CITY OF CARMEL-BY-THE-SEA

AGENDA BILL

AB 1034
November 2, 2015
Consent Calendar

TO:

Honorable Mayor and Members of the City Council

Douglas J. Schmitz, City Administrator

FROM:

Sharon Friedrichsen, Director of Budget and Contracts

SUBJECT:

Authorization for the Purchase of Recyclable Materials and Yard Waste Trimming Carts.

AMOUNT OF EXPENDITURE

$ 42,958

AMOUNT BUDGETED

$0

APPROPRIATION REQUIRED

$0

RECOMMENDATION
Authorize the City Administrator to execute a side letter to the franchise agreement with GreenWaste
Recovery to purchase 35 gallon recyclable material and yard trimming carts for residential use.
SUMMARY
On 17 June 2014 , the City Council authorized the City Administrator to execute an agreement with
GreenWaste Recovery for solid waste, recycling and organics collection services, with new services to
begin on 1 July 2015. As Green Waste Recovery ("GWR") began preparing for the transition of
services, including the delivery of new carts to residential households, both the City and GWR became
aware that approximately 125 residents were utilizing smaller-sized carts for recyclable materials and
yard waste trimmings that had been provided by the previous franchised hauler.
As neither the Request for Proposals for solid waste services nor the franchise agreement referenced
the 32/35 gallon recycle and yard waste cards, GWR had not initially ordered these smaller carts. In
addition, as GWR had already purchased the larger 65 and 95 gallon carts for these residents and built
the cost of the inventory into their rate model and collection service rates , the additional costs for the
new smaller carts were incurred by the company. As such, GWR is seeking compensation for the cost
of the new carts purchased. While several financing options have been explored, including charging the
customers that requested the smaller carts a monthly rental fee (in additional to their bill for costs of
service with the existing carts) or incorporating the cost of the carts into the customer rates, it is
recommended that the City pay for the carts. No additional budget appropriation is required to pay for
the cost of the carts ($42,958) as the City's anticipated franchise fee payment will be deducted by $715
each quarter over the duration of the franchise agreement. However, as the cost of the carts is over
$24,999, Council must authorize the City Administrator to execute the cart purchase agreement, or side
letter, with GWR.

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PRIOR CITY COUNCIL ACTION

17 June 2014 Council authorized the execution of the franchise agreement, which included the 2015
residential, multi-family and commercial customer collection rates
ATTACHMENTS
1. Side letter to franchise agreement between City and GreenWaste Recovery

Date:

Douglas J.

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ATTACHMENT- 1
Reduction of Quarterly Franchise Fee Payment to Purchase 35-Gallon Recyclable Material &
Yard Trimmings Carts for Residential Use
This side letter to the Franchise Agreement for Solid Waste, Recycling and Organics Collection
Services is between the City of Carmel-by-the-Sea (the "City") and Green Waste Recovery, Inc.
("GreenWaste"). This letter, referenced as the "Reduction of Quarterly Franchise Fee Payment
to Purchase 35-Gallon Recyclable Material & Yard Trimmings Carts for Residential Use" is
intended to authorize the deduction of franchise fees to compensate for the purchase of recyclable
materials and yard trimming residential carts. Other than as documented or clarified herein, the
subject Franchise Agreement remains in full force and effect.
EXHIBIT G-3: ADDITIONAL ALLOWABLE CHARGES
35-Gallon Residential Recycling and for Yard Trimmings Carts (Modified Use of Existing Fee)
The Request for Proposals (RFP) and the Franchise Agreement (Exhibit B1), both specified that
Residential Customers will be offered one (1) 65-gallon or one (1) 95-gallon Recycling Cart and one
(1) 65-gallon or one (1) 95-gallon Yard Trimmings Cart for no additional charge, as part of their
monthly garbage subscription. There was no requirement for GreenWaste to provide smaller
Recycling and/or Yard Trimmings carts. Unbeknownst to both the City and Green Waste, there
were a number of Residential Customers in the City that had received and been using smaller
32/35-gallon Recycling andjor Yard Trimmings Carts provided by the previous franchised hauler.
As per Section 3.5: Agency-Directed Changes in Scope:
Agency may meet and confer with Contractor to establish the scope of any additional services
or modification to existing services (which may include use of Approved Facilities) to be
provided under this Agreement. In such case, Contractor shall present, within thirty (30)
calendar days of Agency's request, a written proposal to provide such modified or additional
services.
Agency shall review the Contractor's proposal for the change in scope of services. Agency and
Contractor may meet and confer to negotiate Contractor's proposed revisions and costs and
shall amend this Agreement, as appropriate, to reflect the mutually agreed-upon changes in
scope.

