Item 5 - Response to Public Oral Testimony by Kely Everson AGENDA REPORT SUMMARY
TO: Honorable Mayor and Members of the City Council ~
FROM: James L. Bowersox, City Mana~
iNITIATED BY: John D. Fitch, Assistant City Manager~:]!
James R. Williams, Director of Public Services~ ~
DATE: April 4, 1995
SUBJECT: Response to Public Oral Testimony bv Mr. Kyle Everson at February 14, 1995
Meeting
ABSTRACT
Mr. Kyle Everson addressed concerns regarding the solid waste franchise to the City Council on February
14, 1995. Based upon input he had received from citizens, his concerns include: inequitable rate savings
between residential and commercial customers of the franchise; citizens billed for service when they had not
previously had service, unnecessary green waste collection from some commercial customers, and
inappropriate handling of a letter from NCRRA. He requested two things: (1) "ask original bidders to
update their bids" based upon the NCRRA letter of September 15, 1994, and (2) "start the process all over
again with a panel of citizens involved".
ENVIRONMENTAL REVIEW
This item is not subject to CEQA review.
FISCAL IMPACT
None.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
Copies of this agenda report were sent to Mr. Kyle Everson; Mr. James H. Buckley; Mr. Sam Goldstein; Mr.
Jeff Ritchie, Mashburn Waste & Recycling Services, Inc.; Mr. Gary Talbot, Waste Management of San
Diego; Mr. P,J. ck Berlin, Laidlaw Waste Systems, Inc.; Mr. Greg Short, Browning-Ferris Industries; and Mr.
Conrad Pawelski, Coast Waste Management, Inc.
RECOMMENDATION
It is recommended that the City Council receive and file this report.
ACTION
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AGENDA REPORS
CITY OF POWAY //~~
TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City Man~~>
INITIATED BY: John D. Fitch, Assistant City Ma~ager~¥
James R. Williams, Director of Public S~rvices,52~
DATE: April 4, I995
SUBJECT: Response to Public Oral Testimony by Mr. Kyle Everson at February I4,
1995 Meeting
BACKGROUND
Mr. Kyle Everson addressed concerns regarding the solid waste franchise to the City Council on
February 14, 1995. Based upon input he had received from citizens, his concerns include:
inequitable rate savings between residential and commercial customers of the franchise; citizens
billed for service when they had not previously had service, unnecessary green waste collection from
some commercial customers, and inappropriate handling ora letter from NCRRA. He requested two
things: (1) "ask original bidders to update their bids" based upon the NCRRA letter of September
15, 1994, and (2) "start the process all over again with a panel of citizens involved".
FINDINGS
Following a series of events impacting solid waste management and municipal responsibilities/
liabilities, during December .1991, the City Council directed staffto pursue earliest implementation
of a solid waste franchise. The public record is clear regarding the multiple events, reports to
Council, requests for community input and participation in public hearings, and decisions made
about franchising, that led the Council on September 20, 1994, to approve award of the exclusive
franchise to Mashburn Waste arid Recycling Services, Inc.
At a public workshop held on March 24, 1994 - attended by representatives of ail five bidders - in
addition to several other decisions, a schedule of events was suggested with a bid-opening scheduled
ACTION:
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APR 4 1995 ITEM
Response to Public Oral Testimony by Mr. Kyle Everson at February 14, 1995 Meeting
April 4, 1995
Page 2
for August 1, 1994. Because of unavoidable delays is final review and printing of the bid solicitation
package, in another report to Council on June 21, 1994, the schedule of events was adjusted to show
"Bids due/Bid Opening" on August 1 I, 1994. At a mandatory pre-bid conference held on July 8,
1994, and attended by all bidders, it was agreed to delay the bid receipt/bid opening date to
September 1, 1994. Each of the five eligible bidders delivered a sealed, firm, fixed price bid to the
City Clerk's office before the deadline of 5:00 p.m. on September 1, 1994. Bids were opened
promptly at 5:00 p.m. by the City's General Services Manager in the presence of the Director, Public
Services Department.
