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HomeMy WebLinkAboutItem 3a - Release and Hold Harmless Agreement with Waste Managementcl?"IFORnl9'`jd✓. ?l` STAFF REPORT Public Works Services Department DATE: October 15, 2013 TO: Mayor and City Council FROM: Tom Tait, Public Works Services Director Prepared by: Jacquelyn Mercado, Public Works Office Coordinator SUBJECT: AUTHORIZE THE CITY MANAGER TO EXECUTE A RELEASE AND HOLD HARMLESS AGREEMENT WITH WASTE MANAGEMENT, INC. AND A FIRST AMENDMENT TO THE RESIDENTIAL REFUSE AND RECYCLING AGREEMENT Recommendation: Approve SUMMARY In October 2012, the Public Works Services Department (PWSD) conducted a financial audit of the commercial haulers operating in the City. The audit findings showed that since 2009, Waste Management, Inc. (WM) mistakenly reported multi - family payments and temporary bin payments as part of commercial gross receipts, resulting in an overpayment to the City in the amount of $232,756.26. With the intent of maintaining high levels of services and low rates, PWSD reached an agreement with WM to amend the current Residential Refuse and Recycling Agreement and, in return, WM has agreed to enter into a Release and Hold Harmless Agreement to waive any rights to the overpaid funds. Based on the contractor's service record and continuing satisfactory performance, it is recommended that the City Council authorize the City Manager to execute a release and hold harmless agreement with Waste Management, Inc. and first amendment to the Residential Refuse and Recycling Agreement. BACKGROUND The City is responsible for providing solid waste handling services to its citizens, including source reduction, recycling activities, and the collection, transfer, and disposal of solid waste within City boundaries. WM has been the City's exclusive residential refuse hauler since 1999 and has consistently provided excellent service to the City of Arcadia. Arcadia maintains one of the lowest refuse rates while providing the most comprehensive citywide refuse and recycling programs in the San Gabriel Valley. For example, WM and their programs have assisted Arcadia in meeting the state's annual disposal goal of 9.3 pounds /person /day - with Arcadia exceeding this goal through less waste generated by achieving a per capita disposal rate of 6.0 pounds /person /day. Included in the current Residential Refuse and Recycling Agreement, WM administers the following programs for the convenience of residents: Release and Hold Harmless Agreement and First Amendment to the Residential Refuse and Recycling Agreement October 15, 2013 Page 2 of 4 • Greenwaste and Co- mingled Curbside Recycling • Free Backyard Service for Residents with a Physical Hardship • Four Free Bulky Waste Pick -ups for Single Family Residential Units • Holiday Tree Recycling • Residential Recycling Education • Mail -it -Back Recycling for Sharps Waste WM has successfully demonstrated their commitment to working with the City and their ability to provide the most efficient and effective refuse and recycling services to Arcadia residents. DISCUSSION In October 2012, PWSD conducted a financial audit of the commercial haulers operating in the City. The purpose of the financial audit was to identify any discrepancies or inaccuracies with the commercial refuse fees remitted to the City. The audit findings showed that since 2009, WM mistakenly reported multi - family payments and temporary bin payments as part of commercial gross receipts, resulting in an overpayment to the City in the amount of $232,756.26. The City receives a percentage of gross commercial receipts and the reporting error, which also included multi - family receipts, increased the calculated percentage causing WM to process payments in amounts more than what they actually owed. The overpayments made to the City were not collected from Arcadia residents. Upon receiving the audit findings, PWSD worked closely with WM to reach a settlement that was in the best interests of both parties to resolve all issues related to the overpayment. WM has agreed to enter into a Release and Hold Harmless Agreement (Exhibit A) for the overpayment, which will hold the City harmless from any future liability or claims related to the specific audit and calculated overpayment, and in return PWSD has agreed, in concept, to an amendment to the Residential Refuse and Recycling Agreement (Exhibit B). With the current Residential Refuse and Recycling Agreement set to expire in June 2016, PWSD negotiated additional elements into the amendment to ensure continued excellence in services provided by WM, and low refuse rates. The deal points for the Amendment to the Residential Refuse and Recycling Agreement will include: • Contract Term A five (5) year contract extension through June 2021. • Public Outreach WM will provide additional commercial and multi - family education and public outreach programs along with periodic on -site visits, at no additional cost to the City, to ensure that the City is in compliance with AB 341 requirements of developing and providing public education and outreach to promote recycling for these waste generators. Release and Hold Harmless Agreement and First Amendment to the Residential Refuse and Recycling Agreement October 15, 2013 Page 3 of 4 • Sharps Waste The current mail -it -back