HomeMy WebLinkAboutC27810 Assist in Review of Burrtec Franchise AgreementREQUEST:
SUBMITTED BY:
DATE:
CONTENT:
RECOMMENDATION:
Contract No. C27810
CITY OF PALM DESERT
SPECIAL PROGRAMS DEPARTMENT
STAFF REPORT
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AUTHORIZE STAFF TO ENTER INTO AN AGREEMENT WITH HF&H
CONSULTANTS, LLC TO ASSIST WITH REVIEW OF BURRTEC WASTE
& RECYCLING SERVICES SOLID WASTE FRANCHISE AGREEMENT
Frankie Riddle, Director of Special Programs
June 26, 2008
HF&H Consultants, LLC Proposal
By Minute Motion:
1) Authorize staff to enter into an agreement with HF&H Consultants, LLC to assist with the
City's review of Burrtec Waste & Recycling Services Solid Waste Franchise Agreement.
2) Approve appropriation of funds in the amount of $30,000 from Account No. 110-4132-411-
3090 for said services.
DISCUSSION:
As the City's Franchise Agreement with Burrtec Waste and Recycling Services expires on February
28, 2009, at its meeting on March 13, 2008, City Council authorized staff negotiate a new franchise
agreement with Burrtec.
Due to changes in the law pertaining to solid waste and recycling, programs, services, and a
relatively new hauler, staff requested that HF&H Consultants provide a proposal for services to
assist in the pre and post review of the agreement, rate structure, and other information pertaining to
solid waste and recycling programs. As stipulated within the existing Agreement, Burrtec could be
required to pay for the cost of this service; however, staff is recommending that the City and Burrtec
split the cost 50/50. Staff has discussed the proposal and cost with Frank Orlett, District Manager of
Burrtec Waste and Recycling Services, and he has agreed to pay 50 percent of the coat :«ssociak d.
with the services provided by HF&H Consultants.
Staff recommends that City Council authorize staff to enter into an agreement with F F&H
Consultants, LLC in the amount of $30,000 to assist with the City's review of Burr ec. V.Was,te &
Recycling Services Solid Waste Franchise Agreement.
Submitted By:
Frankie Riddle
Director of Special Pograms
heila R. Gilligan
ACM of Community ServicE
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Approval:
Carlos L. Orte
City Manager
Paul S. Gibson
Director of Finance
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Contract No, C27810
HFdtH CONSULTAM5,LLC Northern California
Advisory Services to Southern California
--
Municipal Management
3990 Westerly Place,Suite 195 Robert D.Hilton,CMC
Newport Beach,Califomia 92b60 John W.Farnkopf,PE
Telephone:949/251-8628 Laith B.Ezzet,CMC
Fax:949/251-9741
wurw.hf li-consu I tan ts.com
May 2, 20Q8
Ms. Frankie Riddle
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert,California 92260
Subject: Solid Waste Contracting Assistance
Dear Frankie:
It was a pleasure speaking you yesterday. Thank you for shazing the background on
your solid waste contracting process. I am certain HF&H Consultants ("HF&H")can be
of significant value to you as you move forward in your contract negotiations with
Buntec Waste Industries. As you may know,we recendy assisted the City of La Quinta
to renegotiate their solid waste agreement with Burrtec.
I have summarized below contracting assistance options that HF&H can provide to the
City of Palm Desert.
BACKGROUND
The City of Palm Desert("City") contracts with Burrtec Waste Industries (Burrtec) for
exclusive residential,commercial and industrial solid waste collection services. The
City originally executed an agreement with Waste Management of the Desert(WMOD)
for collection services through February 28,2008. HF&H assisted the City with the
competitive procurement of that agreement. WMOC assigned the agreement to Burrtec
in 2006. The City exercised its option to extend the agreement for one year,resulting in
a new termination date of February 28,2009. The City intends to negotiate a new
agreement with Burrtec,with updated contract provisions. In order to support the
City's renegotiation efforts,the City has requested HF&H Consultants,LLC ("HF&H")
to evaluate the existing and/or new contract terms to identify provisions that could be
updated or modified.
-� HILTOIV FARI�IICOPF&HOBSON,LLC
Ms.Frankie Riddle
May 2,2008
Page 2 of 3
OPTION 1: Review of Solid Waste Agreement(s)
Option 1A: Review of Existing Agreement Terms and Services-$10,000
HF&H will review the current collection agreement, comparing it to industry standards
and terms found in modern agreements, and provide a written comparison.
OpHon 1B: Review of Proposed New Agreement Terms and Services-$15,000
After the City has negotiated an agreement with Burrtec,HF&H will review the new
agreement,comparing it to industry standards and terms found in modern agreements,
and provide a written comparison.
Option 1C: Review of Current Agreement, and Review of Proposed New Agreement
Terms and Services-$20,000
HF&H will review the current agreement and provide a comparison of terms for use in
negotiations. After the City has negotiated a revised agreement with Burrtec,HF&H
will review the changes proposed in the new agreement,comparing them to industry
.�
r• standards and terms found in modern agreements, and provide a written assessment.