The request for bid (RFB) package included specific instructions to bidders regarding the type of
services required under the franchise, the number of customers requiting each of the services and the
frequency of such service, data characterizing the total tonnage of refuse, recyclable materials and
green waste collected in Poway during the preceding twelve months from each of the categories of
customers, as well as documentation regarding each bidder's business solvency, record of pending
and past litigation, planned staffing for the franchise, planned operating procedures, and other
company related information relevant to determining the "responsibility" and "responsiveness' "of
the bidders to the solicitation. Neither the RFB or the Franchise Agreement (which was included
in the RFB package) specified direction to the bidders regarding how to establish unit prices for
specific types, frequencies, or levels of service. Bidders were expected to establish unit prices that
would equitably distribute expenses among all customers based upon the cost of prox/iding each
service. In other words, bidders were not directed to lower residential rates to a minimum at the
expense of commercial rates or vice versa.
Before the tLFB was issued, staff conducted several surveys of standard (pre-franchise) rates charged
by each of the haulers to Poway customers as well as surveys of rates experienced by other
murdcipalities in San Diego County. Based upon information fi'om these surveys (provided to your
Council with the March 24, 1994, workshop staff report), the Iow bid would result in an average rate
reduction of approximately 25%. The September 20,1994, report to your Council specifically stated
under Fiscal Impact: "Effective January 1, 1995, award of this franchise will save the City of Poway
approximately $230,000 annually, and reduce solid waste rates by an average of 25% for all
residents and commercial customers."
Staff did not survey the 483 commercial customers to determine their pre-franchise rates,
anticipating that these rates would be consistent with the standard rates quoted by the separate
haulers (Attachment A summarizes the standard rates reported to staff). In practice, based upon
subsequent conversations with representatives of competing bidders, some of the pre-franchise
haulers indicated that tipping fee increases were not always passed along to commercial customers.
In some cases, rates charged resulted in losses to the haulers rather than profit. Perhaps the most
extreme example of this inconsistency of rates among customers is found with Waste Management's
July 1, 1993, rates: a range from $39 to $125 - depending on the customer - was being charged by
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Response to Public Oral Testimony by Mr. Kyle Everson at February I4, 1995 Meeting
April 4, 1995
Page 3
the same hauler for once weekly service to one 3-yard bin.
On July 1, I993, landfill tipping fees increased from $28/ton to $43/ton. On October 1, 1994,
landfill tipping fees increased again to $55/ton. During this fifteen month period, tipping fees rose
by 96.4%. Bidders on the franchise were instructed to base their bids on all known rates to be in
effect January 1, 1995, since future rate increases would be restricted by the actual amounts of
tipping fee increases and adjustments for changes in the San Diego Consumer Price Index (CPI).
During the ~velve months before soliciting bids, 14,803 tons of general refuse were collected from
commercial bin customers in Poway. At $55/ton, tipping fees alone would cost the franchisee
$814,165 to service only commercial customers.
Attachment B is the results of a survey of rates conducted by City of Santee staff in November,
1994, following the most recent tipping fee increase. Note that Mashburn's franchise rates (listed
on Attachment B) range from 0.4% higher than the average in the county for once weekly service
to 15% below average for four times weekly servicing of a 3-yard bin. Although - because of
apparently less than full rates being charged to Poway commercial accounts by some pre-franchise
haulers - not all commercial customers of the new franchise are realizing savings, the rates in our
franchise are competitive with those throughout the county and generally are lower than what
commercial customers in other cities are paying.
It does not appear that the average 25% savings previously announced have been realized by
commercial customers. Tiffs prediction was calculated based upon a comparison of the actual bids
received with then available "standard" rates provided by the haulers. As has been done with multi-
family complexes and homeowners associations, staff will continue to work with Mashbum Waste
and Recycling Services, Inc., to make commercial bills as affordable as possible.
Mr. Everson also questioned why bills were sent to citizens who had not previously used solid waste
services. Unsuccessful bidders provided a complete list of the residential customer accounts as a
base fi'om which the franchisee, Mashbum, would establish their new accounts. Staff also provided
Mashburn with a list of water customers and a list of residential properties on the tax roles.
