HomeMy WebLinkAbout09 - Terminating Two Non-Exclusive Franchise Agreements for Commercial Solid WasteQ SEW Pp�T
CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
March 26, 2024
Agenda Item No. 9
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
PREPARED BY: Charles Springer, Senior Management Analyst - 949-718-3466,
cspringer@newportbeachca.gov
TITLE: Ordinance No. 2024-7: Terminating Two Non -Exclusive Franchise
Agreements for Commercial Solid Waste
ABSTRACT:
On March 8, 2024, the City of Newport Beach issued Haul -Away Rubbish Service Co.
and Key Disposal & Recycling, Inc. notices of intent to terminate their non-exclusive
franchises. Pursuant to Newport Beach Municipal Code (NBMC) Section 12.63.140., the
notice of intent informed both haulers of the City's intention to hold a hearing on
March 26, 2024, at 5:00 p.m., or soon thereafter as the matter shall be heard.
RECOMMENDATIONS:
a) Conduct a hearing to consider the termination of the Non -Exclusive Commercial Solid
Waste Franchise Agreement with Haul -Away Rubbish Service Co. and Key Disposal
& Recycling, Inc;
b) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
and
c) Waive full reading, direct the City Clerk to read by title only, introduce Ordinance
No. 2024-7, An Ordinance of the City Council of the City of Newport Beach, California,
Terminating Two Non -Exclusive Franchise Agreements for Commercial Solid Waste,
and pass to second reading on April 9, 2024.
DISCUSSION:
The City utilizes a non-exclusive commercial franchise waste hauling system for the
collection of municipal solid waste (MSW), recyclables, organic waste and construction
and demolition (C&D) debris. On October 22, 2019, the City Council approved a model
agreement amending the Non -Exclusive Commercial Solid Waste Franchise Agreement
(2020 Franchise Agreement) to include explicit State diversion compliance requirements
and revised insurance requirements for franchisees.
9-1
Ordinance No. 2024-7: Terminating Two Non -Exclusive
Franchise Agreements for Commercial Solid
March 26, 2024
Page 2
As of March 26, 2024, there are 22 commercial waste haulers authorized to operate within
Newport Beach under the 2020 Franchise Agreement. Prospective hauling firms undergo
a rigorous review and approval process to become franchise haulers. Once approved,
franchise haulers can provide fixed route and/or temporary waste collection and diversion
services to clients within the City. Franchise haulers are also subject to ongoing reviews
by City staff for 2020 Franchise Agreement compliance.
Moreover, CalRecycle, the State agency responsible for managing statewide recycling
and waste management programs, has placed Newport Beach under a Corrective Action
Plan (CAP) due to deficiencies in meeting waste diversion requirements established by
Assembly Bill (AB) 341, AB 1826 and Senate Bill (SB) 1383 — all legislative pieces
intended to establish and meet statewide waste diversion targets for organics, green
waste and food scraps, as well as recyclable waste. Under the CAP, the City is required
to demonstrate "significant progress" in meeting the waste diversion requirements
established by the legislation.
Justification for Termination of Haul -Away Rubbish Service Co.
Haul -Away Rubbish Service Co. failed to comply with 15 terms of the 2020 Franchise
Agreement and failed to rectify these deficiencies. Haul -Away Rubbish Service Co. also
failed to render City -requested deliverables during the period allotted by the Notice of
Default (Attachment B) issued on December 7, 2023. Haul -Away Rubbish Service Co.
then failed to appeal the Notice of Default within 10 days of issuance, which is allotted
per Section 23.0 of the 2020 Franchise Agreement. Furthermore, upon the City's
submission of the Notice of Default to Haul -Away Rubbish Service Co. on December 7,
2023, the firm informed staff on December 11, 2023, via email, that it was sub -contracting
two of its accounts to another waste hauler, Universal Waste Systems, which is a violation
of Section 26 of the 2020 Franchise Agreement.
On March 8, 2024, the City issued a Notice of Intent to Terminate to Haul -Away Rubbish
Service Co. (Attachment D). The notice informed the contractor of a hearing scheduled
for March 26, 2024, concerning the termination of its franchise agreement, pursuant to
NBMC Section 12.63.140.
Justification for Termination of Key Disposal & Recycling, Inc.
Key Disposal & Recycling, Inc. failed to comply with 10 terms of the 2020 Franchise
Agreement and render City -requested deliverables during the period allotted by the
Notice of Default (Attachment C) issued on February 26, 2024. Key Disposal & Recycling,
Inc. attempted to cure default, but either did not supply what was asked or did not supply
sufficient response to four of the seven items listed in the Notice of Default:
1. Provide:
a. A source separation implementation plan that includes a summary of outreach
efforts to the generator through February 13, 2024;
b. A list of efforts made in calendar year 2023 to divert collected material from
landfills; and
c. A documented approach to implementation from February 14, 2024 going forward.
9-2
Ordinance No. 2024-7: Terminating Two Non -Exclusive
Franchise Agreements for Commercial Solid
March 26, 2024
Page 3
2. Provide results of:
a. On -site load checks;
b. Route reviews; and
c. Waste characterizations for reported generator for calendar year 2023.
3. Provide City with completed Franchise Agreement Exhibit E document (Franchise
Agreement implementation tracking attachment) for serviced account.
4. Provide updated insurance information that meets requirements set forth in the
Franchise Agreement Exhibit D.
Three of the seven items were resolved:
1) Provide City with updated business license information.
2) Provide City with updated fleet list and collision avoidance information for vehicles
utilized in City, including organic material collection vehicle.
3) Provide route information and maps per waste stream.
