HomeMy WebLinkAbout08 - Assign Rainbow Disposal's AgreementCITY OF
F NEWPORT REACH
" City Council Staff Report
October 14, 2014
Agenda Item No. 8
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Mike Pisani, Acting Municipal Operations Department Director— (949) 644 -3055,
mpisani @newportbeachca.gov
PREPARED BY: Mike Pisani, Acting Municipal Operations Department Director
PHONE: (949) 644 -3055
TITLE: Consent to Assign Rainbow Disposal's Commercial Solid Waste Nonexclusive
Franchise Agreement
ABSTRACT:
The City has 31 solid waste haulers operating under Nonexclusive Franchise Agreements, which allow
these firms to conduct solid waste services in the City. The Franchise Agreement requires that the City
Council approve any hauler's change of ownership or control of the Franchisee's interest. Rainbow
Environmental Service is in the process of selling its stock to Republic Services, Inc., and is seeking the
Council's approval of this transaction.
RECOMMENDATION:
Approve the Consent to Assign Rainbow Disposal's Commercial Solid Waste Nonexclusive Franchise
Agreement.
FUNDING REQUIREMENTS:
No fiscal impact.
DISCUSSION:
The City currently has 31 solid waste haulers operating under Nonexclusive Franchise Agreements, which
allow these firms to conduct solid waste services in the City. The City Council awarded a Nonexclusive
Franchise Agreement to Rainbow Disposal Co., Inc., on March 28, 2007.
Section 19 of the Franchise Agreement reads:
Franchisee shall not assign, sell, subcontract, transfer or otherwise delegate its authority to perform
any portion of the solid waste handling services or obligations under the Franchise without prior
express consent of the City Council. This prohibition includes any transfer of ownership or control of
Franchisee, or the conveyance of a majority of Franchisee's stock to a new controlling interest.
City's consent shall not be unreasonably withheld. 8.1
Rainbow has informed City staff that, pursuant to a Stock Purchase Agreement between themselves and
Republic Services, Inc., there will be a change in control of their company. As required by the Franchise
Agreement, they are seeking City Council approval of the change.
It should be noted that Rainbow Environmental Services (as the company is now known) will be an
independent division of Republic, and there will be no difference in the services provided in the city. Staff
recommends approval of the assignment of the Franchise.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality
Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as
defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at
which the City Council considers the item).
ATTACHMENTS:
Description
Attachment A - Consent Agreement
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ATTACHMENT A
CITY OF NEWPORT BEACH'S
CONSENT TO ASSIGN RAINBOW DISPOSAL'S
COMMERCIAL SOLID WASTE NONEXCLUSIVE FRANCHISE AGREEMENT
THIS CONSENT TO ASSIGN A COMMERCIAL SOLID WASTE
NONEXCLUSIVE FRANCHISE AGREEMENT ( "Consent ") is made and entered into as
of October 15, 2014, by the City of Newport Beach, a California municipal corporation
and Charter City ( "City ") at the request of Rainbow Disposal Co., Inc., a Califomia
corporation ( "Rainbow").
Recitals
A. The City and Rainbow entered into a Commercial Solid Waste Collection
Nonexclusive Franchise Agreement for commercial solid waste handling services dated
March 1, 2007 ( "Franchise Agreement ").
B. Rainbow desires to sell the entirety of its stock to Republic Services, Inc.,
a Delaware corporation ( "Republic "), pursuant to that certain Stock Purchase
Agreement, dated August 26, 2014, by and among Rainbow, Republic, and certain other
parties contemplated thereby ( "Purchase Agreement "). As a result of the transaction
contemplated by the Purchase Agreement ( "Transaction "), there will be a change in
control of Rainbow.
C. The conveyance of a majority of Rainbow's stock to a new controlling
interest requires the consent of the City Council pursuant to Section 19 of the Franchise
Agreement.
D. The City Council considered Rainbow's request for consent to the change
of control for Rainbow at a regularly scheduled City Council meeting held on October
14, 2014.
NOW, THEREFORE, the City agrees and certifies to Rainbow and Republic as
follows:
1. Consent to Assignment. Pursuant to Section 19 of the Franchise
Agreement, the City Council hereby consents to the transaction and the change of
control of Rainbow.
2. Effective Date. This Consent shall not be effective unless and until the
closing of the Transaction contemplated by the Purchase Agreement. Notwithstanding
anything herein to the contrary, in the event that the Transaction fails to close, this
Consent shall be of no force and effect.
3. Authority. The undersigned are duly authorized to execute this Consent
on behalf of the City.
99
EXECUTED as of the date first written above.
CITY OF NEWPORT BEACH:
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: 10. }l�`I
By:
By: "Far
Aaron arp cAM olc�lly
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
Rush N. Hill, II
Mayor
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