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P) Hm m co r ew I N H a a ti co H• m a m G n> O rt rt Co a -, a o Lu 0 •Lu �a. a H o H io ' a• m E J rr rt H. 0 0 o m H. 0 G x It G rnrt •< it • no H. • m m G H. G. H- O H. 0 O W W G' O 0 Hh 10 0 G G h7 rt a rt a C Hrt w co H. a m rt 0 Cn E.0 rt N 0 OE SAryT ' REQUEST FOR 4x r 2 II�IWt�• COUNCIL ACTION PREPARED BY .;'+ • .• DATE OFCOUNCI LACTION4e/ .4.17,/ /1,77 DATE 12-15-77 PHONE 4906 friar.Gas (_3"d/iwlt.GVN /y78 SUBJECT SUPPLEMENTAL REPORT ON3 Mt. STATUS OF TRASH CONTRACT NEGOTIATIONS APPROVED DEPARTMENT HEAD DEPUTY CITY MANAGER ASSISTANT CITY MANAGER CLERK OF TH COUNCI RECOMMENDED ACTION That the City Council approve in concept a new contract beginning January 1 , 1978 and ending December 31 , 1982 with Great Western Reclamation, Inc. , based on terms described in this report, and direct that a formal contract be prepared for Council approval at their meeting of January 16 , 1978 . BACKGROUND The City Negotiating Team .invited the-contractor' s team to meet yesterday, December 14 , in a last attempt to break the deadlock in our negotiations . The contractor is willing to modify his request for a_ rate of $2 . 29 starting January 1 and is willing to accept a rate of $2. 21 . This is 3. 7% higher than his present rate of $2.13 and 2. 3% higher than the seven largest cities ' average of $2.16. He also agreed to a 7% increase on January 1 , 1979 to $2 . 36 and on January 1 , 1980 , another 7% increase to $2. 53. This would cost the City $3, 596 , 390 over the three-year period. This is only 0. 5% above the $3, 577 , 000 cost which our consultant feels we could get through competitive bidding. The City team agreed that the contractor could continue to provide bin service for all residential facilities such as apartment and condominium projects, but still strongly feels that bin service for commercial and industrial accounts should be open competition. The two teams have negotiated prices for bin service along the following lines . Great Western' s present price schedule for bin service is about 8% above an 11-city average in Orange County. They have agreed to hold their prices without change through all of 1978 , to be followed with a 7% increase on January 1 , 1979 and another 7% increase on January 1 , 1980. For a three cubic yard bin emptied once weekly, this would cost $23. 00 a month during 1978, $24 . 61 during 1979, and $26 . 33 during 1980. All of the above prices will be firm and the contractor will assume all risks inherent with labor settlements or additional costs caused by inflation. This appears to be a fair and equitable agreement. It will hold prices firm for a three-year period, and future negotiations would be required for a pricing structure during the final two years of the contract. The contractor has not agreed to the open competition on commercial and industrial bin service . This is the only point still in contention, and we it urge the City Council to support the City Negotiating Team on this issue . Respl tfully Submitted by. City Negotiating Team: Rs � ' Davi:' Ort' z; Co rilman t uce C. Spragg , a' t` Y f=•ger Chairman Member ��,oUJTIO& t410111' m 1 o Ronald E. Wolford, A .� stant City Manager s Member a ??76-lei mq SA 3� a� REQUEST FOR ` ° fa COUNCIL ACTION AMU Rc PREPARED BY Pity Negotiating Taam DATE OF COUNCIL ACTION DATE 12-11-77 PHONE 4186 SUBJECT REPORT ON N??GOTTATTONS FOR EXTENSION OF TRASH COLLECTION CONTRACT APPROVED DEPARTMENT HEAD DEPUTY CITY MANAGER ASSISTANT CITY MANAGER CLERK OF THE COUNCIL RECOMMENDED ACTION That the City Council authorize termination of negotiations between. the City and Great Western Reclamation, Inc. , and direct staff to prepare general specifications to bring back to City Council , preparatory to authorizing a call for competitive bids on a new contract to begin November 1 , 1978 . CONCLUSION The negotiations between the contractor' s team and the City' s team are at a deadlock. The contractor' s preferred proposal contains an increase of 7% in the residential rate and continues the Consumer Price Index (CPI) methodology with a re-open clause if labor or other costs escalate beyond certain levels, and would cost the City an estimated $3,719, 771 during the three-year period, 1978 , 1979 , and 1980 . This offer is predicated on retention of an exclusive franchise for the furnishing of commercial bins and further provides for a 4 . 7% increase in bin rates . The contractor has submitted an alternative offer for residential service only, with open competition on bins , at a three- year cost of $4 ,137 ,950. In comparison to the alternative proposal, the City' s consulting engineer, Ralph Stone and Company, estimates that under competitive bidding conditions , the cost for residential collection for the same three-year period be about $3 , 577, 000 with open competition for all bin service. This amounts to a difference of $561 ,000 over the three-year period or about 16% . The consultant recommends that if the contractor cannot agree to a three-year price at or below the $3,577, 000 figure , then the City should seek competitive bids for a new contract and proceed with development of general specifications for Council review prior to development of detail specifications for bidding purposes. The City negotiating team agrees with this recommendation--we feel that open competition in the market place is the best way to achieve the most favorable price for the citizens of Santa Ana. The attached chart shows how much other Orange County cities are paying their contractors . The average payment for a single-family home is $2. 14 per month for 18 cities and $2.16 for the largest seven cities . Our contractor now receives $2.13 but is asking $2. 29 starting January 1, 1978 . BACKGROUND The present contract with Great Western, Inc. , started November 1 , 1963 and was to run for a period of seven years . Two four-year extensions have been granted, the last of which extends the contract period to October 31 , 1978 . In December, 1976, the City Council , after considering a new request for an extension, appointed Councilman Ortiz as the chairman of a City negotiating team consisting of Mr. Ortiz, City Manager Bruce Spragg, and Assistant City Manager Ron Wolford. The team was to negotiate acceptable terms for the City in exchange for a contract extension. Two negotiation sessions were held in January, 1977. The contractor' s team agreed that they would present a multi-year fixed price proposal to the City e��0Wrio,90 615 U z ,3/ 1 7"F6 g16 r REQUEST FOR COUNCIL ACTION Page 2 team for their review in time for subsequent presentation to the City Council in May. On February, 28, the staff contacted Tom Blackman, Jr. , to ask about the progress of the preparation of their proposal . Their response was that they were still in the process of formulating the proposals but expected to have them back to the