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CITY OF SAN BERNARDINO - REQUEST FOR COUNCI~Rlei N A L
From:
Lori Sassoon
Acting City Manager
Subject: RESOLUTION OF THE MAYOR AND
COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE
EXECUTION OF A SERVICES AGREEMENT
WITH R3 CONSULTING SERVICES, INC" FOR
SERVICES RELATED TO THE POTENTIAL
OUTSOURCING OF SOLID WASTE
COLLECTION SERVICES,
Date:
April 22, 2009
MICC Meeting Date: May 4, 2009
Synopsis of Previous Council Action:
June 2004 - The Mayor and Council approved an agreement with R3 Consulting to assist the
City through a competitive proposal process that could result in assigning all new commercial
customers to a franchisee,
Recommended Motion:
I, Adopt resolution; and
2, Authorize the Director of Finance to amend the FY 0.8-09 Refuse Budget to increase
contractual services by $72,500 and increase revenlyf~ )
Signature
Contact person: Lori Sassoon
Phone:
5122
Supporting data attached: staff report resolution, agreement Ward: All
FUNDING REQUIREMENTS:
Amount: No net cost to the City; contract cost of $72,500
to be offset by revenue from proposers,
Source: (Accl. No,) Various
(Accl. Description) IWM Fund
Finance:
Council Notes:
(Nt) /ft!.--T7,M.I 17iK C Ai )
Agenda Item No,
2f)
5.'1.01
STAFF REPORT
Subiect:
Resolution authorizing the execution of a Services Agreement with R3 Consulting Group,
Inc., for services related to potential outsourcing of solid waste collection services.
Backl!round:
In 2004, various options were evaluated for increasing revenues to the General Fund.
One area under consideration was the City's possible expansion of franchised
commercial refuse services.
In the Spring of 2004, R3 Consulting Group was retained to provide an analysis
concerning options to enhance revenues in this regard. One option identified was to
assign all new commercial refuse customers to a franchisee. As an alternative, R3 was
asked to evaluate whether or not a similar financial benefit could be realized through an
expansion of the City's in-house commercial refuse operation. In summary, though that
option is available, it contains risk and would not provide the same level of financial
benefit to the General Fund.
In June of 2004, the Mayor and Council approved another agreement with R3 Consulting
to assist the City through a competitive proposal process that would result in assigning all
new commercial customers to a franchisee. At that time, it was anticipated that the
process would take 60-90 days before a recommendation could be made to the Mayor and
Council concerning award of a franchise.
In the end, further analysis showed that the roll-off operation was generating more in
revenue than was originally estimated in the analysis. Part of this revenue offsets costs of
the Refuse Division's environmental projects, including source reduction and recycling
programs, as well as administrative costs. Over the long term, the Refuse Fund could not
sustain that revenue loss without significant budget reductions that would impact other
Refuse operations (such as environmental projects and administration), and/or
considerable reductions to the transfer from the Refuse Fund to the General Fund.
As a result, it was determined that franchising the City's roll-off operation would not be
beneficial to the City at that time.
Current Analvsis:
Given the City's current financial situation, this office has recommended that we again
explore the feasibility of potentially outsourcing the City's solid waste operations. This
recommendation was first made during the February 2009 mid-year budget adjustment
process. The major goal of this effort would be to replenish the City's reserves using the
one-time proceeds of the transaction, while providing ongoing annual revenue to the
General Fund through franchise fees.
The evaluation of this option requires significant evaluation of the current benefits of the
City-operated business, both in terms of qualitative benefits as well as quantitative
(financial) benefits. Much of the analysis is predicated upon the amount that a private
solid waste firm would be willing to pay to assume the City's business.
Staff contacted R3 Consulting Services, Inc., to ask for their assistance with this project.
R3' s prior experience in the 2004 - 2005 analysis, as well as their preparation of the
business plan for the Refuse Division in 2007, gives them significant understanding of
the City's current operations. That understanding will be especially beneficial in helping
to expedite this analytical process.
The proposed Services Agreement with R3 will provide for them to conduct Tasks I
through 5 as more fully outlined in their proposal, which is attached to the Agreement.
These tasks are as summarized as follows:
Task I:
Preparing a Request for Interest ("RFI") that can be provided to
potential service providers
Task 2:
Interviewing potential service providers to determine their level of
interest and ability to provide the requested services
Task 3:
Issuing a RFI
Task 4:
Evaluating RFI responses
Task 5:
Presenting a summary of the RFI responses to the City to
determine a) if the City wants to proceed to negotiations, and b)
which potential services providers with which to negotiate further
If at that point the Mayor and Council determine to move ahead with this process, the
next step would be to negotiate with one or more potential providers of these services.
However, at this time it is recommended that the City contract only for Tasks I through
5. This will provide a point at which the Mayor and Council can evaluate the analysis and
proposals thus far, and determine if this process should move forward.
Financial Impact:
The cost for this agreement is $72,500. It is anticipated that this cost will be offset by pre-
proposal payments from potential providers, so there is no net cost to the City. As part of
this action, the FY 2008-09 budget will be amended to incorporate these anticipated costs
and revenues into the Integrated Waste Management budget.
Recommendation:
I. Adopt resolution; and
2. Authorize the Director of Finance to amend the FY 08-09 Refuse Budget to
increase contractual services by $72,500 and increase revenue by $80,000.
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RESOLUTION NO.
CCO[PV
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE EXECUTION OF SERVICES AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND R3 CONSULTING SERVICES,
INC., FOR SERVICES RELATED TO THE POTENTIAL OUTSOURCING OF SOLID
WASTE COLLECTION SERVICES
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION I. That R3 Consulting Services' prior experience in the 2004 - 2005
analysis of solid waste collection services, as well as their preparation of the business plan for
the Refuse Division in 2007, gives them significant understanding of the City's current
operations, and that understanding will be especially beneficial in helping to expedite this
analytical process.
SECTION 2. The City Manager of the City of San Bernardino is hereby aathorized
and directed to execute on behalf of said City the Services Agreement between R3 Consulting
Services, Inc., and the City of San Bernardino, which is attached hereto, marked Exhibit "A",
and incorporated herein by reference as fully as though set forth at length.
SECTION 3. This purchase is exempt from the formal contract procedures of Section
3.04.010 of the Municipal Code, pursuant to Section 3.04.010. B.3 of said Code, "Purchases
approved by the Mayor and Common Council."
SECTION 4. The authorization to enter the above-referenced agreement is rescinded
if the parties to the agreement fail to execute it within sixty (60) days of the passage of this
resolution.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE EXECUTION OF SERVICES AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND R3 CONSULTING SERVICES,
INC., FOR SERVICES RELATED TO THE POTENTIAL OUTSOURCING OF SOLID
WASTE COLLECTION SERVICES
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
and Common Council of the City of San Bernardino at a
meeting thereof,
held on the _ day of
,2009, by the following vote, to wit:
Council Members:
AYES
NAYS
ABSTAIN ABSENT
ESTRADA
BAXTER
BRINKER
SHORETT
KELLEY
JOHNSON
MCCAMMACK
City Clerk
The foregoing resolution is hereby approved this
day of ___
2009.
Patrick J. Morris, Mayor
City of San Bernardino
}- - P ev...-
Exhibit "A"
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SERVICES AGREEMENT
This Services Agreement is entered into this _ day of 2009, by and
between R3 Consulting Group, Inc. ("CONSULTANT") and the City of San Bernardino
("CITY").
WITNESSETH:
WHEREAS, it is in the best interests of the CITY to acquire the servIces of a
Consultant to assist with studying the feasibility of outsourcing the City's solid waste
operations;
NOW, THEREFORE, the parties hereto agree as follows:
I. SCOPE OF SERVICES.
For the remuneration stipulated in Paragraph 2, San Bernardino hereby engages the
services of CONSULTANT to provide those Tasks 1 through 5 as set forth in its letter
proposal dated March 19, 2009, which is marked Attachment "1 ", attached hereto and
incorporated herein by this reference. No other tasks that are outlined in Attachment "1" are
authorized by this Agreement.
2. COMPENSATION AND EXPENSES.
Consultant shall be paid a consulting fee not to exceed $72,500. The fees shall be
billed to the City and payable as Tasks 1 through 5 are completed, in accordance with the fee
schedule shown in Table I, on Page 8 of Attachment "I". No other costs shall be paid by the
City.
3. TERM; TERMINATION.
The term of this Agreement shall be for a period beginning on May 4, 2009, and
terminating on November 4, 2009, unless extended by the mutual agreement of the parties.
This Agreement may be terminated at any time by thirty (30) days written notice by either
party. The terms of this Agreement shall remain in force unless mutually amended.
4. INDEMNITY.
CONSULTANT agrees to and shall indemnify and hold the CITY, its elected
officials, employees, agents or representatives, free and harmless from all claims, actions,
damages and liabilities of any kind and nature arising from bodily injury, including death, or
property damage, based or asserted upon any actual or alleged act or omission of
CONSULTANT, its employees, agents, or subcontractors, relating to or in any way connected
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with the accomplishment of the work or performance of services under this Agreement, unless
the bodily injury or property damage was actually caused by the sole negligence of the CITY,
its elected officials, employees, agents or representatives. As part of the foregoing indemnity,
Vendor agrees to protect and defend at its own expense, including attorney's fees, the City, its
elected officials, employees, agents or representatives from any and all legal actions based
upon such actual or alleged acts or omissions. CONSULTANT hereby waives any and all
rights to any types of express or implied indemnity against the CITY, its elected officials,
employees, agents or representatives, with respect to third party claims against the
CONSULTANT relating to or in any way connected with the accomplishment of the work or
performance of services under this Agreement.
5. INSURANCE.
While not restricting or limiting the forgoing, during the term of this Agreement,
CONSULTANT shall maintain in effect policies of comprehensive public, general and
automobile liability insurance, in the amount of $1,000,000.00 combined single limit, and
statutory worker's compensation coverage, and shall file copies of said policies with the
CITY's Risk Manager prior to undertaking any work under this Agreement. CITY shall be
set forth as an additional named insured in each policy of insurance provided hereunder. The
Certificate of Insurance furnished to the CITY shall require the insurer to notify CITY at least
30 days prior to any change in or termination of the policy.
6. CONFIDENTIALITY OF REPORTS.
The CONSULTANT shall keep confidential all reports, information, and data
received, prepared or assembled pursuant to performance hereunder. Such information shall
not be made available to any person, news release, firm, corporation, or entity without prior
written consent of the City.
7. CONFLICT OF INTEREST.
The CONSULTANT shall maintain a code or standard of conduct. The
CONSULTANT shall neither solicit nor accept gratuities, favors, or anything of monetary
value for work completed under the Scope of Services. To the extent permissible by stat
laws, rules and regulations, the standards adopted by CONSULTANT shall provide for
penalties, sanctions, or other disciplinary actions to be applied for violations of such standards
by the CONSULTANT.
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8. NON-DISCRIMINATION.
In the performance of this Agreement and in the hiring and recruitment of employees,
CONSULTANT shall not engage in, nor permit its officers, employees or agents to engage in,
discrimination in employment of persons because of their race, religion, color, national origin,
ancestry, age, mental or physical disability, medical condition, marital status, sexual gender or
sexual orientation, or any other status protected by law.
9. INDEPENDENT CONTRACTOR.
CONSULTANT shall perform work tasks provided by this Agreement, but for all
intents and purposes CONSULT ANT shall be an independent contractor and not an agent or
employee of the CITY. CONSULTANT shall secure, at its expense, and be responsible for
any and all payment of Income Tax, Social Security, State Disability Insurance
Compensation, Unemployment Compensation, and other payroll deductions for
CONSULTANT and its officers, agents, and employees, and all business licenses, if any are
required, in connection with the services to be performed hereunder.
10. BUSINESS REGISTRATION CERTIFICATE AND OTHER
REQUIREMENTS.
CONSULTANT warrants that it possesses or shall obtain, and maintain a business
registration certificate pursuant to Chapter 5 of the Municipal Code, and any other licenses,
permits, qualifications, insurance and approval of whatever nature that are legally required of
CONSULTANT to practice its business or profession.
11. NOTICES.
Any notice to be given pursuant to this Agreement shall be deposited with the United States
Postal Service, postage prepaid and addressed as follows: TO THE CITY:
City Manager
300 N. D Street
San Bernardino, CA 92418
Telephone: (909) 384-5122
Facsimile (909)384-5138
TO THE CONSULTANT:
R3 Consulting Group, Inc.
811 Chippendale Drive, Suite 708
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Sacramento, CA 95841
Telephone: (916) 576-0309
Facsimile: (916) 331-9600
12. RECORDS
The CONSULTANT shall keep full and accurate records of all consulting work
performed under this Agreement. All records, content, sketches, drawing, prints,
computations charts, reports and other documentation made in the course of the consulting
work performed hereunder, or in anticipation of the consulting work to be performed in regard
to this Agreement, shall at all times be and remain the sole property of the City and the
CONSULTANT shall turn over to the City all copies of the Work Records within seven (7)
calendar days after a written request by City.
13. ATTORNEYS' FEES
In the event that litigation is brought by any party in connection with this Agreement,
the prevailing party shall be entitled to recover from the opposing party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party in the exercise
of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions
or provisions hereof. The costs, salary and expenses of the City Attorney and members of his
office in enforcing this Agreement on behalf of the CITY shall be considered as "attorneys'
fees" for the purposes of this paragraph.
14. ASSIGNMENT.
CONSULTANT shall not voluntarily or by operation of law assign, transfer, sublet or
encumber all or any part of the CONSULTANT's interest in this Agreement without CITY's
prior written consent. Any attempted assignment, transfer, subletting or encumbrance shall be
void and shall constitute a breach of this Agreement and cause for the termination of this
Agreement. Regardless of CITY's consent, no subletting or assignment shall release
CONSULTANT of CONSULTANT's obligation to perform all other obligations to be
performed by CONSULTANT hereunder for the term of this Agreement.
15. VENUE.
The parties hereto agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated either in the State courts located in the County of San
Bernardino, State of California or the U.S. District Court for the Central District of California,
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Riverside Division. The aforementioned choice of venue is intended by the parties to be the
mandatory and not permissive in nature.
16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of California.
17. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding on and inure to the benefit of the parties to this
Agreement and their respective heirs, representatives, successors, and assigns.
18. HEADINGS.
The subject headings of the sections of this Agreement are included for the purposes
of convenience only and shall not affect the construction or the interpretation of any of its
provIsIons.
19. SEVERABILITY.
If any provision of this Agreement is determined by a court of competent jurisdiction
to be invalid or unenforceable for any reason, such determination shall not affect the validity
or enforceability of the remaining terms and provisions hereof or of the offending provision in
any other circumstance, and the remaining provisions of this Agreement shall remain in full
force and effect.
20. REMEDIES; WAIVER.
All remedies available to either party for one or more breaches by the other party are
and shall be deemed cumulative and may be exercised separately or concurrently without
waiver of any other remedies. The failure of either party to act in the event of a breach of this
Agreement by the other shall not be deemed a waiver of such breach or a waiver of future
breaches, unless such waiver shall be in writing and signed by the party against whom
enforcement is sought.
21. ENTIRE AGREEMENT; MODIFICATION.
This Agreement constitutes the entire agreement and the understanding between the
parties, and supercedes any prior agreements and understandings relating to the subject
manner of this Agreement. This Agreement may be modified or amended only by a written
instrument executed by all parties to this Agreement.
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SERVICES AGREEMENT
R3 CONSULTING GROUP
IN WITNESS THEREOF, the parties hereto have executed this Agreement on the day and
date set forth below.
Dated:
Dated
Approved as to Form:
JAMES F. PENMAN,
City Attorney
By:
,2009
,2009
CONSULTANT
By:
CITY OF SAN BERNARDINO
By:
Lori Sassoon, Acting City Manager
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SERVICES AGREEMENT
This Services Agreement is entered into this _ day of 2009, by and
between R3 Consulting Group, Inc. ("CONSULTANT") and the City of San Bernardino
("CITY").
WITNESSETH:
WHEREAS, it is in the best interests of the CITY to acquire the services of a
Consultant to assist with studying the feasibility of outsourcing the City's solid waste
operations;
NOW, THEREFORE, the parties hereto agree as follows:
1. SCOPE OF SERVICES.
For the remuneration stipulated in Paragraph 2, San Bernardino hereby engages the
services of CONSULTANT to provide those Tasks I through 5 as set forth in its letter
proposal dated March 19, 2009, which is marked Attachment "I", attached hereto and
incorporated herein by this reference. No other tasks that are outlined in Attachment" I" are
authorized by this Agreement.
