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Chico – Franchise Collection System Procurement and Negotiation

Chico

In 2014, R3 developed a franchise system of solid waste collection for the City of Chico (City) to replace the City’s existing open-market permit system. Under the existing system, solid waste subscription was not mandatory, commercial and multi-family dwelling (MFD) rates were unregulated, and the City provided many services generally provided for free by a hauler under an exclusive franchise agreement. For this engagement, R3 developed and helped implement an improved solid waste collection system that fulfilled the City’s environmental goals and complied with State regulations, including AB 939, AB 341, and AB 1826.

Through R3’s facilitation, the City entered into negotiations for a new franchised collection system with its two permitted haulers, North Valley Waste Management (WM) and Recology Butte Colusa Counties (Recology), with the franchising costs fully reimbursed by the haulers. R3 worked extensively with the City and its permitted haulers to develop and analyze future franchising options, including documenting the existing conditions of the City’s solid waste system, developing key terms and conditions of potential franchise agreements, and establishing operational zones and requirements for the new collection system.

R3 proposed a solid waste collection system with three collection franchise contracts: two exclusive Commercial/Multi-family service zones operated by Recology and WM, and one exclusive City-wide Residential service zone operated by WM. R3 assisted the City in the implementation of the new system, including developing deal points for the City and haulers, developing draft agreement language, negotiating the final agreements, and revising the City’s municipal code.

After successful negotiations, the new agreement went into effect in October 2017. Benefits included a 10% Franchise Fee, operation of previously City-provided services, and clearly defined diversion, service, and equipment requirements.

Project Description:

At the time of this engagement, the City’s solid waste collection was regulated through an open-market permit system, with unrestricted permits issued to North Valley Waste Management (WM) and Recology Butte Colusa Counties (Recology) to serve both residential and commercial accounts in the City. Both permits were set to expire on June 30th, 2019.

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Lane County – Solid Waste System Assessment and Master Plan

Lane County Facilities

R3 (with the assistance of Abbe & Associates and Blue Ridge Services) was engaged by Lane County (County), Oregon, with a three (3) phased master planning process: conducting an Operational Review, developing a Regional Strategic Master Plan, and developing Jurisdiction-Specific Action Plans. The County operates a series of 16 transfer stations, a large landfill and a special waste facility.

Phase I: Operational Assessment

R3 reviewed the operations and finances of Lane County’s landfill and transfer station system, and material recovery operations, and identified opportunities to improve the safety, cost, diversion, and overall system performance. Recommendations were very well received by Lane County and include: reconfiguring Lane County’s rates for material recovery facility residuals to provide more effective incentives to divert material, revising operations at the landfill and at the County’s central transfer station, and closing various rural transfer sites. The Phase I Operational Assessment Final Report was presented and well received by the County Board of Commissioners. A major goal was to identify at least $1.5 million in annual cost savings for the Division; R3’s recommendations are projected to save the County $1.8 million annually.

Phase II: Regional Master Plan

Phase 2 of the project involves conducting a needs assessment and developing a strategic Regional Master Plan, with the goal of achieving a Countywide diversion rate of 63%. The Phase II Regional Waste Master Plan involves identifying, evaluating and recommending programs and policy options, and projecting funding needs associated with the recommended Master Plan components.  R3 also led the stakeholder involvement process as part of Phase II. As part of the development of the Regional Master Plan, R3 designed the supporting stakeholder involvement process that included:

  • Developing a short- and long-range vision (initially working with Lane County staff, then with stakeholders);
  • Developing a communication plan to compile information and feedback from representatives of the various cities in Lane County, the private solid waste haulers and facility operators, non-profits, and residents and businesses; and
  • Conducting stakeholder engagement and outreach efforts (workshops, public meetings, publications, websites, etc.) to obtain feedback, ideas, and “buy-in.”
  • As part of this phase, R3 leveraged the County’s regional food recovery programs to develop recommendations for increased edible food recovery.

Phase III: Jurisdiction-Specific Action Plans

Phase III of the project involved working with the cities of Eugene and Springfield to develop jurisdiction-specific Action Plans to guide the implementation of solid waste management system polices, programs, and facilities in those jurisdictions that are aligned with the County’s Regional Master Plan.