team in time for final presentation to the City Council in May. In May a letter was received from Great Western' s attorney, Rodger Howell , stating that it would now take longer to complete the proposal . Mr. Ortiz wrote to Mr. Howell on June 3, 1977 and asked, "As the lapse of time is of great concern to both parties , may we have a prompt response from you as to when you now expect to submit alternative bid proposals or if you desire to pursue another alternative?" A reply dated July 20, 1977 was received by Mr. Ortiz from SCA Services , Inc. , signed by Dick F. Chase, Sr. , Director, Western Region. Mr. Chase stated that he was responsible in representing the company in negotiations for extending the Great Western Reclamation contract with the City of Santa Ana. On August 8 , Ron Wolford wrote to Dick Chase expressing concern about the delay in their submittal of proposals. Mr. Ortiz wrote to Dick Chase on October 6 in which he stated, " I think it is imperative that our negotiations be resumed and obviously receipt of your proposal is a vital prerequisite to those negotiatons . May we hear from you soon as to when we can expect to receive the information. " Ron Wolford also called Dick Chase that same day and was told that they would have the proposal to us by October 13. The material submitted consisted of a bound volume relating to the various aspects of the company, as well as a proposal to continue the contract under a CPI escalator approach. The contractor was told that we had asked for and had been promised fixed price proposals. Subsequent negotiation meetings were held on November 10 and on November 18 at which time the contractor presented a number of options for fixed price proposals . One would be for a contract in which they would have exclusive commercial bin service and one in which it would be open competition on bins . They also presented an option where the billing of individual customers would be transferred from the City to the contractor. Later negotiation meetings were held on November 30 and December 8 . The City Council , on July 18, 1977, approved the hiring of a consultant, Ralph Stone and Company, of Los Angeles to study the contractor' s operations, analyse his proposals, and act as an advisor to the City with respect to the negotiations . The assistance provided by Mr. Stone and his staff has been most helpful to the City' s negotiating team throughout the process . ANALYSIS Option "A, " preferred by SCA' s team, is the CPI approach with a re-open clause if labor or other costs escalate beyond certain levels . We have been notified by the federal government that the Consumer Price Index is being drastically altered and in the future will consist of two different indices . We have written to the San Francisco office of the Department of Labor asking for materials which they have available for parties who use the CPI in escalator or other contractual agreements . It appears that it is going to become more difficult to use the CPI for the purpose for which we have traditionally used it in adjusting trash collection contract prices . Options "B" and "C" provide for fixed payments for three years on a five-year contract with rates to be negotiated for the final two years. Both options have re-open clauses if labor or other costs escalate beyond certain levels. Option "D" gives the City the option to turn customer billing to over the contractor. The cost of $348,439 for the first three years makes this too expensive and the City team feels that present City billing should continue . Option "E" relates to conversion of the payment unit from the water meter to a service unit. There is general agreement between the two teams that this is entirely feasible and could be accomplished with little disruption in present payment procedures . 2 REQUEST FOR COUNCIL ACTION Page 3 The City team asked for another fixed price proposal for residential collection along with an exclusive franchise on bins for multiple-family units but with open competition on commercial and industrial bins. This is known as Option "F." The contractor, however, does not have a breakdown on his commercial bin accounts between apartments and other customers and informs us that it will take at least until December 30 to present a price proposal for this option. It is obvious that since this option is less attractive to SCA than Option "B" but more so than Option "C, " the cost will be somewhere between those two. There may be arguments aaainst open bin competition such as the large numbers of trucks running around the City owned by different companies servicing bins. The fact is that the same number of trucks will be used but may not be owned by only one company. Cities in Orange County where bin service is open competition are Costa Mesa, Garden Grove, Newport Beach, and in. Irvine for industrial users, This method operates without anv major problems in these cities; the bin service is a private transaction between one business and another without government intervention. The pres- ence of trucks servicing bins are a minute problem compared with the large number of trucks serving most businesses and industries in the delivery and shipment of merchandise or products. • The greatest amount of criticism of our present program on bin service is the high cost as compared with rates in other cities. The contractor admits that the bin revenues in Santa Ana provide a partial subsidy for the residential collection. The City team feels that each sector of the community should stand on its own and pay its way with respect to trash collection service . SCA' s proposals under Options "A" and "B," where an exclusive bin franchise is involved , include sharp increases in bin service on top of an already high price . A summary of the contractor' s proposals follows : OPTION "A" - C.P. I. Escalator Method 1. $2. 29 or 7% increase 1/1/78 . 2. Annual CPI adjustments on January 1 each year. 3. Special adjustments if labor costs increase more than 150% of CPI increase over past 3 years , or if transfer stations or disposal sites are relocated . 4. 4. 7% increase in bin rates 1/1/78 and annual CPI adjustments . 5. 5 year contract. 6. Estimated 3 year payment $3 ,719 ,771 at 7% CPI increase per year. OPTION "B" - Three Year Constant Rate, Exclusive Franchise on Bin Service 1. Total compensation of $1, 236, 967 . 20 annually. 2. 10% increase in bin rates . 3. Special adjustments if labor costs increase more than 150% of CPI increase over past 3 years, or if transfer stations or disposal sites are relocated, or if CPI increase exceeds 10% per annum. 4. Prices fixed for 3 years , renegotiable for last 2 years . 5. 5 year contract. 6. Fixed 3 year payment $3 ,710 ,901 . OPTION "C" - Three Year Constant Rate, Open Competition on Bin Service 1. Total compensation of $1 , 379, 316 . 60 annually. 2. Price fixed for 3 years, renegotiable for last 2 years. 