2. COMPENSATION AND EXPENSES.
Consultant shall be paid a consulting fee not to exceed $72,500. The fees shall be
billed to the City and payable as Tasks I through 5 are completed, in accordance with the fee
schedule shown in Table I, on Page 8 of Attachment "I". No other costs shall be paid by the
City.
3. TERM; TERMINATION.
The term of this Agreement shall be for a period beginning on May 4, 2009, and
terminating on November 4, 2009, unless extended by the mutual agreement of the parties.
This Agreement may be terminated at any time by thirty (30) days written notice by either
party. The terms of this Agreement shall remain in force unless mutually amended.
4. INDEMNITY.
CONSULTANT agrees to and shall indemnify and hold the CITY, its elected
officials, employees, agents or representatives, free and harmless from all claims, actions,
damages and liabilities of any kind and nature arising from bodily injury, including death, or
property damage, based or asserted upon any actual or alleged act or omission of
CONSULTANT, its employees, agents, or subcontractors, relating to or in any way connected
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with the accomplishment of the work or performance of services under this Agreement, unless
the bodily injury or property damage was actually caused by the sole negligence of the CITY,
its elected officials, employees, agents or representatives. As part of the foregoing indemnity,
Vendor agrees to protect and defend at its own expense, including attorney's fees, the City, its
elected officials, employees, agents or representatives from any and all legal actions based
upon such actual or alleged acts or omissions. CONSULTANT hereby waives any and all
rights to any types of express or implied indemnity against the CITY, its elected officials,
employees, agents or representatives, with respect to third party claims against the
CONSULTANT relating to or in any way connected with the accomplishment of the work or
performance of services under this Agreement.
5. INSURANCE.
While not restricting or limiting the forgoing, during the term of this Agreement,
CONSULTANT shall maintain in effect policies of comprehensive public, general and
automobile liability insurance, in the amount of $1,000,000.00 combined single limit, and
statutory worker's compensation coverage, and shall file copies of said policies with the
CITY's Risk Manager prior to undertaking any work under this Agreement. CITY shall be
set forth as an additional named insured in each policy of insurance provided hereunder. The
Certificate of Insurance furnished to the CITY shall require the insurer to notify CITY at least
'30 days prior to any change in or termination of the policy.
6. CONFIDENTIALITY OF REPORTS.
The CONSULTANT shall keep confidential all reports, information, and data
received, prepared or assembled pursuant to performance hereunder. Such information shall
not be made available to any person, news release, firm, corporation, or entity without prior
written consent of the City.
7. CONFLICT OF INTEREST.
The CONSULTANT shall maintain a code or standard of conduct. The
CONSULTANT shall neither solicit nor accept gratuities, favors, or anything of monetary
value for work completed under the Scope of Services. To the extent permissible by stat
laws, rules and regulations, the standards adopted by CONSULTANT shall provide for
penalties, sanctions, or other disciplinary actions to be applied for violations of such standards
by the CONSULTANT.
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8.
NON-DISCRIMINATION.
In the performance of this Agreement and in the hiring and recruitment of employees,
CONSULTANT shall not engage in, nor permit its officers, employees or agents to engage in,
discrimination in employment of persons because of their race, religion, color, national origin,
ancestry, age, mental or physical disability, medical condition, marital status, sexual gender or
sexual orientation, or any other status protected by law.
9.
INDEPENDENT CONTRACTOR.
CONSULT ANT shall perform work tasks provided by this Agreement, but for all
intents and purposes CONSULTANT shall be an independent contractor and not an agent or
employee of the CITY. CONSULT ANT shall secure, at its expense, and be responsible for
any and all payment of Income Tax, Social Security, State Disability Insurance
Compensation, Unemployment Compensation, and other payroll deductions for
CONSULTANT and its officers, agents, and employees, and all business licenses, if any are
required, in connection with the services to be performed hereunder.
10. BUSINESS REGISTRATION CERTIFICATE AND OTHER
REQUIREMENTS.
CONSULTANT warrants that it possesses or shall obtain, and maintain a business
registration certificate pursuant to Chapter 5 of the Municipal Code, and any other licenses,
permits, qualifications, insurance and approval of whatever nature that are legally required of
CONSULTANT to practice its business or profession.
20 11.
NOTICES.
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Any notice to be given pursuant to this Agreement shall be deposited with the United States
Postal Service, postage prepaid and addressed as follows: TO THE CITY:
City Manager
300 N. D Street
San Bernardino, CA 92418
Telephone: (909) 384-5122
Facsimile (909)384-5138
TO THE CONSULTANT:
R3 Consulting Group, Inc.
811 Chippendale Drive, Suite 708
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Sacramento, CA 95841
Telephone: (916) 576-0309
Facsimile: (916) 331-9600
12. RECORDS
The CONSULTANT shall keep full and accurate records of all consulting work
performed under this Agreement. All records, content, sketches, drawing, prints,
computations charts, reports and other documentation made in the course of the consulting
work performed hereunder, or in anticipation of the consulting work to be performed in regard
to this Agreement, shall at all times be and remain the sole property of the City and the
CONSULTANT shall turn over to the City all copies of the Work Records within seven (7)
calendar days after a written request by City.
13. ATTORNEYS' FEES
In the event that litigation is brought by any party in connection with this Agreement,
the prevailing party shall be entitled to recover from the opposing party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party in the exercise
of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions
or provisions hereof. The costs, salary and expenses of the City Attorney and members of his
office in enforcing this Agreement on behalf of the CITY shall be considered as "attorneys'
fees" for the purposes ofthis paragraph.
14. ASSIGNMENT.
CONSULTANT shall not voluntarily or by operation of law assign, transfer, sublet or
encumber all or any part of the CONSULTANT's interest in this Agreement without CITY's
prior written consent. Any attempted assignment, transfer, subletting or encumbrance shall be
void and shall constitute a breach of this Agreement and cause for the termination of this
Agreement. Regardless of CITY's consent, no subletting or assignment shall release
CONSULTANT of CONSULTANT's obligation to perform all other obligations to be
performed by CONSULTANT hereunder for the term of this Agreement.
IS. VENUE.
The parties hereto agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated either in the State courts located in the County of San
Bernardino, State of California or the U.S. District Court for the Central District of California,
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Riverside Division. The aforementioned choice of venue is intended by the parties to be the
mandatory and not permissive in nature.
16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of California.
17. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding on and inure to the benefit of the parties to this
Agreement and their respective heirs, representatives, successors, and assigns.
18. HEADINGS.
The subject headings of the sections of this Agreement are included for the purposes
of convenience only and shall not affect the construction or the interpretation of any of its
provIsions.
19. SEVERABILITY.
If any provision of this Agreement is determined by a court of competent jurisdiction
to be invalid or unenforceable for any reason, such determination shall not affect the validity
or enforceability of the remaining terms and provisions hereof or of the offending provision in
any other circumstance, and the remaining provisions of this Agreement shall remain in full
force and effect.
20. REMEDIES; WAIVER.
All remedies available to either party for one or more breaches by the other party are
and shall be deemed cumulative and may be exercised separately or concurrently without
waiver of any other remedies. The failure of either party to act in the event of a breach of this
Agreement by the other shall not be deemed a waiver of such breach or a waiver of future
breaches, unless such waiver shall be in writing and signed by the party against whom
enforcement is sought.
21. ENTIRE AGREEMENT; MODIFICATION.
This Agreement constitutes the entire agreement and the understanding between the
parties, and supercedes any prior agreements and understandings relating to the subject
manner of this Agreement. This Agreement may be modified or amended only by a written
instrument executed by all parties to this Agreement.
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SERVICES AGREEMENT
R3 CONSULTING GROUP
IN WITNESS THEREOF, the parties hereto have executed this Agreement on the day and
date set forth below.
Dated:
Dated
Approved as to Form:
JAMES F. PENMAN,
City Attorney
,2009
,2009
CONSULTANT
By:
CITY OF SAN BERNARDINO
By:
Lori Sasso on, Acting City Manager
6
Attachment "1"
R3
Consulting Group, Inc.
Resources Respect Responsibility
R3 Consulting Group, Inc
4811 Chippendale Drive, Suite 708
Sacramento, CA 95841
Tel. 916-576-0309
Fax: 916-331-9600
www.r3cgi.com
March 19, 2009
Mr, Mark F. Weinber9, Interim City Manager
Ms. Lori Sassoon, Assistant City Manager
City of San Bernardino
300 North D Street, 6th Floor
San Bernardino, CA 92418
Subject: Feasibility of Outsourcing Solid Waste Collection Services
Dear Mr. Weinberg:
Thank you and Ms. Sassoon for talking with me on how R3 Consulting Group ("R3") can assist the City
of San Bernardino in analyzing options for outsourcing the City's solid waste management programs.
Per our conversation, attached is a brief Scope of Services to examine the feasibility of outsourcing the
City's solid waste collection services, including street sweeping. Please call me at (916) 576-0309, or
e-mail atrterwin@r3cgi.com. if you have any questions or comments regarding our proposed Scope of
Services and how we may best proceed.
Sincerely,
R3 CONSULTING GROUP
~o.---~ ~ c..~- 'S---
Richard Tagore-Erwin
Principal
attachment
Page 1
SCOPE OF SERVICES
R3 proposes to approach the possible outsourcing of the City's solid
waste collection operations in an incremental approach to minimize
any potential exposure to the City. We suggest this be done through
the following steps:
1. Preparing an Request for Interest ("RFI") that can be provided to
potential service providers;
2. Interviewing potential service providers to determine their level of
interest and ability to provide the requested services;
3. Issuing a RFI to those potential service providers that indicated
an interest in responding the RFI;
4. Evaluating RFI responses, including conducting a quantitative
and qualitative pro-con analysis of outsourcing;
5. Presenting a summary of the RFI responses to the City to
determine a) if the City want to proceed to negotiations, and b)
which potential services providers to negotiate with;
6. Conduct negotiations with the recommended service provider(s)
and develop a franchise agreement and asset/service transfer
agreement;
7. Present results of the negotiations to the City and finalize the
franchise agreement and asset/service transfer agreement.
We also suggest that to minimize any financial exposure to the City
related to the RFI process, the City require that the potential service
providers be required to pay the City all costs associated with the
costs of steps 1 - 5, with an additional fee be charged to those
service providers recommended for negotiations, and a final fee paid
by the service provider recommended for contract award.
Preparing a Request for Interest ("RFI") that can
be provided to potential service providers
Upon authorization to proceed, R3 will prepare a RFI for potential
services providers to respond to, including a listing of minimum
payments to be made to the City for 1) participating in the
outsourcing process, 2) an estimated minimum up-front payment to
the City for selection by City Council for outsourcing contract (i.e.,
$40M+), and 3) estimated annual payments to the City (i.e., franchise
fees). The responses to the RFI will be used to determine if the
Task 1:
R3
Page 2
company has the financial, management and operational capacity
and capability to outsource the City's solid waste collection
operations, and if outsourcing is a sound financial and operational
option for the City. RFI responses will include items such as
. Demonstrated cash reserves;
. Borrowing ability;
. Lines of credit;
. Insurance;
. Key personnel;
. Operational resources;
. Prior transition experience;
. Operational experience;
. Minimum up-front payment to the City for outsourcing;
. Estimated impact on residential and commercial customer
rates;
. Employee seniority, wage and benefit packages; and
. Prior litigation history in San Bernardino County.
The RFI will also require the companies to sign a communication
protocol (1) and require a fee to be paid to the City as part of the RFI
submittal.
In order to develop the RFI, R3 will need the following information:
. Current customer rates for residential, commercial,
permanent and temporary roll-off services;
. FY 2008/09 IWM budget, revenue projections, and year-to-
date results;
. List of current IWM employees by classification and
pay/benefits;
. List of current IWM vehicles (age and type);
. List of current IWM vehicle lease terms;
1 This would specify how interested companies are to communicate with the
City during the outsourcing process. For example, to ensure real and
perceived integrity of the outsourcing process, interested companies should
not be allowed to have direct contact with City IWM staff or other elected or
appointed officials.
R-3
Page 3
. Current franchise agreements and franchise fees received
and reported revenue from franchised permanent and
temporary roll-off services (Jack's and Burrtec),
. Current agreement for recyclables processing;
. Current Waste Disposal Agreement with San Bernardino
County; and
. Annual and monthly billing registers by cat size, bin size,
roll-off size, and collection frequency.
Interviewing potential service providers to
determine their level of interest and ability to
provide the requested services
R3 will develop a list of potential services providers that are likely to
be interested in responding to the RFI. This may include companies
such as Waste Management, Republic Services, Burrtec, Athens,
CR&R and Norcal. Next R3 will contact key owners/management of
the companies and set up a time for an initial interview with the
company at the company's offices to discuss the RFI and determine
if the company is a) interested in responding to the RFI, b) has the
ability to pay significant up-front cash to the City, c) has the ability to
begin services by Fall 2009, and d) what type of information the
company will need to conduct its internal valuation process.
Task 2:
Task 3:
Issuing a RFI
Based on the results from the interviews, R3 will provide the selected
companies with a communication protocol agreement. Upon receipt
of an executed communication protocol agreement, R3 will provide
the RFI for the companies to complete and send back to R3. Note
that it may be necessary for R3 to have multiple conversations or
meetings with the companies as they complete the RFI.
Task 4:
Evaluating RFI responses
R3 will analyze the responses to the RFI to determine if the
companies have both the financial ability and operational ability to
assume the City's solid waste collection operations, and what the
estimated financial and operational impact would be on the City. As
part of this analysis, R3 will prepare a comparative analysis of
outsourcing based on the RFI responses to show the estimated
impacts in the following areas:
. City staffing (IWM, customer service/billing, maintenance,
management, etc.);
R-3
. 5-year projected impact on the City's budget (upfront cash
Page 4
payment, franchise fee payments, IWM vehicle lease costs,
staffing reductions, impact on the City's cost for self-
insurance, Waterman Landfill costs, etc.);
. Impact on services provided to residential and commercial
customers, and services provided for City buildings, facilities,
public events, community clean-ups, illegal dumping, etc.;
. What services or equipment should be retained by the City
(i.e., collection or sweeping vehicles that could be used by
other City departments); and
. Projected impact on customer rates.
Task 5:
Presenting a summary of the RFI responses to
the City to determine a) if the City wants to
proceed to negotiations, and b) which potential
services providers with which to negotiate further
After the RFI responses are evaluated, R3 will prepare a summary of
responses as well a recommendation to proceed to negotiations or
discontinue the process. The summary will include items such as
the range of potential up-front cash payments to the City, impact on
the City's employees, transition issues and timing, and an outline of
terms and conditions to be included in any franchise agreement and
asset/service transfer agreement. As part of this task, R3 will also
prepare a recommendation on whether to proceed with negotiations,
and if so which companies with which to negotiate.
Task 6:
Conduct negotiations with the recommended
service provider(s) and develop a franchise
agreement and asset/service transfer agreement
Based on Task 5, and at the direction of the City, R3 will invite the
recommended companies to negotiate the terms and conditions of a
franchise agreement and asset/service transfer agreement. This will
be done by first preparing a Letter of Invitation the recommended
companies, including a requirement for payment of a fee to the City
to participate in the negotiations. Next R3 will preparing a draft
franchise agreement and asset/service transfer agreement to present
to the companies that responded favorably to the Letter of Invitation.
The franchise agreement will include the terms and conditions under
which the selected company will provide solid waste collection
services to the City.
R3 anticipates that negotiations will occur with two or more
companies unit the most advantageous agreements can be made.
After negotiations are completed, R3 will paper a summary report on
the results of the negotiations and the terms and conditions of the
1Z3
Page 5
franchise agreement and asset/service transfer agreement to present
to the City.
The franchise agreement typically includes the following:
. Definitions;
. Representations and warranties;
. Franchise term and extensions;
. Scope of services (residential, commercial, rOIl-off, street
sweeping):
o Minimum waste diversion requirements and AB 939
indemnification.
o Collection vehicle emissions standards and requirements;
o Collection vehicle weight, size and noise limitations;
o Specifications for container size, color, and labeling;
o Public education program requirements (e.g., transition
period, quarterly newsletter, annual campaigns,
classroom presentations, commercial waste audits per
year, etc.);
o Collection and recycling services to be provided to City's
parks, offices, and facilities, events, police and fire
stations, green waste drop-off bins/compactors, and
public schools located within the City;
o Collection service hours;
o Collection service quality standards;
o Collection driver uniforms and identification badges;
o Customer Service standards;
o Billing procedures;
o Time requirements for responses to customer calls
regarding service complaints (i.e., missed collections,
material spillage, hydraulic leaks, etc.;
o Time requirements for container replacement or
exchanges;
o Vehicle maintenance and replacement requirements; and
o Collection frequency and method.