Recently, R3 was selected to further assist the County with the following:

  • Drafting and executing waste disposal agreements with each of the incorporated cities that currently deliver their waste to the County’s waste management transfer station and landfill system;
  • Assessing  the pros and cons of establishing a countywide solid waste joint powers authority, and each of the jurisdiction’s level of interest in forming a JPA, and identify next steps; and
  • Drafting and negotiating a memorandum of understanding for coordinated county-wide solid waste management reporting requirements,;
  • Assess the pros and cons of the various collection system structures available to the County for the regulation of its private haulers in the Eugene-Springfield Urban Growth Boundary and the other more rural unincorporated areas of the County, and recommend a preferred structure
    based on the County’s objectives for its solid waste management system;
  • Drafting a performance-based high-recovery “model” franchise agreement, with private hauler input, that the County can use to regulate haulers within the County based on the preferred collection system structures determined above; and
  • Assisting the County with the executing performance-based high- franchise agreements with the private haulers operating in unincorporated Lane County.
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Santa Rosa – Zero Waste Plan, Performance Review, & Procurement Assistance

R3 has conducted a wide range of projects for the City of Santa Rosa (City), including the following:

Zero Waste Plan

R3’s Zero Waste Plan (Plan) was tailored to the unique disposal and waste reduction trends and goals of the City, executable within, and measured by, 5-, 10-, and 20-year milestones.For this project, R3 formed a project team of leading experts in the fields of Zero Waste public engagement, waste stream modeling, and municipal solid waste planning. Aided by the expertise of two subconsultants, Ruth Abbe of Abbe & Associates and Cascadia Consulting Group, R3’s primary goal for this project was to provide the City with a Plan that sets the new standard in its specificity, rigor, and vision.

In developing the Plan, R3 provided the City with a quantitative, practical guide to residential, commercial and City programs that will achieve the City’s Zero Waste goals. The Plan also provided the City with cost estimates of the Zero Waste programs that would be necessary to achieve those goals, which included an analysis of current disposal and diversion tonnage and trends in the City and an estimate of what can actually be diverted with the Plan.

Core components of the Plan included developing a Waste Diversion Model and implementation outreach strategy, conducting a vigorous stakeholder engagement process, and designing a comprehensive Plan document that includes policy, program, partnership, and facility diversion options for the City. R3 also provided the City with an analysis of the economic, diversion, greenhouse gas, and financial impacts of the Plan, as well as the timeline and actionable steps for its implementation.

R3 shepherded Council adoption of Plan with recommendations for $600,000 in annual program funding.

Performance Review(s)

R3 is currently engaged by the City to conduct a comprehensive Performance Review of the City’s franchised solid waste hauler, Recology Sonoma Marin (Recology), for the calendar year 2018 and the first quarter of 2019. The review included the following main tasks:

  • Franchise Agreement (Agreement) and Regulatory Compliance Review;
  • Operational Performance Review, including management and administration, collection operations, customer service and financial management practices, and vehicle and equipment upkeep;
  • Billing Audit and Financial Assessment; and
  • Legislative Compliance Review.

R3 is working with Recology and the City to review Recology’s existing services through data analysis, observations, and on-site reviews. For this engagement, R3 is specifically addressing Recology’s efforts in support of the City’s compliance with AB 1826 and SB 1383, as well as the hauler’s achievement of its 40% diversion requirement.

Procurement Assistance

As a result of a performance review conducted by R3 in 2015, we were engaged by the City to provide assistance in procuring a new hauler for the City’s solid waste and recycling collection and processing services.  As with all of our procurement projects, R3 worked closely with City staff to complete the following tasks:

  • Conduct community workshops and City Council meetings;
  • Prepare written RFPs and Agreements;
  • Oversee the competitive procurement process;
  • Analyze waste hauler proposals; and
  • Manage the evaluation of proposers and selection of a provider for City services.