Key Disposal & Recycling, Inc. failed to appeal the Notice of Default (Attachment C) within
10 days of issuance, which is allotted per Section 23.0 of the 2020 Franchise Agreement.
On March 8, 2024, the City issued a Notice of Intent to Terminate (Attachment E) to
Key Disposal & Recycling, Inc. The notice informed the contractor of a hearing scheduled
on March 26, 2024, concerning the termination of its franchise agreement, pursuant to
NBMC Section 12.63.140.
Request of City Council
Staff requests that the City Council open the hearing to consider the terminations of
Haul -Away Rubbish Service Co., and Key Disposal & Recycling, Inc. from the
2020 Franchise Agreement. At the conclusion of the hearing, City Council is asked to
approve the first reading of Ordinance No. 2024-7 (Attachment A) to consider terminating
two non-exclusive franchise agreements. The second reading is scheduled for April 9,
2024.
FISCAL IMPACT:
Both haulers each represent a single account and nominal revenue loss is anticipated.
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.
9-3
Ordinance No. 2024-7: Terminating Two Non -Exclusive
Franchise Agreements for Commercial Solid
March 26, 2024
Page 4
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:
Attachment A
— Ordinance No. 2024-7
Attachment B
— Notice of Default — Haul -Away Rubbish Service Co.
Attachment C
— Notice of Default — Key Disposal & Recycling, Inc.
Attachment D
— Notice of Intent to Terminate Haul -Away Rubbish Service Co.
Attachment E
— Notice of Intent to Terminate Key Disposal & Recycling, Inc.
Attachment F
— Franchise Agreement with Haul -Away Rubbish Service Co.
Attachment G
— Franchise Agreement with Key Disposal & Recycling, Inc.
ATTACHMENT A
ORDINANCE NO. 2024.7
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, TERMINATING
TWO NON-EXCLUSIVE FRANCHISE AGREEMENTS FOR
COMMERCIAL SOLID WASTE
WHEREAS, the City Council of the City of Newport Beach ("City") finds and
determines that the collection of municipal solid waste and divertible materials, including
recyclable materials, food scraps, green waste, wood waste, construction and
demolition debris, and all other materials that can be diverted from landfill disposal
(collectively, "Commercial Solid Waste") generated within the City is a vital public
service;
WHEREAS, the City Council further finds and determines that the collection,
transportation, storage and disposal of municipal solid waste and the collection,
transportation, processing and diversion of processable municipal solid waste and
divertible materials ("Commercial Franchise Services") is a matter of great public
concern because improper control of such matters subjects 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;
WHEREAS, the non-exclusive franchises for the use of public streets to provide
Commercial Franchise Services promotes the public health, safety and welfare by
providing permanence and stability among those businesses wishing to provide such
service and accountability to the City for compliance with current and future state
mandates;
WHEREAS, on October 22, 2019, the City Council approved a new model
franchise agreement in compliance with state law ("2020 Franchise Agreement"), that
expires in the year 2027;
WHEREAS, the City has identified violations of the 2020 Franchise Agreement
related to subcontracting, delayed diversion reporting, diversion deficiencies and/or
failing to retain required insurance from two franchisees, Haul -Away Rubbish Service
Co. and Key Disposal & Recycling, Inc.;
9-5
Ordinance No. 2024-
Page 2 of 4
WHEREAS, pursuant to Article XIII (Franchises) of the City Charter, Chapter
12.63 (Solid Waste Management) of the Newport Beach Municipal Code ("NBMC") and
California Public Resources Code Sections 40059, 49300 and 49500 through 49523, or
any successor statutes, the City is authorized to enter into and/or terminate non-
exclusive franchise agreements for Commercial Franchise Services with private solid
waste haulers;
WHEREAS, pursuant to Section 12.63.140 (Termination) of the NBMC, the City
transmitted a notice of intent to terminate the non-exclusive franchise to the franchisee
in question that stated the City Council's intent to hold a hearing, along with the time,
date and place of hearing to be held within fifteen (15) days and sixty (60) days of the
date of notice;
WHEREAS, the City Council held a hearing on March 26, 2024, in the City
Council Chambers located at 100 Civic Center Drive, Newport Beach, California. A
notice of time, place and purpose of the public hearing was given in accordance with
California Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Section
12.63.140 (Termination) of the NBMC. Evidence, both written and oral, was presented
to, and considered by, the City Council at this public hearing;
WHEREAS, pursuant to Section 12.63.140 (Termination) of the NBMC, the City
Council finds, on the basis of the hearing, information, materials and testimony
submitted that:
• Haul -Away Rubbish Service Co. has failed to comply with supplying records as
requested, including a source separation implementation plan and route
information per waste stream; implementing a three -container source separation
program per generator; providing City with compliance tracking documentation;
educating clients about state mandates and source separation; providing City
with education materials supplied to generators; maintaining updated insurance
information; submitting monthly reports by the due date; submitting accurate
monthly reporting; unauthorized subcontracting to another firm; and utilizing an
unpermitted disposal facility; and
• Key Disposal & Recycling, Inc. has failed to comply with supplying records as
requested, including vehicle information and collision avoidance; implementing a
three -container source separation program per generator; maintaining updated
insurance information; submitting monthly reports by the due date; and
submitting accurate monthly reporting; and
Ordinance No. 2024-
Page 3 of 4
WHEREAS, having considered all oral and documentary evidence presented at
the hearing, the City Council determines that the termination of the 2020 Franchise
Agreement with Haul -Away Rubbish Service Co. and Key Disposal & Recycling, Inc.,
respectively, is in the public interest.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows:
Section 1: The 2020 Franchise Agreements with Haul -Away Rubbish Service
Co. and Key Disposal & Recycling, Inc. are hereby terminated.