. Annual cost adjustment process and formula;
. Franchise fees, Vehicle Road Impact Fees, and AS 939 fees;
. Financial record-keeping and reporting requirements;
rz3
Page 6
. Indemnity, insurance, and per romance bond requirements;
. Performance standards;
. Breach, default, and remedies; and
. Transition of equipment, employees, and customer lists.
The asset/service transfer agreement will specify what assets are to
be transferred to the company, the value of the assists, and debt
recovery by the City, and company payment amounts to the City and
payment schedule2.
Task 7;
Present results of the negotiations to the City
and finalize the franchise agreement and
asset/service transfer agreement.
Based on the results of Task 6, R3 will present the results to the City
Council. This may require more than one City Council meeting,
special workshop, community meetings, or other meetings to discuss
asset transfer and employee issues. Based on direction from the
Mayor and Council, R3 will finalize the franchise agreement and
asset/service transfer agreement.
SCHEDULE
R3 understands both the sensitivity and timeliness of outsourcing the
City's solid waste collection operations. Companies that have been
involved in acquisitions typically prefer shorter timeframes negotiate
and finalize a "deal", and to minimize service and employee
disruptions - typically 45 - 90 days. Accordingly, with the goal of an
October 15, 2009 changeover, we propose to complete Tasks 1 - 4
within 60 days of authorization to proceed. Task 5 would be
scheduled durin9 late May/June 2009, or as per the City's needs.
Assuming an May 4, 2009 authorization to proceed, we would begin
Task 6 on or before July 15, 2009, and target to complete Task 7 by
approximately August 15, 2009. This would leave 60 days for the
new company to begin its transition prior to October 15, 2009 start
date.
2 R3 su9gests that outside legal counsel be used to assist in
preparing/reviewing the asset/service transfer agreement, and we have
several firms we would be pleased to work with. This will be at the City's
discretion.
R3
Page 7
UDGET
understands the City wishes to minimize its financial exposure
d cash outlay for this project. Please note that the RFI will be
uctured to require interested companies to fully reimburse the City
all costs associated with this scope of services through various
yments aligned with the work tasks, and the City may discontinue
s project at any time.
r Tasks 1 - 5, R3 proposes to invoice the City on a not-to-exceed
p sum basis as follows:
Table 1 Cost Estimate
Tasks 1 - 5
Task R3 Prepayment
Hours R3 Cost by
Proposers
sk 1: Preparing an Request for 64 $9,500
Interest ("RFI")
sk 2: Interviewing potential 88 $15,500
service providers $80,000 (est.)
sk 3: Issuing a RFI 40 $4,800 payment from
sk 4: Evaluating RFI Responses 190 $31,500 companies by
May 30, 2009
sk 5: Presenting a summary of 68 $11,200
the RF I responses to the
City
Total Not-to-Exceed Tasks 1 - 5 450 $72.500.00
r Tasks 7 and 8, because of the nature of negotiations. R3
oposes to invoice the City on an hourly basis, with the following
timate of hours and costs for these two Tasks. Table 3 is the
ting of our hourly rates to be used in invoicing Tasks 7 and 8.
Table 2 Cost Estimate
Tasks 6 and 7
Task R3 R3 Est. Prepayment
Hours Cost by
Proposers
sk 6: Conduct negotiations with 470 $83,750 $200,000
the recommended service (est.)
provider(s) and develop a payment from
franchise agreement and companies by
asset/service transfer July 2009
agreement
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Page 8
Pa
Table 2 Cost Estimate
Tasks 6 and 7
Task R3 R3 Est. Prepayment
Hours Cost by
Proposers
sk 7: Present results of the 88 $16,500 $200,000
negotiations to the City (est.)
payment from
companies by
Sept. 2009
Estimated Total Tasks 6 and 7 558 $100,250.00 $200,000
Table 3
Hourly Billing Rates and Reimbursables
incipal $175 per hour
oject Manager $175 per hour
actice Director $170 per hour
nior Manager $155 per hour
anager $150 per hour
nior Associate $140 per hour
sociate II $120 per hour
sociate I $100 per hour
ministrative Support $70 per hour
eimbursable Costs
nsultants/Subcontractors cost
dging and meals cost
avel - Private or company $0.55 per mile
r
avel - Other cost
livery and other expenses cost
yments
less otherwise agreed in writing, fees will be billed monthly at the first of
ch month for the preceding month and will be payable within 30 days of
e date of the invoice.
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Page 9
CITY OF SAN BERNARDINO
CITY MANAGER'S OFFICE
INTEROFFICE MEMORANDUM
TO: Mayor and Common Council
FROM: Lori Sasso on, Acting City Manager (! ~
SUBJECT: Additional Materials for Item #28 - Agreement with R3 Consulting Group for
services related to the potential outsourcing of solid waste collection services
DATE: April 30, 2009
COPIES: Charles McNeely
At the April 29 agenda briefing, Councilmember McCammack requested information regarding
prior studies of the refuse operation that have taken place in recent years. Attached are the
following documents pursuant to that request:
. June 21, 2004 agenda item authorizing an agreement with R3 Consulting for assistance
concerning expansion of commercial refuse services provided by franchised haulers.
. August 5, 2005 agenda item amending the agreement with R3. In the staff report of this
item, it is noted that the commercial roll-off operation was generating more revenue that was
originally estimated in the initial analysis. As a result, staff noted that "it does not appear that
franchising the City's roll-off operation would be beneficial to the City at this time".
. Copy of the May 2008 Business Plan for the Integrated Waste Management Division.
Completion of this business plan was recommended in the 2007 Organizational Review
completed by Management Partners. You will note that the business plan does not recommend
outsourcing the refuse operation, for a number of reasons that are detailed in that report.
Since the completion of the business plan last year, the City's financial position has changed
significantly, and I believe it is prudent to take another look at the complete privatization of the
solid waste operation. I look forward to discussing this matter further with you on Monday.
15 /4-/,q
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Date: June 11, 2004
Subject: Resolution of the Mayor and
Common Council of the City of San
Bernardino authorizing the Mayor to
execute Services Agreement with R3
Consulting Group, Inc., for assistance
concerning expansion of commercial refuse
services provided by franchised refuse
haulers
From: Fred Wilson, City Administrator
Dept: City Administrator's Office
MICC Meeting Date:
Synopsis of Previous Council Action:
Recommended Motion:
1. Adopt resolution;
2. Authorize the Director of Finance to amend the FY 2004-05 Budget to include
anticipated revenues and expenses as indicated in this staff report.
11;; rt /(tL~~! ( tJ I~)
Signature :
Contact person: I=rprl WiI<:nn
Phone:
5122
Supporting data attached:Staff report resolution Ward: all
FUNDING REQUIREMENTS:
Amount: 1\10 net cost to the Refuse Fund; see staff
report
Source: (Accl. No.)
(A,...rt n4:loc:rriptinn)
Finance:
Council Notes:
Agenda Item No.
...S I
~/2/ !()~
STAFF REPORT
Subiect:
Resolution authorizing the Mayor to execute a Services Agreement with R3 Consulting
Group, Inc., for assistance concerning expansion of commercial refuse services provided
by franchised refuse haulers
Background:
As part of the FY 04-05 budget process, various options have been evaluated for
increasing revenues to the General Fund. One area under consideration has been the
City's possible expansion of franchised commercial refuse services.
In the Spring of 2004, R3 Consulting Group was retained to provide an analysis
concerning options to enhance revenues in this regard. One option identified was to
assign all new commercial refuse customers to a franchisee. The franchisee would then
be required to pay the City a fee that would equal an estimated two (2) times the gross
annual revenue from these new commercial customer accounts. R3 estimated that this
option could provide the City with additional revenue of over $1 million annually, with
no impact on current employees or operations. This revenue would provide a direct
benefit to the General Fund.
As an alternative, R3 was asked to evaluate whether or not a similar financial benefit
could be realized through an expansion of the City's in-house commercial refuse
operation. That evaluation is attached (Attachment I). In summary, though that option is
available, it contains risk and will not provide the same level of financial benefit to the
General Fund.
Staff is recommending that the Mayor and Council consider assigning all new
commercial customers to a franchisee. The franchisee would be selected through a
competitive proposal process. At staffs request, R3 submitted a proposal to provide
assistance to the City through this process. Consultant services will include drafting the
RFP and franchise agreement, conducting pre-proposal conferences and proposer
interviews, evaluating the proposals, negotiating franchise terms, and presenting all
results and recommendations to the Mayor and Common Council.
Upon approval of this item, the RFP process will be initiated. It is anticipated that the
process will take 60-90 days before a recommendation can be made to the Mayor and
Council concerning award of a franchise.
Financial Impact:
The estimated cost for R3's services for Tasks I - 5 of the Scope of Services is an
amount not to exceed $48,070. Task 7 (Transition Planning and Implementation) may be
added if the franchise is pursued, at a cost not to exceed $10,000. The total cost forRJ's
services will be funded through a $20,000 proposal fee charged to each proposer. Any
balance of consultant costs would be reimbursed by the successful bidder as part of the
agreement terms, so that this process has no net cost to the City.
The Refuse Division budget will be amended to include anticipated proposer fee revenue
of $60,000 into account number 527-000-4901, and expenses of $58,070 into account
number 527-XXX-5502.
Recommendation:
1. Adopt resolution;
2. Authorize the Director of Finance to amend the FY 2004-05 Budget to include
anticipated revenues and expenses as indicated in this staff report.
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RESOLUTION NO. 2004-206
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SERVICES
AGREEMENT WITH R3 CONSULTING GROUP, INC., FOR ASSISTANCE
CONCERNING EXPANSION OF COMMERCIAL REFUSE SERVICES PROVIDED
BY FRANCHISED REFUSE HAULERS
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION I.
The Mayor of the City of San Bernardino is hereby authorized
and directed to execute on behalf of said City a Services Agreement with R3 Consulting, Inc., a
copy of which is attached hereto marked Exhibit "A" and incorporated herein by reference as
fully as though set forth at length.
SECTION 3. The authorization granted hereunder shall expire and be void and of no
further effect if the agreement is not executed and returned to the Office of the City Clerk
within 60 days following the effective date of this resolution.
III
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III
2004-206
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SERVICES
AGREEMENT WITH R3 CONSULTING GROUP, INC., FOR ASSISTANCE
CONCERNING EXPANSION OF COMMERCIAL REFUSE SERVICES PROVIDED
BY FRANCHISED REFUSE HAULERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
and Common Council of the City of San Bernardino at a j t. reg.
meeting thereof, held
, 2004, by the following vote, to wit:
on the 21st day of June
Council Members: AYES
ESTRADA X
LONGVILLE X
MCGINNIS X
DERRY X
KELLEY X
JOHNSON X
MCCAMMACK X
NAYS
ABSTAIN ABSENT
,A,'"(i
. ;' I. i', '1'\ i:
},_._. I _..r. tP...
, Rachel G.. Clark, City Clerk _ .
I. _ i -. :. -I " 'I' It' ~,: i I: ';. 1 1'- ~:' . ,t' ;
"' 'I ,'~' 11it ---:~,~., ".'~,~.II ~ I ..}l-t'~['-<"i
The foregoing resolution is hereby approved this 2')r' day of I June.)
2004.
u th Valles, Mayor
C' y of San Bernardino
Approved as to
Form and legal content:
JAMES F. PENMAN,
City Attorney
Bi~" 7 Ie........
2004-206
EXHIBIT "A
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SERVICES AGREEMENT
This Services Agreement ("Agreement") is entered into this 21st day of
June 2004, by and betwecn R3 Consulting Group, Inc" ("CONSULTANT") and the City of
San Bernardino ("CITY" or "San Bernardino"),
WITNESSETH:
WHEREAS, thc City has determined that it is advantageous and in the best intercst of
the City of San Bernardino to engagc a professional consultant to provide procurement
assistance concerning expansion of commercial refuse services provided by franchised refuse
haulers; and
WHEREAS, the CITY desires to retain the services of the CONSULTANT for the
purpose of providing such services; and
WHEREAS, CONSULTANT possesses the professional skills and ability to provide
assistance to the CITY concerning solid waste collection-related issues;
NOW, THEREFORE, the parties hereto agree as follows:
1. SCOPE OF SERVICES.
For the remuneration stipulated herein, San Bernardino hereby engages the services of
CONSUL T ANT to perform Tasks One (I) through Five (5), and Task Seven (7), as indicated
in the attachcd Scope of Services (Attachment "A"),
2, COMPENSA nON AND EXPENSES.
For Tasks One (l) through Five (5), CITY shall pay the CONSULTANT a fee not to
exceed $48,070, If the Mayor and Council award a franchise to a refuse hauler for an
expansion of commercial refuse services, CITY shall also pay the CONSULTANT a fee not to
exceed $10,000 for Task Seven (7),
2004-206
EXHIBIT "A'
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CONSUL TANT shall invoice CITY monthly using the billing rates cost reimbursement
terms found on Pages 13 and 14 of Attachment "A". No other expenditures made by
CONTRACTOR shall be reimbursed by CITY without the prior written approval of the City
Administrator.
3. TERM; SEVERABILITY.
The term of this Agreement shall be for a period of six (6) months, commencing on July
1, 2004, and terminating on December 31, 2004, unless previously modified, amended, or
cancelled by the written mutual consent of the parties.
This Agreement may be terminated at any time by thirty (30) days written notice by
either party. The terms of this Agreement shall remain in force unless mutually amended in
writing. The duration of this Agreement may only be extended with the written consent of both
parties.
4. INDEMNITY.
CONSULTANT shall indemnify. defend (if requested by CITY) and hold harmless the
CITY, its departments, boards, commissions, elected officials, officers, attorneys, employees
and agents trom all liabilities, charges, and expenses (including, without limitation, reasonable
costs of defense and reasonable attorney's fees) arising or growing out of or related to CITY'S
performance of this Agreement, except that such duty to indemnify, defend and hold harmless
shall not apply where injury to person or property is caused by CITY'S willful misconduct or
negligence. The costs, salary and expenses of the City Attorney and members of his office in
enforcing this Agreement on behalf of the CITY shall be considered as "attorneys' fees" for the
purposes of this paragraph.
2
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5. INSURANCE.
While not restricting or limiting the forgoing, during the term of this Agreement,
CONSUL TANT shall maintain in effect policies of comprehensive public, general and
automobile liability insurance, in the amount of $ \,000,000.00 combined single limit, and
statutory worker's compensation coverage as required by law, and shall file copies of said
policies with the CITY'S Risk Manager prior to undertaking any work under this Agreement.
CITY shall be set forth as an additional named insured in each policy of insurance provided
hereunder. The Certificates of Insurance furnished to the CITY shall require the insurer to
notify CITY in writing at least ten (10) days in advance of any change or termination in the
policy.
6. NON-DISCRlMINA TION.
In the performance of this Agreement and in the hiring and recruitment of employees,
CONSUL T ANT shall not discriminate on the basis of race, creed, color, religion, sex, physical
handicap. ethnic background or country of origin.
7, NO EMPLOYMENT.
CONSUL T ANT shall perform work tasks provided by this Agreement but for all intents
and purposes CONSULTANT and its agents or employees shall be an independent contractor
and not an agent or employee of the CITY.
8. ASSIGNMENT OR SUBCONTRACTING.
CONSUL T ANT shall not assign this Agreement, or any portion thereof without the
written consent of CITY. Any attempt by CONSULTANT to assign or subcontract any
performance of this Agreement without the written consent of the CITY shall be null and void
and shall constitute a breach of this Agreement.
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20 TO THE CITY:
2004-206
EXHIBIT" ,
1 9.
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LEGAL ACTIONS.
In addition to any other rights or remedies, either party may institute legal action to
cure, correct or remedy any default, to recover damages for any default, or to obtain any other
remedy consistent with the purposes of this Agreement. Such legal actions must be instituted
in the Superior Court of the County of San Bernardino, San Bernardino District, State of
California. The laws of the State of California shall govern the interpretation and enforcement
of this Agreement.
10. ENTIRE AGREEMENT.
This Agreement and any documents or instruments attached hereto or referred to herein
integrate all terms and conditions mentioned herein or incidental hereto, and supercede all
negotiations and prior writings in respect to the subject matter hereof. In the event of conflict
between the terms, conditions or provisions of this Agreement, an any such document or
instrument, the terms and conditions of this Agreement shall prevail.
11. NOTICES.
Any notice to be given pursuant to this Agreement shall be deposited with the United
Postal Service, postage prepaid and addressed as follows:
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City Administrator's Office
300 North "D" Street
San Bernardino, CA 92418
Facsimile (909) 384-5138
Richard Tagore-Erwin, Principal
R3 Consulting Group, Inc.