sharps waste recycling program costs the City approximately $3,000 per year for the purchase of sharp waste containers to be utilized under the program. As part of the proposed amendment, WM will provide the mail back containers at no cost to the City. WM will continue to, at no cost to the City, receive and dispose the sharps waste. • Household Hazardous Waste Disposal WM will provide services for the collection and disposal of household hazardous waste generated from customers at no charge to the City or customers up to $25,000 annually. • Hazardous Waste Disposal Aside from household hazardous waste, WM will also provide services for the collection and disposal of hazard waste generated from City facilities at no charge to the City or customers up to $25,000 annually. • Emergency Service and Disposal WM will, at the City's request or when deemed necessary during a major event, assist in emergency collection and disposal services by providing collection vehicles, drivers, and delivery /pick -up of collection bins, at negotiated fixed rates provided in the amendment to the Residential Refuse And Recycling Agreement. • Rate Adjustment Methodology The rate adjustment methodology will remain the same as under the current agreement and WM will continue to be entitled to receive annual rate adjustments, which are subject to City Council's approval. Due to the closure of the Puente Hills Landfill, the disposal and green waste component of the rate adjustment methodology will be tied to Riverside County landfills. Any rate increase will be based on a rate adjustment formula consisting of three weighted indices: ➢ Consumer Price Index (CPI) (65 %) ➢ Disposal /Green Waste Facility Index (30 %) ➢ Producer Price Index (PPI) for fuel (5 %) Under the proposed Amendment, effective July 1, 2016, the Disposal /Green Waste Facility index will be adjusted based on the number of tons of solid waste and greenwaste collected and further calculated by the change in landfill gate fees charged by the Riverside County Waste Management Department. Additionally, the Disposal /Green Waste index will be further broken down to the percentage of trash and greenwaste disposed in Riverside County at County - system landfills. Release and Hold Harmless Agreement and First Amendment to the Residential Refuse and Recycling Agreement October 15, 2013 Page 4 of 4 With stringent state mandates that regulate the waste stream, it is the City's responsibility to ensure the proper disposal and recycling of refuse and hazardous waste in the community. A continued partnership with WM will facilitate the ongoing process of increasing recycling in the City, guarantee landfill disposal capacity, and maintain a diversion rate in compliance with state mandates. FISCAL IMPACT The City will continue to receive an Administrative Fee per year, subject to cost of living adjustments, for the length of the contract extension to fund roadway repairs and maintenance. Additionally, the City will be relieved of the reimbursement to WM for the overpayment of $232,756.26. RECOMMENDATION It is recommended that the City Council authorize the City Manager to execute release and hold harmless agreement with Waste Management, Inc. and first amendment to the Residential Refuse and Recycling Agreement. Approved: Dominic La7za2 City Manager Attachments: Exhibit A — Release and Hold Harmless Agreement Exhibit B — First Amendment to Residential Refuse and Recycling Agreement RELEASE AND HOLD HARMLESS AGREEMENT THIS AGREEMENT is made this th day of October, 2013, by and between the CITY OF ARCADIA, a Municipal Corporation, hereinafter referred to as CITY, and USA WASTE OF CALIFORNIA, INC. DBA WASTE MANAGEMENT OF SAN GABRIEL /POMONA VALLEY, a Delaware corporation, hereinafter referred to as CONTRACTOR. City and Contractor are referred to collectively as the Parties. WHEREAS, City and Contractor entered into that certain ageement entitled Residential Refuse and Recycling Agreement, dated March 10, 2009 ( "Franchise Agreement "); and WHEREAS, the Agreement provided for the payment of certain fees by Contractor to City; and WHEREAS, an contract compliance audit undertaken by City for the time period running from to (the "Audit Period ") disclosed an overpayment of fees by Contractor in the amount of $232,756.26 (the "Overpayment "); and WHEREAS, City and Contractor agree that it is in the best interests of both parties to fully and completely resolve issues related to the Overpayment under the terms and conditions provided herein. NOW, THEREFORE, in consideration of the mutual promises, covenants, guaranties and conditions contained herein and for other good and valuable consideration, the City and Contractor agree to the terms and conditions set forth 1 herein. 