Section 2: The recitals provided in this ordinance are true and correct and are
incorporated into the substantive portion of this ordinance.
Section 3: If any section, subsection, sentence, clause or phrase of this
ordinance is for any reason held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this ordinance. The
City Council hereby declares that it would have passed this ordinance and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 4: The City Council finds the introduction and adoption of this
ordinance 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, Division 6, Chapter 3, because it has no potential for resulting in
physical change to the environment, directly or indirectly.
9-7
Ordinance No. 2024-
Page 4 of 4
Section 5: The Mayor shall sign and the City Clerk shall attest to the passage
of this ordinance. The City Clerk shall cause the ordinance, or a summary thereof, to be
published pursuant to City Charter Section 414. This ordinance shall be effective thirty
(30) calendar days after its adoption.
This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the 26th day of March, 2024, and adopted on the 9th day of
April, 2024, by the following vote, to -wit:
AYES:
NAYS:
ABSENT:
WILL O'NEILL, MAYOR
rA119* 5
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
—I X4 0�__ 42s��
AARON r
RP, CITY A RNEY
Attachment B
592 Superior Avenue
Newport Beach, California 92663
949 644-3055 1949 650- 0747 FAX
newportheachca.gov/refuse
Fo Rv�
December 07, 2023
Haul -Away Rubbish Service Co.
1205 Date St, Montebello, CA 90640
RE: Notice of Default for Failure to Comply with Terms of Franchise Agreement
Dear Haul -Away Rubbish Service Co.:
The City is on a Corrective Action Plan with CalRecycle and is required to demonstrate
significant progress in implementing AB 341, AB 1826, and SB 1383. Accordingly, the
City requires hauler compliance with State mandates and the City's non-exclusive
commercial franchise hauler agreement. The City has not seen appropriate progress
required from your company to comply with either State mandates or the City's franchise
agreement. The City has made multiple attempts via email to reach out to your company to
work toward compliance on amenable terms, mainly through invitations to quarterly one-
on-one meetings and follow-up emails, with very generous compliance deadlines.
The City invited Haul -Away Rubbish to three quarterly meetings in 2023; in February,
April, and October, to discuss:
1) compliance with the Corrective Action Plan and mandate implementation
2) deliverables requested by City to fulfill franchise agreement requirements
3) deliverables requested by City and State to ensure implementation progress
4) issues associated with implementation
5) Exhibit E Referral Protocol utilization
6) Implementation of dirty MRF phase -out.
The following ongoing deficiencies have been documented:
Issue
Franchise
City Requests
City Deadline
Status
Section
or Franchise
Requirement
1)
Provide Source
Sections
February 2,
June 30, 2023
Not provided to City
Separation
83 & D
2023
Implementation
Plan
2)
Implement
Sections
February 2023
October 31,
No progress
Three Container
6.A, 12.A
2023 (Exhibit
demonstrated. City
& C, 13.A
E progress)
brought to Haul-
System Per
& C, 14.A
November 6,
Away's attention in
Generator
& C
2023
February 2023 —
organics/green waste
present at Bank of
America and
Mac 's.
3)
Provide City
Section
February 2,
October 31,
City & State -
with Exhibit E
83 & D,
2023,
2023
requested quarterly
progress
12.A & C,
meeting deliverables
13.A & C
April 10, 2023,
not provided
October 2,
2023
4)
Educate clients
Section
February 2023
October 31,
Clients have not
about mandates
22.A, B,
to December 5,
2023
been educated of
and source
& C
2023
mandate and source
separation
separation by hauler.
December 5, 2023 -
City made contact
with Bank of
America, Rite Aid,
and Macy's.
Outreach and
education has not
been conducted.
5)
Provide
Sections
February 2023
October 31,
State -requested
education
8.13 & D,
to December 5,
2023
deliverables not
materials used
Section
2023
provided by October
22.A, B,
31, 2023
&C
6)
Provide updated
Exhibit D,
Incumbent
Policies
Last insurance
insurance
Section
upon hauler.
expired
information expired
information
5.A
Insurance
August 15,
in August 2023. "At
expired
2023 and
least fifteen (15)
October
October 1,
clays prior to the
2023.
expiration of any
such policy,
Deadline was
evidence of
July 31, 2023
insurance showing
and September
that such insurance
16, 2023.
coverage has been
renewed or extended
shall be filed with
the City."
7)
Provide route
Section
October 2,
October 31,
City & State -
information and
8.B & D
2023
2023
requested quarterly
maps per waste
meeting deliverables
stream
not provided
9-10
8)
Provide monthly
Section
Recurring
February 25,
Tl & T2 January
reporting in
16.0
requirement
2023
reporting submitted
timely fashion —
February 27, 2023.
T1 & T2
Januaiy
9)
Provide monthly
Section
Recurring
March 25,
T1 February
reporting in
16.0
requirement
2023
reporting submitted
timely fashion—
April 11, 2023.
T1 & T2
February
T2 February
reporting submitted
November 10, 2023.
10)
Provide monthly
Section
Recurring
May 25, 2023
Tl & T2 April
reporting in
16.0
requirement
reporting submitted
timely fashion —
June 3, 2023.
Tl & T2 April
11)
Provide monthly
Section
Recurring
June 25, 2023
Tl & T2 May
reporting in
16.0
requirement
reporting submitted
timely fashion —
July 6, 2023.