���• ��OPTION 2: Solid Waste Agreement Negotiations -$50,000 to$65,000
� C�� HF&H will review the current agreement, confirming new, desired terms with the City.
HF&H will draft an updated agreement containing the desired revisions. Burrtec will
then propose rates based on the updated agreement. HF&H will evaluate the
reasonableness of rates,comparing proposed annual rate revenue to current rate
revenue and that of surrounding cities. HF&H wilI assist in finai negotiations,as to
reasonableness of changes to terms and conditions proposed by Burrtec. HF&H will
attend the City Council meeting at which the Council considers the agreement.
Detailed Scope of Work
We have attached detailed scopes of work for both Option 1 and Option 2 that may be
appended to a City purchase order or professional services agreement.
* * � * *
� HILTON FARNKOPF&HOBSON,LLC
Ms. Frankie Riddle
May 2,2008
Page 3 of 3
We look forward to assisting the City again with its solid waste contracting needs. If
you have any questions,please contact me at(949) 251-8902.
Very truly yours,
HF&H CONSULTANTS,LLC
a+.�i ��
Laith B. Ezzet
Senior Vice President
EXHIBIT A
SCOPE OF SERVICES FOR OPTION 1:
� REVIEW OF SOLID WASTE AGREEMENT(S)
The objective of the engagement is to review the key terms and conditions of the
current and/or new franchise agreement to determine whether they are
consistent with the terms and conditions that are expected in a modern franchise
agreement that protects the City's interests. This objective can be accomplished
under three options: review of the current agreement, review of the new
agreement,or review of both agreements,
As part of our review of the agreement(s),HF&H will:
• Review your City's current and/or new collection contract and other relevant
documents
• Profile current contract terms and services
• Profile industry standards and alternative contract terms, noting where
changes should be made and where new concepts should be added
• Include in the list contracting items which we have found to be of interest and
concern to cities due to industry changes and new and pending regulations
Our evaluation and resulting recommendations may be used in the development
of a new agreement that will provide the City with:
• Quality collection services with performance standards
• Diversion programs and contract provisions to assist the City with continued
AB 939 compliance
• Flexibility to accommodate future changes in collection needs
• Contract term and renewal provisions most beneficial to the City
Option 1 Approaches
Option lA: Review of E�cisting Contract Terms and Services
Under this option,we will review the current agreement prior to the City
drafting a new agreement with Burrtec. Our work product will be an exhibit that
identifies the major service and contract terms of the City's cunent collection
agreement and compares those terms to alternative provisions that may be
desired and could be used as a tool during negotiations.
May 14,2008 Page 1 City of Palm Desert
Option 1A Cost-We will perform this scope of work for Option 1A for a fixed
fee of$10,000. We will bill you the$10,000 fee upon submittal of our written
work product.
Option 1B: Review of Proposed New Agreement Terms and Services
Under this option, after the City negotiates a new contract with Burrtec,but prior
to its execution,we will review the new agreement to determine whether its
terms are consistent with the terms and eonditions that are expected in a modern
franchise agreement that protects the City's interests.
Our work product will be an exhibit that identifies the major service and contract
terms of the City's proposed agreement and compares those terms to the City's
desired terms and industry standards to determine the adequacy of the
agreement for the new term.
Option 1B Cost-We will perform the scope of work for Option 1B for a fixed fee
of$15,000. We will bill you the$15,000 fee upon submittal of our written work
product.
Option 1C: Review of Current Agreement,and Review of Proposed New
A�reement Terms and Services
Under this option,we will both review the current agreement prior to the City
drafting an agreement with Burrtec,and also review the new agreement after the
City has negotiated it with the hauler.
Our first work product will be an exhibit that identifies the major service and
contract terms of the City's current agreement and compares those terms to
alternative provisions that may be desired for the City's use in negotiating the
new agreement with Burrtec.
Our second work product will be an exhibit that compares major changes to the
terms and services in the newly negotiated agreement to state of the art terms
that may be desired by the City, to ensure that the City's next collection
agreement includes such terms.
Option 1C Cost-We will perform the scope of work for Option 1C for a fixed fee
of$20,000. We will bill you$10,000 upon submittal of our first written work
product, the review of the cunent agreement. We will bill you the remaining
$10,000 upon submittal of the second work product, our review of the new,
negotiated agreement.
May 14, 2008 Page 2 City of Palm Desert
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�,... --
- ption 1�Review of Current Agreement,Review of Proposed New
ee Terms and Services and Evaluation of Current and Pro osed Rate
evenues
This option includes the review of both the existing and the negotiated
agreement as described in Option 1C. In addition, this option includes an
evaluation of the current and proposed rates.
We will evaluate the proposed rates by calculating the annual rate revenues
generated by the existing and proposed customer rates based on the level of
service currently provided in the City of Palm Desert for residential,commercial
and roll-off customers. This will allow the City to compare the increase or
decrease in the overall level of compensation proposed by the contractor. In
order to perform this analysis, the City will need to provide us with the current
and proposed rates for all services, and Waste Management will need to
complete data collection forms reporting the current service levels by customer
category and container size. We will also compare the calculated annual rate
revenues to two other Coachella Valley cities served by Waste Management.
