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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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Rancho Cordova – Legislative Compliance & Solid Waste Support

Rancho Cordova

Rancho Cordova is one of R3’s longest-standing clients—a partnership that began in 2004 and continues strong today. Over the past two decades, we’ve earned the City’s trust by consistently delivering reliable guidance through California’s constantly evolving waste regulations. This enduring relationship reflects the confidence City leadership has in our team’s expertise and our deep understanding of their community’s unique needs. We’ve worked alongside multiple city managers and staff transitions, providing the continuity and institutional knowledge that allows the City to adapt to new requirements without disrupting service to residents.

We handle the full spectrum of waste program management—from creating public outreach materials and updating ordinances to reviewing franchise agreements and monitoring hauler compliance. Our team develops branding, website content, social media posts, and educational guides that help residents and businesses understand new recycling requirements in plain language. We also work behind the scenes to identify which commercial generators must comply with state laws, verify their participation, and coordinate with local food recovery organizations to redirect edible food from landfills. This combination of public education and technical enforcement ensures high participation rates and regulatory compliance.

Our financial oversight includes conducting annual rate reviews to verify that hauler costs are reasonable and that residents pay fair prices for collection services. We review hauler reporting, evaluate contract amendments, negotiate service terms, and provide recommendations that balance quality service with cost control. We’ve helped the City update its waste hauler contracts and municipal code to incorporate new state requirements while protecting the City’s interests and maintaining good relationships with its service providers.

Twenty years of collaboration has made us an extension of the City’s team. Rancho Cordova trusts us to manage complex regulatory requirements, represent their interests in hauler negotiations, and provide honest guidance on difficult decisions. This partnership has resulted in streamlined operations, successful grant applications, and consistent compliance with state mandates—all while allowing City staff to focus on broader community priorities knowing their waste programs are in capable, experienced hands.

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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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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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Berkeley – Negotiation Assistance

R3 provided negotiation services to the City of Berkeley, who was seeking to arrange for the recyclables processing services currently provided by Community Conservation Centers (CCC). R3 provided support in the negotiation of a short-term contract with CCC to continue to provide recycling processing services as the City begins redevelopment of one of its solid waste facilities and the development of long-term solid waste policies via a Zero Waste Plan.  R3’s objective was to facilitate a contract that provides the City with a greater level of operational and financial accountability from CSS and resolves outstanding matters of dispute, including amounts owed to the City by CCC per the terms of the current contract.

For this engagement, R3 conducted the following main tasks:

  • Established clear objectives and refine initial positions with respect to the City’s key interests and desired outcomes from these negotiations;
  • Updated analysis of recyclables market conditions to provide the City with detailed cost estimates of hauling/processing recyclable materials at other facilities;
  • Led negotiation sessions with the City and CCC over the course of three half day negotiations;
  • Attended meetings with City staff, prepared negotiation session agendas, and attended negotiation sessions (phone and in-person);
  • Reviewed and analyzed cost and program data presented by CCC and made recommendations to City staff;
  • Drafted a new recyclables processing agreement for review by the City and CCC;
  • Facilitated five (5) rounds of revision and comment by the City and CCC; and
  • Assisted City staff in the preparation of a staff report to the Council presenting the results of these contract negotiations.

As a result of R3’s assistance, the City gained the following benefits:

  • Excel workbook of recyclables market conditions estimating hauling/processing costs for three alternative recyclables processing facilities;
  • Negotiation and finalization of a short-term contract between the City and CCC that clearly addressed CCC’s operational and financial accountability;
  • Creation of a compensation structure that takes into account revenues lost from the impacts from China’s National Sword while providing assurances for the City that its hauler will be able to collect and market materials;
  • Resolution of the amounts owed by CCC to the City per the contract (~$800,000);
  • Cessation of CCC’s periodic requests for special payments from the City, which had been made outside the terms of the current agreement; and
  • The creation of a coterminous Agreement with the City’s Agreement with Ecology Center for the City to make an educated decision of the future of its Agreements.
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Rolling Hills Estates – Performance Review

In early 2016, R3 was engaged by the City of Rolling Hills Estates (City) to conduct a Performance Review of their franchised hauler, Waste Management (WM), with the objective of assessing WM’s collection operations prior to the Franchise Agreement’s (Agreement) expiration.

Overall, WM received a positive review, although R3 found that they were out of compliance on vehicle weights and diversion standards, and they were substantially undercharging for manure collection and processing, which in turn negatively impacted their other required services.

Rather than seeking competitive bids, the City opted to work with the hauler to correct the compliance violations and renegotiate the contract, because of the City’s unique service requirements (e.g., unlimited multiple container sizes for recycling and organics at no cost; required use of smaller collection trucks; and required no-cost service for hard-to-service areas). R3 subsequently worked on the City’s behalf to negotiate the new Agreement, which assists the City in complying with state legislation (e.g., AB 939, AB 341, AB 1826, and AB 1594), prevents negative impacts on customer rates, and includes these beneficial features: a very specific public education program; a contamination monitoring and reporting program; and universal rollout of organics to all commercial and multi-family customers as a base service requirement.

R3 is currently assisting the City with modernizing and streamlining the language in the City’s municipal code to include legislative requirements for recycling and organics diversion (AB 341, AB 1826, SB 1383, and AB 1594).

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Half Moon Bay – Full Service Procurement Assistance

R3 was engaged by the City of Half Moon Bay to provide full service assistance with the City’s procurement of solid waste collection and street sweeping services. The City identified the following goals, among others, which R3 addressed as part of the RFP process:

  • Improving the quality of contractor reporting content, including tracking of special events and public education activities undertaken by the contractor;
  • Considering the possibility of new customer rate structures;
  • Potentially implementing a “Vehicle Impact Fee” to recover the cost of street deterioration caused by collection operations;
  • Exploring new programs such as residential organics, and expanded commercial organics collection, and including applicable program requirements as part of the RFP process;
  • Considering street sweeping schedule changes to meet the requirements of new storm water plans.

R3’s procurement assistance services for the City included:

  • Reviewing City and current contractor resource documents, working with stakeholders, and compiling the RFP package;
  • Developing collection program requirements, the franchise agreement, minimum contractor qualifications, and a mailing list of potential proposers;
  • Preparing evaluation criteria, providing written responses to questions submitted regarding the RFP, and preparing addenda as necessary;
  • Conducting the pre-proposal meeting, evaluating responses, conducting interviews, and checking references of proposers;
  • Attending City Council meetings, assisting with the presentation of the results of the evaluation process and staff recommendations, and finalizing the franchise agreement.

As a result of R3’s assistance, the City gained the following at the conclusion of the procurement process:

  • A dedicated recycling specialist;
  • Food waste collection and processing for all customers;
  • Two HHW drop-off collection events for the City; and
  • An implementation plan designed to lay out the foundation for new services and facilitate a smooth transition before the start of the new contract.

 

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