This project resulted in a high-diversion, state-of-the-art residential and commercial exclusive Agreement (that complied with AB 1826 and SB 1383) and RFP. The City received five (5) proposals for the provision of collection service – R3 reviewed and analyzed proposals, interviewed and negotiated with the highest-ranked companies, conducted site visits at proposed facilities, and provided the City with high-level information about how each company could affect the goals and collection within the City.

During this process, The Ratto Group sold its company to Recology. R3 assisted in a review of Recology to establish findings regarding the proposed contract assignment, on behalf of the various jurisdictions in Sonoma County (including Santa Rosa) holding solid waste collection franchise and other agreements with The Ratto Group. Currently, R3 is providing contract management assistance and developing a Zero Waste Plan for Santa Rosa.

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Rancho Cordova – Legislative Compliance & Solid Waste Support

Rancho Cordova

R3 has provided various on-call solid waste consulting services for the City of Rancho Cordova (City) since 2004, including comprehensive assistance in implementing AB 341, AB 1826, and SB 1383 programs. R3 is currently serving as City solid waste support staff.

R3’s specific tasks include:

  • Creating an overall branded look for the City, which included analyzing, providing recommendations, and assisting with the development of education and outreach material (letters to covered generators, brochures, updated website language, social media posts, customer guides, etc.) for AB 341, AB 1826, AB 827, and SB 1383 compliance, among other applicable state law;
  • Revising the City’s non-exclusive commercial Franchise Agreements (Agreements) and City’s Municipal Code to incorporate AB, 341, 1826, and SB 1383 requirements (provision of services, tonnage and covered generator tracking, delivery of recyclable materials and organic waste to certified facilities, education and outreach, multifamily bulky waste collection, annual planning and reporting, inspection, monitoring, etc.);
  • Revising waste hauler reporting forms to include local and state regulatory requirements;
  • Developing mechanisms for hauler tracking and monitoring;
  • Identifying covered generators and top waste food waste generators for AB 1826 and SB 1383 compliance;
  • Monitoring covered generator compliance;
  • Meeting with the City’s food recovery organizations to discuss opportunities for collaboration regarding the Edible Food Recovery Requirement in SB 1383;
  • Verifying the receipt of quarterly covered generator compliance reports and the required notification and outreach to non-compliant businesses;
  • Assisting in evaluating and reviewing annual rate increases;
  • Assisting in contract negotiations and amendments for applicable state law;
  • Assisting with annual State reporting and grant submissions;
  • Assisting the City and its haulers with the development of the required organic recycling service component;
  • Overseeing the contractual requirements and fee payments of its residential franchised hauler, Republic Services (Republic), and 10 non-exclusive franchised haulers; and
  • Providing the City with recommendations to further maintain good-standing with CalRecycle, including organizing and managing correspondence with CalRecycle, and developing associated public education and outreach.

As a result of our assistance, the City gained the following benefits:

  • City compliance with state regulations by adding waste hauler requirements to Agreements and Ordinance;
  • More efficient waste hauler tracking protocols;
  • Annual EAR reporting and grant submissions for funding mechanisms;
  • Capacity planning and edible food recovery protocols; and
  • Up-to-date Ordinances to reflect local and state regulatory requirements.
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El Cajon – Solid Waste Procurement Services

R3 is currently engaged by the City of El Cajon (City) to provide procurement assistance regarding the City’s franchise agreement with Waste Management for the collection of residential and commercial solid waste, which expires in December 2020. For this engagement, R3’s primary objective is to assist the City in procuring a solid waste collection Agreement that provides the highest level of service to the City’s residents and businesses at the best cost, and accounts for all state legislative requirements.

R3 is acting as an extension of the City staff for all tasks of this engagement, by developing a knowledge base of the City’s current solid waste collection programs.

In late 2019, R3 developed a request for proposals (RFP), including a draft franchise agreement outlining program requirements. The RFP was issued to qualified hauler, and as a result, the City received three qualified proposals.

R3 assisted in the evaluation of the proposals by providing the City’s proposal evaluation team with a summary of the qualifications, technical approach (transition, operations, customer service, diversion, education and outreach plans), reference checks, and proposed service rates provided by each proposer.

