HomeMy WebLinkAboutE-5 - Staff Report - Green Waste Processing Contract RenewalCONSENT ITEM
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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: LIZA SAGUN, UTIL. COMM. & ENVT. PROGRAMS SPECIALIST
DATE: OCTOBER 15, 2018
SUBJECT: AUTHORIZATION TO EXTEND GREEN WASTE PROCESSING AND
DIVERSION SERVICES CONTRACT WITH RECYCLED WOOD PRODUCTS
BACKGROUND:
After the closure of Puente Hills Landfill in October 2013, the City of Azusa has directed Athens
Services, the City’s franchised hauler, to haul Azusa’s municipal solid waste to Mid-Valley Landfill in
Rialto and residential green waste to Recycled Wood Products (RWP) in Pomona (based on flow
rights as stated in the Franchise Agreement). The City entered into agreement with RWP for green
waste processing and diversion services from November 1, 2013 to November 1, 2018 for the initial
term, with two (2) additional option periods of five years to extend. After a comparison of alternatives
for green waste disposal, Staff recommends extending the initial RWP agreement for a second five-
year term at a green waste disposal rate of $47 per ton with 3% annual escalation over the term.
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Approve the amendment to agreement with Recycled Wood Products for green waste
processing and diversion services from November 1, 2018 to November 1, 2023.
ANALYSIS:
The City of Azusa has an exclusive franchise agreement for residential and commercial refuse
collection with Athens Services. All wastes are taken to Athens’ Material Recovery Facility (MRF)
where most recyclables are removed. The residual waste is then transported by Athens to a landfill
designated by the City. Following the closure of Puente Hills Landfill on October 31, 2013, the City
directed Athens to take post-MRF waste to Mid-Valley Landfill in the City of Rialto. Residential
green waste is taken to Recycled Wood Products (RWP) located in Pomona, where green waste is
composted.
APPROVED
CITY COUNCIL
10/15/2018
Green Waste Processing Contract Amendment
October 15, 2018
Page 2
The City entered into agreement with RWP from November 1, 2013 to November 1, 2018 for the
initial term, with two (2) additional option periods of five years to extend. The processing fee base rate
for the first year was $23 per ton with 3% annual escalation. The green waste processing fee is now
$25.89 per ton until November 1, 2018, at which time the first term of the agreement expires. The
proposed new rate for the extended term is $47.00 per ton with 3% annual escalation.
For comparison, Staff obtained the following rates for green waste processing:
Facility/Hauler
Green Waste
Recycling Fee
Per ton
Waste Management $63.83
Athens Services $52.50
Recycled Wood Products (RWP) $47.00
Given this significant increase from the current processing rate, Staff plans to explore lower cost green
waste processing options, and may recommend exercising the 90-day early termination clause prior to
the June 30, 2019 if a lower cost alternative becomes available.
Due to the passage of AB 1594 (Williams, Green Waste Diversion Bill) effective January 1, 2020, the
cost of green waste processing has significantly increased. Per AB 1594, green materials used as
Alternative Daily Cover (ADC) will no longer be considered as diversion as of January 1, 2020.
Jurisdictions must have plans/programs to divert green materials from landfill or risk not being able to
meet its AB 939 diversion goal. If the City is perceived as not making “good faith effort” to comply
with the law, the City could be potentially exposing itself to fines of up to $10,000 per day for non-
compliance. The upcoming demand for green waste recycling is projected to even go higher as
jurisdictions that do not currently have programs in place scramble to comply with the law.
Since the higher green waste disposal cost was not included in the rate adjustment effective July 1,
2018, per contract, Athens Services has the right to be compensated for the additional disposal cost
from November 1, 2018 to June 30, 2019. Athens’ estimated additional disposal cost is $ 33,500,
depending on the tonnage of actual green waste collected from November to June, to be paid in July
2019. Staff is recommending that this cost will be paid using AB 939 fee revenue in order to reduce
the need for a higher rate adjustment this fiscal year.
FISCAL IMPACT:
The fiscal impact of the additional green waste disposal cost is approximately $33,500 for the
remainder of Fiscal Year 2018-19, subject to the actual amount of green waste collected. There is
adequate AB 939 funds in the FY2018-19 approved budget in account 39-40-750-065-6625 to cover
for the proposed costs.