1. Contractor's General Release. Contractor hereby releases, discharges and holds City harmless from any and all claims, liabilities, demands and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against City related to the audit with respect to the Audit Period, including but not limited to, the Overpayment calculated with respect to the Audit Period (collectively, "Contractor's Claims ") 2. City's General Release. City hereby releases, discharges and holds Contractor harmless from any and all claims, liabilities, demands and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against City related to the audit with respect to the Audit Period (collectively, "City's Claims ") 3. Waiver Of Section 1542 Riahts. The Parties hereby acknowledge that they understand the meaning of Section 1542 of the Civil Code of the State of California, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. With respect to the matters set forth herein and subject to the terms of this 2 Agreement, the Parties expressly waive and relinquish any right or benefit which they now have, or may in the future have, under Section 1542 of the Civil Code of the State of California, or under any other state, federal or local statute, code, ordinance or law similar to Section 1542 of the Civil Code. In connection with such waiver and relinquishment, the Parties acknowledge that they are aware that attorneys or agents may hereafter discover claims or facts in addition to or different from those which the Parties now know or believe to exist with respect to such matters, but it is their intention to hereby fully, finally and forever settle and release all of the released matters, disputes and differences, known or unknown, suspected or unsuspected, which do exist, or may exist, or heretofore have existed arising out of such matters. In furtherance of such intention, the releases herein given shall be and remain in effect as full and complete releases notwithstanding the discovery or existence of any such additional or different claims or facts. 4. Amendment to Franchise Agreement. In full and complete satisfaction of Contractor's Claims, City agrees to enter into a First Amendment to Residential Refuse and Recycling Agreement ( "First Amendment ") in substantially the form set forth in Exhibit "A ". The Parties' releases in Section 1 and 2 are expressly contingent upon the Parties' execution of, and the full and complete effectiveness of, the First Amendment. 5. General Provisions. 3 5.1. This Agreement is the entire Agreement between City and Contractor. Any oral or any other written representations, understandings or agreements covering the same subject matter, which are in conflict with this Agreement, are hereby merged into and superseded by the provisions of this Agreement. 5.2. No provision of this Agreement may be amended, modified or waived unless agreed to in writing between City and Contractor. 5.3. The headings of Sections and subsections hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 5.4. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of California. Venue shall be in Los Angeles County or the federal Central District of California 5.5. In the event litigation is commenced against any party hereto arising from the failure or refusal or alleged failure or refusal of such party to perform its obligations under this Agreement, then the court shall award reasonable attorneys' fees and costs to the prevailing party, including all such fees and costs associated with any appeal. 5.6. No waiver of any breach of any one or more of the conditions or covenants of this Agreement by either party shall be deemed to imply or constitute a waiver of a breach of any other condition or covenant in this Agreement or of a breach of the same condition or covenant in the future. 5.7. By their signatures below, each respective signatory represents that he or 11 she has the express authority of the party or parties for which he or she executes this Agreement and any exhibits hereto and further has the express authority to bind his or her principals to the terms of this Agreement. 5.8. The Parties agree to cooperate and to execute such further documents as may be necessary to effectuate the provisions of this Agreement. IN WITNESS WHEREOF, said City has caused its corporate name and seal to be hereunto subscribed and affixed by the City Manager and City Clerk, both thereunto duly authorized, and said Contractor has hereunto subscribed his name. CITY OF ARCADIA A Municipal Corporation 5 By: ATTEST: City Manager USA WASTE OF CALIFORNIA, City Clerk INC. A Delaware Corporation APPROVED AS TO FORM: By: City Attorney USA WASTE OF CALIFORNIA, INC. A Delaware Corporation By: Vice President 5 W:1:11419 :1 FIRST AMENDMENT TO RESIDENTIAL REFUSE AND RECYCLING AGREEMENT This First Amendment to Residential Refuse and Recycling Agreement ( "First Amendment ") is made and entered into on this, the t" day of October, 2013 (the "Effective Date ") by and between the CITY OF ARCADIA, a Municipal Corporation, hereinafter referred to as CITY, and USA WASTE OF CALIFORNIA, INC. DBA WASTE MANAGEMENT OF SAN GABRIEL /POMONA VALLEY, a Delaware Corporation, hereinafter referred to as CONTRACTOR. WHEREAS, the City is responsible for providing solid waste handling services to its citizens, including source reduction, recycling activities and the collection, transfer and disposal of solid waste within the City boundaries subject to solid waste handling jurisdiction, as provided in Section 40057 through 40059 of the Public Resources Code (Waste Management Act (the "Act "); and WHEREAS, the purposes of the Act are to promote the reduction, recycling and reuse of solid waste to the maximum extent feasible in an efficient and cost - effective manner, to improve regulation of landfills, to streamline permitting procedures and to specify the role of local agencies to develop and implement