COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

September 30, 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:

Operations Agreement with South Bay Recycling, LLC for Operation of the Shoreway Recycling and Disposal Center in San Carlos

RECOMMENDATION:

Adopt a Resolution Approving the Operations Agreement with South Bay Recycling, LLC for operation of the Shoreway Recycling and Disposal Center in San Carlos.

BACKGROUND:

Your Board directed the County representative to the South Bayside Waste Management Authority (SBWMA) Board to vote “No” at the SBWMA meeting on April 23, 2009 when the selection of South Bay Recycling, LLC (SBR) for the Shoreway Recycling and Disposal Center (Shoreway Center) Facility Operations Services was being considered. The selection of SBR; however, passed 10-2 with ten jurisdictions voting in favor of the selection.

DISCUSSION:

The operation of the Shoreway Center has never been competitively procured until initiation of the contractor selection process by the SBWMA in 2005. The SBWMA is comprised of twelve member agencies and the participation and support of the County of San Mateo staff in this Joint Powers Authority has been instrumental in the competitive procurement of a new Shoreway Center operator.

The process to select a new Shoreway Center operator commenced in 2005 at a series of SBWMA meetings. On September 11, 2007, your Board adopted Resolution No. 068987 approving release of the SBWMA’s Shoreway Center Facility Operations Services Request for Proposal (RFP) scope of services, proposals evaluation process and future contract terms.

On November 1, 2007 the SBWMA released the Shoreway Center Facility Operations Services RFP. Proposals for the new operations services were due on March 4, 2008 and the SBWMA received seven responsive proposals from companies capable and qualified to provide the facility operations services described in the RFP.

The RFP prescribed a thorough process to evaluate the proposals using an Evaluation Team consisting of: SBWMA staff and Sloan Vazquez consulting firm; and a Selection Committee comprised of: Member Agency Board Members including Larry Patterson (City of San Mateo), Mark Weiss (City of San Carlos), Jim Porter (County of San Mateo), and SBWMA staff Kevin McCarthy and Hilary Gans.

On July 24, 2008 the SBWMA Board voted 10-0 to short list two of the seven companies, Hudson Baylor Corp. and SBR, for final negotiations to select the final Shoreway Center facility operator.

A lengthy short-list evaluation period ensued from August 2008 through March 2009 in which the Evaluation and Selection Committees issued two reports, one dated January 15, 2009 and the other March 16, 2009, culminating in a recommendation to select SBR.

On April 23, 2009, the SBWMA Board voted 10-2 to approve the selection of SBR and directed staff to negotiate the final Operations Agreement and bring back the Agreement for SBWMA Board approval with such SBWMA Board approval then subject to approval by at least two-thirds of the Member Agencies (8 out of 12 member agencies). The SBWMA Board approved the motion and stated that if staff could not successfully negotiate a contract with SBR then staff would begin negotiations with Hudson Baylor Corporation. Exhibit A indicates the status of the Member Agencies’ approval of the Operations Agreement.

Also, on April 23, 2009 SBWMA staff was given direction to discuss with SBR during contract negotiations the potential use of the County of San Mateo Vocational Rehabilitation Services (VRS) workers as material recovery sorters. The VRS workers were used previously utilized by Browning Ferris Industries, the existing contractor, as sorters but such an arrangement was discontinued in 2007 due to Allied Waste Service (formerly BFI) companywide legal concerns regarding the classification of these workers as temporary workers and the need to offer benefits.

The VRS programs help local residents with employment barriers and disabilities attain their maximum vocational potential through vocational training. Additional information about VRS can be found at:

http://www.co.sanmateo.ca.us/smc/department/home/0,,15587225_18152561_20763708,00.html.

On July 23, 2009 the SBWMA Board approved the Operations Agreement with a vote of 11-0 (East Palo Alto was absent). The SBWMA Board also directed the Executive Director to distribute full and complete copies of the Operations Agreement executed on behalf of the SBWMA and SBR to each Member Agency upon receipt of the Guaranty executed by the two corporate members of SBR. The Agreement does not become effective unless at least eight (8) of the twelve (12) Member Agencies approve the Agreement (per Section 7.1.1 of the SBWMA First Amended and Restated Joint Exercise of Powers Agreement) on or before November 30, 2009.