3. Special admustments if labor costs increase more than 150% of CPI increase over past 3 years , or if transfer stations or disposal sites are relocated, or if CPI increase exceeds 10% per annum. 4 . 5 year contract. 5. Fixed 3 year payment $4 ,137 ,950. OPTION "D" - Contractor Billing Instead of City 1 . Adds cost of $0 . 23 per month per account . 2. Adds cost of one time only $0 . 25 per account set-up charge . 3. Estimated annual cost of $116 ,146 or $348 ,439 for 3 year pe Le • 3 REQUEST FOR COUNCIL ACTION Page 4 OPTION "E" - Payment by Other than Water Meter 1. Convert from water meter as basis of payment to direct service unit. 2. As of 11-1-77, there are 40 ,682 water meters and we calculate that there are 40 , 876 service units . Formula agreed on is single-family home is one service unit, small business not on bins is one unit, each part of duplex is 0 . 85 unit , each part of triplex or above is 0 . 75 unit. Those on bin service are not included. OPTION "F" - Three Year Constant Rate, Exclusive Franchise on Residential Bin Service Only 1. Same as Option "C" except they get exclusive franchise on all resi- dential bins for apartments, etc. , but with open competition on commercial and industrial bin service . 2. Cost not available from contractor until end of December. A copy of this report will be delivered to the contractor on Friday, December 16 . We told their team on December 13 that our recommendation to City Council would be to re-bid the contract, as we were not able to mutually agree on rates and it appeared that we were too far apart to gain any benefit from continued negotiations . Respe ' fully Submitted by City Negotiating Team: Davi F. Ortiz, CR . • , r an Chairman Alf eat be C. Spragg , tyTr Member ir 6 )414.-sta Ro ald E. Wolford; As ' stant City Manager Member mq Attachment 4 Councilman Bricken suggested that the people in the area be informed that they are being double taxed so that they can exert some influence in their own behalf to accomplish the detachment. CA 94 CIVIC CENTER GRAPHICS A report prepared by STATUS REPORT Director of Public FILED Works John Stevens , dated December 29, 1977, providing Council with an explanation for the long delay in the implementation of the Civic Center Graphics and Signing, Program, was received and filed on the motion of Councilman Ortiz , seconded by Councilman Brandt, and carried 6 : 0 unanimously. Mr. Stevens advised Council that when the County G.S.A. is able to fill a vacant position, that the County will proceed with its position as the lead agency, and in the very' near future pick up on the program where it was left and carry it to comple- tion. CA 77. 17 ORAL REPORT BY POLICE CHIEF Police Chief Raymond POLICE COMPAINT Davis reported that the JOHN ,NIEBLAS specific complaints reported by John Nieblas (Council Minutes , December 27 , 1977) were being investigated, and an answer would require numerous interviews and thorough investigation. He stated that one portion of Mr. Nieblas ' com- plaint concerned the number of arrests being made of drunk drivers , particularly Mexican Americans , and the setting up of stationary roadblocks . He stated that apprehension of drunk drivers is a high priority of the Police Department because a review of the accident records shows that 70% of all traffic accidents involve drunk drivers. He further stated that the citizen complaint form objected to by Mr. Nieblas has been used by the Police Department for over four years following approval by the Human Relations Commission and Council:, and is used by the State as a model. The Chief told Council that his report would be completed in about two or three weeks . CA .47 TRASH NEGOTIATIONS City Staff was directed STAFF DIRECTED to continue the negotia- tions with the existing contractor, Great Western Reclamation, that have been under way and that within a period of 90 days the Staff must return with a negotiated contract for discussion by the Council , including the recommendations of the consultant and the items to beprovided by the contractor, including an 'audit of the books of the company and all the issues 'which have been spoken of many times and which Mr. Ortiz has valiantly tried to discuss , on the motion of Councilman Bricken, seconded by Councilman Yamamoto , and carried 4 : 2, with Council- men Brandt and Ortiz dissenting. A prior motion to direct Staff to prepare specifications in preparation for calling for competitive bids for a new contract to begin November 1 , 1978 made by Councilman Ortiz , seconded by Councilman Brandt, failed on a 2 :4 vote, with Councilmen Garthe , Yamamoto and Bricken and Vice Mayor Ward dissenting. Councilman. Brickenstated that there has not been sufficient justification for the recommendation to call for bids for a new contract to begin November 1 , 1978; that Councilman Ortiz has done an admirable job in bringing to a head many of the issues involved, and has worked long and hard to bring the current contractor to the recognition of the need for changes and, frustrating as it may be , that now is not the time to give up . CITY COUNCIL MINUTES 9 JANUARY 3, 1978 The following written communications were received and considered by Council prior to adoption of the motion: 1) Letter dated December' 28, 1977 from 'F. *. Blackman of Great Western Reclamation; Inc. , requesting Council approval ofa three-year extension of the existing contract ; 2) Letter dated December 28, 1977 from Moore and Hanson, 214 South Broadway, recommending Council authorize a bid call for a new trash collection contract; 3) Letter dated December 28, 1977 from Thomas Elsea, 1502 E. First Street, recommending open competition trash collec- tion service ; 4) Letter dated December 28, 1977 from C. A. Ranney, Jr. , President of Cal-Compack Foods, Inc. , 4906 W. First Street, recommending open competition for industrial trash collec- tion. City Manager Bruce Spragg stated that the cost estimate to the City of a three-year extension of the present contract With Great Western Reclamation would be $260 ,000 more than the cost for the previous three years , based on the assumption that the City, would have the same kind of experience' with the cost of living increase 'and with the adjustments that were negotiated - after the labor settlement.; that based on the negotiations that have been attended by Councilman Ortiz and Assistant City Manager Ronald Wolford the Negotiating Team recommendation to bid a new contract would be in the best interests of the City. Vice Mayor Ward said that he never supported the contract with a cost of living increase provision plus open negotiations later for extra equipment and strikes . Councilman Ortiz responded that the contract proposed by the City during negotiations would not give both the cost of living increase •and later open negotiations for labor costs . Lillian Wolf of 3124 South Main Street , who manages apartment buildings in several Orange County Cities , said that she uses 19• bins at her Santa Ana apartments which are picked up three times a week at a cost of $674 per month; that she uses 21 bins with three pickups a week in Costa Mesa at a cost of $483; that it seems unreasonable that Santa Ana charges $200 more per month than Costa Mesa for about the same service ; and that Great Western Reclamation refuses to clean, repaint or replace dirty, damaged bins . Mr A. Stark, 720 South Lyon, stated that he had been in the rubbish industry for 23 years , and that competitive bidding for a new contract would give the citizens of Santa Ana much better service and a much better rate. CA 11.4 R- 70-yam RECONSIDERATION - LEAGUE OF CITIES Vice Mayor Ward's motion ORANGE COUNTY - DIVISION for reconsideration was QUARTERLY DUES PAYMENT- APPROVED seconded by Councilman Bricken and carried 4 : 2 , with Councilmen Ortiz and Yamamoto dissenting.