T1 & T2 May
12)
Provide monthly
Section
Recurring
August 25,
Tl & T2 July
reporting in
16.0
requirement
2023
reporting submitted
timely fashion —
August 29, 2023.
Tl & T2 July
13)
Provide monthly
Section
Recurring
November 25,
Tl & T2 October
reporting in
16.0
requirement
2023
reporting submitted
timely fashion —
November 30, 2023.
Tl & T2
October
14)
Utilize
Section
Franchise
Franchise
City reviewed
permitted
6.0
Requirement
Requirement
monthly reporting
disposal facility
on December 1,
2023 and identified
an unpermitted
recycling facility
utilized; West Coast
Recycling at Chapin
Rd Landfill.
15)
Submit accurate
Section
Recurring
Recurring
City reviewed
monthly reports
16.A
requirement
requirement
monthly reporting
on December 1,
2023.
City identified two
haulers reporting
service to Macy's.
After contact with
Macy's, general
manager indicated
no service rendered
9-11
by Haul -Away. City
last documented
Haul -Away presence
on February 2, 2023.
Franchise agreement sections referenced above:
Section 6.A (Diversion and Disposal of Municipal Solid Waste, Recyclable Materials,
Food Scrap and Green Waste) requires your company to abide new or additional diversion
requirements imposed by law. SB 1383 implementation is covered within this category and
the City provided notice in February of 2023. The City also invited your company to one-
on-one meetings in February, April, and October of 2023 to discuss.
Section 6.0 (Diversion and Disposal of Municipal Solid Waste, Recyclable Materials, Food
Scrap and Green Waste) requires your company to dispose of municipal solid waste,
recyclable materials, food scraps, or green waste at permitted facilities. The City has
confirmed with Los Angeles County that West Coast Recycling in Montebello, California,
is operating at the Chapin Rd Landfill, a closed facility with an expired permit. West Coast
Recycling does not have their own permit to operate at the site.
Section 8.13 (Records) & D (Inspection; Audit) requires your company to make available
records pertaining to mandate and franchise compliance.
- The City requested a source separation implementation plan (generator -oriented)
including a dirty MRF phase -out plan (processing facility and agreement -oriented).
This was due June 30, 2023.
Through our Corrective Action Plan meetings with CalRecycle, City has been
tasked with obtaining Exhibit E progress, hauler education outreach materials
provided to generators, and route information and maps per waste stream. The City
requested CalRecycle deliverables through quarterly meeting notification and
provided a submission deadline of October 31, 2023.
- The City requires monthly reports to be submitted by the 25`h day of the following
month. The City has reached out to your company to supply missing reports and
with submission, the City has documented six instances of late reporting in 2023.
The City will focus on deficiencies in 2023, but there were six instances of late
reporting in 2022; January, February, May, July, August, and November.
Section 12.A (Diversion Program) & C (Program Implementation) requires your company
to ensure compliance with AB 341 through Exhibit E reporting. City has not received
Exhibit E documentation to demonstrate full implementation. CalRecycle has determined
all generators are to have source separation represented on -site. Recycling will not be
exempted.
Section 13.A (Food Scrap Diversion Program) & C (Program Implementation) requires
your company to ensure compliance with AB 1826 through Exhibit E reporting. City has
not received Exhibit E documentation to demonstrate full implementation. City has
documented sufficient green waste in company bin to warrant source separation under SB
1383. CalRecycle has determined all generators are to have three -container source
9-12
separation represented on -site, unless 1383 waivers are completed to support not having
organics.
Section 14 A (Act Requirements) & C (Program Implementation) requires your company
to ensure compliance with AB 1826 through Exhibit E reporting. City has not received
Exhibit E documentation to demonstrate fall implementation. City has documented
sufficient green waste in company bin to warrant source separation under SB 1383.
CalRecycle has determined all generators are to have three -container source separation
represented on -site, unless 1383 waivers are completed to support not having organics.
Section 16 A (Monthly Reports) & C (Report Due Date) requires your company to submit
accurate and timely monthly reports. The City requires monthly reports to be submitted by
the 25th day of the following month. The City has reached out to your company to supply
missing reports and with submission, the City has documented six instances of late
reporting in 2023. The City will focus on deficiencies in 2023, but there were six instances
of late reporting in 2022; January, February, May, July, August, and November.
Additionally, the Exhibit E Tracking Document is to be submitted monthly.
Section 22.A (Informational Materials), B (Customer Compliance Notification) & C
(Submission to City of Informational Materials) requires your company to annually
transmit annually educational materials describing requirements under State law, annually
communicate compliance obligations to all generators, and provide City with any requested
educational materials necessary to comply with State reporting requirements. City has not
received any CalRecycle-driven deliverables that were requested. City conducted generator
outreach and generators either declined knowledge of business relationship or were
unfamiliar with State mandates and any communication with your company.
Exhibit D., Section 5.A (Evidence of Insurance) requires your company to supply updated
insurance information 15 days prior to expiration of policies.
As a result, the City has been left with no other alternative but to move forward with
enforcement action. The City has determined to pursue Section 23.13 (Notice of Default)
of the franchise agreement and issue a Notice of Default in lieu of Section 23.H
(Termination Without Right to Cure). Please note that aforementioned deficiencies
qualify for three of the six potential considerations for material breach of contract:
1) Section 23.H.3 - Insurance lapsed in August 2023 and though policy information
was submitted in October 2023, it did not meet the requirements set forth in
Exhibit D. Updated insurance information has not been provided. City recognizes
expired or deficient policy information on file.
2) Section 23.H.5 — Franchisee has failed to submit Records thirty (30) calendar days
or more following a written request by City, or its designated representative for
Records disclosure.