48 I I Chippendale Drive, Suite 902
Sacramento, CA 95841
4
2004-206
EXHIBIT "A'
SERVICES AGREEMENT
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12 APPROVED AS TO FORM AND
LEGAL CONTENT:
IN WITNESS THEREOF, the parties hereto have executed this Agreement on the day
and date first above written.
Date: June
,2004
R3 Consulting Group, Inc.
By:
Richard Tagore-Erwin, Principal
Date: June
,2004
City of San Bernardino
By:
Judith Valles, Mayor
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By:
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III
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2004-206
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16 /1
SERVICES AGREEMENT
IN WITNESS THEREOF, the parties hereto have executed this Agreement on the day
and date first above written,
Date: June
,2004
R3 Consulting Group, Inc,
By:
Richard Tagore-Erwin, Principal
Date: June 2_~ .2004
APPROVED AS TO FORM AND
LEGAL CONTENT:
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/11
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/11
III
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2004-206
I ntrod uction
The City of San Bernardino ("City") is interested in changing the
method of providing solid waste and recycling services to the
City's commercial solid waste customers.
The City recently completed an analysis of available options for
providing commercial solid waste collection services. The options
range from continuing with the current method of City operated
commercial collection services with private franchisees competing
for temporary debris box collection, to transitioning the City from
the primary commercial collection provider to franchised haulers
providing some or all commercial collection services'. A specific
option the City has expressed interest in pursuing is providing a
method for franchised haulers to provide commercial collection
services to new commercial customers.
Based on this initial analysis, the City is interested in undertaking
a competitive Request for Proposals ("RFP") process for possible
transition of new commercial solid waste collection services to
franchised haulers, while retaining the City's current commercial
collection operations and customer base.
The City understands that even though it may undertake a
competitive RFP process, at any time prior to selection and
execution of a franchise agreement, the City has the option of
discontinuing further action and continuing with the current City-
provided commercial collection operations.
Project Approach
Our proposed scope of services is for full service procurement
assistance. R3 will act as an extension of City staff and will
assist in all aspects of this procurement. This will include the
following:
. Working with City Staff and the City Council to develop a
sound short- and long-term strategy and financial plan for
providing commercial collection services;
\ 1 This analysis was completed by R3.
Exhibit A
,
,/
(f\'\ oJ>~
Scope of
Services
Solid Waste
Procurement
Services
The City has an opportunity to
generate additional General
Fund revenue by changing
the method in which
commercial solid waste
collection services are
provided.
. Undertaking a Request for
Proposal ("RFP7 process
will allow the City to
receive competitive pricing
and payment options, while
retaining the right to keep
its current commercial
operations.
. Undertaking a RFP
process will also allow the
City to require proposers to
pay for and/or reimburse
the City for the cost of the
RFP process.
1<3
Page 1
Scope of
Services
R3
Page 2
2004-206
Preparing a financial analysis of the possible impacts of
changes in commercial collection services on the City's
General Fund and the Refuse Enterprise Fund;
Drafting program requirements, the RFP, and the franchise
agreement, including pricing options for different transition
approaches;
Developing a mailing list and issuing the RFP;
Conducting a pre-proposal conference;
Responding to questions regarding the RFP and preparing
addenda;
Conducting contractor interviews;
Assisting in the evaluation of responses from contractors;
Presenting the estimated financial impact on the City
based on RFP submittals;
Presenting the evaluation results to the City Council;
Conducting clarification or negotiation sessions if
necessary; and
Finalizing the franchise agreement.
The goals that will guide the procurement process include the
following:
.
. Providing the highest level of service to the City's
commercial customers; and
Ensuring that the City is adequately compensated by the
franchisee through transition fees, franchise or user fees.
The following work tasks outline R3's approach to assisting the
City in conducting a RFP process for commercial solid waste
collection services.
Work Tasks
Task 1: Procurement Strategy
Task 1.1:
Facilitate Kick-Off Meeting
R3 will facilitate a project kick-off telephone conference call with
City Staff to confirm project objectives, review and confirm the
proposed timeline for accomplishing the tasks, discuss our project
2004-206
approach, identify areas of concern, discuss plans for involvement
of the City Council, and review the City Staff's preliminary
thoughts on policy and service issues to be considered for the
procurement. In preparation for the meeting, we will review all
pertinent materials provided by the City.
Task 1.2:
Develop Procurement Strategy
R3 anticipates that the procurement strategy will be developed
through a series of telephone conference calls with City Staff over
a 2-3 week period. Significant emphasis of the procurement
strategy will be on estimating the potential impact on the City's
General Fund and the Refuse Enterprise Fund. In order to
accomplish this, R3 will prepare a financial model to be used
during the conference calls. R3 anticipates that one on-site work
session will be scheduled with City staff to finalize the
procurement strategy.
The procurement strategy will focus on having the City franchise
for new commercial accounts as discussed in the prior Analysis of
Options draft report dated May 2004, and will address short- and
long-term program and financial needs for the City. This will
include procurement options available to the City, including:
. Exclusive or non-exclusive franchise operations;
. Defining the specific commercial accounts available for
possible franchised collections (all new accounts, accounts
by geographic zones, accounts where ownership or service
changes occur. etc.);
. Phasing of franchised services and length of franchisee
agreement term;
. Mitigating any negative impact on current City staff,
equipment and operations;
. Protecting the City in the event of a revenue shortfall.
franchisee performance problems. or underpayment of
franchise or transition fees;
. Developing the type and amounts of franchise payments
made to the City, (one-time transition, percentage of annual
revenue, franchise fee, etc.); and
. Requiring the franchisees to pay for the City's cost of the
RFP process through Proposal submittal fees and/or
reimbursement by the awarded franchisee(s).
To the extent possible, the strategy will be prepared with pros and
cons of each item and linkages between them.
Scope of
Services
Q3
Page 3
Scope of
Services
Q3
Page 4
2004-206
Oeliverables for Task 1
As part of this Task, R3 will be responsible for the following:
Facilitate one telephone conference kick-off meeting;
Conduct telephone conference calls and one on-site
meeting with City staff to develop a procurement
strategy;
Prepare financial model for estimating the impact on
the City's General Fund and Refuse Enterprise Fund;
and
Prepare a letter report outlining the procurement
strategy.
Task 2: RFP Documents
Task 2.1: City Staff Conference Call
R3 will conduct a conference call to discuss ho the procurement
strategy form Task 1 will impact the proposed RFP documents.
During this conference call, R3 will also discuss the outline for the
RFP documents.
Task 2.2:
Develop Potential Proposer List
R3 will develop a list of potential proposers and provide it to the
City in electronic format. This will allow the City to notify these
companies of the dates of the expected release date of the RFP
documents.
Task 2.3:
Prepare Draft Request for Proposals (RFP)
R3 will prepare a draft RFP package based on the results of Task
1 and our experience working with the solid waste management
community. The RFP will specify minimum requirements and
qualifications, and will require proposers to submit work plans that
specify how they will transition to new services, achieve diversion
requirements, implement customer service and billing programs.
and promote public education activities.
In addition, separate sections of the RFP will include instructions
specifying the rules of the proposal process for the proposers and
the City, the format and submittal of responses, the method for
evaluating responses, and transition and other payments to be
made to the City. We suggest including computer disks that
2004-206
contain forms for the contractors as part of the submittal package.
As an option, the City may wish to post the RFP on its web site in
PDF format.
In our experience, the Franchise Agreement should be developed
and issued as part of the RFP package. This significantly reduces
the time and cost of negotiations, and contractually links the
requested services to proposed costs as part of the evaluation
process. We have followed this proven approach in our scope of
services and strongly recommend that the City elect to use it given
the project timeline.
R3 will prepare the draft franchise agreement to be included in the
RFP package. Proposers will be required to specify any
exceptions and provide language for any changes they propose to
the agreement.
The franchise agreement will include the following sections:
Definitions;
Representations and proposer warranties;
Franchise term and extensions;
Annual program monitoring fee requirements;
Account transition payments and franchise fee
requirements;
Account audit and payment audit provisions;
Scope of services;
Compensation;
General requirements;
Financial record-keeping and reporting requirements;
Indemnity, insurance, and performance bond coverage
requirements;
Performance standards such as:
o Time requirements for responses to customer calls
regarding service complaints (e.g., missed
collections, material spillage, hydraulic leaks, etc);
o Time requirements for responses to customer calls
regarding billing complaints, new accounts, etc.;
o Time requirements for cart or bin exchanges;
o Vehicle noise requirements;
Scope of
Services
R?
Page 5
2004-206
Scope of
Services
o Vehicle maintenance requirements;
Breach, default, and remedies; and
AS 939 diversion requirements and indemnification.
Task 2.4:
Finalize & Issue RFP
As needed, R3 will finalize the RFP and provide the City with one
original, un-punched, and twenty (20) copies of the RFP
documents. In addition, R3 will provide the City with a draft notice
of the availability of the RFP.
Oeliverables for Task 2
As part of this Task, R3 will be responsible for the following:
Develop a potential proposer list;
. Preparing an RFP package for distribution to
prospective proposers that includes the draft Franchise
Agreement, process rules, evaluation and selection
criteria, project schedule, and all required forms;
Providing process rules to guide the negotiation
process (e.g., how the proposers may communicate
with City staff, the consultant, and the City Council, the
format for negotiation sessions; and options available
to the City if negotiations are not completed
successfully);
. Finalize the RFP as needed;
Prepare one original and twenty copies of the final
RFP; and
Prepare a notice of when the RFP is available, and
how interested parties can obtain copies.
Task 3: Pre-Proposal Meeting
Task 3.1: Facilitate Pre-proposal Meeting
R3 will facilitate a mandatory pre-proposal meeting with
prospective proposers. The pre-proposal meeting will provide the
opportunity for the City to review the RFP with prospective
proposers and answer questions, as appropriate.
R3
Page 6
2004-206
Task 3.2:
Responses & Addenda
R3 will prepare written responses to questions raised before and
during the pre-proposal meeting for submittal to all parties whom
attended the meeting. In addition, R3 will prepare addenda to the
RFP, as required.
Oeliverables for Task 3
As part of this Task. R3 will be responsible for the following:
Conduct the pre-proposal meeting;
Prepare written responses to questions raised before
and during the pre-proposal meeting; and
Prepare addenda to the RFP, as required.
Task 4: RFP Evaluation
Task 4.1: Evaluate Responses to the RFP
R3 (and the evaluation committee) will evaluate the proposals
submitted by the proposers. To ensure that commercial customers
continue to be provided with a high level of service throughout the
franchise term. the evaluation will include, but not be limited to,
evaluating the proposers proposed disposal site, collection
methods, customer service programs. work plans, insurance
requirements, financial statements, transition experience and
plans, references, and transition and franchisees payments to be
made to the City as proposed by the proposers.
After the initial evaluation is completed, R3 will also prepare any
written request for clarification to the proposers, as necessary. In
the event a proposer's proposal does not meet the minimum
requirements of the RFP, that proposer will be notified in writing
that their proposal has been disqualified.
Task 4.2:
Proposer Interview
Once the initial review of the proposers' submittals has been
completed, interviews will be scheduled and conducted with those
proposers meeting the minimum requirements of the RFP.
Scope of
Services
R3
Page 7
2004-206
Scope of
Services
Task 4.3:
Prepare Proposer Recommendations
Based on the proposer evaluation results. R3 will prepare a letter
report for the City. The report will highlight the transition schedule,
financial impact on the City, work plans, and payments to the City
as proposed by the proposers. To the extent possible, this
information will be provided as comparative summaries, followed
by a recommendation of the top ranked proposers.
Deliverables for Task 4
As part of this task, R3 will be responsible for the following:
Assist in the evaluation of the proposals, including
analysis of the technical feasibility, financial strength,
ability to provide services, and ability to meet diversion
and performance guarantees;
Prepare any requests for additional information or
clarification of the proposals;
. Schedule and conduct interviews with the proposers;
Prepare an evaluation matrix to easily compare the
proposed collection program and payments to be made
to the City;
. Prepare a letter report detailing evaluation results; and
Provide proposer ranking recommendations.
Task 5: Negotiations and
Recommendations
Task 5.1: Evaluation Committee Meeting
R3 will meet with City Staff to prepare for the final negotiation
meetings with the top ranked proposer(s).
Task 5.2:
Conduct
Negotiation
Proposers
Final Clarification and
Sessions with Short-Listed
1Z3
To the extent necessary, R3 will conduct final negotiations with
the top ranked proposer(s). Negotiations will focus on clarifying
the proposers' service and payment proposals, and finalizing
contractual language.
Page 8
2004-206
Task 5.3:
Prepare Final Recommendations
Upon the conclusion of proposer meetings, R3 will prepare a letter
report detailing the results of the discussions. The letter report will
also include a recommendation of the selected proposer that the
City Council should consider for contract award. The
recommendation will include a summary of the proposed
programs. payments, and implementation schedule.
Task 5.4:
Finalize Franchise Agreement
Based on the results of the proposer clarification meetings. R3 will
finalize the Franchise Agreement, as necessary.
Task 5.5:
City Council Presentation
R3 will attend a City Council meeting to present the final proposer
recommendation.
Deliverables for Task 5
As part of this task, R3 will be responsible for the following:
Prepare a listing of franchise agreement issues to be
clarified with proposers based on proposer responses
and City needs;
Conduct two clarification and negotiation sessions with
the proposers;
Prepare a letter report detailing the final results of the
proposer meetings;
Finalize the franchise agreement based on the results
of the proposer meetings; and
One City Council presentation.
Task 6: Solid Waste Ordinances
(OPTIONAL)
Task 6.1: City Staff Meeting
R3 will meet with City Staff to discuss the extent to which the
current solid waste ordinances will need to be revised or new
ordinances be prepared.
Scope of
Services
Q.3
Page 9
2004-206
Scope of
Services
Task 6.2:
Prepare or Revise Solid Waste Ordinances
R3 will work with City Staff to incorporate any changes and
provide final draft ordinances to the City Attorney.
Task 6.3:
City Council Meeting
R3 will attend a City Council meeting to discuss the proposed
ordinance language.
Deliverables for Task 6
As part of this task, R3 will be responsible for the following:
. Assist in preparing draft ordinances;
. Meet with the City; and
. Attend one City Council meeting (public hearing on the
solid waste ordinance).
Task 7: Transition Planning and
Implementation (OPTIONAL)
R3 Staff will assist the City in implementing the transition plan of
the selected proposer. This will include assisting the City in
establishing internal management controls to ensure that all
payments are made by the selected proposer.
Task 7.1:
Transition Period Checklist
In order to ensure a smooth implementation process. R3 will work
with the proposer to develop and maintain a checklist to organize
and track implementation tasks during the transition period. R3
proposes that the checklist be initially developed in conjunction
with the selected proposer, and reviewed and updated regularly
during the transition process.
The following are examples of transition checklist tasks:
Q3
. Order Equipment
. Develop container delivery schedule (by collection
route)
. Develop new route maps
. Develop equipment inventory
Page 10
2004-206
. Develop and mail public education materials
. Coordinate "Kick-off' media event for collection
programs
. Advertise community meetings
. Develop press releases
. Implement Customer Service functions
Task 7.2:
Develop Proposer Reporting Checklist
The franchisee will be required to submit numerous reports to the
City during the contract term. R3 will develop a checklist for easy
reference by both the City and the proposer to identify recurring
contractual requirements and the corresponding due dates. The
checklist will be used as a tool at the meetings between the City,
the franchisee and R3 to address concerns or confusion regarding
these requirements.
The following are examples of reporting checklist tasks:
. Annual diversion report
. Franchisee payments to City (transition and franchise
fee)
. Financial information report
. Accounting records
. Contract materials records
. CIWMB (format) annual reports
. Public education and outreach plan
. Annual collection service notice
. Performance bond and insurance certificates
Task 7.3: Development of Franchise Fee Payment
System
The franchisee will be required to submit account transition and
franchise fee payments to the City throughout the contract term.
R3 will coordinate with the City and the franchisee to develop a
payment form for use by the franchisee. The form will provide the
detail needed by the City to document the basis for the payments.
Scope of
Services
Q~
Page 11
Scope of
Services
R3
Page 12
2004-206
Task 7.4: Review of Hauler Accounting System
For purposes of calculating payments and reviewing financial
records, it is important that the franchisee's accounting system be
designed to segregate the accounts, revenues and expenses
related to the City franchise agreement from those accounts,
revenues and expenses related to services provided to other
municipalities.