Mashburn used the staff-provided lists to validate the accounts listing from the unsuccessful bidders.
A total of 1,117 single family dwellings were found not to be paying for solid waste service before
the franchise took effect. Mashburn questioned staff how to handle the "potential" 1,117 customers.
Staff developed a process whereby residents could apply for exemption to service by filing a form
that designated alternate methods of disposing of their solid waste and recyclable materials. Of the
many exemption requests, the most prevalent reasons for not needing the service were: (1) resident
disposed of refuse at his/her place of business where he/she paid for bin service, or (2) resident self-
hauled trash to a county landfill. Staff began to receive and approve requests for exemption in mid-
December 1994 and to date has received and approved 270 requests for exemption. "Potential"
customers have now been individually noticed by mailing inserts from the City of Poway added to
Mashburn's bi-monthly bills of the procedures to qualify for and request exemption to the franchise.
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Response to Public Oral Testimony by Mr. Kyle Everson at February 14, 1995 Meeting
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It appears that tkrough using the process described in this paragraph, over 800 residents are now
paying for solid waste service although they may not have been paying in the past.
The third question raised by Mr. Everson was the issue of unnecessary green waste being added to
multi-family customers whose grounds maintenance contracts already disposed of the green waste.
Mr. Everson is correct that this was initially a deficiency of the franchise. However, Resolution No.
95-002, approved by the Council on January 10, 1995, corrected this deficiency by establishing new
lower rates to accommodate multi-family customers not requiring green waste service under the
franchise.
Lastly, Mr. Everson expressed concern about the September 15, 1995, letter from the NCRRA (a
private company) requesting the City of Poway abandon its curbside recycling and green waste
programs in favor of delivering all waste to the NCRRA Plant for recyclable materials processing.
Mr. Everson stated that ail the bidders should have been given the opportunity to adjust and resubmit
their bids based upon the NCRRA letter. Staff strongly disagrees with Mr. Everson on this point.
The aggregate bids were available to ali bidders at the time of bid opening (bid results were also
faxed to all bidders the next morning, September 2, 1994). To allow all bidders to "adjust" their bids
at this point would have materially altered what to this point had been a "level playing field" for the
bidders. All bidders now knew the low bid in relation to their own. In staff's opinion - based upon
established principles and procedures for public contracting - to re-open bids would have invited a
lawsuit against the City unless the entire process were started over, complete with rewrite of the
franchise agreement at RFB package. To start over would minimally have required six months. This
~vas not considered an option. Further obviating the arguments presented by Mr. Everson, the
County Board of Supervisors voted approval on February 15, 1995, the day following Mr. Everson's
testimony, to proceed with actions necessary to close the NCRRA plant. A letter was sent to Mr.
Everson on February 21, 1995, over the signature of the Director, Public Services Department, to
report on the Board's decision.
Mr. Everson's first request was that Council ask all original bidders to update their bids based upon
the new evidence presented by the NCRRA letter of September 15, 1994. For the reasons stated,
staff strongly recommends against this action.
Secondly, Mr. Everson asked your Council to start the franchising process all over with a panel of
citizens involved. Although it is possible that additional ideas may surface through involvement of
a citizen panel, staff is confident that the existing Poway franchise is the best in the county as it is
now written and that it has ample room for improvement through future adjustments based upon
citizen/customer input. To start the franchising process anew would, in staff's opinion, cause
unnecessary additional confusion, disruption of service, and anger among Poway's citizens. In
addition, there appears to be no legal grounds to terminate the existing seven-year franchise
agreement xvith Mashburn. Unlawful termination of the franchise by the City would result in
potential general fund liability. With few exceptions during the last four months, staff and the
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ResponSe to Public Oral Testimony by Mr. Kyle Everson at February 14, I995 Meeting
April 4, 1995
Page 5
franchisee have resolved every special condition or circumstance brought to our attention by
citizens/customers. Staff does not recommend that Council consider termination of the franchise
agreement.
ENVIRONMENTAL REVIEW
This action is not subject to CEQA review.