Through the negotiation process, R3 will also assist the City staff with:

  • Conducting interviews with proposers;
  • Preparing staff reports;
  • Conducting negotiation sessions, as necessary;
  • Finalizing the Agreement; and
  • Assisting City staff with making City Council presentations.

Anticipated project benefits include the following:

  • Finalization of a high-diversion Agreement for solid waste collection that incorporates new legislation to address franchised hauler requirements and City compliance, including AB 341, AB 1594, SB 1383, and AB 1826;
  • Verification that the City is adequately compensated by the franchisee through franchise, road impact fees, surcharge and/or AB 939 fees; and
  • Increase of the City’s overall landfill diversion through the promotion of re-use, recycling, composting, and source reduction strategies and programs.
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California State Polytechnic University, Pomona (Cal Poly Pomona) – Solid Waste Hauler Procurement Assistance

R3 is currently engaged to assist California State Polytechnic University at Pomona (Cal Poly) procure a solid waste hauler for solid waste, recycling, organics, and stable bedding collection services by developing a Franchise Agreement (Agreement) aligned with the University’s sustainability policy. For this engagement, R3 conducted the following main tasks:

  • Conduct an initial audit of Cal Poly’s existing baseline service level with comparison of subscribed service levels against the actual levels of provided service to ensure that Cal Poly is currently receiving the services that are paid for;
  • Analyze findings from the audit to provide accurate minimum required service level for use in the RFP;
  • Determine Cal Poly’s collection need and develop procurement strategy;
  • Prepare and issue RFP package;
  • Review and evaluate submitted proposals, including assembling an Evaluation Team and conducting interviews;
  • Develop a contract management guide for Cal Poly that clearly identifies important terms and conditions of the Agreement, such as monthly, quarterly and annual reports, diversion reports, and outreach and education;
  • Provide contract management training and support to one designated Cal Poly staff person with responsibility for management and oversight of the selected hauler; and
  • Provide on-call assistance to Cal Poly during the transition to the newly selected hauler following the RFP process.

Project objectives include the following benefits:

  • Incorporation of new solid waste services, programs, and rates into Cal Poly’s new Agreement with the selected hauler;
  • Compliance with regulatory requirements, including SB 1383; and
  • Benchmarking of the Cal Poly solid waste system’s effectiveness, sustainability efforts, and future needs to improve the collection efficiency and material diversion.
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Beaumont – Procurement & Negotiation Support

City of Beaumont, City Hall

R3 recently assisted the City of Beaumont (City) with the negotiations with their exclusive franchised hauler, Waste Management (WM), for a new Franchise Agreement (Agreement) for the collection of residential and commercial solid waste. The new Agreement was designed to address new regulatory requirements and, specifically, featured programs to achieve SB 1383 compliance.

R3’s tasks for this engagement included the following:

  • Analyzed the City’s existing customer service rates and rate structure and compared them to similar jurisdictions to support the City’s ability to obtain rate and/or service concessions from WM as part of the new Agreement;
  • Reviewed the existing Agreement to develop an understanding of how the City’s current solid waste collection programs and services, performance standards, and operational requirements compared to solid waste industry standard best practices; and
  • Provided the City with recommendations for Agreement updates that incorporated the latest international solid waste trends and state legislation, including AB 341, AB 1826, AB 901, AB 1594, and SB 1383.

Our negotiation support included advising the City on how to cost effectively implement commercial organics, and validating WM’s cost basis for the new services.

With our assistance, the City gained the following benefits:

  • $5 million contract extension payment by WM to the City that transfers City billing functions and street sweeping services to WM at no cost to the City;
  • Universal recycling and organics for all commercial and MFD accounts;
  • 5-year residential rate freeze;
  • Future annual rate increases capped at 4% per year;
  • $2.1 million/year franchise fee paid by WM to the City;
  • $125,000/year paid by WM to the City to fund City staffing and contract services for contract monitoring and compliance;
  • Provision by WM of a half-time dedicated contract compliance/recycling coordinator for the City; and
  • Provision by WM of a sustainability team for ongoing outreach and compliance with SB 1383, AB 1826, and AB 341.
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Los Altos – Perfomance Review of Mission Trail Waste Solutions (MTWS) & High Diversion Planning