- (Minutes Page 6) On the motion of Councilman Bricken, seconded by Councilman Brandt, carried 4 :2 with Councilmen Yamamoto- and Ortiz dissenting, payment of quarterly dues (January, February, March 1978) to the Orange County Division, League of California Cities in the amount of $1 ,049 was authorized. CA 148.1 CITY COUNCIL MINUTES _ 10 JANUARY 3, 1978 4-74 { There being no further speakers , Vice Mayor Ward closed the public hearing. On the motion of Councilman Ortiz , seconded- by Councilman Brandt carried 4 : 2 , with Councilman Yamamoto. and Vice Mayor Ward dis- senting, the Negative Declaration was approved and the City Attorney directed to prepare a resolution granting Variance Application 77-64 for a roof sign and outdoor patio dining tables (approved at the December 12 ,1977 meeting) , and affirm- ing the decision of the Planning Commission. CA 13. 3A ORAL COMMUNICATION Janice Boer, 912 North GREAT WESTERN RECLAMATION Lowell, stated that she TRASH CONTRACT was the only private citizen present in 1963 when the . bid for the trash collection contract was opened; that she 'is a long- time observer of the contractor, "originally a so-called little group of experts who came out of Great Western- Title Company" ; that the company started with a group of hometown men who pro- mised the Council it would always be a home town outfit, whose stock would never be sold; that now we have ended up with a - company owned by a group from Boston; that they always come in just before an election to ask for an extension of their con tract; that she is glad that 1978 will be the year that the Council will end what has been quite an injustice to the people of this City for quite some time ; and that she hopes that the first thing that will be done is to reduce the price of a bin. CA. 11. 4 ORAL .COMMUNICATION Mike Flint, 709 East Park ORANGE TOWERS PROJECT Lane ,-asked for. the status of the Environmental Impact Report for the Orange Towers Project and the results of the traffic analysis conducted on Park Lane. Councilman Bricken responded that a meeting was being scheduled to be held about January 16 to discuss the issues ; - that one. meeting had been held with the architect to discuss what he should be looking at in terms of a response to the City at this point in time.; and that the EIR has not yet been filed. CA 78.11 ADJOURNMENT At 8 : 55 P.M. on the motion - of Councilman Brandt, seconded by Councilman Ortiz , carried 6 :0 unanimously, the meeting was adjourned by the Vice Mayor. FLORENCE I . MALONE CLERK OF THE COUNCIL CITY COUNCIL MINUTES 14 JANUARY 3, 1978 ti j - PUBLIC HEARING - APPEAL 3&4 Vice Mayor Ward announced CUP 77- 26 922- 926 N. BEW.ZEY . that this was the time and APPEAL DENIED- STAFF INSTRUCTED place for the public hear- ing of Negative Declaration and Appeal #384 of Conditions 6A3 and 6A6 oftheapproval of Conditional Use Permit 77- 26 requiring removal -of concrete slabs , and installation of landscaping andunderground utilities . Planning Director Charles Zimmerman stated that the Planning Commission approved Conditional Use Permit 77- 26 to permit the - conversion of four single-family residences and two- duplexes to condominiums in the R2 District at 922-926 North Bewley Street; that the Commission conditioned the use with the requirement to -underground the utilities and to remove the exist- ing concrete slabs between the northerly and southerly buildings to allow for private fenced patios between the units , and appropriate landscaping. David Bates , 4502 Goldenglow, Irvine , appellant-applicant , described the present situation and how he intends to utilize - the existing concrete slabs for private patios for each unit. He stated that there are two utility poles , both quite tall , so that they are not in the field of vision; that they are not objectionable to present tenants and probably would not be to future tenants ; that the area' s utilities are 'all overhead; and that his two are well within the boundaries of the property.- John State , 926 Bewley, a resident of one of-- the subject units , - stated that the utility poles have not caused any problem for the residents-. There being no further speakers , Vice Mayor Ward closed the public hearing. On the motion of Councilman Bricken, seconded by Councilman Ortiz and carried 4 : 2 , with Councilmen Garthe and Yamamoto dissenting, the Negative Declaration was approved and filed, and the City Attorney directed to prepare a resolution denying Appeal #384 , approving Conditional Use Permit 77- 26 and affirming the decision of the Planning Commission with all requirements except that Condition 6A3 be modified to provide that 'the Appellant and Planning Department will work out a suitable combination of patio slabs and landscaping that would • permit the utilization of theexistingconcrete slab to the extent possible. CA 13. 4 • PUBLIC HEARING Vice Mayor Ward announced VA 77- 64 - 1727 E. 17TH ST. that this was the time and VARIANCE APPROVED place for--the public hearing of Negative Declaration and Variance Application 77-64 feria roof sign at 1727 East Seventeenth Street in the C5 District in connection with a new "Zantigo" restaurant. Planning Director Charles Zimemrman stated that the Planning Commission had approved the roof-mounted sign in view of the development with similar signing on either side of the proposed restaurant ; that the proposed roof. sign is 24 square feet -and the pole sign is 100 square feet ; that pole signs are generally 200 square feet; and that the total sign area is less than the maximum allowable . Speaking in favor of the variance was Kenneth Hostetler, 241 North Oak, Orange , owner/developer, who stated that there are about 60 of these restaurants across the country : that they are all designed in the same fashion with the Dole sign and the chimney sten which becomes an integral part of the building; that across the street will be a Fazio' s market , on one side