVSWMA, Executive Director executes new Waste Disposal
Contract, which will provide for disposal of waste at Guadalupe Landfill.
Contract term begins March 1, 2007.
July Collection Procurement
HFH Procurement Specialists draft preliminary Summary of Proposed
Services and Key Terms of RFP and Franchise Agreement.
July R PAC Meeting
Review packet for August 4 Authority Board meeting..
August Collection Procurement
HFH Procurement Specialists continue drafting preliminary Summary of
Proposed Services and Key Terms of RFP and Franchise Agreement and
conduct workshops with Councils, commercial generators, multifamily
generators, residential generators, etc.
August JPA Board Meeting
Board receives status report of procurement process.
September Collection Procurement
Continue workshops with Councils, commercial generators, multifamily
generators, residential generators, etc.
October 7 PAC Meeting
Review packet for November 3 Authority Board meeting..
November 3 JPA Board Meeting
Board reviews, modifies, and approves Summary of Proposed Services and
Key Terms of RFP and Franchise Agreement.
C:\DOCDN=S AND SETTINGS\L. SCOTT HOBSON\MY DOCUMENTS\I-IEMCLIENTS\W VSWMA\BOARD MEETTNGS\2-3-05
BOARD'I 1EETING\3-2005-06 CONTRACTS TRVMLINE ATTACHM=.DOC
November Collection Procurement
HFH Procurement Specialists draft RFP and Franchise Agreement.
December I Special Authority Board Meeting
Board reviews, modifies, and approves P and Franchise Agreement for
nssuanm
December 1 Issue Collection and Recycling Services Request For Proposals
RFP is issued, requesting proposals for refuse collection, recycling, and
residential yard waste services. Proposals are due March 1.
20®6
January 6 PAC Meeting
Review packet for February 2 Authority Board meeting..
February 2 Authority Board Meeting
March 1 Submission of Proposals
March Collection Procurement
HFH Procurement Specialists conduct proposal evaluation, tour of facilities,
and reference checks.
April Collection Procurement
Presentation of proposals by Companies.
April 7 PAC Meeting
Review packet for May 4 Authority Board meeting..
May 4 Authority Board Meeting
Executive Director recommends Company(ies) for negotiations. Board
provides direction to Negotiating Team.
C:\DOCUMENTS AND SETTINGS\L. SCOTT HOBSON\MY DOCUMENTS\IFH\CLIENTS\WVSWMA\BOARDMEETINGS\2-3-05
BOARD MEETING\3-2005-06 CONTRACTS TIMELINE ATTACHMENT.DOC
June 1 Special Authority Board Meeting
Board reviews results of direction from May Board Meeting.
July 6 Special Authority Board. Meeting
Board reviews and approves negotiated Collection and Recycling Services
Agreement.
July 6 Execute Collection and Recycling Services Agreement
On behalf of WVSWMA, Executive Director executes new Collection and
Recycling Services Agreement, which will provide for collection of waste and
recyclables. Contract term begins March 1, 2007.
July Collection Procurement
Company places equipment orders.
August- Collection Procurement
February
Company continues implementation, including public education activities.
2007
March 1 Begin New Collection and Recycling Services
New contracts for refuse collection, recycling, and residential yard waste
services become effective.
C:\DOCLI ENTS AND SE=GS\L. SCOTT HOBSONWY DOCUMENTS)IFH\CLMN TS\W VSWMA\BOARD MEETINCIM-3-65
BOARD MEETIN03-2005-06 CONTRACTS TIMEL7NEATTACHN EN LDOC .11