Op ' n 1D Cost-We will perform the scope of work for Option 1D for a fixed
fe of$30,000. W will bill the City for$10,000 upon submittal of our first
ritten work oduct,the review of the current agreement. We will bill the City
r the sec installment of$10,000 upon submittal of the second work product,
o iew of the new,negotiated agreement. We will bill the City for the third
and final installment of$10,000 upon submittal of the rate revenue comparison.
Schedule
We anticipate delivering our written work product for Options lA or 1B and our
first work product for Option 1C or 1D within 30 days of receipt of a purchase
order or other written authorization to proceed and receipt of background
documents (city franchise agreement and amendments and rate schedule).
May 14,2008 Page 3 City of Palm Desert
EXHIBIT B
SCOPE OF SERVICES FOR OPTION 2:
SOLID WASTE AGREEMENT NEGOTIATIONS
The objective of this engagement is to renegotiate the City's franchise agreement
in order to obtain a comprehensive, state-of-the-art agreement with services that
meet the needs of the city's residents and businesses, and position the city to be
in full compliance with AB 939 waste diversion requirements and other
legislation
Task 1: Review Current Contract and Profile Existing Services &Contract Terms
We will review the City's e�cisting franchise agreement, including amendments,
and profile it against the terms and conditions contained in a modern agreement
in order to identify potential service enhancements and improvements to
contract terms. We will subsequently confirm with City staff the desired service
and contract enhancements, and document the City's direction in writing. This
will provide the outline for an updated franchise agreement.
Task 2: Assist in Preparation of Draft Franchise Agreement
Based on the direction provided in Task 1, we will prepare a draft franchise
agreement for the desired services and contract terms. City staff, including the
City Attorney,will subsequently review the draft agreement, and the City will be
responsible for consolidating comments from the City's various reviewers into a
single "redline" of the agreement, which we will then use to prepare an updated
draft agreement.
Task 3: Ne otiate Rates Terms and Conditions of Desired Services with
Contractor
We recommend that the draft agreement be provided to Burrtec Waste Industries
("Contractor") documenting the City's desired services and contract terms. The
Contractor can then propose rates that are consistent with the City's desired
terms and conditions contained in the draft agreement. The result of the
Contactor's review of the agreement will likely be a series of points that it wishes
to address and proposed rates that may or may not be satisfactory. HF&H will
then assist in negotiating reasonable rates. We will also work with City staff to
guide the City through its determination of which service provider concerns are
minar and which are valuable enough not to negotiate away without a
substantial offsetting gain for the City.
May 14,2008 Page 4 City of Palm Desert
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Task 4: Gather and Review Hauler Operating Data to be used to Evaluate the
Reasonableness of Proposed Rates
Service statistics, such as the number of customers, container size and frequency
of collection, can be used to determine the overall value of the contract at
proposed rates. Typically, we determine and compare the overall compensation
to the service provider currently and using newly renegotiated rates in order to
demonstrate the true overall financial impact to the rate payer. For example, a
decrease in the rate for a common service level is more valuable than a decrease
in a rate for a service that is seldom used. With the proper data, we can compare
the overall proposed company compensation on a similar basis with other
jurisdictions.
Task 5: Gather Comparable Rate InformaHon from Surrounding Turisdictions
Service data collected under Task 4 above can also be used to determine how the
Contractor's rates compare to rates in surrounding cities.
Task 6: Attend Cit�Council Meeting for Award
Once the contractor has signed the final agreement, we will attend the City
Council meeting when the Council considers the new agreement.
Task 7: Manage Project
We will administer the project and prepare the project work papers at the
conclusion of the engagement.
SCHEDULE
We are prepared to initiate our services upon receipt of written authorization to
proceed. A typical negotiation can take three to six months, depending on the
cooperation from the waste hauler and the complexity of the issues to be
negotiated.
COSTS
We will assist the City based on time and materials. Because the complexity of
the negotiations and the number of issues to be negotiated cannot be known in
advance, the project costs cannot be precisely estimated. Based on our
experience in other cities, we estimate the cost to be $50,000 to $65,000, although
our actual costs could be higher or lower than this amount. The fee estimate
May 14, 2008 Page 5 City of Palm Desert
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� does not include preparing a competitive RFP should the negotiations be
unsuccessful. In most jurisdictions the City's contracting cost is usually required
to be reimbursed to the City by the Contractor upon approval of the new
franchise agreement.
We will bill you once per month based on the number of hours worked
multiplied by our hourly billi.ng rates, plus out-of-pocket expenses incurred.
Hourly rates for our consultants through December 31,2008 are as follows:
Senior Vice President $235
Director $195
Senior Associate $165-$190
Associate Analyst $135
Assistant Analyst $95
Administrative Staff $80
Clerical Assistant $45
Out-of-pocket expenses for mileage will be billed at the standard IRS allowance,
currently$0.505 per mile. Black and white document reproduction over 15 pages
per run will be billed at $0.15 per page, and color copies at $0.75 per page.
Postage, overnight mail, and other out-of-pocket expenses will be billed at actual
cost.
May 14,2008 Page 6 City of Palm Desert