COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

October 8, 2009

BOARD MEETING DATE:

October 20, 2009

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Executive Summary: Franchise Agreement with Recology San Mateo County (formerly NorCal Waste)

RECOMMENDATION:

Adopt a resolution:

(1)

Approving the franchise agreement with Recology San Mateo County to provide services for the collection of recyclable materials, organic materials, and solid waste in County Service Area 8 (North Fair Oaks), and in the remainder of the unincorporated South Bayside Waste Management Authority Service Area (Burlingame to Menlo Park) from January 1, 2011 through December 31, 2020, and

(2)

Authorizing and directing the County Manager or the County Manager’s designee to execute the Agreement in substantially the form presented to this meeting with such non-substantive additions, clarifications and other changes as the County Manager or the Manager’s designee deems necessary or advisable after consultation with County Counsel.

BACKGROUND:

Local governmental agencies are authorized to regulate aspects of solid waste handling which are of local concern. To date, the County’s regulation and franchising of solid waste in the unincorporated area is limited to County Service Area 8 (CSA-8), in North Fair Oaks. However, the remainder of the unincorporated areas within the South Bayside Waste Management Authority (SBWMA) service area will benefit by inclusion in the franchise.

The SBWMA Joint Powers Authority (JPA) addresses regional issues related to solid waste and recycling. The SBWMA service area is served by a longstanding franchise agreement with Allied Waste Services, which will expire on December 31, 2010. The new ten-year franchise agreement is the culmination of the SBWMA selection process that began in 2005. On March 3, 2009, the Board endorsed SBWMA’s recommendation that the new franchise be awarded to Norcal Waste Systems, which is now known as Recology San Mateo County. The Board has also endorsed the expansion of the franchise area, and homeowners associations and advisory committees in the affected unincorporated areas have been notified of the anticipated changes in service.

DISCUSSION:

The majority of the new franchise agreement is a standardized agreement that has been negotiated and prepared by SBWMA for use by all twelve SBWMA member agencies. In general, the new franchise will result in improved customer service and will include significant measures to reduce the amount of landfilled material and increase recycling. The agreement features a simplified and transparent rate-setting process, which will save approximately $200,000 in consultant fees annually.

In addition, the agreement has been customized to address matters of concern to the County. Inclusion of more unincorporated territory in the franchise area means that more residents will be protected by a transparent and predictable rate setting process. The County will receive an increased franchise fee of 5% in the existing franchised area as well as a new franchise fee of 5% in the newly franchised area, and that fee will cover a larger area. The Board will be responsible for setting rates for collection services, and for determining the method of collecting those charges from rate payers. We expect that residents in CSA-8 will continue to be billed for collection services on their tax bills, and that residents of the other unincorporated franchised areas will be billed directly. Finally, Public Works has been considering West Bay Sanitary District’s request that the County manage WBSD’s collection services, and we will report back on this at a later date.

The final rates per jurisdiction will be determined approximately six months prior to commencement of the new collection service during the annual rate review by SBWMA in 2010. CSA-8 ratepayers may see a minimal rate increase once Recology’s rates are determined in 2010. Newly franchised areas are unlikely to see a rate increase. SBWMA is working diligently to manage and minimize the need for rate increases, and to minimize unnecessary costs.

FISCAL IMPACT:

It is anticipated that the recommended rates will be determined by July 2010 and that subsequent annual rates will be recommended in accordance with the Franchise Agreement as specified in Section 11.02 “Determination of Contractor’s Compensation”. The Franchise Agreement requires that the contractor pay a franchise fee of 5%, which will be used to offset staff time involved in administering the Franchise Agreement and providing customer support.