integrated waste management programs, including setting the level of services, charges and the nature, location and extent of the provision of solid waste handling services; and WHEREAS, the collection of residential solid waste and recycling is crucial to the health, safety, and welfare of the City. 1 WHEREAS, City and Contractor entered into that agreement entitled Residential Refuse and Recycling Agreement dated March 10, 2009 ( "Agreement "); and WHEREAS, as permitted in Section DD of the Agreement, City and Contractor desire to extend the term and modify the performance requirements of the Agreement as set forth herein. NOW, THEREFORE, in consideration of the mutual promises, covenants, guaranties and conditions contained in this Agreement and for other good and valuable consideration, the City and Contractor agree to the terms and conditions set forth in this First Amendment. 1. Section B.1(e) of the Agreement is amended to read in full as follows: "Sharps. Contractor shall ensure the safe collection and disposal of sharps generated by single - family and multi - family residential customers at no charge to the City and the customers." 2. Section B.1(f) of the Agreement is added to read in full as follows: "HHW Disposal. Contractor shall collect, accept and dispose of Household Hazardous Waste (as defined in 14, California Code of Regulations, Section 18502 or successor laws and regulations as may be amended from time to time) generated from customers in compliance with all applicable law at no charge to the City or customers. Specifically, Contractor shall provide up to three Household Hazardous Waste collections as requested by each dwelling unit per year. Contractor shall be solely responsible for complying with this section and shall indemnify and hold the City harmless from its failure to do so. 2 Notwithstanding any provision herein to the contrary, the total value of services provided by Contractor at no charge under this Section B.1.(f) and Section B.2(I) shall not exceed, in the aggregate, Twenty Five Thousand Dollars ($25,000.00) per year." 3. Section B.2( /) of the Agreement is added to read in full as follows: "Hazardous Waste Disposal. Contractor shall collect, accept and dispose of Hazardous Waste (as defined in 14, California Code of Regulations, Section 18502 or successor laws and regulations as may be amended from time to time) generated from City facilities in compliance with all applicable law at no charge to the City or customers upon the City's request. Notwithstanding any provision herein to the contrary, the total value of services provided by Contractor at no charge under this Section B.2(I) and Section B.1.(f) shall not exceed, in the aggregate, Twenty Five Thousand Dollars ($25,000.00) per year" 4. Section B.9 of the Agreement is added to read in full as follows: "Without limiting Contractor's obligations under this Agreement, Contractor will assist City at City's request for emergency collection and disposal service (in the event of major disaster, such as earthquake, storm, riot or civil disturbance), or as otherwise determined necessary by the City, by providing collection vehicles and drivers normally assigned to the City, at the rates provided in Exhibit C. The rate for this service is to remain fixed for the term of the Agreement." 5. Section G.2 of the Agreement is amended to revise the second sentence as follows.. 3 "Beginning July 1, 2011 and on each July 1 thereafter through and including July 1, 2015, subject to the requirements of subsection 3 below, the rates shall be adjusted in accordance with the rate adjustment methodology set forth below." 6. Section G.2(a) of the Agreement is added to read in full as follows:: "Beginning July 1, 2016 and on each July 1 thereafter, subject to the requirements of subsection 3 below, the rates shall be adjusted in accordance with the rate adjustment methodology set forth below. Contractor shall submit to the City, not less than ninety (90) days prior to the effective date of the proposed adjustment, information in support of the adjustment. The City Manager shall review the information submitted by Contractor for completeness and accuracy. The City Manager shall refer the proposed adjustment to the City Council for approval, which shall not be withheld unless the City determines the information submitted by Contractor is incomplete or inaccurate. Contractor acknowledges that its late submission of the proposed adjustment and supporting information may make it impossible for the City to timely complete compliance with Proposition 218's notice and majority protest procedures so as to allow the rate increase to take effect on July 1St Rate Adjustment Methodology. Service Component. The Service Component comprises sixty -five percent (65 %) of the overall rates. The Service Component shall be adjusted annually by seventy -five (75 %) of the percentage increase or decrease in the Consumer Price Index ( "CPI "), All Urban Consumers -, for the Los Angeles- 11 Orange County - Riverside Metropolitan Statistical Area (MSA), as published by the United States Department of Labor, Bureau of Labor Statistics, by calculating the average of the changes in the CPI between each month during the January to December period immediately preceding the date of the rate adjustment and the