FISCAL IMPACT
None.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
Copies of this agenda report were sent to Mr. Kyle Everson; Mr. James H. Buckley; Mr. Sam
Goldstein; Mr. Jeff Ritchie, Mashburn Waste & Recycling Services, Inc.; Mr. Gary Talbot, Waste
Management of San Diego; Mr. Rick Berlin, Laidlaw Waste Systems, Inc.; Mr. Greg Short,
Browning-Ferris Industries; and Mr. Conrad Pawelski, Coast Waste Management, Inc.
RECOMMENDATION
It is recommended that the City Council receive and file this report.
Attachments: A - Pre-franchise Rates Comparison
B - San Diego County Solid Waste Survey (updated 11/22/94)
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AGENDA REPORT
CITY OF POWAY
TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City Man~
John D Fitch, Assistant City Manage~ ~''
INITIATED BY: James i~. Williams, Director of Publi~'-~0~rvice~
DATE: April 4, 1995
SUBJECT: Response to Public Oral Testimony by Mr. Kyle Everson at February_ 14.
1995 Meeting - Additional Information
BACKGROUND
Since submission for distribution of the original staff report, additional information pert'ment to
commercial accounts under the solid waste franchise has become available.
FINDINGS
Following a meeting with commercial property owners, staff has met with Mr. Jeff Ritohie of
Mashbum Waste and Recycling Services, Inc., to address several specific concerns of these property
owners.
One concern has been where business owners have changed to larger bin sizes to reduce costs, the
new bins are inaccessible to some users. Staffhas confirmed that these bins are approximately 10
inches higher in the front and may create a hardship for some users. Mashbum has determined that
two varieties of bins can be made available to customers to ovemome this problem. One bin - called
a "hump-back" bin - is the same height in the fi'ont where trash is loaded as are the standard 3-yard
bins, and the lids are of similar size and weight. The second option is for a "pedai-ope?ated" bin.
When stepping on a ground level pedal the bin's lid is mechanically opened allowing both hands the
freedom necessary to deposit trash in the bins.
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Mr. Kyle Everson --Additional Information Report
Page 2
April 4, 1995
A second recunSng complaint has been that the franchise penalizes the business community by
requiring them to pay more so residential rates will be lower. Mashburn's bid, received on
September 1, 1994, and approved by the Council on September 20, 1994, showed the commercial
accounts portion of their bid to be valued at $1,635,476.88. This aggregate bid was based upon the
number, size and frequency of service for all bins in Poway at the time of bidding. Since beginning
to operate under the franchise on January 1, 1995, Mashbum has worked independently with Poway
business owners to adjust their services consistent with need and the options available for recycling,
etc. The aggregate expense to commercial customers under the franchise has been reduced by nearly
$600,000 to a new total of $1,073,898.36. Staffbelieves this definitely demonstrates "good faith"
effort by Mashbum Waste and Recycling Services, Inc., to provide the best possible rates to both
commercial and residential customers.
Mr. Ritchie reports that the number ofbnsinesses in Poway that have signed up for recycling services
is increasing each week. On Tuesday of last week, nine new commercial recycling accounts were
started in Poway. Since January 1, 1995, 52 new commercial recycling accounts have been set-up
with Mashbum by businesses in Poway. Last year records indicate that only 3.4% of commercial
refuse generated in Poway was diverted from landfills through voluntary recycling efforts. Through
January and February of 1995 (since the franchise was implemented) commercial customers have
recycled only 76 tons (3.6%) of the 2,112 tons collected from their bins. Residential customers have
diverted 1,431 tons (39.7%) of their total 3,607 tons of waste through the curbside recycling and
green waste programs. Considering the number of new commemial recycling accounts recently
established, progress in this area will definitely be realized during 1995 as result of the franchise.
This is the way that all businesses can reduce their rates, but they must make the effort to recycle.
Staff has carefully analyzed tonnage and revenue data under the franchise for the first two months
of its implementation. For residential accounts, 44.64% of revenues collected is necessary to pay
tipping and franchise fees. In comparison, for commercial accounts, 67.56% of revenues collected
is required to pay tipping and franchise fees. Clearly, from auditable revenue and expense data,
commercial rates were not set higher than required in order to lower residential rates.
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