Operations Agreement

The Operations Agreement remains substantially unchanged from the Operations Agreement adopted by your Board on September 11, 2007 by Resolution No. 068987 for its inclusion in the Facility Operations RFP process. However, the Operations Agreement and associated referenced sections of the Operations Agreement were amended to address the following key items:

•

Commitments from SBR that were in the March 4, 2008 proposal and follow-up correspondence have been included in the Agreement. For example, SBR offered to purchase and operate a sort line in the Shoreway Center at a cost not to exceed what is currently paid for offsite transportation and processing of Construction and Demolition materials.

•

SBWMA has endorsed the use of VRS workers.

•

Key items discussed during the selection including a price assurance mechanism, liquidated damages and charges that can be imposed, self haul diversion guarantees, and critical implementation milestones have been addressed.

•

Compensation for interim operations (as opposed to full operation), expected to result from delays in the completion date of the Shoreway Center facility improvements, has been addressed.

SBR also is no longer responsible for installation of the single stream processing equipment. The SBWMA is separately negotiating the purchase and installation of the equipment with an equipment vendor.

California Environmental Quality Act (CEQA)

The Operations Agreement will provide for an increased level of service at the Shoreway Center Facility and in the unincorporated County areas being considered for franchising. The Shoreway Center Facility will be modified and improved to handle the increase in service and a Use Permit was obtained from the City of San Carlos in July 2008 for the improvements to be made to the Shoreway Center. As part of the Use Permit process, a Mitigated Negative Declaration (MND) was prepared and approved by the City of San Carlos Planning Commission. A legal opinion has been obtained from legal counsel to the SBWMA indicating that CEQA can be complied with as to action on the Operations Agreement for both the SBWMA Board, and by the Member Agencies by referring to the MND as an adequate environmental document pursuant to CEQA and CEQA Guidelines for the purposes of analysis and consideration of the Operations Agreement. A copy of the MND has been on file with the Clerk of the Board and is available for review. CEQA language has been included in the Resolution approving the Operations Agreement.

County Counsel has reviewed and approved the Resolution and Agreement as to form.

Approval of the Operations Agreement will contribute to the Shared Vision 2025 outcome of an Environmentally Conscious Community by complying with the California Integrated Waste Management Act of 1989, creating new diversion opportunities for residents and businesses, and encouraging source reduction, recycling, or reuse of solid waste generated in the unincorporated areas of the County. It is anticipated that 63% of the waste generated in the unincorporated areas of the County will be diverted from the landfill partially through the efforts supported by the operations of the Shoreway Center. This performance target remains unchanged for the estimate for the current fiscal year and continues to surpass the AB939 targets of 50% diversion imposed by the California Integrated Waste Management Act of 1989; however, with the future implementation of single stream recycling and the Shoreway Center improvements the diversion percentages are anticipated to increase in the future.

Performance Measure(s):

Measure

FY 2009-10
Estimated

FY 2010-11
Target

AB 939 solid waste diversion rate for Unincorporated San Mateo County

63%

63%

FISCAL IMPACT:

The cost to provide the services covered in the Operations Agreement are included in the garbage collection rates approved by your Board for residential and commercial accounts for County Service Area 8 (North Fair Oaks) and future rates to be considered. SBR’s actual projected 2011 costs are expected to be below Allied Waste’s projected future costs and should therefore, not adversely impact collection rates.

The total cost for SBR to operate the Shoreway Center will be $14.32 million per year. For comparison purposes only, Allied Waste Service’s projected compensation to operate the Shoreway Center for 2009 is $17.1 million. Both the SBR and Allied Waste Service figures are exclusive of disposal costs.

There is no direct impact to the General Fund.

Exhibit A -

SBWMA Member Agency Status of Shoreway Center Facility Operations Approval