MTWS Performance Review for Los Altos - Project Analysts Claire Wilson and Ryan Calkins

Performance Review

R3 was engaged by the City of Los Altos (City) to conduct a Performance and Billing Review of Mission Trail Waste Solutions (MTWS) as included under their Collections Service Agreement (Agreement) to provide solid waste, recycling, and organic collection services for the City. R3’s high level review of MTWS consisted of two main tasks: a performance review and a financial compliance assessment. The primary goal was to determine MTWS’ compliance with the applicable terms and conditions of the Agreement, review the effectiveness of current operations; and identify opportunities for program improvement.

R3 worked with MTWS management and City staff to assess MTWS’ compliance with the reporting requirements and performance standards of the Agreement, as well as verify customer billing rate calculations and service levels, franchise fee calculations, and reported diversion percentages.

R3 utilized a variety of methods in the execution of the performance review, including analysis of relevant documents, on-site and field observations, and interviews. The Performance Review addressed the following major aspects of MTWS’s operations:

  • Collection Service Agreement Compliance Review;
  • Collection Operations Review;
  • Management and Administration Review;
  • Vehicle and Equipment Maintenance, Repair and Replacement Review;
  • Customer Service Review (including customer feedback);
  • Monthly, quarterly and annual report assessment;
  • Diversion Programs, Performances and Good Faith Efforts; and
  • Outreach and Education Services.

R3 conducted the financial compliance assessment to determine that customers are being charged the proper service rate based on their service level; service rate revenues are properly recorded and accounted for by the contractor; franchise fees are properly calculated, paid and received. R3 conducted three tests to accomplish this goal:

  • Test of Subscribers to verify that service subscribers are billed the correct rate for the level of service provided;
  • Test of Revenue Transactions to verify that the billed amounts to City residents and businesses, and the corresponding payments received are properly recorded in the MTWS billing and accounting systems; and
  • Test of Franchise Fee Transactions to verify that the franchise fees are calculated correctly, and based on the correct level of recorded revenues.

Our review found that MTWS is in compliance with the vast majority of the Agreement’s requirements. Collections are performed in a safe, courteous, and cleanly manner; coordination between the drivers, customer service, shop, and management is facilitated by an effective system of work orders; fleet maintenance operations and vehicles have consistently received satisfactory ratings from the California Highway Patrol; and MTWS is operating a sophisticated and professional customer service operation.

We determined that the most significant area for improvement relative to the Agreement’s terms and conditions is in outreach and education, which is not being performed according to the Agreement’s requirements.

Project benefits include:

  • Verification of MTWS’ compliance with the vast majority of the Agreement’s provisions;
  • Recommendations for MTWS’ improved compliance with the existing requirements of the Agreement regarding meeting reporting requirements, outreach and education activities, and paying the City franchise fee and administrative fees; and
  • Recommendations for revisions to the Agreement with regards to HHW collection services, rate requirements, and the billing schedule.

High Diversion Planning

R3 has been working with the City of Los Altos (City) since 2010, when we were originally engaged to provide procurement assistance resulting in the award of the Franchise Agreement (Agreement) with the City’s current hauler, Mission Trail Waste Systems (MTWS), that requires 78% diversion of franchised waste.

In service of our ongoing diversion support for the City, R3 has recently:

