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Home My WebLink About03 - Terminating One Non-Exclusive Franchise Agreement for Commercial Solid WasteQ �EwPpRT CITY OF s NEWPORT BEACH `q44:09 City Council Staff Report April 9, 2024 Agenda Item No. 3 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 One Non -Exclusive Franchise Agreement for Commercial Solid Waste On March 26, 2024, the City Council held a hearing to consider terminating the Non -Exclusive Commercial Solid Waste Franchise Agreements with Haul -Away Rubbish Service Co. and Key Disposal & Recycling, Inc. Following the hearing, the City Council introduced Ordinance No. 2024-7. Council voted in favor of staff's recommendation to terminate the agreement with Haul -Away Rubbish Service Co. The Council provided Key Disposal an additional opportunity to remedy outstanding non-compliance elements. The second reading and adoption of this ordinance will be the final City Council action necessary for terminating the Non -Exclusive Commercial Solid Waste Franchise Agreement with Haul -Away Rubbish Service Co. RECOMMENDATIONS: a) 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 b) Conduct second reading and adopt Ordinance No. 2024-7, An Ordinance of the City Council of the City of Newport Beach, California, Terminating One Non -Exclusive Franchise Agreement for Commercial Solid Waste. DISCUSSION: The City of Newport Beach utilizes a non-exclusive commercial franchise waste hauling system for the collection of municipal solid waste, recyclables, organic waste and construction and demolition 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 of California diversion compliance requirements and revised insurance requirements for franchisees. 3-1 Ordinance No. 2024-7: Terminating One Non -Exclusive Franchise Agreement for Commercial Solid Waste April 9, 2024 Page 2 As of April 9, 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 AB 341, AB 1826 and 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 Haul -Away Rubbish Service Co. The City issued a Notice of Default to Haul -Away Rubbish Service Co. on December 7, 2023, informing the waste hauler it failed to comply with 15 terms of the 2020 Franchise Agreement. The waste hauler failed to rectify these deficiencies during the time allotted by the Notice of Default, as well as failed to appeal the Notice of Default within 10 days of its issuance, 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, 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., informing the firm of a hearing concerning its termination from the 2020 Franchise Agreement, pursuant to Newport Beach Municipal Code Section 12.63.140. This hearing was held on March 26, 2024. FISCAL IMPACT: Haul Away Rubbish Service Co. represents 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. 3-2 Ordinance No. 2024-7: Terminating One Non -Exclusive Franchise Agreement for Commercial Solid Waste April 9, 2024 Page 3 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). ATTACHMENT: Attachment A — Ordinance No. 2024-7 3-3 ATTACHMENT A ORDINANCE NO. 2024- 7 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, TERMINATING ONE NON-EXCLUSIVE FRANCHISE AGREEMENT 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 franchisee Haul -Away Rubbish Service Co.; 3-4 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 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. is in the public interest. 3-5 Ordinance No. 2024- Page 3 of 4 NOW THEREFORE, the City Council of the City of Newport Beach ordains as follows: Section 1: The 2020 Franchise Agreement with Haul -Away Rubbish Service Co. is 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. 3-6 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 ATTEST: LEILANI 1. BROWN, CITY CLERK APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE AARON -C. HARP, Q)TY ATTORNEY 3-7