a Wendy' s and on the other an RB Furniture store. CITY COUNCIL MINUTES 13 JANUARY 3 , 1978 Wie REQUEST FOR COUNCIL ACTION lei F p/ ..170µ.tiff. �j / PREPARED BY Ronal d E. Wnl ford r. TE OF COUNCIL ACTIONXILed*m44., ZOj /797‘/ DATE 12-15-76 PHONE 4136 . r-1 tY7fiakKyE SUBJECT SUPPLEMENTAL INFORMATION eZteas Ilealagad -er �, REGARDING REFUSE COLLECTION arcs 5- r). CONTRACT APPROVED ROWIAL DEPARTMENT HEAD DEPUTY CITY MANAGER ASSISTANT CITY MANAG C ERK OF THE COUNCIL RECOMMENDED ACTION It is recommended that the City Council consider the information in . this report in their deliberations regarding the extension of the current refuse collection contract. BACKGROUND Staff submitted a report to City Council dated October 11 , 1976 regarding the request for extension of contract by Great Western Reclamation, Inc. The request is for a three-year extension of the contract termination date from October 31 , 1978 to October 31 , 1981 . At their meeting of November 1, 1976 , the City Council continued this matter until December 20 . During the discussion at the November 1 meeting , Councilman Bricken suggested that consideration should be given to hiring a consultant to make a study and recommendation as to whether it is in the best interest of the City to either extend the present contract or to put it out for competitive bids. ANALYSIS The City staff has discussed this matter with three Orange County consulting engineer firms with the capability and expertise to undertake such a study. Among the answers that would be developed as a part of such a study and recom- mendation would be: 1. Availability of contractors to bid on a new City contract including development of a list of names and locations. 2 . Where do these contractors presently provide service, and what is the quality of the service? 3 . What rates for what levels of service do these contractors charge? 4 . What has been the short and long-term experience encountered by other cities in changing from a sole-source contract to a competitive type contract? This would include the history of rate changes and quality of service impacts. 5 . Identification of factors which can be expected to have an effect on rates such as change in disposal sites, transfer of stations, method of disposal , regional charges for disposal, and future recycling programs. The consultants feel that such a study should concentrate on the experience in Southern California so that they would have the greatest applicability to the City of Santa Ana. The study could be undertaken in two phases. The first would be to analyze the present contract and make recommendations as to extension or re-bidding . The second phases would be assistance in :developing specifications, encouraging contractors in the competitive market to submit bids , analysis of bids and other contract documents, and recommendation of contract award. P�J0WT1O,,60 cc Z V V 1?76-1916® REQUEST FOR COUNCIL ACTION -2- December 15 , 1976 COST AND TIME FOR COMPLETION Consultants interviewed estimate that such a study involving both phases would be in the range of $10-15 ,000 and could be completed in approximately 90 days from the date of approval of an agreement for consulting services. The cost of a study would have to be funded from Council Contingency. mg • 55 04 sti NTe_ REQUEST FOR COUNCIL ACTION pq' t O ft,,pr e� f/, / PREPARED BY Ronal d F. idol ford DATE OF COUNCIL ACTI�yO_N&� eft/1776 DATE 10-11-76 PHONE 4116 ��% .eae izope-a iw/, 07/4t ,t4-1,-stsida4As in SUBJECT REOUEST FOR EXTENSION OF /'��Ye f 74 CONTRACT PERIOD BY REFUSE COLLECTION CONTRACTOR. GREAT WESTERN RECLAMATION, INC. OVED moi..- f DEPUTY CITY MANAGER CIT Vq - ,// CLERK OF THE COUNCIL RECOMMENDED ACTION '•iy- It is recommended that the City Council set for public hearing the -request by Great Western Reclamation, Inc. for extension of the contract termination date from October 31 , 1978 to October 31 , 1981. CONCLUSIONS Arguments in favor of extending the contract period are as follows: 1 . The present contractor is providing high quality of service. 2. Additional time may be needed for amortization of the contractor' s head- quarters repair and yard facility on South Grand Avenue. i 3 . Additional time may be needed by the contractor to amortize new equipment purchases. 1 4 . The break-in period for a new contractor could be a traumatic experience servicewise for the citizens which could last up to 12 months or more. Arguments against extending the contract period as follows: 1. The primary assurance of a fair price for trash customers is through re- bidding the contract. The principle of open competition in the market- place is not being met in light of a 15-year exclusive contract now being considered for extension to 18 years. 2. The present contract provides for exclusive collection by the contractor of both residential and commercial refuse. If extended on the present basis, it would continue the inability of individual merchants and industrial firms from seeking more economical prices for commercial bin service in the marketplace. 3. No additional time is needed to amortize collection equipment as it could be readily absorbed by sister companies of SCA Services if Great Western Reclamation was not the successful bidder for a new contract. BACKGROUND The City Council at their meeting of September 20 , 1976 referred to staff for report and recommendation a request from Great Western Reclamation, Inc. for an extension of its refuse collection contract from October 31 , 1978 to Octo- ber 31, 1981. Great Western' s letter of request dated September 14 , 1976 also suggested that an additional seven year extension to October 31 , 1988 would need to be com- mitted in order for them to start on a project for a $2.25 million resource recovery facility in the City of Santa Ana. Because the resource recovery program is very complex and would need additional study and firming up of commitments on both sides, it was agreed by Mr . Blackman that this could be 4conoN i z °m —1— • S5 W z -• { REQUEST FOR COUNCIL ACTION Refuse Collection Contract considered at a later date and that the City' s attention should be focused upon the request for the three year extension described above. ANALYSIS The contractor in his letter states that they need the extension to amortize new equipment. They say they have purchased six new rubbish trucks at an approximate cost of $300 ,000 within the past few months and have issued purchase orders for an additional $800 ,000 of equipment, much of which will be delivered this year . It would seem that this argument is not as strong a one as it once was. Great Western Reclamation, Inc. is a company wholly owned by SCA Services, Inc, a huge corporation in the refuse collection and resource recovery business, with annual revenues of $166 million in 1974. As any equipment purchased locally by the company could be used by any number of