  • Completely revised the City’s Solid Waste Ordinance to align with the Agreement with MTWS, facilitated complete subscriber compliance with two State of California Assembly Bills (AB), AB 341 (mandatory multi-family and commercial recycling) and AB 1826 (mandatory commercial organics diversion), and facilitated increased diversion of recyclables and organics from commercial, industrial, and multi-family waste generators;
  • Undertaken an SB 1383 preparedness exercise in which we identified opportunities for the City to obtain needed support from MTWS in complying with the regulations;
  • Assisted the City in identifying enforcement thresholds for mandatory recycling and organics service: drafting enforcement letters which include notification of state law for generators covered under AB 341 and AB 1826, exemption forms, and a self-haul tonnage reporting form; and site visits to covered generators to encourage compliance;
  • Reviewed implementation of services in the field, including lid-flip assessments of waste from the top 50 generators in the City, as well as an assessment of MTWS’s outreach and education pertaining to increased diversion of recyclables and organics;
  • Developed a technical assistance plan and framework in support of the City’s commitment to providing diversion-related technical assistance and outreach;
  • Revised the City’s Construction and Demolition (C&D) Debris ordinance in alignment with CALGreen, establishing a system of facility certification;
  • Certified facilities and revised the City’s mandatory building checklist to include the certified facilities and other approved means of compliance such as deconstruction and purchase of a debris box from the City’s franchised hauler;
  • Conducted a street maintenance impact fee study for refuse vehicles used in the City; and
  • Completed the City’s Electronic Annual Report to CalRecycle for the reporting years 2016-2019.

R3 has also been engaged to assist the City with contract extension negotiations with MTWS, which includes support for some SB 1383 requirements, including universal roll-out of organics service to all businesses in the City.

 

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Zero Waste Sonoma – Organics Processing Procurement

On behalf of the Zero Waste Sonoma (ZW Sonoma, formerly known as Sonoma County Waste Management Authority), R3 was initially engaged to compile a Request for Information (RFI) for future compost facilities that might be sited in the County of Sonoma (County) which was used to aid ZW Sonoma in developing a strategic action plan to provide for organics capacity throughout the region, simultaneous with the procurement of solid waste services for several jurisdictions within the County.

R3 was subsequently engaged by ZW Sonoma to assist in the procurement of an organics material processing facility in the county. R3’s project goals were to:

  • Provide the highest level of service to ZW Sonoma’s residents and businesses at the best cost; and
  • Ensure long-term sustainability and successful operations of organics processing facilities utilized by ZW Sonoma.

R3 compiled, drafted, and issued the RFP package for ZW Sonoma, and provided technical assistance to the proposal evaluation team by assisting in the proposal scoring and analysis of the County’s long-   and short-term options. Through our analysis of 11 submitted proposals, R3 gained insight on the processing costs for organics, including commercial source-separated food waste, mixed green and food waste, biosolids, and manure. Based on the analysis, R3 recommended the award of one contract to Renewable Sonoma for the construction and operation of an organics processing facility to provide organics processing throughout the Sonoma County region.

In addition to assisting with procurement tasks, R3 also provided ZW Sonoma with a valuable financial analysis of the impacts of the various proposals submitted based on location, County fees, waste delivery requirements, flow control and available programs.

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Piedmont – Franchise Extension Negotiations & Solid Waste Collection Service RFP

R3 assisted the City of Piedmont with franchise extension negotiations with the City’s hauler, Republic Services (Republic). During negotiations, Republic requested unacceptable rate increases, and R3 subsequently recommended going to bid.

R3 subsequently conducted a competitive process to procure high-quality services for garbage, green waste, and recyclables collection and processing and also conducted an operations and billing review of the City’s franchised hauler, Republic.  Among other tasks, R3 conducted a survey of rates and services for comparative communities, fully reviewed the current Agreement, established a set of recommendations for the new Agreement, and organized the City’s “deal points” for potential inclusion in an extended and restated Agreement.

City Council approved staff’s recommendation to proceed to negotiations with Republic, and R3 scheduled negotiation meetings and submitted letters to Republic for clarification of their proposal and stances on various negotiation items. The second round of negotiations resulted in Republic being selected for the solid waste collections contract.

As a result of our negotiation assistance, the City gained the following benefits:

  • The provision of on-premises “backyard” service at a surcharge equivalent to the costs of providing these services, except for physically disabled residents, who pay curbside rates;
  • A new fleet of collection vehicles;
  • Compact fluorescent lamp (CFL) pickup at curbside;
  • Payment to the city of $75,000 (escalated by CPI) per year to fund the provision of commercial education and outreach services by the City or its representative; and
  • Bulky item pickup provided twice per year for up to 6 cubic yards per event for single-family residents and provided to multi-family residents at the request of the property manager.
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