As part of the development of the payment system, R3 will review
the accounting system developed by the franchisee to verify that it
is designed to segregate the revenues and expenses related to
the services provided under the terms of the franchise agreement
with the City.
Schedule
R3 has developed this Scope of Services to enable the City to
authorize a new franchise agreement as quickly as 3 - 5 months
upon notice to proceed. This schedule will require timely review by
City Staff and action by the City Council. This also assumes that
developing the Procurement Strategy (Task 1) will be completed
in one month.
Our project staff has extensive experience in procuring solid waste
collection services and is committed to completing the project on-
time. In addition, we have the staff resources necessary to
accommodate unforeseen changes in project scope or in the
schedule.
As part of the Project Kick-off Meeting (Task 1.1), R3 will prepare
a detailed schedule as a Gantt chart, showing all work tasks,
deliverables and submittal dates, review periods, meetings, and
presentations. This schedule will be updated and provided to the
City as changes occur.
Budget
R3 suggests that the City require the proposer(s) pay for the
cost of RFP process in the forms of 1) non-refundable
submittal fees of approximately $10,000 - $20,000 per
proposal, and 2) the balance of the project cost being
reimbursed t the City by the proposer(s) that is awarded the
franchise agreement. Accordingly, while the City will not
need to fund the project beyond the schedule for the RFP
process, the City will incur short-term project costs and will
be reimbursed for 100% of the project cost.
2004-206
R3 estimates that approximately 344 hours will be needed to
complete Tasks 1 - 5 for a not to exceed price of $48,070. We
suggest that billing be done monthly, based on actual hours billed
during the billing period. In this manner, if the City Council
decides to discontinue the project, the project costs would be
limited to actual hours worked.
It may be necessary to modify the work efforts in each Task, but
this will not affect the total not to exceed price. In the event the
City requests additional services, such as attending additional City
Council meetings or conducting community meetings, we will
provide the City with a budget amendment prior to performing the
additional services.
Tasks 6 and 7 should be considered as "Optional", and for these
Tasks, R3 will work with the City of finalize the details. Once the
task development is finalized, we will provide the City with a
budget amendment should the City need any assistance with
these tasks.
Cost Estimate
Task Hours Cose
Task 1: Procurement Strategy 68 $9,763
Task 2: RFP Documents 96 $12,617
Task 3: Pre-Proposal Meeting 36 $5,047
Task 4: RFP Evaluation 92 $13,114
Task 5: Negotiation and Recommendations 52 $7,529
TOTALS 344 $48,070
Billing Rates and Charges
Technical Services
Project Manager $150.00/hour
Senior Analyst $135.00/hour
Analyst $90.00/hour
Associate $75.00 hour
2 Includes labor and project expenses.
Scope of
Services
Q3
Page 13
2004-206
Scope of
Services
Administrative Support
$50.00/hour
Reimbursable Costs
Consu Ita nts/Su bcontractors
Lodging and meals
Travel - Private or company car
Delivery and other expenses
cost
cost
$0.375 per mile
cost
Payments
Unless otherwise agreed in writing, fees will be billed monthly at
the first of each month for the preceding month and will be
payable within 30 days of the date of the invoice.
1<3
Page 14
CITY OF SAN BERNARDINO
CITY ADMINISTRATOR'S OFFICE
INTEROFFICE MEMORANDUM
SUBJECT:
Mayor and )j~mon Council
Fred Wilso'~ty Administrator
Analysis of options to enhance revenue from Refuse Services
TO:
FROM:
DATE:
June 16,2004
COPIES:
Lynn Merrill, Director of Public Services
In order to address the City's General Fund budget shortfall, R3 Consulting was retained
to analyze options to increase revenue to the City generated from solid waste operations.
Options evaluated include an expansion of City services; an expansion of franchised
hailer services; and restructuring how the City owns and manages its solid waste utility.
The analysis was prepared to provide the City with a document to discuss the viability of
the options.
After reviewing several options, R3 is recommending the City consider assigning all new
commercial growth to a franchisee. Under this scenario, the franchisee will be required to
pay the City a fee equal to approximately 2 times gross annual revenue received from all
new commercial accounts. In addition, the 15% franchisee fee would apply to all current
and all new Franchisee revenue. The City would have to agree not to accept any new
accounts. This option could result in the City receiving a net revenue increase of $46.7
million to the General Fund over the next 20 years. The actual' amounts of payments
received would be determined through a competitive bid and subsequent negotiation
process.
As an alternative, the attached summary report from R3 discusses the revenue-enhancing
options related to expanding the City's commercial refuse services. The underlying issue
with that option is that even if successful, growth in commercial business would not
greatly benefit the General Fund due to limitations in state law. For that reason, staff is
not recommending expansion of commercial refuse services at this time.
The next step in this process will be to retain R3 Consulting to prepare an RFP and
provide assistance through the franchisee selection and negotiating process. It is
anticipated that such an action may be prepared for consideration by the Mayor and
Council on June 21.
-Sl
6/~./ /0 i
Resources Respect Responsibility
R3 Consulting Group, Inc
4811 Chippendale Drive, Suite 902
Sacramento, CA 95641
Tel. 916-576-0309
Fax: 916-331-9600
12-3
Consulting Group, Inc,
www.r3cgi.com
June 8, 2004
Mr. Fred Wilson
City Administrator
City of San Bemardino
300 North D Street, 6"' Floor
San Bemardino, CA 92418
Subject: Option to Expand City Commercial Solid Waste Collection Services
Dear Mr. Wilson:
Per your request and as a follow-up to our report dated May 10, 2004, we have prepared a brief
summary of the City's options to expand its commercial solid waste collection services.
We appreciate the opportunity to assist the City in determining the best options to pursue for
commercial solid waste collection services. Please call me at (916) 576-0309, or e-mail at
rterwin@r3cgi.com, if you have any questions or comments.
Sincerely,
R3 CONSULTING GROUP
~~~r..~- ~
Richard Tagore-Erwin
Principal
attachment
Page 1
Expanded Commercial Services
As an option to continuing with the current commercial collection
system, the City could expand its operations to provide collection
services to all existing permanent and temporary debris boxes, and
a/l new commercial customers.
This would require the City to take several actions:
1. The City would need to either terminate the existing franchise
agreements with the franchised haulers, or wait until the
franchise agreements terminate eight years after the City
issues a notice of non-renewal in accordance with the terms
of the franchise agreements.
2. The City would need to purchase additional collection
vehicles and collection bins, provide additional maintenance
facilities for vehicles and bins, hire additional collection staff,
and hire additional customer service staff.
Expanding the City's operations to all commercial collection
operations would provide the City with additional gross revenue of
approximately $2.1 million per year', which would increase with
growth. Additional gross revenue generated from limiting expansion
to new growth only would be approximately $420,000 per year, based
on growth projections.
Because of potential limitations related to Proposilion 218, under this
option, while expanded commercial operations may result in
additional net revenue to the Refuse Enterprise, the City's General
Fund would receive approximately the same amount (approximately
$315,000/year) it receives from the current franchise fees paid by
franchised haulers. In addition, any increased revenue is predicated
on growth in the commercial sector. If growth occurs at a faster pace
than anticipated, the City may have difficulty in providing all the
required services due to capital and personnel requirements. If, on
the other hand, the City invests in capital and personnel, and growth
is slower then expected, the City may be faced with underutilization
of vehicles, bins, and personnel, while absorbing the full cost of the
expansion. This may result in reducing available net revenue to the
Refuse Enterprise and revenue transfers to the General Fund.
Q.~
, Based on reported revenue from the current franchised collection
operations.
Page 2
Conclusion
Successful expansion of the City's commercial services is contingent
on future growth in the commercial sector and will require the City to
make a long-term commitment of capital and personnel with no
guarantee of a return on its investment. If the commercial sector
realizes sustained growth, and if the City is able to provide the
necessary capital and personnel to service the growth. then the
Refuse Fund may receive additional net revenue. However. we
understand that the General Fund will continue to be limited to
approximately 15 percent of gross revenue. as is currently provided
by the franchised haulers2.
If the City allows the franchised haulers to provide services to new
commercial accounts (Options 3 and 4 of the report dated
May 10. 2004), the City will receive the 15 percentfranchise fees plus
payments for new account transition which are estimated to range
between $840.000 to over $1.1 million per year. Under the worst
case scenario, this approach would provide at least as much revenue
to the General Fund as expansion of City operations without the
necessary investment in capital and personnel, and the risk of a
revenue shortfall. Consequently, Options 3 or 4 pose significantly
lower financial risk to the City with a potentially higher return.
R3
2 Franchise fees will increase from the current 11 % to 15% as of May 2005
in accordance with the terms of the franchise agreements.
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. CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
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From: Fred Wilson, City Administrator
Subject: RESOLUTION AUTHORIZING THE
MAYOR TO EXECUTE AN AMENDMENT TO
THE SERVICES AGREEMENT WITH R3
CONSULTING GROUP, INC" FOR ASSISTANCE
CONCERNING COMMERCIAL REFUSE
SERVICES PROVIDED BY FRANCHISED
REFUSE HAULERS
Dept: City Administrator's Office
Date: July 28, 2005
MICC Meeting Date: August 15, 2005
Synopsis of Previous Council Action:
June 21, 2004 - Mayor and Council adopt Resolution 2004-206, approving an agreement with R3
Consulting for assistance concerning expansion of commercial refuse services provided by franchised
refuse haulers
Recommended Motion:
Adopt resolution, and authorize the Director of Finance to amend the FY 2005-06 Budget as indicated in
~N'.en ~
Signature
Contact person: Fred Wilson
Phone:
5122
Supporting data attached: staff report resolution Ward: all
FUNDING REQUIREMENTS:
Amount: $30,000 in additional cost for this amendment
Source: (Acct. No.) 527-411-5505
(Ace!. Description) Refuse Fund
Finance:
Council Notes:
Agenda Item No.
-3
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STAFF REPORT
Subiect:
Resolution authorizing the Mayor to execute an amendment to the Services Agreement
with R3 Consulting Group. Inc., for assistance concerning commercial refuse services
provided by franchised refuse haulers
Backl!round:
In 2004. various options were evaluated for increasing revenues to the General Fund.
One area under consideration was the City's possible expansion of franchised
commercial refuse services.
In the Spring of 2004, R3 Consulting Group was retained to provide an analysis
concerning options to enhance revenues in this regard. One option identified was to
assign all new commercial refuse customers to a franchisee. As an alternative, R3 was
asked to evaluate whether or not a similar financial benefit could be realized through an
expansion of the City's in-house commercial refuse operation. In summary, though that
option is available, it contains risk and would not provide the same level of financial
benefit to the General Fund.
In June of 2004, the Mayor and Council approved another agreement with R3 Consulting
to assist the City through a competitive proposal process that would result in assigning all
new commercial customers to a franchisee. At that time, it was anticipated that the
process would take 60-90 days before a recommendation could be made to the Mayor and
Council concerning award of a franchise.
Activities to Date
In the summer and fall of 2004. the consultant drafted an initial RFP and franchise
agreement that would have assigned all new commercial refuse customers to a franchisee.
However. as the concept evolved. it became apparent that this franchise would be
difficult to administer. Definitions of "new" commercial refuse customers would be
problematic to enforce, and franchise monitoring costs were anticipated to be high. Staff
and the consultant began to consider other options that would still generate revenue for
the General Fund while minimizing the impact on current refuse operations, but also be
easier to administer for both the City and the potential franchisee.
Under a new franchise concept. it was recommended that a Request for Proposals (RFP)
be issued for the purposes of defining the financial benefits of franchising the City's roll-
ofT operations. Roll-ofT operations are those bins delivered to businesses and/or residents
for debris removal, construction projects, etc. The current roll-ofT operation involves six
(6) refuse operators, making it a relatively small component of the City's commercial
refuse operations. A minimum one-time payment of $5.6 million for this franchise and
$500,000 for the associated equipment would be established, plus annual franchise fee
and other revenues that were estimated at more than $600,000 annually.
At the Mayor's direction, an RFP for this work was released on Tuesday, February 15,
2005. The Council was informed of the action via memo, and also given a copy of the
.
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negotiate a $8.5 million tranSItion payment and a $500,000 equipment tranSItIOn
payment. for a total up-front payment of$9 million from Burrtec Waste Industries, Inc.
However. at the direction of the City Administrator, Finance and Public Services staff
began additional in-depth analysis of the roll-off operation in late May, using new data
available through Refuse's new billing system. Staff also hand-audited roll-off
paperwork to verify the amount of revenue that is being generated from this program for
the Refuse Fund, in order to be sure that the fund could continue to be self-sustaining if
the roll-off operation were to be franchised.
In the end, this analysis showed that the roll-off operation is generating more in revenue
than was originally estimated in the analysis. Pan of this revenue offsets costs of the
Refuse Division's environmental projects, including source reduction and recycling
programs, as well as administrative costs. Over the long term, the Refuse Fund could not
sustain that revenue loss without significant budget reductions that would impact other
Refuse operations (such as environmental projects and administration), and/or
considerable reductions to the transfer from the Refuse Fund to the General Fund.
In shon, it does not appear that franchising the City's roll-off operation would be
beneficial to the City at this time.
Amendment to the A2reement with R3 Consultin2:
The agreement approved with R3 Consulting by the Mayor and Council in June 2004 was
for an amount not to exceed $58,070. The project evolved significantly since that time,
requiring additional work by the consultant. The proposed amendment to R3's
agreement will provide for the payment of remaining services related to the franchise
process ($25,000 in FY 04-05), as well as a contingency for any outstanding wrap-up
issues ($5,000 in FY 05-06), for a total additional cost of $30,000.
The total contract cost of $88,070 has been offset to some degree by revenue from
proposer submittal fees of $30,000.
Financial (mpae':
As noted earlier, the proposed amendment to R3 's agreement will provide for the
payment of remaining services related to the franchise process ($25,000 in FY 04-05), as
well as a contingency for any outstanding wrap-up issues ($5,000 in FY 05-06), for a
total additional cost of $30,000.
It is recommended that the Director of Finance be authorized to amend the FY 04-05 and
FY 05-06 Refuse Fund Budgets to reduce the Refuse Fund Undesignated Balance by this
amount, and increase the Refuse contractual services budgets by the corresponding
amounts indicated above.
Recommendation:
Adopt resolution, and authorize the Director of Finance to amend the FY 05-06 Budget as
indicated in this staff report.
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RESOLUTION NO. 2005-284
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AN AMENDMENT TO
THE SERVICES AGREEMENT WITH R3 CONSULTING GROUP, INC., FOR
ASSISTANCE CONCERNING COMMERCIAL REFUSE SERVICES PROVIDED BY
FRANCHISED REFUSE HAULERS
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION 1. The Mayor of the City of San Bernardino is hereby authorized and
directed to execute on behalf of said City, Amendment No. 1 to the Services Agreement
between the City of San Bernardino and R3 Consulting Group, Inc., a copy of which is attached
hereto marked Exhibit "An and incorporated herein by reference as fully as though set forth at
length.
SECTION 2. The authorization to execute the above-referenced agreement is
rescinded if the parties to the agreement fail to execute it within sixty (60) days of the passage
of this resolution.
III
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RESOLUTION OF TIlE MAYOR AND COMMON COUNCll.. OF TIlE CITY OF SAN
BERNARDINO AUTHORIZING TIlE MAYOR TO EXECUTE AN AMENDMENT TO
TIlE SERVICES AGREEMENT WITH R3 CONSULTING GROUP, INC., FOR
ASSISTANCE CONCERNING COMMERCIAL REFUSE SERVICES PROVIDED BY
FRANClUSED REFUSE HAULERS
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
joint
and Common Council of the City of San Bernardino at a rellular meeting thereof, held on the
15thday of August .2005, by the following vote, to wit:
Council Members: AYES NAYS ABSTAIN ABSENT
ESTRADA x
LONGVILLE x
-
MCGINNIS ---L
DERRY x
KELLY x
JOHNSON ---L..
MCCAMMACK x
-
~I h. C&JL-
City Clerk
The foregoing resolution is hereby approved this (7;J.
day of August
2005.
~~../~
Approved as to
Form and legal content:
Wendy McCammack, Mayor Pro Tern
City of San Bernardino
25
26 James F. Penman, City Attorney
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1.
. "___"_-,~,,,,,,",,,,_~"""'c-,;-~,.......,,,-'_~',,~,,, ~_,~.:: ~
-. 2005-284
ORIGINAL
Exhibit "A"
AMENDMENT No.1
TO THE
SERVICES AGREEMENT
Tbj'gm N. I to"'" __" """'" hrto "" niL ..,
of '. 2005, by and between the City of San Bernardino ("CITY") and R3
Cons g Group, Inc., ("CONSULTANT") relating to assistance concerning
commercial refuse services provided by franchised refuse haulers and other issues related
to refuse regulations and operations.