sister companies within the corporation, it would seem that the argument for amortization of equipment purchased for use in Santa Ana would be somewhat diminished . Great Western Reclamation, Inc. was low bidder and was awarded the City of Santa Ana contract beginning November 1 , 1963 and running for a period of seven years. Subsequent extensions of the contract by the City Council provide now for an expiration date of October 31, 1978 , or a total contract. period of 15 years. There are three issues of primary importance which should be dealt with during consideration of the extension of the contract. These are 1) a fair pricing policy for the citizens of Santa Ana, 2) quality of service performed by the contractor in the past, and 3 ) the principle of competition in the marketplace. DETERMINATION OF FAIR PRICE Three methods of determining a fair price to be paid to contractor by the City are as follows: a. Rebid the contract allowing competition in the market place to establish an equitable price. b. Contractor opens his financial records to the City so that determinations can be made through the auditing process of reasonable rates of return on investment and reasonable profit levels. This is the public utility approach where firms enjoying a monopoly such as suppliers of gas, electricity, telephone or other utility service must disclose all fiscal information to justify pricing. c. Compare the contractors price with those of other contractors serving municipalties in this vicinity. This is probably the least desirable method because the operations vary considerably from city to city. Such factors as population density, general design of the street system, traffic congestion, distance from transfer stations, distance from disposal sites, etc. all are variables which have an impact upon the cost of refuse collec- tion and disposal . The following is a result of a recent survey showing present monthly prices being paid to contractors in larger cities within Orange County who use the contract method of collection: Anaheim $1 .55 Huntington Beach $2.07 Buena Park 1 .85 Orange 1 .50 Costa Mesa 2 . 35 Santa Ana 1 .98 Fullerton 1 .60 1 Garden Grove 1 .50 AVERAGE, above 8 cities 1 .74 Note: Buena Park , Orange and Santa Ana use the water meter as the basic unit of payment. All others use the dwelling unit. QUALITY OF SERVICE For quality of service, we would have to give a high mark to Great Western Reclamation. The number of service requests received from citizens during the 1975-76 fiscal year amounted to 724 . This averages out to 60 per month or 14 per week. Considering that over 50 ,000 refuse collection stops are serviced each week , we feel that this is an extraordinary record. Many of these requests -2- 5 REQUEST FOR COUNCIL ACTION Refuse Collection Contract cannot be considered as actual complaints. Some of them are misses, and the company promptly follows up with a supervisor in a pickup truck to take care of the missed collection on the same day that the call is received. Some occur when the homeowner puts out his trash after the crews have already been through the area. In fiscal year 1974-75 , the number of service requests amounted to 1 ,042. The 724 received in fiscal year 1975-76 are a decrease of over 30% from the prior year. Service requests for the current fiscal year through September 30 , 1976 amount to 182. Projecting this figure for the full year would indicate that about 728 will be received which compares closely with that for the fiscal year just completed. The quality of service has been consistently high since the initial break-in period in late 1963 and early 1964. Our complaint level was well below that of other large cities in Southern California as shown in previous studies and compares favorably with the other seven larger Orange County cities using the contract method of collection. COMPETITION IN THE MARKETPLACE Collection contracts should be of sufficient duration to make it feasible for the contractor to purchase and amortize the equipment and facilities necessary to provide effective service. Three to five years is generally recommended as a reasonable period for amortization of vehicle costs. Capital investment costs for headquarters buildings and repair and yard facilities would require a longer period. With the completion of the present contract period, in 1978 a total of 15 years will have elapsed since the contract was awarded to Great Western Recla- mation in 1963. f There has been criticism voiced by business and industrial firms regarding the exclusive right of the contractor to provide commercial bin service. While strong arguments can be advanced for an exclusive franchise or contract for the collection of residential refuse, the same arguments generally are not 1 valid for commercial bin service. Many other cities, while providing for an I exclusive contract for residential pickup, do allow open competition for the provision of commercial bin service. Some of the larger cities in Orange County that permit this type of competition are Costa Mesa, Garden Grove and Newport Beach. They report that no problems have resulted from this approach. PUBLIC HEARING A public hearing is not a legal requirement for consideration of the contract extension. There has been considerable interest expressed by the public in the past regarding the trash contract, and it is felt by the staff that a matter of major policy such as this should be set for public hearing. This will provide the opportunity for the citizens and business interests of the City to express their views to the City Council. -3- AMENDMENT TO CONTRACT FOR REFUSE COLLECTION THIS AGREEMENT, made and entered into this day of -tuntmsr , 1976, by and between the City of Santa Ana, a muncipal corporation of the State of California ("City") , and Great Western Reclamation, Inc. , a wholly owned subsidiary of SCA Services, Inc. , a corporation ("Contractor") ; WITNESSET H: Recitals: 1. City and Contractor have heretofore, on or about August 12, 1963, entered into a certain agreement P'said agreement") for the collection of refuse within the City of Santa Ana, which said agreement was thereafter, from time to time amended in certain respects. 