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Home My WebLink About06 - Termination of Non-Exclusive Solid Waste Collection Franchise with Ocean Waste & Recycling, LLC4% TO: FROM: SUBJECT: City Council Agenda Item No. 6 October 8, 2002 Mayor and City Council General Services Director Involuntary Termination of Non - Exclusive Solid Waste Collection Franchise with Ocean Waste and Recycling, LLC. Recommendation Adopt the attached Resolution of Intention (Resolution No. 2002 -_j to Terminate the Non - Exclusive Solid Waste Franchise with Ocean Waste and Recycling, LLC, and setting a public hearing on the matter for October 22, 2002. Background Article XIII of the City Charter (Granting of Franchises) and Chapter 12.63 of the Municipal Code (Solid Waste Management) establish requirements and procedures to grant a franchise to provide solid waste handling services within the City. There are currently twenty solid waste franchisees operating under separate agreements to collect and transport solid waste generated within the City limits. There is no limit on the number of franchises that Council may approve. Such a policy permits competitive, service - oriented refuse operations. As part of the franchise system, Ocean Waste and Recycling, LLC (Ocean Waste) was awarded a franchise on June 12, 2001. Before staff could obtain the necessary documents, Ocean Waste began full -scale refuse collection operations. For the next eleven months, staff pursued Ocean Waste by phone, by US mail, and in person to obtain the insurance policies required by the franchise agreement. In May of 2002, staff was forced to notify Ocean Waste that their franchise agreement was temporarily suspended until the insurance documents were received by the City. Shortly after notification of the suspension, Ocean Waste produced the proper insurance documents required by the franchise agreement. The franchise agreement also requires the submission of quarterly recycling reports and franchise fees. Franchise fees are due and payable on the thirtieth (30`x) day of the month following the end of each calendar quarter. The franchise fees are billed and accounted for by the Revenue Division of the Administrative Services Department. The recycling reports state the total amount of solid waste that the franchisee collected in the City during the reporting quarter. The recycling reports are used by the City to track solid waste and recyclables transported out of the FAUSERSI0SWH..,.dl.SMffRepomU W8020ceanTennFiml.doc City and also in the preparation of the annual report submitted to the California Integrated Waste Management Board. Since the City awarded Ocean Waste a franchise on June 12, 2001, Ocean Waste has failed to submit quarterly franchise fees and recycling reports as required by the Municipal Code and its franchise agreement with the City. hi an attempt to remedy the situation, again staff has repeatedly contacted Ocean Waste by phone, US mail, and in person for compliance, but have been unable to collect the required reports and franchise fees. On September 19, 2002, the City Manager sent a letter to Ocean Waste notifying the Ocean Waste that a Notice of Intent to Terminate its Non - Exclusive Franchise Agreement for failure to comply with the terms and conditions of its franchise agreement had been placed on the City Council Agenda of October 8, 2002. Discussion Section 12.63.130 of the City of Newport Beach Municipal Code gives the City Council the right to terminate any non - exclusive franchise. The City Council may, after conducting a public hearing, terminate or suspend a franchise if it finds that the franchisee has violated any provisions of the ordinance granting the franchise or its franchise agreement, including failing to timely pay all franchise fees or failing to file required reports. hi the case of Ocean Waste, the franchisee has failed to pay any quarterly franchise fees since it was awarded its franchise in June 2001 and also has failed to file any required recycling reports during that period. During this period, Ocean Waste has operated refuse collection routes within the City. County landfills track all waste that enters the landfill system and allocates the waste to each jurisdiction that produced the waste. According to County landfill records through the first quarter of 2002, Ocean Waste hauled 2,030 tons of material from the City of Newport Beach to the landfill. Using this amount of waste transported by Ocean Waste, staff is able to estimate that approximately $16,240 in franchise fees are owed through the first quarter of 2002. Staff also estimates another $12,000 are owed for the second quarter of 2002, assuming that the tonnage between the first and second quarter remains consistent. Staff is also concerned that Ocean Waste is hauling debris directly to the landfill instead of taking it to a recycling facility. The Non Exclusive Franchise that is awarded by the City of Newport Beach requires that a minimum of 25% of all waste that is collected