Green Waste Processing Contract Amendment
October 15, 2018
Page 3
Prepared by: Fiscal Impact Review:
Liza Sagun Talika M. Johnson
Util. Comm. & Envt. Programs Specialist Director of Finance
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Original RWP Contract
2) Contract Amendment
ATTACHMENT 1
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CITY OF AZUSA
AMENDMENT TO AGREEMENT FOR GREEN WASTE PROCESSING AND
DIVERSION SERVICES
1.PARTIES AND DATE
This Amendment To Agreement For Green Waste Processing and Diversion Services
(“Amendment”) is entered into as of the 1st day of November, 2018 by and between the City of
Azusa (herein after referred to as “City”) and Recycled Wood Products, (hereinafter referred to as
“Contractor”).
2.RECITALS
City and Contractor entered into an Agreement for Green Waste Processing and Diversion
Services dated October 28, 2013 (“Agreement”), whereby Contractor agreed to provide green waste
processing and diversion services for green waste generated inside the jurisdictional limits of the
City of Azusa (“Services”). Unless otherwise mentioned, all terms in this Amendment shall have the
same definition as set forth in the Agreement.
The initial term of the Agreement is five (5) years from November 1, 2013 to November 1,
2018. As per Section 2.2 of the Agreement, the City shall have the option to extend the initial term
for up to two (2) additional periods of five (5) years (“Option Period”) on the same terms, covenants
and conditions provided in the Agreement. The parties desire to enter into this Amendment in order
to provide for an additional five (5) year term.
3.AMENDMENTS
3.1 Section 2.1 Term. Section 2.1 is hereby deleted and replaced in its entirety with the
following:
“The term of this Agreement shall be from November 1, 2018 to November 1, 2023, unless
earlier terminated as provided herein. Contractor shall complete the Services within the term of this
Agreement, and shall meet any other established covenants and conditions provided herein. This
first Option Period extension shall terminate on at 11:59 p.m. on November 1, 2023. Both parties,
may, by mutual, written consent, extend the term of this Agreement if necessary to complete the
Services.”
3.2 Section 3.1 Base Rate. Section 3.1 is hereby deleted and replaced in its entirety with
the following:
“City shall pay a disposal fee of $47 to Contractor (“Disposal Fee”), as adjusted in Section
3.2, for each ton of Green Waste delivered to the Processing Facility.”
ATTACHMENT 2
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3.3 Section 6.1.2 Termination Without Cause. Section 6.1.2 is hereby deleted and
replaced in its entirety with the following:
“City may, by written notice, terminate this Agreement at any time, for any reason, at any
time before June 30, 2019, for any reason, with ninety (90) days written notice to Contractor. If the
City exercises the termination rights under this section, City shall pay Contractor any sums due to
the Contractor for deliveries received by Contractor prior to termination.”
3.4 Continuing Effect of Agreement. Except as amended by this Amendment, all
provisions of the Agreement shall remain unchanged and in full force and effect. From and after the
date of this Amendment, whenever the term “Agreement” appears in the Agreement, it shall mean
the Agreement as amended by this Amendment.
3.5 Counterparts. This Amendment may be signed in counterparts, each of which shall
constitute an original.
[Signatures on following page]
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CITY OF AZUSA
By: By:
Sergio Gonzalez
City Manager
Name: Chris Kiralla
Attest:
Title: President
Jeffrey Lawrence Cornejo, Jr.
City Clerk
[If Corporation, TWO SIGNATURES,
President OR Vice President AND Secretary,
AND CORPORATE SEAL OF
CONTRACTOR REQUIRED]
Approved as to Form:
Best Best & Krieger LLP By:
Name:
City Attorney
Title:__________________________
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EXHIBIT A
Annual Adjustment Schedule for Option 1
Extension
Year Cost per ton
Adjustment
Percentage
Effective
Date
1 47.00 3 11/1/2018
2 48.41 3 11/1/2019
3 49.86 3 11/1/2020
4 51.36 3 11/1/2022
5 52.90 3 11/1/2023