2. The parties desire to amend said agreement, as amended to express their present contractual intent. WHEREFORE, in consideration of their mutual covenants and agreements, hereinafter contained, and subject to the terms and con- ditions hereof, the parties hereto do hereby agree as follows: Section 1. Weight Limitation Subsection (f) of Section 2 of the specifications dated June 17, 1963, attached to and made a part of said agreement ("said specifications") is hereby amended to read as follows, effective May 'l, 1976: (f) Preparation of refuse. All refuse shall be placed in containers adequate to eliminate overflow or contamination of surrounding areas. Individual containers must not weigh in excess of fifteen (15) pounds empty or have a capacity exceeding thirty five (35) gallons. Total combined weight of container and contents - shall not exceed fifty (50) pounds . Cardboard or wooden carton, acceptable as temporary containers, will be considered as trash and will not be returned 4 to the user. Any cardboard or wooden cartons, not specifically used as a temporary container, must be broken down, flattened and tied in budndles with strong cord or wire heavy enough to act as a handle or shall be placed in acceptable containers. Cardboard, papers, magazines, palm fronds, tree limbs, brush, weeds and similar dry materials must also be tied in bundles with a heavy cord or wire strong enough to act as a handle or may be placed in acceptable containers. Any such bundle or item may not exceed four (4) feet in length, eighteen (18) inches in thickness, or weigh in excess of forty (40) pounds. Oil drums, grease drums, arid similar metal containers; paper grocery bags; broken wooden boxes and crates; broken or wet cardboard boxes; any container with sharp, rough or jagged edges which may hamper or injure the handler are not acceptable as refuse containers and will not be picked up or emptied. Discarded household items, broken down to the specified size and weight easily handled by one man, may be con- sidered as refuse. All kitchenwaste, ashes, hair clippings, floor sweepings , must be well and securely wrapped to protect the public health and safety. Hot ashes will not be collected. There will be a load limit of fifty (50) pounds per container with contents . 'L Also, there will be a load limit of 200 pounds (including container) . for each refuse service stop except at single family dwellings. Section 2. Time of Collection. Subsection (k) of Section 2 of said specifications is hereby amended to read as follows, effective May 1, 1976: (k) Maintenance of schedules. Presently existing routes, schedules and times for collection of garbage and trash shall be maintained, but may be changed by authorization of the Director of Public Works and after at least one week' s advance noti- fication by the Contractor to the occupantsof buildings in the area where the changes are to be made. All collections from residential areas shall be. made 2. Y between the hours of 5:00 a.m. and 8 :00 p.m. , and collections from commercial and industrial locations other than multi-family residential units or from locations immediately adjacent to residential units may start at 3:00 a.m. provided, however, that if the Director of Public Works determines that the commencement of collection in residential areas between the `hours of 5: 00 a.m. and 6:00 a.m. unduly and un- necessarily disturbs the residents thereof,. he may direct that collections in such areas shall be made between the hours of 6:00 a.m. and .8:00 p.m. , and in that event, Contractor agrees to comply with such order. Section 3. Compensation Readjustment. The first full paragraph of subsection (b) of Section 4 • of said specifications is hereby amended to read as follows, effec- tive May 1, 1976: (b) Compensation readjustment. On the first day of July of each year, during the term hereof, commencing July 1, 1976, the contract unit price shall be adjusted to reflect the percentage change, as compared to the last such adjustment, in the Consumers' Price Index (1957-59 base) , Los Angeles area, published by the '''. S. Department of Labor, as indicated • by the index figure for the month of May most recently published prior to said dates, respectively. Such adjust- ment shall be computed by using the figure of 108. 0 as equal to 100, and increases or decreases in the contract unit price shall be one cent per unit for each increase or decrease of one full percentage point from the base of 108 . 0 as compared to the last such adjustment, whether heretofore or hereafter made. 3. Section 4. 1973 Amendment. It is mutually agreed between the parties that that certain "Supplement to Agreement" , dated December 10, 1973, is except as to paragraph 1 thereof, captioned "Consent to Stock Sale", cancelled, effective May 1, 1976 , and thereafter shall be null and void and no longer a part of said agreement. Section 5. Contract Price. Article II of said agreement is hereby amended to read as follows, effective May 1, 1976: ARTICLE II. Contractor agrees to receive and accept the following prices as full compensation for furnishing the services and work contemplated and . embraced in this contract; also for all loss or damage arising out of the nature of said services, or from the acts of the elements, and for all risks of every description connected with the services, also for all expenses incurred by or in consequence of the suspension or discontinuance of services, and for well and faithfully completing the services, and the whole thereof, in the manner and according to the specifications and requirements of the City of Santa Ana under them. It is understood that payment is to be made on the basis of "Unit Cost" times the actual number of units. Said price is as follows, to wit: • Per. Unit $1. 98 The word "Unit" as used in Article II is defined and limited by Section 4. "Payments By City" at page 9 of the specifications attached hereto. Section 6. Agreement and Amendments Ratified. Said agreement, and each and every amendment, addendum, and supplement thereto is hereby ratified and confirmed by the 4 . parties as their agreement, as hereinabove amended. IN WITNESS WHEREOF, the parties hereto have executed this agreement the day and year first above written. ATTEST: CITY OF SANTA ANA, a municipal corporation of the State of California FLORENCE L AAAL@NE i. d CLERK OOFstTHE OUNCIL' t MAYO "City" APPROVED AS TO FORM: / >(� KEITH L. GOW CITY ATTORNEY GREAT WESTERN RECLAMATION, INC. , a wholl o led subsidiary of SCA SE' I ,"'S, INC. , co poration i Bye "Contractor" 5. __ $ry4 --211144. a�3 REQUEST FOR COUNCIL ACTION PREPARED BY Ronald E. Wolford DATE OF COUNCIL ACTION t.-1 .-1( DATE 6-1-76 PHONE 4136 c -etecta .kis,lb,,, SUBJECT AMENDMENT TO CONTRACT FOR REFUSE COLLECTION WITH GREAT .ca$ I 4- 4- S r,-14L WESTERN RECLAMATION, INC. e � APPROVED P +� DEPARTMENT HEAD DEPUTY CITY MANAGER ASSISTANT CITY Os. AGER CLERK OF THE COUNCIL RECOMMENDED ACTION It is recommended that the City Council approve an amendment to the contract for refuse collection with Great Western Reclamation, Inc. CONCLUSION An amendment to the contract should be submitted to the City Council for their consideration incorporating the changes which have been successfully negotiated by the City staff. The changes to be made in the amendment will provide for the following items: 1 . Removes the 200 pound weight limitation for single-family residences. 2. Allows a one hour earlier residential collection start on a trial basis from 6 A.M. to 5 A.M. subject to cancellation by the Director of Public Works if not acceptable to the public. 