3) Section 23.H.6 — Franchisee fails to meet the Diversion requirements of this
Agreement or pursuant to applicable laws.
9-13
In order to cure the default, the following City -requested and State -requested items, in
addition to clarified objectives from CalRecycle, will need to be met.
1) Provide Source Separation Implementation Plan that includes summary of outreach
efforts to generators through December 5, 2023, approach to implementation from
December 5-forward, any backhaul agreements for generators, and 2023 results of on -site
load checks, route reviews and waste characterizations for reported generators.
2) Provide City with Exhibit E progress per account — CalRecycle requirement.
3) Provide education materials supplied to generators in calendar year 2023 — CalRecycle
requirement.
4) Provide updated insurance information that meets requirements set forth in Exhibit D.
5) Provide Dirty MRF phase -out plan that includes a timeline for sourcing proprietary
waste processors.
6) Provide route information and maps per waste stream — CalRecycle requirement.
7) Provide the November monthly report with an updated account list by December 25,
2023.
8) Cease utilizing West Coast Recycling in Montebello, California for recyclable
processing. Provide name of alternate and permitted facility to handle recyclables.
All deliverables must be supplied via email to wastereporting cr newportbeachca.gov by
5:00pm Friday, January 5, 2023.
If any deliverable is omitted from submission, City will exercise Section 23.H (Termination
Without Right to Cure). Any and all documents supplied, including this notice, may be
provided to CalRecycle.
If your company is receiving this letter and would like to contest, per Section 23.C.
(Suspension; Termination; Appeal — Public Works Director Review) of the Agreement,
Franchisee must make a request to meet with the Public Works Director within ten (10)
business days of the issuance of the Default Notice.
If you have any questions concerning the contents of this letter, please contact me at 949-
718-3466, or cspringer@newportbeachca.gov.
Sincerely,
Charles Springer
Refuse Manager
cc: Micah Martin, Deputy Public Works Director
9-14
Attachment C
CITY OF NEWPORT BEACH
592 Superior Avenue
Newport Beach, California 92663
949 644-3055 1 949 650- 0747 FAX
newportbeachca.gov/refuse
�IFORr'i
February 26, 2024
John Katangian, President
Key Disposal & Recycling, Inc.
5202 Industry Avenue
Pico Rivera, CA 90660
RE: Notice of Default for Failure to Comply with Terms of Non -Exclusive Franchise
Agreement For Commercial Solid Waste and Divertible Materials Handling
Services
Dear Mr. Katangian:
This letter serves as a Notice of Default of the Non -Exclusive Franchise Agreement
between the City of Newport Beach and Key Disposal and Recycling, Inc. for Commercial
Solid Waste and Divertible Materials Handling Services entered between the City of
Newport Beach and Key Disposal on November 9, 2022 (Franchise Agreement).
As you are aware, the State of California has adopted an ambitious plan for the diversion
of solid waste including the adoption of Assembly Bill 341 (AB 341), Assembly Bill 1826
(AB 1826) and Senate Bill 1383 (SB 1383). To that end, the City has taken a number of
measures including, but not limited to, updating its Franchise Agreement to ensure
diversion measures are in place. In spite of those efforts, the City is on a Corrective Action
Plan (CAP) with CalRecycle and is required to demonstrate significant progress in
implementing AB 341, AB 1826, and SB 1383. Accordingly, the City requires Key
Disposal and Recycling's compliance with State mandates and the Franchise Agreement.
The City has made multiple attempts to work toward compliance with your company on
amenable terms, mainly through email correspondence and one-on-one quarterly meetings.
Specifically, the City invited Key Disposal & Recycling, Inc. to quarterly meetings in
October 2023 and January 2024, to discuss:
1) Compliance with the CAP and mandate implementation,
2) Deliverables requested by City to fulfill franchise agreement requirements,
3) Deliverables requested by City and State to ensure implementation progress,
4) Issues associated with implementation,
5) Exhibit E Referral Protocol utilization,
6) City's franchise hauler expectations regarding reporting, and
7) City's stance on subcontracting.
However, violations of the Franchise Agreement persist. The following lays out the
violations of the Franchise Agreement by Key Disposal and strict timelines that Key
Disposal must comply with so that the City does not take further action as provided in the
Franchise Agreement.
Franchise Agreement Requirements
Section 6.A. (Diversion and Disposal of Municipal Solid Waste, Recyclable Materials,
Food Scrap and Green Waste) requires your company to abide by new or additional
diversion requirements imposed by law. SB 1383 implementation is covered within this
category and the City provided notice in February 2023. The City also invited your
company to one-on-one meetings in February, April, and October of 2023 to discuss.
Sections 8.B. (Records) & D. (Inspection; Audit) require your company to make available
records pertaining to mandate and franchise compliance. Through our CAP meetings with
CalRecycle, City has been tasked with obtaining Exhibit E progress, hauler education
outreach materials provided to generators, and route information and maps per waste
stream. The City requested submission of vehicle and collision avoidance information for
truck used to collect organic material. This was to be provided by January 31, 2024.
Sections 12.A (Diversion Program) & C. (Program Implementation) require your company
to ensure compliance with AB 341 through Exhibit E reporting. City has not received
Exhibit E documentation to demonstrate full implementation. CalRecycle has determined
all generators are to have source separation represented on -site. Recycling will not be
exempted.
Sections B.A. (Food Scrap Diversion Program) & C. (Program Implementation) requires
your company to ensure compliance with AB 1826 through Exhibit E reporting. City has
not received Exhibit E documentation to demonstrate full implementation. City has
identified an organic generator which warrants source separation under SB 1383.