I. The Section No. 2 entitled "COMPENSA nON AND EXPENSES" is
hereby amended to now read as follows;
"For the services performed pursuant to Section 1 of this Agreement,
CITY shall pay CONSULTANT a fee not to exceed $88,070."
2. The Section No.3 entitled "TERM; SEVERABILITY" is hereby amended
to now read as follows:
"The term of this Agreement shall be for a period of eighteen (18) months,
commencing on July 1, 2004, and terminating on December 31, 2005,
unless previously modified, amended, or cancelled by the written mutual
consent of the parties. This Agreement may be terminated at any time by
thirty (30) days written notice by either party. The terms of this
Agreement shall remain in force unless mutually amended in writing. The
duration of this Agreement may only be extended with the written consent
of both parties."
III
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2005-284
.
AMENDMENT No.1
TO THE
SERVICES AGREEMENT
IN WIlNESS WHEREOF, the parties have executed this instrument upon the date first
herein above appearing.
By: ~h~
Raclie Clark, City Clerk
CITY OF SAN BERNARDINO
~L
~ . y McCammack, Mayor Pro Tern
City of San Bernardino
ArrEST:
R3 CONSULTING GROUP, JNt.\
BY:~ \.~-~
Title: R-,I''' \ \:>1>..\
Approved as to fonn
and legal content:
JAMES F. PENMAN
City Attorney
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Business Plan
for the
Integrated Waste Management Division
Submitted to:
City of San Bernardino
Public Services Department
II
May 2008
1J:2.. Consulting Group, Inc.
K...J Resources. Respect Responsibility
City of San Bernardino
Cover
TABLE OF CONTENTS .................... ........ ............ .................................. .............i
1.0 BACKGROUND ............................................................................. 1
2.0 APPROACH ..................................................................................2
3.0 L1MITATATIONS ........................................................................... 2
4.0 FINDINGS AND RECOMMENDATIONS .......................................3
4.1 Findings .................................................................................3
4.2 Recommendations ................................................................. 4
5.0 FINANCIAL PLAN ....................................................................... 1,4
5.1 Budget Projections ............................................................... 14
5.2 Example FY 2008/09 Rates.................................................. 17
5.3 Potential Revenue Enhancements and Cost
Reductions ............... ............................................................ 18
5.4 Financial Model Assumptions ............................................... 19
6.0 EXAMPLE IMPLEMENTATION STEPS....................................... 21
LIST OF TABLES
Table 1 Projected Capital Needs For FY 08/09 - FY 12/13 ................ 14
Table 2 Cost for Additional Staff For FY 08/09.................................... 15
Table 3 Cost of Implementing Recommendations............................... 15
Table 4 Projected Costs, Revenue and Rate Increases For
FY 08/09 - FY 12/13.............................................................. 16
Table 5 Example FY 2008/09 Monthly Rates...................................... 17
Table 6 Cost Decreases and Revenue Increases From
Implementing Recommendations........................................... 18
Table 7 Line Of Business (LOB) Allocation Factors ............................20
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1.0 Background
The City of San Bernardino Integrated Waste Management Division (Division)
provides collection services to approximately 43,500 residential customers and
3,500 commercial customers within the City. Residential solid waste, recycling
and yard waste collection services are provided weekly on a 4-day per week 10-
hour per day schedule. Residential collection operates on a three-pass system,
where separate route drivers collect garbage, recyclables and green waste
materials (Separate Commodity Routes). Commercial collection services are.
provided six days per week to provide service to commercial accounts. The City
also provides a small amount of Commercial recycling and green waste
collection services.
The Division had an annual budget of $24,600,000 for FY 07/08. The annual
expenditures are split between residential and commercial services with
approximately 52 percent of the costs going for residential services and 48
percent of the cost going to the commercial services.
The City of San Bernardino has approximately 100 employees that provide
residential, commercial, and roll-off collection services. Over the past two years,
the Division has begun the process of addressing current operational challenges,
including:
. Purchased 20 new vehicles in FY 2006-07,
. Purchasing 17 additional vehicles in FY 2007-08;
. Tracking and improving the following items:
o Department overtime;
o Sick Time hours used by employees;
o Workers compensation claims; and
o Liability claims.
. Constructed a liquefied natu raJ. gas (LNG) and compressed natural gas
(CNG) fueling station;
. Focusing resources on route efficiencies, accuracy of account information,
and establishing improved enforcement of the Division's policies and
procedures related to waste collection; and
. Revising the City's Refuse and Solid Waste Division Code.
At the same time, the Division is facing several longer term issues:
. Arranging for disposal of approximately 200,000 tons of solid waste
currently disposed at the Colton Landfill after December 31,2012, when
the San Bernardino County Waste Delivery Agreement (WDA) expires.
. Providing for all temporary bin services after the expiration of the
agreements with the two franchise waste haulers that compete with the
City for temporary bin services;
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. Addressing the need for customer rate increases or restructuring, given
that customer rates have not been increased in four years;
. Addressing recommendations contained in the March of 2007, a City-wide
Organizational Review:
o Preparing detailed business plan and rate study;
o Identifying enterprise costs and potential cost savings of
contracting out; and
o Preparing bid specifications for residential and commercial
services, and conducting a managed competition process.
To address these current and future challenges, the City retained R3 Consulting
Inc. (R3) to prepare a Business Plan that addresses five major areas: 1) rate
structures, 2) equipment needs, 3) staffing levels, 4) long range planning, and 5)
the impact of managed competition.
2.0 Approach
The Business Plan is intended to present a 5-Year work plan to guide the
Division in its efforts to deliver high quality services in a cost-effective manner
and to successfully compete with comparable utilities, both publicly and privately
operated, in terms of efficiency, productivity, customer service and customer
rates, and net financial impact on the City.
Our study involved a review of the Division's collection operations and support
functions. As part of that review, we met with management, reviewed operational
information including productivity and vehicle availability data, observed
collection activities in the field, conducted residential route time and motion
analyses, audited commercial accounts, and performed an analysis of current
and projected residential solid waste collection productivity. While our review
covered a range of issues, it was not intended to be a detailed review of any of
those specific issues, and we relied in part on management's representations of
the Division's operations and results in developing our findings and
recommendations.
3.0 Limitations
In determining if further action on our recommendations is warranted, the City
.should consider the following limitations of our review:
. A comprehensive management review of the City's solid waste operations
was not conducted;
. Field observations were limited to three days;
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. A detailed financial analysis and/or cost-of-service study of the City's solid
waste operations was not performed;
. R3 was not able to independently verify the customer account data, off
route travel time, and container set-out data provided by the City;
. The projections used in this analysis are based on limited operational and
financial data received from the City. Because events and circumstances
may not occur as expected, there will usually be differences between
projected and actual results, and those differences may be material.
4.0 Findings and Recommendations
Our review of the Division's operations identified a number of management and
operational issues that impact the Division's ability to provide consistent high
quality solid waste collection services to the City's residents and businesses.
There is a combination of system and operational changes that will need to be
addressed by the Division to maintain ongoing operations. The major findings
and recommendations to address these issues are listed below.
4.1 Findings
The findings fall in three (3) major areas:
1. The Division operates as a "garbage" collection department with the
diversion of material through collection of recyclables and green waste as
a secondary function.
a. Total residential, commercial, and C&D recycling diversion is 6.6%
of collected material.
b. Total residential, commercial, and C&D green waste diversion is
12.0% of collected material.
c. Contamination of recyclables is between. 40 - 50% of collected
material.
d. The Division has the potential to reduce annual cost through
reductions in equipment, staffing adjustments, and technology
improvements.
e. The Division can realize additional revenue through expanded
recycling programs, decreased recycling contamination, and
increased recovery of materials now lost in landfill loads.
2. The Division does not have proper management systems in place to
accurately identify service levels and bill customers, timely implement
service changes, and proactively manage its operations.
a. The Division can not provide an accurate accounting of current
customers and service levels.
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b. The Division's customer service and billing system is not tied to
daily operations, service and billing changes are done on a
"paper" basis with limited ability to confirm if changes were made,
service inquiries are not tracked and tied back to route operations.
c. Without an inventory of bins, carts and containers the Division
cannot manage its equipment properly; and the billing system
cannot accurately bill for actual service.
d. Routes are unbalanced, with the number of stops/route/day
ranging from 800 to 1,400, and no accurate tracking of accounts
and service levels.
e. Approximately 30% of residential and commercial vehicles deliver
loads that are over 1.1 tons and potentially over the legal street
limit.
f. Onboard truck scale systems and onboard vehicle tracking
systems (GPS) are not used to monitor daily operations.
3. The Division is significantly underfunded, in terms of capital replacement,
operating reserves, and operating revenue for residential cart services.
a. The Division has no capital or operating reserves.
b. The Division needs capital expenditures of approximately $21
million over the next five years to replace old equipment and bring
the Division up to service levels seen by other municipal or
privately run solid waste operations.
c. Residential cart services is running a deficit of approximately $3.4
million/year.
d. It is unclear if temporary services is covering its costs due to
inaccurate revenue and operations tracking.
e. There is no established procedure to collect delinquent account
payment, and budgeted revenues do not reflect delinquency
experience. The Division does not use property tax liens for
delinquent payment collection.
4.2 Recommendations
There are recommendations that the City of San Bernardino should consider that
will result in improving the operational and financial environment of the Division.
The recommendations are broken down by the following areas:
. Expenditure and Revenue Accounting;
. Customer Service;
. General Operations;
. Residential Services;
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. Commercial Services;
. Temporary Services;
. FY 2008/09 Budgets and Rates; and
. Privatization/Managed Competition.
Expenditure and Revenue Accountina
The Division should consider the following steps to improve the expenditures and
revenue accounting:
1. Establish all budgets on a Line-of-Business basis (LOB) - 1)
residential, 2) commercial, 3) temporary services, 4) street sweeping.
5) City Services.
2. Account for all revenue and expenses on a LOB basis.
3. Account for lease payments, capital purchases and capital reserve
amounts on separate line items by LOB.
4. Record tip fees by function (disposal, green waste, recycling, CaD).
5. Establish a capital acquisition reserve account of 10% for planned
future needs.
6. Establish an operating reserve account of 10% for unanticipated
operating changes.
7. Adopt rate structures to generate revenue and cover expenses for
each LOB.
8. Audit 100% of residential, commercial, and on-call accounts to
verify/identify service levels.
9. Accept over the phone or on-line credit /debit card payments, and
automatic payments.
10. Require advance payment for temporary drop boxes via the CSRs (no
payment to drivers).
11. Establish a debt collection procedure, including tax liens for
delinquent accounts.
Customer Service
The Division should consider the following steps to improve the overall accuracy
and efficiency of the Customer Information Service system:
1. Purchase an integrated Customer Information System (software and
hardware) for the Residential, Commercial, and Temporary services that
would handle the following:
a. Account management;
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b. Billing;
c. Routing;
d. Dispatching; and
e. Reporting.
A sample list of companies that offer "off-the-shelf' solid waste software systems
include RouteWare, Soft-Pak, Trux, EnCore, Waste Works and Desert Micro.
2. Establish separate Customer Service Representatives (CSR) teams to
handle residential customers separately from Commercial and Temporary
Customers.
3. Hire one (1) additional CSR to reduce the number of customers to CRSs
to a ratio of 6,000:1
4. Hire two (2) Commercial Account Supervisor that will be responsible for
all commercial accounts.
5. Establish a procedure to formally track all calls and service requests.
6. Hire Dispatchers (a.m. and p.m.) that receives and coordinates all Roll-off
and Commercial service request orders (SROs).
7. Implement a "ride along" program for CRS to observe on-route
operations.
8. Introduce real-time GIS/GPS vehicle monitoring, interfaced with radio
frequency identification in all new bins, containers, and carts.
General Operations
1. Establish Best Management target productivity metrics:
a. Residential 700 - 800 accounts per day (23 - 27 seconds per
stop);
b. Commercial 80 - 100 lifts per day;
c. Temporary bin services 17 - 20 pulls per day;
d. Temporary roll-off services 8 - 10 pulls per day;
e. Bin or roll-off drop/pull within one (1) business day;
I. 30 seconds wait time on customer calls;
g. Call by 3:00 pm for the same day correction of missed collections;
h. Closing work orders within two days (container repair or
replacement, billing error, property damage); and
i. A maximum 2% delinquent accounts;
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2. Establish diversion standards
a. Residential recyclables diversion of 30% of total residential waste
stream;
b. Residential green waste diversion of 40% of total residential waste
stream;
c. Commercial recyclables diversion of 30% of total commercial
waste stream; and
d. C&D diversion of 50% of the C&D waste stream (temporary
services).
3. Supervisors and drivers should review and monitor all current routes to
determine maximum load points and eliminate vehicle overweight's.
4. Current accurate sequenced route sheets and maps are needed, with all
new stops verified.
5. All trucks that currently have "on-board scales" should be calibrated and
operational.
6. All drivers should be trained in the operation of the "on-board-scales"
7. Establish and enforce a formal overweight policy.
8. All driver paper work, dump tickets, and SRO's should be reviewed with
the drivers at the end of the day by the assigned supervisor or dispatcher.
9. Reconcile all driver tickets with tip fee tickets on a daily basis.
10. Unaccounted or lost tickets should be "recovered" the following day.
11. Overweight loads should be documented daily by the supervisor and
driver to determine the cause and method of prevention.
12. Implement on-board scale house readers.
Residential Services
The residential operations will benefit immediately from the better balancing
routes, emphasizing recycling and green waste services, and the use of a new
software system. The Division should take the following actions:
1. Purchase and install GPS software and tracking devises for all residential
collection vehicles. This should be directly tied to an integrated Customer
Information System.
2. Audit all. residential accounts to verify account information, and reconciled
to accurate route sheets.
3. Re-balanced residential routes based on 8 hour work day, 5 days of
collection and with established productivity requirements, and evenly
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balanced between garbage, recycling and green waste collection (650 -
800 accounts/route}.
4. Provide route books and daily route logs to drivers to verify account data
and any requested changes.
5. Reassign "Extra" commercial drivers to residential recycling and green
waste routes.
6. Route residential routes to the closest disposal facility.
7. Reassign residential supervisors to be responsible for geographic areas
rather than lines of business.
8. Drivers should be held accountable for overweight loads, missed
collection, and driver caused damages.
9. Focus on reducing recyclables and green waste contamination through
on-route "cart" checks, increased public education efforts, "tagging"
contaminated carts, and pulling recycling and green waste carts from
habitual offenders.
a. The Division should consider conducting a recycling
characterization study to determine contamination levels and
evaluate opportunities for improvement. The characterization
should include landfill loads as well as recycling loads, to
determine extent of lost recyclable and green materials.
b. The Division should consider renegotiating the current
residential recycling processing agreement as contamination is
reduced.
10. Increase outreach and education for the recycling and green waste
programs, using social marketing techniques.
11. Provide continual training on collection techniques to reduce unintentional
damage to carts.
12. Provide continual training on established procedures for issuing non-
collection notices, Service Request Orders ("SRO"}, completing their daily
logs.
13. Reduce vehicle spare ratios to 15%.
Commercial Services
1. Purchase and install GPS software and tracking devises for all
commercial collection vehicles.
2. Enter all current customer information into new software system.
3. Audit all commercial routes to verify account information, and reconciled
with the customer account system.
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4. Include a complete bin inventory assessment as part of the route audit,
with procedures established to assure ongoing accuracy.
5. Conduct commercial waste audits for all commercial accounts, identifying
recycling and organics rich accounts. Priority should be given to the 20%
largest commercial accounts in the first year (up to 500 total).
6. Establish "select" commercial recycling and organics collection routes to
accommodate high concentrations of recyclable and organics material.
7. Focus on reducing recyclables and green waste contamination through
on-route "bin" checks, increased public education efforts, 'tagging"
contaminated bins, and pulling recycling bins from habitual offenders.
8. Coordinate drivers, supervisors, and transfer station personnel to work
together to assure that select routes maintain high levels of diversion.
9. Rebalance commercial routes with specific productivity standards
established, i. e., each route should be managed as a "profit center". (80
- 120/lifts/route).
10. Minimize the number of two-man commercial routes and reassign the
"extra" drivers to residential collection (est. 5 - 6 drivers).
11. Drivers should not collect overloaded bins, or from locations that require
the driver to leave the truck to clear a path to the bin or place items in the
bin prior to collection.