The City requested Green Waste provide a written proposal to provide these additional services
because the costs associated with the purchase of these Carts was not contemplated by GreenWaste
or included in the revenue requirement that was used to determine the Initial Collection Service
Rates (Exhibit G3).
Commodity Type
Recyclable Materials
Yard Trimmings

Cart Size Quantity

472
35-Gallon
325
35-Gallon
Total Cart Cost*

Costs
$17,450
$12,015
$29,465

$ 13,493
Additional Allowable Fees**
$42,958
Total Cost
$2,864
ANNUAL COST
*Cart Costs include production, hot stamping, RFID chips, sales tax and delivery.
**Additional Allowable Fees include interest expenses, corporate overhead and profit.
The City has decided to compensate GreenWaste directly for the annual cost of the carts by
deducting the annual cost from the franchise fees instead of 1) charging Customers requesting the
smaller carts or 2) incorporating the cost of the carts into the Customer Rates. The compensation to
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Reduction of Quarterly Franchise Fee Payment to Purchase 35-Gallon Recyclable Material &
Yard Trimmings Carts for Residential Use
Green Waste will be made by the City to Green Waste as a reduction in the Franchise Fees payable to
the City and therefore, the costs described above do not include Franchise Fees. Throughout the
initial15-year Term of the Franchise Agreement, Green Waste will deduct $716 (25% of the $2,864
annual cost) from the payment due payable to the City of Carmel-by-the-Sea on a quarterly basis.
A total of 4 72 35-gallon Recyclable Materials Carts and 325 35-gallon Yard Trimmings Carts will be
made available by Green Waste to Residential Customers in the City throughout the Term of the
Agreement. GreenWaste shall obtain the written approval of the City prior to using any of the 35gallon Recyclable Materials or Yard Trimmings Carts that the City has paid for through this
arrangement for any purpose other than provision to Residential Customers in the City. The City's
approval may be withheld if the City cannot arrange satisfactory payment for the use of the Carts
from such other users. Consistent with Section 2 of the Quarterly Report Content described in
Exhibit D: Reporting Requirements, Green Waste will report the number of each container type and
size in use at each service level. This agreement creates no obligation for GreenWaste to maintain a
separate inventory for Carmel. It is the City's understanding that GreenWaste will seek approval for
use of containers if someone outside of the City requests a 35-gallon green or blue cart and
Green Waste has not made separate arrangements with that party (as they have done with the City
of Pacific Grove) to secure additional container inventory beyond that purchased for the City. If a
Residential Customer requests more than one (1) Recyclable Materials or Yard Trimings Cart, the
standard fees described in Exhibit G3: Additional Allowable Charges will apply.
If Residential Customer demand exceeds the number of carts included in the purchase, the City and
GreenWaste will discuss the cost implications of purchasing additional carts and the City may
request GreenWaste provide another written proposal to provide these additional services and the
associated costs per Section 3.5: Agency-Directed Changes in Scope.
CONCURRENCE
As the Contract Manager for the City of Carmel-by-the-Sea, I have reviewed this letter and the
attached Exhibit G-3: Allowable Additional Charges and agree with the clarifications or application
of rates as described herein and agree that any additional charges and/or new rates identified
above will be incorporated into the Franchise Agreement with Green Waste Recovery for Solid
Waste, Recycling and Organics Collection Services. I further authorize Green Waste to reduce the
quarterly payment of Franchise Fees by $716 throughout the Term of the Agreement.
Agency Contract Manager:

Name, Title (Please Print)

Signature

Date

As a duly authorized representative of GreenWaste Recovery, I have r eviewed this letter and the
attached Exhibit G-3: Allowable Additional Charges and agree with the clarifications or application
of rates as described herein and agree that any additional charges and/or new rates identified
above will be incorporated into the Franchise Agreement with GreenWaste Recovery for Solid
Waste, Recycling and Organics Collection Services.
Collector:

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Signature

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Date

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