CalRecycle has determined all generators are to have three -container source separation
represented on -site. A waiver will not be granted for this account as a restaurant is on -site.
Sections 16 A. (Monthly Reports) & C. (Report Due Date) require your company to submit
accurate and timely monthly reports. The City requires monthly reports to be submitted by
the 25th day of the following month. The City has reached out to your company to supply
missing reports. The City has documented five instances of late reporting in 2023. The City
will focus on deficiencies in 2023, but there was an instance of late reporting in November
2022 as well. Reports were submitted late for the reporting periods of January, March,
April, May, and October 2023.
Exhibit D., Section S.A. (Evidence of Insurance) requires your company to supply updated
insurance information 15 days prior to expiration of policies. The City worked with your
company to obtain insurance compliance from March 2022 through franchise approval.
Compliance was attained in July 2023 and maintained until January 2024. After review,
updated insurance policy information is either expired or incomplete and is considered non-
compliant.
Violations of Franchise Agreement
The following ongoing violations have been documented:
9-16
Franchise
City Requests
Issue
Section
or Franchise
City Deadline
Status
Requirement
1)
Implement
Sections
Franchise
October 31,
Sufficient progress
three -container
6.A, 12.A
requirement
2023 (Exhibit
not demonstrated.
system per
& C, 13.A
and City
E progress)
Hauler has had an
generator
& C,
requests made:
effective agreement
September
December 31,
since November 20,
2023
2023 (CAP
2022.
Deadline)
December 21,
City reminded
2023
hauler of
implementation
December 28,
requirements to Key
2023
Disposal's attention
in September of
January 8, 2024
2023.
(Quarterly
Mtg)
February 5,
2024
2)
Provide City
Section
January 10,
January 31,
City -requested
with requested
8.13 & D,
2024
2024
quarterly meeting
deliverables
12.A & C,
deliverables not
13.A & C,
provided;
18.C.4.
specifically truck
detail for organic
material collection.
3)
Provide monthly
Section
Recurring
January 25,
T1 & T2 January
reporting in
16.0
franchise
2023
reporting submitted
timely fashion
requirement
November 9, 2023.
T1 & T2
January 2023
Refuse staff
emailed
submission
reminder on
November 9,
2023.
4)
Provide monthly
Section
Recurring
April 25, 2023
TI & T2 March
reporting in
16.0
franchise
reporting submitted
timely fashion —
requirement
April 26, 2023.
T1 & T2 March
2023
5)
Provide monthly
Section
Recurring
May 25, 2023
T1 & T2 April
reporting in
16.0
franchise
reporting submitted
timely fashion —
requirement
May 26, 2023.
T 1 & T2 April
2023
9-17
6)
Provide monthly
Section
Recurring
June 25, 2023
Tl & T2 May
reporting in
16.0
franchise
reporting submitted
timely fashion —
requirement
June 26, 2023.
T1 & T2 May
2023
7)
Provide monthly
Section
Recurring
November 25,
T1 & T2 October
reporting in
16.0
franchise
2023
reporting submitted
timely fashion
requirement
November 30, 2023.
T1 & T2
October 2023
Refuse Manager
sent reminder about
monthly reporting
deadlines to Key
Disposal on
December 6, 2023.
8)
Submit accurate
Section
Recurring
Recurring
City reviewed
monthly reports
16.A
franchise
requirement
monthly reporting
requirement
submission for July
2023. City notified
Key Disposal on
September 22, 2023
of missing disposal
locations. Pending
submission of
revised monthly
report.
9)
Submit accurate
Section
Recurring
Recurring
City reviewed
monthly reports
16.A
franchise
requirement
monthly reporting
requirement
submission for
December 2023.
Hauler indicated in
January quarterly
meeting that two 65-
gallon organics
carts were
implemented;
however, account
list and service
volume were
incorrect and
disposal location
was omitted.
9-18
10)
Insurance
Exhibit D
Recurring
Recurring
City worked with
franchise
requirement
hauler to gain
requirement
compliance between
March 2022 and
July 2023.
Compliance was
maintained between
July 2023 and
January 2024.
Current policy
information is
incomplete and non-
compliant.
Required Action to Cure Default
As a result, the City has been left with no other alternative but to move forward
with enforcement action. Based on the violations noted above, the City may
terminate the Franchise Agreement as provided in Section 23.H (Termination
without Right to Cure) due to violation of Sections 23.H.3 and 23.H.6 of the
Franchise Agreement. However, the City is instead giving Key Disposal the
opportunity to cure the default pursuant to Section 23.B. (Notice of Default) of the
Franchise Agreement.
To cure the default, the following items are required:
1) Provide a source separation implementation plan that includes a summary of
outreach efforts to the generator through February 13, 2024, efforts made in
calendar year 2023 to divert collected material from landfills, and documented
approach to implementation from February 14 going forward.
2) Provide results of on -site load checks, route reviews and waste characterizations for
reported generator for calendar year 2023,
3) Provide City with completed Exhibit E document for serviced account.
4) Provide City with updated business license information.
5) Provide updated insurance information that meets requirements set forth in Exhibit
D.
6) Provide City with updated fleet list and collision avoidance information for vehicles
utilized in City, including organic material collection vehicle.
7) Provide route information and maps per waste stream.
All deliverables must be supplied via email to wastereporting, a,newportbeachca.gov no
later than 12:00pm Friday, March 8, 2024.
If any deliverable is omitted from submission, the City will exercise Section 23.H.