12. All bin enclosures should be inspected to ensure access and safety.
13. Develop new bin enclosure standards to assure adequate collection
space for recycling, organics, and refuse; and to assure that new and
remodeled commercial developments provide adequate collection space.
14. Target "clean" recycling loads, aggressively target contaminated
recyclables for non collection, and conduct waste audits to increase
commercial recycling.
15. Identify opportunities and arrange for commercial food composting.
16. Establish and enforce additional charges for rejected recycling loads.
17. Direct drivers not to collect contaminated commercial recycling bins.
18. Hold drivers accountable for overweight loads, missed collection, and
driver caused damages.
19. Retrain drivers to follow established procedures on issuing non-collection
notices, SROs, completing their daily logs.
20. Reduce vehicle spare ratios should 10%.
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Temporary Services
The temporary account operations will benefit immediately from the use of the
new account supervisor, software system, and dispatcher. The Division should
take the following actions:
1. Purchase and install GPS software and tracking devises for all temporary
collection vehicles (both roll-off and front loaders).
2. Require all customers requesting temporary services to the CSR's to
request service.
3. Restrict Temporary Services to construction and demolition materials,
and clean-ups. Temporary services should not be provided for regular
scheduled collection of garbage.
4. Base Temporary Services on a one (1) week service period. One (1)
additional week "bin" rental can be requested at a set fee. All temporary
drops must be pulled weekly, unless the customer requests a one time
one (1) week extra bin rental.
5. Track all activity by drivers by SROs and account number on a daily
driver activity log.
6. Enter all temporary services into the new software system.
7. Audit all permanent accounts and accounts serviced on a short term (over
seven days) and on-call basis by the Commercial Account Supervisor and
Roll-off Supervisor to verify customer information, bins onsite, and identify
diversion opportunities. Permanent scheduled accounts should be
allocated on a regular route basis, so that temporary services do not
conflict with permanent collections.
8. Establish a procedure for monitoring compactor loads with high
concentrations of recycling and organics material, including a transfer
station floor sort procedure and accounting.
9. Work with local recycling facilities to receive additional material that
current drivers or supervisors think are "contaminated" and must go to the
landfill.
10. Require the Roll-off supervisor and/or Commercial Account Supervisor to
review any loads dispatched as "recycling" loads that the driver feels are
contaminated before the material is hauled to the landfill.
11. Reduce vehicle spare ratios to 10%.
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FY 2008/09 BudQets and Customer Rates
1. The FY 2008/09 budget should incorporate the cost to purchase and
install an Integrated Customer Information and Billing System
(ICSBS), including:
a. The cost to complete the residential and commercial customer
account audits, including identification of select recycling and
organics accounts.
b. Software for account management, billing routing; dispatching,
and reporting.
c. Collection vehicle on-board GPS. route and account tracking.
2. The FY 2008/09 budget should incorporate capital replacement for:
c. Residential containers, in full 3-color imprinted with "recycling",
"organics" and "refuse" identification and descriptions.
d. Residential collection vehicles.
e. Commercial containers.
f. Commercial collection vehicles.
g. Temporary collection vehicles.
h. Street sweepers.
3. The FY 2008/09 budget should incorporate a 5% capital reserve and
increase to 10% by FY 2013/14.
4. The FY 2008/09 budget should incorporate a 5% operating reserve
and increase to 10% by FY 2013/14.
5. The 2008/09 budget should incorporate the cost to begin a feasibility
study for Corporation Yard/MRFlTransfer Station.
6. The 2008/09 budget should incorporate the cost to implement
aggressive public outreach programs and enforcement.
7. The 2008/09 budget should incorporate the cost to conduct a detailed
cost of service study to establish accurate rates on LOB starting in FY
2009/10.
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8. Customers Rates should be revised to:
a. Incorporate items 1 - 7 above.
b. Discontinue bin/box rental beyond 1 week.
c. Adopt "flat" tonnage limits of 2 tons for temporary bins.
d. Adopt '1ree" recycling for residential and commercial
customers.
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e, Reassign five "extra" commercial drivers to residential
services.
f. Hire two (2) outside sales representatives (commercial and
temporary services).
g. Discount commercial green waste by 50% from standard
garbage bin rates.
h. Charge full garbage rates for contaminated recycling or green
waste loads.
i. Implement separate street sweeping charges on residential
and commercial customers.
j. Increase rates for residential, commercial, and temporary
services on an "across the board" basis for Y 2008/09.
9. For FY 2009/10 and beyond:
a. Adopt "pay-as-you-throw" rates for residential and commercial
customers to provide incentives for recycling.
b. Transition to full LOB rates.
Privatization/Manaqed Competition
R3 does not believe it is in the City's best interest to consider privatization of
the Division functions at this time for the following reasons:
1. It is not possible to accurately determine costs, revenue, number of
accounts, billing errors by LOB and any private hauling company
would want an accurate accounting to customer levels to determine a
reasonable "value" of the contract.
2. The City would need to receive approximately $4.7 - $6.0 Million in
annual franchise fee payments to account for lost revenue to the
General Fund, Water, and Fleet Services, and to provide for Street
Sweeping Services:.
a. Currently the City provides approximately $400,000 in
''free'' City Services that is not accounted for or tracked in
the Division budget.
b. Currently, approximately $2.7 million is transferred from
Division to the City General Fund.
c. Currently the direct cost of providing Street Sweeping
services is approximately $1.6 million/year (including
capital and operating reserves).
d. Currently the Division pays approximately $90,000 to the
Water Department for billing services. The cost for Water
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billing approximately 39,500 solid waste accounts that
receive City water services would not be eliminated.
e. Currently the Division pays approximately $1.8 million to
Fleet Services for vehicle maintenance (excludes fuel).
Some, but not all of this cost.would be eliminated.
3. The City's rolling stock has little or no value:
a. Of the City's fleet of 98 vehicles, 19 are less than 2 years
old; most are over 5 years old, are not CARB compliant
and have minimal or no market value.
b. Residential carts have no market value due to age and
condition and will need to be replaced. .
c. The City's commercial bins have low market value due to
age and condition, and bins that have not been replaced or
refurbished will need to be replaced or refurbished.
d. The City's roll-off containers have little or no market value
due to age and condition and will need to be replaced'.
4. A private hauler would likely have to increase the City's current
customer rates:
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a. Similar to the City, a private hauler will need to capitalize
containers and vehicles at an estimated cost of $25 million.
b. Similar to the City, a private hauler will need to conduct a
billing audit of all accounts and implement a new Customer
Information System:
c. A private hauler would likely incorporate up-front. cash
payments to the City into its customer rates. \
d. A private hauler would need to make annual franchise fee
payments to the City as discussed in NO.3 above.
e. A private hauler would need to operate on a 10+%
operating ratio to meet corporate profit requirements.
1 The City has begun a program to refurbish existing commercial bins and is targeting
approximately 100 per month to be refurbished.
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5.0 Financial Plan
5.1 Budget Projections
R3 developed financial model for a 5-Year Financial Plan on a Line of Business
basis as follows:
1. Residential Cart Services.
2. Commercial Bin and Roll-off Services (regular accounts serviced on a set
schedule).
3. Temporary Bin and Temporary Roll-Off Services.
4. Street Sweeping Services.
The model incorporates the City's FY 2007/08 budget, the Division's projected
capital and operating needs, the operational recommendations discussed above,
operating and financial practices used by other public agencies, and discussions
with City staff. Changes to the capital requirements and new staff requirements
for FY 08/09 - FY 12/13 are listed in Tables 1 and 2 below. Table 3 shows the
additional one time costs for implementing the recommendations in FY 2008/09.
'~':!{:i-':;:!_,:,~:><'~;~,., ',".C-,
.":;,tar,qE!Gt
;1." "/".. ','>--.' ..'....."
Commercial Vehicle Replacement
$3,847,000
Residential Vehicle Replacement
$8,781,197
Street Sweeper Vehicle Replacement
$789,000
Residential Carts
$6,987,090
$2,10,000
Commercial & Roll-off Containers
Integrated Customer Service/Billing/Route Management
System
$1,075,00
$20,415,364
TOTAL CAPITAL NEEDS
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I Residential Drivers 5 $51,600 $258,000
I Residential Supervisor 1 $74,500 $74,500
Public Education Staff 2 $56,100 $112,200
I Customer Service 1 $47,500 $47,500
Residential Dispatch 1 $51,600 $51,600
I Commercial Regular Drivers -5 $51,600 -$258,000
I Commercial Regular Supervisors 1 $74,500 $74,500
Commercial Regular Public Education Staff 1 $56,100 $56,100
I Commercial Regular Account Supervisors 2 $50,400 $100,800
I Commercial Regular Dispatch 1 $51,600 $51,600
TOTAL ADDITIONAL STAFF 10 $568,800
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City Clean-up Services $400,000 Ongoing
I Public Education Campaign/Materials $300,000 Ongoing
I City-wide Billing Audit $199,750 One time
City-wide Reroute $100,000 One time Q3
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Cost of Service Study $100,000 One time
MRF/Transfer Station Feasibility $150,000 $500,000 over next
4 years
Capital Reserve-Initially set at 5% $1,125,214 Increase to 10%
over 5-year period
Operating Reserve-Initially set at 5% $1,164,662 Increase to 10%
over 5-year period
Table 4 below shows the projected impact of adopting the above
recommendations, including the projected rate increases.
Table 4
Projected Costs, Revenue and Rate Increases For FY 08/09 - FY 12/13
Bldgeted
07-08
08'()9
00-10
Prqecled
10-11
11-12
12-13
Cumulaive
Nellnrome
Loos
Revenue Adjustment Percentaae
R
Residential 0.00% 21.00% 3.00% 3.00% 3.00o/~l 3.00%
Corrrnercial-Regula- 0.00% 21.00% 3.00% 3.00% 3.00%1 3.00%
Corrrnerdal- T empaary 0.00% 21.<)0% 3.00% 3.00% 3.00% 3.00%
Commercial-Regular
Revenue & Transfers In 10,398.233 12,577,594 12,954,922 13,343,570 13,743,877 14,156,194
~~s & Transfe~~()ut 8,416,974 9,239,034 9,019,018 9,536,167 10,596574 11,058.232
t~ili.H .,,~ .'/ ~ l:!ii$'il~ $' , $$-'SjiQ4, - . "$,T47:9l'1~f 3JjlfMlrl 17,.33>441 I
.,,,,
Commercial-Teflllor;ry
Revenue & Transfers In 4,202.867 5,082,606 5.235,084 5,392,137 5,553,901 5,720,518
Exnenses & Transfers QUI 3,682,426 4,308,411 4.206,395 4,440,766 4,912.444 5,12.2,713
rN..Dl'",,~~'. r SllQ,Ml 71:4;1$$ t,OIill,6!l1l '!l!<liiiltl 1>41:4.1\'1 ilM;lji'ljl 3,g$,518 I
Street Sweeping 1,828.6991
Revenue & Transfers In 4,946 1,673,519 1,723,725 1,775,436 1,883,560
E'6Ienses & Transfers Out 1,439,363 1,770,516 1,602,223 1,722,485 1,979,697 2,030,171
~NefMI'i'I"8 77L!)ss--;r .,.,.. 1,434,417 ~,w1.' 121;001 5:05'1 '115ttgg~ 146611 (22),153>1
_.~-- . -.
T alai All U nes of Servi ce
88Jinning Fund Balance 589,200 '2,200 192,516 1,972,482 3,838.865 3,029,014
,
Revenue & Transfers In 24,749,700 31,611,150 32,567,367 33,552,913 34,568. 720 I 35,615,752
E>onenses &Transfers Out 25,341,100 31 701,466 30,502,370 31,686,529 ~,378.571 36,735,104
It#>f11\Wrne / I=' .. Sgl,400 ''''',316 2064,997 1.",",,$3 15Q9,8$1\1 111'19,353 1,911,8611
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As can be seen by Table 4 above, for FY 2007/08 the City will need to increase
residential, commercial, and temporary rates by 21.0%, adopt~% annual CPI
increases, and adopt a new street sweeping rates of $1.'6!!l"per residential
accounVmonth, and $13:53 per commercial accounVmonth. The result of the
rate increases and new street sweeping rates will provide the Division with the
necessary funding to improve services to a level .provided by other publicly run
solid waste operations and effectively compete with private waste haulers.
However, rate increases in FY 2008/09 are "across the board" increases and 3%
do not move the Division to LOB based rates. This "across the board" approach
is recommended for the following primary reasons:
. Avoid a one time residential rate increase of 61.5%.
. Avoid a one time commercial rate decrease of 12.0%.
. Allow the Division to conduct a detailed cost of service study.
. Complete the customer service level audits.
. Track revenue and expenses by LOB (commercial and temporary
services) and to adopt residential variable container size rates.
. Incorporate disposal cost reductions and increased recyclables revenue
from increased residential and commercial recycling.
. Incorporate operational efficiencies due to more efficient routing, and
more accurate customer billing.
Also, as can be seen in Table 4 above, residential services will run a cumulative
5-year deficit of approximately $19 million unless additional rate increases are
adopted. Accordingly, R3 recommends the Division should phase in residential
rates on a LOB basis over a three (3) year period in conjunction with the
customer service audit, cart replacement program, and adoption of variable
rates.
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5.2 Example FY 2008/09 Rates
The following table provides a list of rates if the Division adopts the
recommended rate increases:
Residential 96 Gallon Trash
$19.86
-0-
$24.03
$1.69
Residential Street Sweeping
$95.00
$114.95
Commercial - 1 Yard - (1 x weekly)
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Commercial- 3 Yard - (1 x weekly)
$101.00
$122.21
Commercial- 6 Yard - (1 x weekly)
$161.00
$194.81
$13.53
Commercial Street Sweeping
-0-
Temporary Per Pull
$343.64
$284.00
5.3 Potential Revenue Enhancements and Cost
Reductions
Assuming the Division successfully implements the recommendations discussed
earlier in this Business Plan, the Division should realize both cost savings and
revenue enhancements. These are presented below:
Reducing Vehicle Reserve Ratio (16
vehicles at $25,000 vehicle for insurance, ($400,000)
registration, m?intenance costs)
Not
determined
Reducing Bad Debt (target 2%)
$164,000
Increase residential and commercial revenue
from billing corrections
o
o
Increase Residential Recycling Tonnages
(target of 30% of residential waste stream)
o
$1,815,000
Decrease Residential Tonnage Disposal due
to Increased Recycling
($700,000)
o
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Increase Residential Green Waste Tonnages 0 0
(target of 40% of residential waste stream)
Increase Commercial Recycling Tonnages 0 $1,160,00
(target 30% of commercial waste stream)
Decrease Commercial Tonnage Disposal ($1,826,000) 0
TOTALS ($2,426,000) $3,079,000
5.4 Financial Model Assumptions
A significant number of assumptions were incorporated into the financial model:
. Annual growth of 3%.
. Assumed annual operating cost increases of 3% (salaries, benefits, tip
fees, etc).
. Interest rate of 6.0%.
. Cart and bin depreciation over 10 years.
. Collection vehicle depreciation over 7 years.
. Retire all payments for lease-purchased vehicles at the end of FY
2013/14.
. Debt finance new purchases of vehicles and containers.
. FY 2008/09 one time cost of $450,000 for moving Division staff to the
corporation yard.
. $25 million capital cost for a new Corporation Yard/Material Recovery
Facility/Transfer Station beginning in FY 2012/13.
. No revenue increases or operating cost decreases due to improved
recyclables and green waste diversion.
In order to develop the model on a LOB basis, it was necessary to reassign and
allocate FY 2007/08 expenditures and revenue categories to specific LOBs as
follows:
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Revenue:
Interest on Cash 50.0% 50.00% 0.00% 0.00%
Commercial May be using 0.00% 100.00% 0.00% 0.00%
Rubbish cart collection.
Commercial Bin 0.00% 0.00% 100.00% 0.00%
Rent
Permanent &
Commercial Bin commercial 0.0% 89.3% 10.7% 0.0%
Service bin accounts
3-6 CY bins.
Temp services
Commercial (bin and roll- 0.0% 0.00% 100.0% 0.0%
Special off) $1 M is roll-
off.
Res Water Billed 100.0% 0.00% 0.0% 0.0%
Residential B Accts 100.0% 0.00% 0.0% 0.0%
Roll-off
Dino Bin Service includes roll- 0.0% 38.9% 61.1% 0.0%
off erm.
Commercial 0.0% 100.0% 0.0% 0.0%
Penalties
Residential 100.0% 0.0% 0.0% 0.0%
Penalties
Compliance
tickets,
Misc. Receipts inspector 50.0% 50.0% 0.0% 0.0%
citations, state
funding,
rants.
