REPORT TO THE CITY COUNCIL
October 8, 2015
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
BY: JERRY L. SCHUBER SR., Assistant Director
Department of Public Utilities - Solid Waste Management Division
SUBJECT
Title
Actions pertaining to processing of green waste materials and co-mingled recyclable materials (Citywide)
1. Negotiate and execute a Ten-Year Agreement with Mid Valley Recycling, LLC (“MVR”) for co-mingled recyclable material processing as outlined in the Request for Proposal (RFP) issued by the City (Bid File 3405)
2. Negotiate and execute a Ten-Year Agreement with Kochergen Farms Composting, Inc. of Fresno for green waste material processing as outlined in the RFP issued by the City (Bid File 3405)
Body
RECOMMENDATION
Staff recommends that the Fresno City Council authorize the Director of the Department of Public Utilities or designee(s) to negotiate and execute a ten-year agreement with MVR for Co-Mingled Recyclable Material Processing, and a ten-year agreement with Kochergen Farms Composting Inc. for Green Waste Material Processing. Both agreements shall be developed with the assistance of and approval as to form by the City Attorney’s Office.
EXECUTIVE SUMMARY
In May 2015, the City distributed RFP Bid File 3405, seeking price proposals to process green waste materials and to process recyclable materials. The RFP was structured to provide the City with the flexibility to award separate contracts for Co-Mingled Recyclable Materials Processing and Green Waste Materials Processing to either a single vendor or multiple vendors, whichever was deemed to be most advantageous to the City. Eight (8) proposals were received in response to RFP Bid File 3405. The lowest proposed unit-rate charge for green waste processing was submitted by Kochergen Farms Composting Inc. at $16.50 per ton. The highest unit-rate payment for co-mingled recyclable material processing was submitted by MVR at $10 per ton.
The estimated annual increase in revenue for recyclable materials will be approximately $300,000 per year. The estimated annual decrease in costs for green waste material processing will be approximately $510,000 per year. Combined, the two agreements represent an annual net benefit to the Solid Waste Management Division of $810,000 per year. This net annual benefit will contribute to allowing the Solid Waste Management Division to maintain the current solid waste rates at their current levels through June 30, 2019.
Staff recommends that the Fresno City Council authorize the Director of the Department of Public Utilities or designee(s) to negotiate and execute a ten-year agreement with MVR for Co-Mingled Recyclable Material Processing, and a ten-year agreement with Kochergen Farms Composting Inc. for Green Waste Material Processing. Both agreements shall be developed with the assistance of and approval as to form by the City Attorney’s Office.
BACKGROUND
Recyclable Material Processing
On March 16, 2000, the Fresno City Council awarded an agreement to Sunset Waste Paper Inc. to receive and process recyclable materials. On April 3, 2002, the Fresno City Council approved the First Amendment to the 2000 Sunset Waste Paper Inc. Agreement. The First Amendment to the 2000 Sunset Waste Paper Inc. Agreement allowed for a recyclable material processing charge that consisted of a $15.00 per ton charge for recyclable material processing and $31.25 per ton for residual waste materials disposed of at the American Avenue Landfill. As of September 2014, the processing fee had increased to $18.33 per ton and the American Avenue Landfill disposal fee remained at $31.25. The agreement with Sunset Waste Paper Inc. was scheduled to expire on March 16, 2015.
On September 18, 2014, the City received a request from MVR to allow the agreement with Sunset Waste Paper Inc. to be assigned to MVR as part of a sale and purchase agreement between MVR and Sunset Waste Paper Inc. To secure the assignment, MVR agreed to reduce the processing fee for recyclable materials from $18.33 per ton to $0 per ton for the remaining term of the agreement (March 16, 2015). The City agreed to allow the Sunset Waste Paper Inc. agreement to be assigned to MVR in exchange for MVR eliminating the processing fee for recyclable materials. On September 30, 2014, the processing facility owned by Sunset Waste Paper Inc. was sold to MVR, and MVR became the City’s contractor for recyclable material processing for the remaining term of the Sunset Waste Paper Inc. agreement.
The immediate costs savings to the City for assigning the contract from Sunset Waste Paper Inc. to MVR was approximately $470,000.
Green Waste Material Processing
On April 30, 2005, the Fresno City Council approved two interim agreements for green waste material processing with Kochergen Farms Composting Inc. and West Coast Waste Inc. The term date for both agreements was established as June 30, 2005. On June 28, 2005, the Fresno City Council approved an extension of the agreements with Kochergen Farms Composting Inc. and West Coast Waste Inc. to November 30, 2005 to allow the City conduct an RFP process for green waste material processing.
On November 29, 2005, the Fresno City Council approved two agreements for green waste processing with Synagro West, LLC and West Coast Waste, Inc. The agreements with Synagro West, LLC and West Coast Waste, Inc. had initial termination dates of December 31, 2010. However, both agreements allowed for one 5-year extension and two one-year extensions at the discretion of the City. The first five-year extension was awarded on January 1, 2011, and is scheduled for expiration on December 31, 2015.