(Tennination Without Right to Cure). All documents supplied, including this notice, may
be provided to CalRecycle.
You may request a Public Works Director Review meeting as provided Section 23.C.
(Suspension; Termination; Appeal — Public Works Director Review) of the Franchise
9-19
Agreement, within ten (10) business days of the issuance of this Notice of Default. This
date is March 8, 2024.
If you have any questions concerning the contents of this letter, please contact me at 949-
718-3466, or cspringer@newportbeachca.gov.
Sincerely,
Refuse Manager
cc: John Salazar, Acting Deputy Public Works Director
City Attorney's Office
9-20
Attachment D
CITY Of NEWPORT BEACH
592 Superior Avenue
Newport Beach, California 92663
949 644-3055
newportheachca.gov/municipaloperations
March 8, 2024
Nick Korneff
Haul -Away Rubbish Service, Co.
1205 Date Street
Montebello, CA 90640
RE: Notice of Hearing to Terminate Non -Exclusive Franchise Agreement for
Commercial Solid Waste between the City of Newport Beach and Haul -Away
Rubbish Service, Co.
Dear Mr. Korneff:
You are hereby notified pursuant to Section 12.63.140.A (Termination) of the Newport
Beach Municipal Code (NBMC) and Section 23 (Termination) of the Non -Exclusive
Franchise Agreement between the City of Newport Beach and Haul -Away Rubbish Service
Co. for Commercial Solid Waste Handling Services (Agreement) — effective since
October 8, 2020 — that on March 26, 2024 at 5:00 p.m. in the Newport Beach City
Council Chambers located at 100 Civic Center Drive, Newport Beach, CA 92660, the
Newport Beach City Council will consider termination of the Agreement due to the 15
Agreement deficiencies outlined in the Notice of Default (Attachment A) rendered to Haul -
Away Rubbish Service, Co. on December 7, 2023, as well as the firm's failure to correct
and/or show progress on these deficiencies within the 30 calendar days from notice
issuance, per Section 23 (Termination) of the Non -Exclusive Franchise Agreement.
1. Pursuant to Sections 8.B&D, Haul -Away Rubbish Service Co. failed to furnish City
staff with its Source Separation Implementation Plan, initially requested on February
2, 2023, and given a corrective deadline of June 30, 2023.
2. Pursuant to Sections 6.A, 12.A&C, and 13.A, Haul -Away Rubbish Service Co. failed
to demonstrate significant progress on State -mandated waste diversion requirements
pertaining to organic and recyclable waste, brought to the firm's attention in February
2023 and given a corrective deadline of showing Exhibit E progress by October 31,
2023.
3. Pursuant to Sections 8.B&D, 12.A&C and 13.A&C, Haul -Away Rubbish Service Co.
failed to provide City staff with quarterly evidence of Exhibit E progress to aid with
the City's Corrective Action Plan with CalRecycle, which was requested on February
2, 2023; April 10, 2023; and October 2, 2023; and given a corrective deadline of
October 31, 2023.
4. Pursuant to Sections 22.A, B & C, per Haul -Away Rubbish Service Co. clients, the firm
has failed to educate clients about waste -related State mandates and source separation.
The City requested that the firm demonstrate progress on this since February 2023; and
gave a deadline of October 31, 2023.
5. Pursuant to Sections 8.B&D and 22.A, B &C, Haul -Away Rubbish Service Co. failed
to furnish waste -related education materials that were or would be distributed to clients.
These materials were first requested by the City in February 2023 and given a corrective
deadline of October 31, 2023.
6. Pursuant to Exhibit D and Section S.A, Haul -Away Rubbish Service Co. failed to
furnish proof of up-to-date insurance policies at least 15 days prior to the expiration of
any such policy. Per City records, hauler's insurance policies lapsed on August and
October 2023.
7. Pursuant to Section S.B&D, Haul -Away Rubbish Service Co. failed to provide route
information and maps per waste stream, requested on October 2, 2023, and given a
corrective deadline of October 31, 2023.
8. Pursuant to Section 16.C, Haul -Away Rubbish Service Co. failed to furnish required
monthly Tier 1 and Tier 2 reporting in a timely manner for the months of January,
February, April, May, July and October 2023.
9. Pursuant to Section b.C, Haul -Away Rubbish Service Co. failed to utilize a permitted
disposal facility for recyclable waste, which was identified by City staff on December
1, 2023, upon review of a submitted monthly report. The hauler was found to have used
an unpermitted recycling facility, West Coast Recycling at Chapin Road Landfill.
10. Pursuant to Section 16.A, Haul -Away Rubbish Co. failed to submit accurate monthly
reporting, as hauler claimed to be providing service to one account that was also
claimed by another hauler. Facility (Macy's at Fashion Island) indicated that Haul -
Away Rubbish Co. was not rendering service.
Moreover, upon receipt of the Notice of Default on December 7, 2023, Haul -Away Rubbish
Co. informed City staff via email on December 11, 2023, that it was sub -contracting two
of its accounts to another waste hauler, Universal Waste Systems — a violation of Section
26 of the Agreement. Haul -Away Rubbish Co. also failed to contest its Notice of Default
issued on December 7, 2023, within 10 days of issuance as per Section 23.0 of the
Agreement.