Revenue from
Recycling Receipts curbside, DOC 100.0% 0.0% 0.0% 0.0%
100%
Residential
Expenditures
Administration By drivers 42.4% 34.8% 15.2% 7.6%
Automated All residential 100.0% 0.0% 0.0% 0.0%
Residential
By drivers
Subscription within com 0.0% 69.6% 30.4% 0.0%
Services perm-temp
s lit
Street Sweeping All Street 0.0% 0.0% 0.0% 100.0%
Swee in
Recycling \ By drivers 42.4% 34.8% 15.2% 7.6%
Environmental
1<3 Billing System By drivers 83.0% 5.00% 5.00% 7.00%
Corporation Yard On accounts 42.39% 34.8% 15.2% 7.1%
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Commercial By drivers
Equipment within com 0.0% 69.6% 30.4% 0.0%
perm-temp
Allocation s Irt
Transfers By drivers 42.4% 34.8% 15.2% 7.6%
6.0 Example Implementation Steps
1. Billing System
Year 1
Problem: The current customer service and billing systems (H.T.E.) does not
have the ability accurately identify customer accounts, service levels,
or rates charged to customers. The lack of accurate customer
information greatly reduces the ability of the Division to identify cost
and revenue requirements for all customers and department
functions.
The current H.T.E. system does not have the ability to track and bill all
customers for services provided by the Division;
. The Division must manually enter commercial and roll-off
information to update billing at the end of the month;
. H.T.E. does not have the ability to generate route sheets or
management reports to assist staff with daily operations;
. The current system relies heavily on handwritten notes, faxed
work orders, or phone calls directly to drivers or supervisors;
. Work orders are not issued for all service requests; and
. There is not a system in place to track and all close work
orders.
Year 1
The Division should procure and install an industry standard "off-the-shelf"
Integrated Customer Service and Billing System (ICSBS). A sample list of
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companies that offer "off-the-shelf" solid waste software systems include
Routeware, Soft-Pak, Trux, EnCore, Waste Works and Desert Micro.
The Division should consolidate all billing and customer service functions into
one system that has the ability to do the following functions:
. Identify all customers by service type, level of service, and rates
charged;
. Identify all customer calls and requests;
. Processing billing and accounting functions;
. Identify customers by day and routes;
. Track container usage andinvehtory; and
. Provide management reports.
Year 2
. Begin full use of new Integrated Customer Service and Billing Systems
(ICSBS) for all customer and billing activity; and
. Implement new variable can rate structure for residential customers.
Year 3 - Year 5
During Year 3, the IWD should begin the process of conducting annual
compliance audits of customers to verify billing and routing information. Begin
annual compliance audits of 20 percent of all commercial and residential
customers.
Compliance Audits should include confirmation of the following:
. Address;
. Container size;
. Service level/frequency; -and
. Confirm correct rate.
2. Finance and Accounting
Problem: The current financial and accounting system tracks costs by five
section codes, (41t- Administration, 412- Automated Residential
Collection, 413 - Subscription Refuse, 414, Street Sweeping, and 415
- Recycling/Environmental). Revenue is tracked by two section codes
(412 - Automated Residential Collection, and 413 - Subscription
Refuse). This caused a "disconnecF between cost and revenue
tracking, and does not accurately reflect the costs associated with the
services provided by the Division.
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Year 1
. Conduct a cost of service analysis by Line Of Business (LOB) to
determine costs that can be used to determine future rate increases;
Expand the current accounting systems to track costs and revenue by the
following LOBs and functions:
o Residential
. Solid Waste Collection
. Residential Collection
. Green Waste Collection
o Commercial
. Solid Waste Collection
. Recycling Collection
. Temporary Bin Collection
o Roll-off
. Permanent Collection Accounts
. Temporary Collection Accounts
o Street Sweeping
. Residential
. Commercial
. Revise the current procedure for Permanent and Temporary Roll-off
accounts to:
o Define permanent accounts as customer with regularly scheduled
service or with established bin rental charges and minimum
collection frequencies established;
o Establish rates that include a fixed hauling charge and a pass-
through of actual tipping fees;
o Eliminate the use of "temporary gO-day roll-off boxes"; and
o Establish all Temporary accounts to have weekly collection that is
paid in advance.
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Year 2
. Adopt new rate structure to cover costs by LOB (may be necessary to
phase in residential rates over three years);
. Establish new commercial rates to "include" recycling to provide an
incentive for commercial businesses to recycle and divert material.
. Begin tracking costs and revenue by LOB; and
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. Adopt new residential ''variable can rate";
Year 3
Implement variable rate system for all residential customers.
Year 4
. Conduct a cost of service analysis by LOB to determine costs that can be
used to determine future rate increases;
3. Collection Operations
Problem:
Current collection operations is under staffed with the current
number of supervisors that cover several functions. This
understaffing and cross utilization reduces 'the amount of time the
supervisors have to monitor the quality of service provided and
limits their ability to improve performance and reduce costs.
Management and customer service functions do not have the
ability to effectively monitor route operations productivity or
collection efficiencies.
The current collection and routing system has resulted in
overweight vehicles that deliver overweight loads in excess of 30
percent of the total loads delivered to the landfill. The potential
financial issues related to overweight vehicles may include
excessive wear and reduced life span of vehicles, excessive road
wear, and potential financial penalties by local enforcement
offices. .
Year 1
.
Hire two (2) Collection Route Dispatchers to:
o Assist supervisors monitor daily routes;
o Communicate and schedule customer service request; and
o Check-in drivers at the end of the day to ensure the completeness of
daily activity.
Procure, install, and activate GPS units with "real-time" monitoring of
vehicles thaI tie to ICSBS system;
Adopt a formal "overweight" policy program to identify and eliminate
overweight vehicles; ana
Adopt and implement a daily "check-in" program with the drivers and
Dispatcher.
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Year 2
. Develop a monitoring program to record and improve customer service
and route operations through daily use of GPS systems;
. Establish benchmark system to track customer service calls and route
performance;
. Include Radio Frequency Identification (RFID) on all new collection carts
and bins;
. Install RFID systems on all new collection vehicles; and
. Establish procedure to monitor and balance routes to eliminate
overweight loads.
Year 3 - Year 5
. Use GPS and monitoring system to establish goals to improve customer
service and improve route efficiencies; and
. Install RFID systems on all existing collection vehicles.
4. Commercial Accounts
Problem:
The current commercial collection system has several areas that
can show significant improvement and result in positive financial
returns to the Division.
The current commercial collection system does not have the
ability to accurately identify commercial customers by day, route,
or service levels. The current routing system allows for frequent
overweight vehicles and drivers to collect from customers that are
paying for lower service levels. The Division does not have an
established routing or billing audit system in place to monitor
routing performance and customer service levels.
The current Commercial Recycling Collection program has
approximately 200 customers that are collected by routes that
operate five (5) days per week. Due to random contamination,
drivers will determine entire loads are contaminated, resulting in
loads of contaminated recyclables that end up delivered directly to
the landfill.
Year 1
. Audit 100% of current commercial accounts to document the following:
o Service location;
o Container size and bin number;
o Days of service;
o Customer specific issues (locks, dismount, 2 staff person service,
etc.); and
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o Opportunities to increase diversion.
Identify current size of commercial routes;
Present options to re-balance routes to increase efficiency;
Re-route commercial accounts to reduce the number of two-man
collection routes by five (5);
Design routes with sequenced stops;
Implement container inventory tracking system through ICSBS;
Conduct a waste audit of top 500 generators;
"Re-introduce" Commercial Recycling Collection;
Meet with local recyclers to evaluate additional processing capabilities to
increase recycling diversion; and
Replace 20% of commercial bins.
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Implement new ICSBS;
Re-route commercial accounts;
Reduce two-staff person routes to four (4) routes per day;
Expand commercial recycling to new bundled rates;
Identify and implement the collection of select commercial loads;
Develop commercial organics collection program;
Begin to conduct waste audits on top 20% of the largest generators; and
Replace 20% of commercial bins.
Year 3 - Year 5
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Implement commercial organics collection program;
Continue waste audits on 20% of the largest generators;
Begin annual compliance billing audits on 20% of all commercial
customers;
Replace 20% of commercial bins (each year);
Establish procedure to monitor facility diversion of select commercial
loads, C&D material, and bulky waste material; and
Continue to expand commercial recycling and select load collection
programs.
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5. Roll-off Accounts
Problem:
The current roll-off system has several accepted practices that
provide service to customers not typically found in private sector
roll-off operations. The system does not have systems in place to
accurately identify the quantity. or location of containers.
"Temporary" customers have the ability to use a roll-off bin for up
to 90 days while generating only one (1) revenue producing load
for the Division.
The current system of charging for weight, while typical for
permanent accounts, is burdensome for temporary bin accounts.
Additionally, with permanent accounts, the overweight limits and
charges should be reviewed to reduce the administrative burden
and increase the penalty for overloading the bins.
Roll-off and Construction and Demolition diversion has the
potential to generate a high amount of diversion with the proper
outreach to customers. Currently, opportunities for diversion are
missed due to quality standards accepted at local recycling and
C&D facilities.
Year 1
. Audit 100% of Roll-off accounts;
. Conduct bin inventory;
. Implement bin inventory tracking system;
. Negotiate material quality standards with local Recycling and C&D
facilities;
. Evaluate and establish permanent roll-off routes;
. Conduct waste audit of top 50 generators;
. Adopt new permanent and temporary roll-off customer policy; and
. Conduct site visits with all new permanent or temporary C&D customers.
Year 2
. Evaluate and establish permanent roll-off routes;
. Conduct waste audit of top 51-100 generators; and
. Implement new permanent and temporary roll-off customer policy.
Year 3
. Conduct waste audit of top 101-150 generators.
Year 4
. Conduct waste audit of top 50 generators.
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Year 5
. Conduct waste audit of top 51-100 generators.
6. Residential Accounts
Problem:
The current residential system operates four (4) days per week
with unbalanced routes and lacks basic routing information
including customer service level information or sequenced route
maps.
Year 1
. Audit 100% of Residential accounts;
. Evaluate current route time saving options; and
. Implement new customer start-up program with new bins and recycling
outreach;
. Replace 33% of solid waste carts;
. Replace 33% of recycling carts;
. Replace 33% of green waste carts; and
. Begin re-route residential collection routes to five (5) day collection
schedules (Mon-Fri) routes.
Year 2
. Replace 33% of solid waste carts;
. Replace 33% of recycling carts;
. Replace 33% of green waste carts; and
,; Complete re-route residential collection routes to five (5) day collection
schedules (Mon-Fri) routes.
Year 3
. Begin annual compliance billing audits of 20% of all residential
customers;
. Replace 33% of solid waste carts;
. Replace 33% of recycling carts; and
. Replace 33% of green waste carts.
Year 4 - Year 5
. Continue annual compliance billing audits of 20% of all residential
customers.
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7. Customer Service
Problem:
The current Customer Service Department is limited by the H.T.E.
system. The current system relies heavily on hand-written notes,
faxed work orders, or phone calls directly to drivers or supervisors.
Customer Service Representatives (CSRs) are burdened by a
slow and inefficient system that does not allow them to effectively
provide customer service and participate in the delivery of high
quality customer service and expand recycling and diversion
programs.
Work orders are not issued for all service requests and there are
no formal systems in place to track and close work orders.
Year 1
. Hire CommerciaVlndustrial Account Managers;
. Hire Recycling Diversion Analysts;
. Establish Residential and Commercial CSR leams;
. Begin training CSRs on new ICSBS system; and
. Implement CSR ride-along program for CSR's to observe on route
activity.
Year 2
. Implement new ICSBS system;
. Implement new customer start up procedure for residential and
commercial accounts including new bins and recycling outreach; and
. Incorporate results of annual compliance audits.
Year 3 - 5
. Incorporate results of annual compliance billing audits.
8. Public Education and Outreach
Problem:
The current Public Education and Outreach programs have hot
achieved the goals of increasing recycling activity while informing
residents and businesses on the proper procedures for separating
recyclables from the solid waste to maintain acceptable levels of
contamination.
Current contamination levels for the residential program are
estimated to be above 40 percent. Commercial recyclables are
contaminated on a regular basis that results in a majority of the
material being landfilled.
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Year 1
. Develop and expand the Public Education and Outreach Programsto
inform all residents and businesses the reasons to recycle and the proper
methods; and
. Contract with a social marketing firm to:
o Conduct phone surveys to identify method to improve the
program;
o Conduct focus groups to get community involvement in the
programs; and
o Develop and implement pilot programs to improve the collection
programs.
Year 2
. Begin annual site visits of top 20% of the largest commercial accounts
without recycling;
. Re-introduce residential recycling program;
. Continue with social marketing surveys and focus groups; and
. Introduce variable can rate to provide a financial incentive for customers
to increase recycling.
Year 3
. Implement Commercial Recycling Recognition Program;
. Implement Residential Recycling Recognition Program;
. Introduce special item collection programs;
. Continue with social marketing surveys and focus groups; and
· Continue with social marketing surveys and focus groups.
Year 4
. Implement residential food waste collection program; and
. Continue with social marketing surveys and focus groups.
Year 5
. Evaluate and measure the progress made through improved Public
Education and Outreach programs and social marketing surveys; and
. Develop new five-year plan for Public Outreach and Education Program.
9. Disposal and Processing Facilities
Problem:
The Division's disposal and processing capacity will expire in 2012
when the Waste Disposal Agreement (WDA) with San Bernardino
County, the Recyclable Processing Agreement with Burbank
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Recycling Inc. (BRI), and the Green Waste Processing Agreement
with Republic Services expire.
The City does not have facility options for the processing and
diversion of material from select commercial loads, commercial
organics, or the material collected from the bulky waste collection
programs.
Year 1
. Negotiate an extension of current disposal agreement with San
Bernardino County;
. Identify facility options to process commercipl dry waste (mixed dry
garbage and recyclables);
. Identify facility options to process commercial food waste; and
. Identify and arrange for facility(ies) to handle and process bulky waste
collection material.
Year 2
. Conduct a Corporation Yard/MRFfTransfer Station Study;
. Enter into contract(s) for processing commercial dry waste and
commercial food waste; and
. Enter into processing agreement for the handling and diversion of bulky
waste material.
Year 3
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Implement action plan for long term Corp YardlMRF/Disposal facility; and
Conduct material characterization per agreement with BRI.
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10. Recycling Programs
Problem:
Current recycling programs are not achieving the goals of
increasing and maintaining participation by residents and
providing recyclables with acceptable levels of contamination
(under 15%). The Division will need to develop and expand the
current outreach programs and address these issues with all
Division employees.
Year 1
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Develop an expanded Outreach program for Residential and Commercial
Recycling Program, using social marketing techniques;
Adopt a Cart and Bin Contamination Policy and Procedure;
Conduct driver training to monitor and tag carts and bins with
unacceptable levels of contamination in the recyclables;
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. Identify recycling-rich commercial accounts, for inclusion on source-
separated or select routing collection programs;
. Develop new bin enclosure standards, assuring adequate collection
space for recycling, organics, and refuse containers; and
. Assure that new and remodeled commercial developments provide
adequate collection space for recycling, organics, and refuse containers.
Year 2
. Conduct recyclables material characterization for residential and
commercial recyclables per the agreement with BRI;
. Begin tagging and enforcing contaminated bins through the new bin/cart
contamination policy;
. Begin delivery of new recycling carts with full color imprinted recycling
information;
. Expand commercial recycling collection;
. Initiate routing and collection of select commercial accounts with high
levels of recyclables; and
. Continue social marketing surveys, focus groups, and outreach programs.
Year 3
. Initiate process to develop, induce, or contract for long term facility
options including disposal, transfer station and material processing
facility; and
. Continue social marketing surveys, focus groups, and outreach programs.
Year 4
. Conduct recyclables material characterization for residential and
commercial recyclables per the agreement with BRI;
. Contract for transfer station and materials processing facility services;
and
. Initiate transfer station a"nd materiats processing facilities construction and
expansion.
Year 5
. Conduct five (5) year review of Collection Operations and Recycling
Programs.
11. Bulky Waste Collection Programs
Problem:
The Division would like to provide bulky waste collection programs
for all residential customers to help increase diversion, reduce the
impact on the neighborhood clean up events, and reduce the
impact on potential illegal dumping of material.
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Year 1
. Design and plan bulky waste collection programs;
. Procure equipment for bulky waste collection;
. Identify and adopt rates structure for bulky waste collection; and
. Notify public of new bulky waste collection.'
Year 2
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Implement on-call bulky waste collection program; and
Phase out neighborhood collection events.
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Year 3
. Expand bulky item collection program to include universal waste and
household hazardous waste material as part of the bulky waste collection
program.
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