3 . Changes the twice yearly CPI adjustment to once per year . New rates would be based on the CPI as of May 30 each year and would be applicable to the monthly payments beginning July 1 . 4. Provides a $0 .15 per water meter per month increase in contract unit price due to the added wage and fringe benefit costs caused by the strike settlement of 1975. 5. Delete the refund payments imposed by the City as a condition of the approval of stock transfer to SCA Services. BACKGROUND The contractor , by letter dated November 25, 1975, requested seven amendments to the present contract. These were for a contract time extension, special adjustment in contract unit price because of the impact of the 1975 strike settlement, cancellation of the requirement for the pay-back feature imposed in December , 1973 when stock was sold to SCA Services, CPI adjustment to be once yearly rather than twice, that the commercial bin rates be adjusted to reflect changes in the CPI , that collection time be advanced from 6 A.M. to 5 A.M. and that the 200 pound weight limitation for single-family residences be removed. The staff, over a long period of time, has been carrying on negotiations with the contractor regarding these requests. On January 19 , 1976, a City Council study session was held at which time certain policy decisions were made by City Council regarding these requests and other matters being con- sidered in conjunction with the refuse collection program. Some of the decisions are for guidance of staff and according to the City Attorney need not be part of the contract. These relate to procedures for handling future requests for adjustments in both residential or commercial rates. The Council specifically denied the contractor ' s request for annual adjustments ,OLUTION 45.5 2 F U m 5��6 1>i6 1926^a2 Request for Council Action Page 2 in commercial bin rates as based on the CPI. The Council further directed that the extension of the current contract would not be considered for favorable approval until all the other matters had been successfully negoti- ated. The extension does not appear , at this time, to be supported by a majority of the City Council so this clause is not included in the amendment. Three members of Council have declared conflicts of interest on the subject of the refuse collection contract and have abstained from participation in deliberations and voting. Mayor Garthe has informed staff that he will not support an extension of time so the maximum possible is three affirmative votes, not sufficient to carry a motion for extension. Further discussions with the contractor and analysis by the City' s staff indicated that it would be better not to change the current basis of the contractor ' s payments from water meters to population or some other indicator . The City Attorney has also subsequently reviewed the existing contract and amendments and has advised that it is legally sufficient and, therefore, need not be redrawn in its entirety at this time. The matter of rate adjust- ment due to the strike settlement was concluded by Council approval of a special $0.15 increase at their May 3, 1976 meeting. ms p REQUEST FOR COUNCIL ACTION PREPARED BY Ronald E. Wolford DATE OF COUNCIL ACTION DATE 5-11-76 PHONE 4136 ` SUBJECT AMENDMENT TO CONTRACT FOR REFUSE COLLECTION WITH GREAT WESTERN RECLAMATION, INC. APPROVED FLORENCE L S ASSISTANT S DEPARTMENT HEAD DEPUTY CITY MANAGER SIS TANT�J C .Y '" AGER CLERK OF OF THE H HE CO IL RECOMMENDED ACTION It is recommended that the City Council approve an amendment to the contract for refuse collection with Great Western Reclamation, Inc. CONCLUSION An amendment to the contract should be submitted to the City Council for their consideration incorporating the changes which have been successfully negoti- ated by the City staff including an extension of the contract. The changes to be made in the amendment will provide for the following items : 1. Removes the 200 pound weight limitation for single-family residences . 2 . Allows a one hour earlier collection start on a trial basis subject to cancellation by the Director of Public Works if not acceptable to the public. 3. Changes the twice yearly CPI adjustment to once per year. New rates would be based on the CPI as of May 30 each year and would be applicable to the monthly payments beginning July 1. 4. Provides a $0.15 per water meter per month increase in contract unit price due to the added wage and fringe benefit costs caused by the strike settlement of 1975. 5. Deletes the refund payments imposed by the City as a condition of the approval of stock transfer to SCA Services. 6. Extends the contract period from October 31 , 1978 to October 31, 1981. BACKGROUND The contractor, by letter dated November 25, 1975 , requested seven amendments to the present contract. These were for a contract time extension, special adjustment in contract unit price because of the impact of the 1975 strike settlement, cancellation of the requirement for the pay-back feature imposed in December, 1973 when stock was sold to SCA Services , CPI adjustment to be once yearly rather than twice, that the commercial bin rates be adjusted to reflect changes in the CPI, that collection time be advanced from 6 :00 a.m. to 5 :00 a.m. , and that the 200 pound weight limitation for single-family residences be removed. The staff, over a long period of time, has been carrying on negotiations with the contractor regarding these requests. On January 19 , 1976 , a City Council study session was held at which time certain policy decisions were made by City Council regarding these requests and other matters being considered in conjunction with the refuse collection program. Some of the decisions are for guidance of staff and according to the City. Attorney need not be part of the contract. These relate to procedures for handling future requests for adjustments in both residential or commercial rates. The Council specifically denied the contractor' s request for annual adjustments in commercial bin rates JOLUTION z m2 v rn 6��67>>6 �916�2 REQUEST FOR COUNCIL ACTION Page 2 as based on the CPI. The Council further directed that the extension of the current contract would not be considered for favorable approval until all the other matters had been successfully negotiated. Further discussions with the contractor and analysis by the Citys staff indi cated that it would be better not to change the current basis of the contrac- tor' s payments from water meters to population or some- other indicator, The City Attorney has also subsequently reviewed the existing contract and amend- ments and has advised that it is legally sufficient and, therefore, need not be redrawn in its entirety at this time. The matter of rate adjustment due to the strike settlement was concluded by Council approval of a special $0 .15 increase at their May 3, 1976 meeting. ms