Section 23.13 of the Agreement authorizes termination by the City if the franchisee has
defaulted in the performance of any obligation of the agreement. Additionally, NBMC
Section 12.63.140.D authorizes the City Council to terminate the Agreement, after
providing notice and a hearing to the franchisee, if the City Council finds, in pertinent part
that, "[t]he franchisee has failed to comply with, or to do anything required of the
franchisee by this chapter, ... including, but without limitation, ... file required reports or
has violated any provision of the franchise agreement ... "
Thus, Haul -Away Rubbish Service Co. is hereby notified that the City Council will
consider termination of the Agreement at the time and location indicated above. You or a
representative may appear at the hearing and present any evidence as to why the Agreement
should not be terminated. Per NBMC Section 12.63.140, a decision will be rendered no
later than 60 days after the City Council hearing and you will receive written notice of the
decision.
Please be advised that if the Agreement is terminated, operating within the City without a
valid franchise is a violation of the NBMC.
Si ,
John Salazar
Acting Deputy Public Works Director
Municipal Operations Division
Attachment A: Notice of Default December 7, 2023
Attachment E
CITY OF NEWPORT BEACH
592 Superior Avenue
Newport Beach, California 92663
949 644-3055 1 949 650-0747 FAX
newportheachca.gov/municipaloperations
FOR,'%
March 8, 2024
John Katangian, President
Key Disposal & Recycling, Inc.
5202 Industry Avenue
Pico Rivera, CA 90660
RE: Notice of Intent to Terminate Non -Exclusive Franchise Agreement for
Commercial Solid Waste between the City of Newport Beach and Key Disposal &
Recycling, Inc.
Dear Mr. Katangian:
You are hereby notified pursuant to Section 12.63.140(A) (Termination) of the Newport
Beach Municipal Code (NBMC) and Section 23 (Termination) of the Non -Exclusive
Franchise Agreement between the City of Newport Beach and Key Disposal & Recycling,
Inc. for Commercial Solid Waste Handling Services (Agreement), effective since August
3, 2023, that on March 26, 2024 at 5:00 p.m. in the Newport Beach City Council
Chambers located at 100 Civic Center Drive, Newport Beach, CA 92660, the Newport
Beach City Council will consider termination of the Agreement for the 10 deficiencies
pursuant to the Agreement and outlined in the Notice of Default rendered to Key Disposal
& Recycling, Inc. on February 26, 2024, as well as the firm's failure to correct and/or show
progress on these deficiencies:
1. Pursuant to Sections 6.A, 12.A & C and 13.A & C, Key Disposal & Recycling, Inc.
failed to demonstrate significant progress on State -mandated waste diversion
requirements pertaining to organic and recyclable waste, which was brought to the
firm's attention in September 2023 and given a CalRecycle-issued deadline of
December 31, 2023 in accordance with our Corrective Action Plan (CAP). Moreover,
the City also issued a corrective deadline of showing Exhibit E progress by October 31,
2023.
2. Pursuant to Sections 8.B&D, 12.A&C, 13.A&C and 18.C.4, Key Disposal &
Recycling, Inc, failed to provide the City with requested quarterly dcliverables,
specifically details related to trucks that were to collect organic material. This
information was requested January 10, 2024, and given a corrective deadline of January
31, 2024.
3. Pursuant to Section 16.C, Key Disposal & Recycling, Inc. failed to furnish required
monthly Tier 1 and Tier 2 reporting in a timely manner for the months of January,
March, April, May and October 2023.
4. Pursuant to Section 16.A, Key Disposal & Recycling, Inc. failed to submit accurate
monthly reporting, as hauler did not log information for all of its disposal locations in
its July 2023 monthly report submission per verification of City records. The City
notified the hauler of this discrepancy on September 22, 2023, and requested a revised
report submission that has not been received.
5. Pursuant to Section 16.A, Key Disposal & Recycling, Inc. again failed to submit
accurate monthly reporting for December 2023, as hauler did not completely log
reportable information. During the January quarterly meeting, hauler indicated that two
65-gallon organics carts were implemented; however, the account list and service
volume were incorrect and disposal location was omitted from the December report.
6. Pursuant to Exhibit D, Key Disposal & Recycling, Inc. has failed to furnish the City
with complete and compliant insurance information following January 2024. Insurance
compliance was maintained between July 2023 and January 2024. The City had
previously worked with hauler to gain compliance between March 2022 and July 2023.
Moreover, upon receipt of the Notice of Termination
Section 23(B) of the Agreement authorizes termination by the City if the franchisee has
defaulted in the performance of any obligation of the agreement. Additionally, NBMC
Section 12.63.140(D) authorizes the City Council to terminate the Agreement, after
providing notice and a hearing to the franchisee, if the City Council finds, in pertinent part
that, " jt]he franchisee has failed to comply with, or to do anything required of the
franchisee by this chapter, ... including, but without limitation, ... file required reports or
has violated any provision of the franchise agreement ... "
Thus, Key Disposal & Recycling, Inc. is hereby notified that the City Council will consider
termination of the Agreement at the time and location indicated above. You or a
representative may appear at the hearing and present any evidence as to why the Agreement
should not be terminated. Per NBMC Section 12.63.140, a decision will be rendered no
later than 60 days after the City Council hearing and you will receive written notice of the
decision.
Please be advised that if the Agreement is terminated, operating within the City without a
valid franchise is a violation of the NBMC.
Sincerely,.>
/Jahn Salazar
Acting Deputy Public Works Director
Municipal Operations Division
Attachment A: Notice of Default - February 26, 2024
Attachment F
Franchise Agreement - Haul -Away Rubbish Service Co.
Available separately due to bulk at:
http://ecros.newportbeachca.gov/WEB/DocView.aspx?id=10611 &dbid=0&repo=CNB
9-26
Attachment G
Franchise Agreement - Key Disposal & Recycling, Inc.
Available separately due to bulk at:
https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=2900401 &dbid =0&repo=CNB
9-27