is recycled. Without the documentation that is provided in the required quarterly reports, staff has no way to prove that this waste is being recycled. Without proof that this large tonnage of waste is being recycled, the City runs the risk of loosing its good faith effort towards the annual recycling mandate of AB 939. As required by Section 12.63.130(E) of the City of Newport Beach Municipal Code, the decision to suspend or terminate a franchise shall contain findings of fact, a determination of the issues presented, and shall be final and conclusive. Any suspension of a nonexclusive franchise shall state specific conditions upon which the non - exclusive franchise may be reinstated or terminated. F:\USERS\GSV\J Ha.ond\SYaR' Reports \l 00802_0ceanTc=Fina1.doc The attached resolution will set an October 22, 2002 date for a public hearing to terminate the Non - Exclusive Solid Waste Franchise with Ocean Waste. At the conclusion of the public hearing, the City Council will be able to terminate the Non - Exclusive Solid Waste Franchise and set any specific conditions upon which the non - exclusive franchise may be reinstated. A copy of this report has been provided to Ocean Waste. Very respectfully, David E. Niederhaus Attachment: (1) Resolution No. 2002 - Resolution of Intent to Terminate the Non - Exclusive Solid Waste Franchise with Ocean Waste and Recycling, LLC and Setting a Public Hearing On The Matter for October 22, 2002. F: \USERS \GSV VHammond\Smff Reports \10080_OceanTennFinal.doc RESOLUTION NO. 2002- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DECLARING ITS INTENTION TO TERMINATE THE NON - EXCLUSIVE SOLID WASTE FRANCHISE FOR OCEAN WASTE AND RECYCLING, LLC AND SETTING A PUBLIC HEARING ON THE MATTER FOR OCTOBER 22, 2002. WHEREAS, the City Council finds and determines that the collection of solid waste generated within the City is a vital public service and that the storage, accumulation, collection, and disposal of solid waste and recyclables is a matter of great public concern because improper control of such matters would subject the City to potential liability, damages and penalties and may create a public nuisance, air pollution, fire hazard, infestation, and other problems affecting the public health, safety and welfare; and, WHEREAS, non - exclusive franchises for the use of public streets to provide commercial solid waste hauling services will promote the public health, safety, and welfare by promoting permanence and stability among those businesses wishing to provide such service and accountability to the City for compliance with current and future state mandates; and, WHEREAS, pursuant to Article XIII of the City Charter and pursuant to Sections 49500 through 49523 of the Public Resources Code, the City is authorized to enter into non - exclusive franchise agreements for commercial solid waste collection services with private solid waste haulers; and, WHEREAS, Ocean Waste and Recycling, LLC was awarded a Non - Exclusive Solid Waste Franchise on June 12, 2001 and entered into a Commercial Solid Waste Collection Franchise Agreement ( "Franchise Agreement') with the City on or about that date; and, WHEREAS, Section 4 of the Franchise Agreement requires Ocean Waste and Recycling LLC to pay quarterly franchise fees to the City for the privilege of providing commercial solid waste handling services in the City; and, WHEREAS, Section 6 of the Franchise Agreement requires Ocean Waste and Recycling LLC to submit quarterly reports to the General Services Director stating the total amount of solid waste that franchisee collected in the City during the quarter; the total weight (in tons) of 1 solid waste disposed of by franchisee at landfills and transfer stations; and the total weight and the weight by material category (in tons) of solid waste disposed of by franchisee at recycling and materials recovery facilities during the reportable quarter. Such quarterly reports are due on or before the 15i' day of the month following the end of the quarter; and, WHEREAS, Ocean Waste and Recycling, LLC has failed to submit the quarterly reports and franchise fees as required by the Non - Exclusive Franchise Agreement. that: NOW, THEREFORE, be it resolved by the City Council of the City of Newport Beach 1. A public hearing shall be conducted on October 22, 2002, at 7:00 p.m., or as soon thereafter as practical, in the City Council Chambers, located at 3300 Newport Boulevard, Newport Beach, California, to consider the termination of the franchise agreement with Ocean Waste and Recycling, LLC. as a result of: a. Failure to pay franchise fees as required by Section 4 of the Nonexclusive Franchise Agreement; and b. Failure to submit the quarterly reports as required by Section 6 of the Non- Exclusive Franchise Agreement. 2. This Resolution of Intention shall be published in the City's official newspaper within 15 days of its adoption and at least 10 days prior to October 22, 2002. ATTEST: CITY CLERK Adopted this 8th day October, 2002 4 MAYOR