The current unit-rate charges being assessed by Synagro West, LLC and West Coast Waste, Inc. for green waste processing are $23.97 per ton and $24.51 per ton, respectively.
REQUEST FOR PROPOSAL PROCESS
In May 2015, the City distributed RFP Bid File 3405, seeking proposals to process green waste materials and co-mingled recyclable materials. The RFP was structured to provide the City with the flexibility to award separate contracts for Co-Mingled Recyclable Materials Processing and Green Waste Materials Process to either a single vendor or multiple vendors, whichever was deemed to be most advantageous to the City. The proposal due date was established as June 23, 2015, and the City received eight (8) proposals on that date in response to RFP Bid File 3405. One proposal was eliminated from consideration immediately as a result of being deemed non-responsive to the requirements of the RFP.
Committee Members
Solid Waste Management Division Staff, with the assistance of a committee established by the Purchasing Division, reviewed the submissions to RFP Bid File 3405.
• Gary Watahira, Purchasing Manager/Facilitator, City of Fresno, Finance Department- Purchasing
• Thomas Esqueda, Director, City of Fresno, Department of Public Utilities
• Jerry Schuber, Assistant Director, City of Fresno, Department of Public Utilities
• Anita Villarreal, Management Analyst II, City of Fresno, Finance Department
• Joe Sallee, Former Solid Waste Manager
Committee Findings
The goal of this Request for Proposal (RFP) was to solicit proposals to receive, process, and reuse co-mingled recyclable materials and green waste materials.
Evaluation committee unanimously agreed that each of the seven (7) remaining proposers were qualified to meet the City’s requirements for receiving and processing co-mingled recyclable materials and green waste materials. Accordingly, the selection was based on the best value offered to the City as described in each vendor’s written proposal. For recyclable materials, best value was defined to mean the highest revenue potential for the City. For green waste materials, best value was defined to mean the least cost to the City.
The Committee was in unanimous agreement that based on the unit-rate payment offered by MVR for recyclable materials, that MVR offered the best value to the City of Fresno. The Committee was also unanimous that based on the unit-rate charge offered by Kochergen Farms Composting Inc., that Kochergen Farms Composting Inc. offered the best value to the City of Fresno. A summary of the proposals is presented in Exhibit 1.
COMMITTEE RECOMMENDATION
MVR and Kochergen Farms Composting, Inc. were two of eight firms that submitted proposals in response to an RFP (RFP Bid File 3405) issued by the City for co-mingled recyclable material processing and green waste material processing.
The Committee recommends that the Fresno City Council authorize the Director of the Department of Public Utilities or designee(s) to negotiate and execute a ten-year agreement with MVR for Co-Mingled Recyclable Material Processing, and a ten-year agreement with Kochergen Farms Composting Inc. for Green Waste Material Processing. Both agreements shall be developed with the assistance of and approval as to form by the City Attorney’s Office.
ENVIRONMENTAL FINDINGS
This is not a “project” for the purposes of CEQA pursuant to CEQA Guidelines § 15378(b)(4), as it is a fiscal governmental action that will not result in direct or indirect physical changes to the environment.
LOCAL PREFERENCE
Local preference was not considered because FMC 4-109 does not require local preference for non-consulting, non-professional services contracts.
FISCAL IMPACT
The City currently collects approximately 30,000 tons of co-mingled recyclable material each year from the City’s residential accounts. By assigning the original Sunset Waste Paper Inc. contract to MVR in September 2014, the City realized an annual savings of approximately $470,000 per year. The proposed new agreement with MVR will represent additional benefits for the Solid Waste Management Division of approximately $300,000 per year. Accordingly, the total net benefit to the Solid Waste Management Division and the City’s ratepayers for recyclable material processing services will be approximately $770,000 per year.
The City currently collects approximately 77,000 tons of co-mingled recyclable material each year from the City’s residential accounts. Last year the Solid Waste Management Division paid over $1,800,000 to process green waste material. The new agreement with Kochergen Farms Composting Inc. will be reduce per ton costs from $23.97 per ton and $24.51 per ton, to $16.50 per ton, which will result in a net savings to the Solid Waste Management Division and the rate payers of approximately $510,000 annually.
The Solid Waste Management Division currently provides service to approximately 108,000 single-family residential accounts, and the $1.28 million annual net benefit associated with these proposed agreements will be used by the Solid Waste Management Division to hold the monthly charge for solid waste services at its current rate of $25.37 per month through June 30, 2019.
Attachments:
Exhibit 1 - Summary of Proposals Submitted by Seven Vendors
Contract Form - MVR for Recyclable Materials Processing
Contractor Form - Kochergen Farms Composting, Inc.