same month in the preceding year. An example of the rate adjustment methodology is provided below. CPI Calculation Jan 2012 thru Dec 2012 Jan -11 Jan -12 Y -O -Y Month Dec -11 Dec -12 % Chng Jan 228.652 233.441 2.09% Feb 229.729 234.537 2.09% Mar 232.241 236.941 2.02% Apr 233.319 236.866 1.52% May 233.367 237.032 1.57% Jun 232.328 236.025 1.59% Jul 231.303 235.776 1.93% Aug 231.833 237.222 2.32% Sep 233.022 238.104 2.18% Oct 233.049 240.111 3.03% Nov 232.731 237.675 2.12% Dec 231.567 236.042 1.93% Average 2.03% 2.03% x 0.75 = 1.52% Fuel Component. The Fuel Component comprises five percent (5 %) of the overall rates. The Fuel Component shall be adjusted annually by the percentage increase or decrease in the annual CNG or LNG (On Highway) price published in the Official Energy Statistics, as published by the United States Department of Energy by calculating the average of the changes in 5 the GNG or LNG price between each month during the January to December period immediately preceding the date of the rate adjustment and the same month in the preceding year. Disposal /Green Waste Component. The Disposal Component comprises thirty percent (30 %) of the overall rates. The Disposal /Green Waste Processing Component will be adjusted annually to reflect changes in the actual cost of providing these services. First, the number of tons of solid waste and green waste collected will be calculated, and the relative percentage of each determined. The change in the disposal component will be determined by calculating the change in the landfill gate fees charged by the Riverside County Waste Management Department for solid waste generated in Riverside County at County- system landfills during the January to December period immediately preceding the date of the rate adjustment, or the anticipated change during the current January to December period, if known. The change in the green waste processing component will be calculated by determining the actual change in cost based on the gate fees charged by processors utilized by Contractor for green waste collected in the City. Finally, the changes will be allocated in accordance with the relative percentage of each material collected to determine the final disposal /green waste cost component. 7. Section L.14 of the Agreement is amended to add the following provision after the last sentence of the paragraph ending in "Contractor's failure to comply with 6 this paragraph. ": "As of the Effective Date of the First Amendment, Contractor is providing collection service using exclusively alternative -fuel collection vehicles, and shall remain in compliance with the requirements of Rule 1193." 8. Section R.1 of the Agreement is amended to revise the first sentence as follows: "The term of this Agreement shall commence on the Effective Date and expire at the close of business on June 30, 2021, subject to extension as provided herein." 9. Section Z. of the Agreement is amended to delete the notice address for Contractor's legal department, the address previously identified as "Attn: Group Legal Counsel ", and to substitute the following: "Waste Management — Southern California Market Area 9081 Tujunga Avenue Sun Valley CA 91352 Attention: Legal Counsel" 10. Section 11.1 of the Agreement is added to read as follows: "Contractor shall implement the requirements of AB 341, including its education, outreach and monitoring requirements to multi - family complexes and other affected customers. On or before February 1, 2014, Contractor shall submit to City for review and approval, a plan to provide such assistance, and more specifically, to implement a public education plan, identify all customers subject to the requirements of AB 341, provide periodic on -site visits to such premises to offer and promote recycling services and attempt to resolve any logistical detriments to providing service, and notify and request assistance from the City 7 for potential follow up action where there is a repeated refusal to implement recycling services as required by AB 341 or City ordinances or resolutions regarding the same. City agrees to prepare a letter for distribution to customers regarding AB 341 requirements and ensure occasional participation by City personnel in meetings with customers who repeatedly refuse to implement recycling services. As provided in this section and pursuant to the provisions set forth above, Contractor shall indemnify and hold City harmless for failure to comply with this paragraph." 11. Except as provided herein, the terms and conditions of the Agreement remain in full force and effect. 8 IN WITNESS WHEREOF, said City has caused its corporate name and seal to be hereunto subscribed and affixed by the City Manager and City Clerk, both thereunto duly authorized, and said Contractor has hereunto subscribed his name. CITY OF ARCADIA A Municipal Corporation By: ATTEST: City Manager City Clerk APPROVED AS TO FORM: City Attorney USA WASTE OF CALIFORNIA, INC. A Delaware Corporation By: President By: Secretary EXHIBIT C Emergency Collection & Disposal Service Rates ROLL -OFF RATE Per Pull $ 250.00 Per Ton $ 55.00 Per Relocation $ 113.00 Additional Wait Time Charge for wait > 15 minutes, for each additional 15 minute period $ 36.25 Initial Delivery Only Charge $ 113.00 COMMERCIAL RATE Per Hour $ 125.00 Per Ton $ 55.00 10