HomeMy WebLinkAbout10 - Terminating a Non-Exclusive Franchise Agreement for Commercial Solid WasteQ �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
May 14, 2024
Agenda Item No. 10
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. 2024-14: Terminating a Non -Exclusive Franchise
Agreement for Commercial Solid Waste
ABSTRACT:
The City of Newport Beach has been working to gain compliance with the terms of the
Non -Exclusive Commercial Solid Waste Franchise Agreement (2020 Franchise
Agreement) with Key Disposal & Recycling, Inc. (Key Disposal) since its execution in
August 2023. The City issued a Notice of Default of the 2020 Franchise Agreement in
February to resolve the violations. Since the violations were not resolved, the City issued
Key Disposal a Notice of Intent to Terminate the 2020 Franchise Agreement on March 8,
2024, pursuant to Newport Beach Municipal Code (NBMC) Section 12.63.140, with a
hearing to be held on March 26, 2024. At the March 26, 2024 meeting, the hearing was
continued to April 9, 2024 (and again to May 14, 2024) to provide Key Disposal with
additional time to comply. Key Disposal has been unable to fulfill the outstanding
requirements. As a result, staff recommends termination of Key Disposal's
2020 Franchise Agreement.
RECOMMENDATIONS:
a) Conduct a hearing to consider the termination of the Non -Exclusive Commercial Solid
Waste Franchise Agreement with 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. 2024-14, An Ordinance of the City Council of the City of Newport Beach,
California, Terminating a Non -Exclusive Franchise Agreement for Commercial Solid
Waste, and pass to second reading on May 28, 2024.
DISCUSSION:
The City utilizes the 2020 Franchise Agreement to allow waste haulers to collect
municipal solid waste, recyclables, organic waste, and construction and demolition debris
at non-residential properties throughout the City. The 2020 Franchise Agreement
incorporates a number of State mandates as well as standard contract provisions. Some
examples include diversion compliance and insurance.
10-1
Ordinance No. 2024-14: Terminating a Non -Exclusive
Franchise Agreement for Commercial Solid Waste
May 14, 2024
Page 2
As of March 26, 2024, there were 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.
Violations of 2020 Franchise Agreement as of the March 26, 2024, City Council
Hearing
Key Disposal failed to comply with terms of the 2020 Franchise Agreement on
10 occasions. Of the 10 violations, three pertain to late reporting, although reports were
eventually submitted. The other violations relate to the failure to deliver seven items
required under the 2020 Franchise Agreement, including-
1 ) A comprehensive source separation implementation plan which details how
recyclable and non -recyclable material will be sorted when discarded at the
customer's place of business in accordance with Sections 6(A), 12(A), 13(A),
13(C), and 16 of the agreement. A source separation implementation plan should
also summarize customer outreach efforts made by the franchise hauler.
2) Results of on -site load checks, route reviews and waste characterizations of the
customer's waste stream to ensure compliance with Sections 6(F) and 7(E). These
measures are intended to "double-check" whether the source separation is
effective.
3) The franchise hauler's contact tracking with the customer (Exhibit E) to ensure
adequate efforts are made by the franchise hauler to gain compliance by the
customer.
4) Updated business license information in accordance with 2020 Franchise
Agreement application requirements and Section 27(K).
5) Updated insurance information that meets requirements set forth in Exhibit D of
the 2020 Franchise Agreement.
6) Updated fleet list and collision avoidance information for vehicles utilized in the
City, including an organic material collection vehicle in accordance with
Section 18.
7) Route information and maps per waste stream as required by CalRecycle.
10-2
Ordinance No. 2024-14: Terminating a Non -Exclusive
Franchise Agreement for Commercial Solid Waste
May 14, 2024
Page 3
Key Disposal advised the City that it would cure the default, but was only able to cure
Items 4, 6, and 7. Four deliverables were not supplied, thus not sufficiently curing default.
Key Disposal failed to appeal the Notice of Default (Attachment B) within 10 days of
issuance, which is allowed per Section 23.0 of the 2020 Franchise Agreement.
On March 8, 2024, the City issued a Notice of Intent to Terminate (Attachment C) to
Key Disposal. The notice informed Key Disposal of a hearing to be held on March 26,
2024, to consider termination of its 2020 Franchise Agreement pursuant to NBMC Section
12.63.140.
The City Council granted a time extension, providing Key Disposal until April 9, 2024, to
comply. The City and Key Disposal believed additional time was needed for compliance
and on April 9, 2024, City staff asked to instead return to the Council on May 14, 2024.
The request was approved by the City Council.
Compliance Efforts Following the March 26, 2024, City Council Meeting
On Monday, April 1, 2024, City representatives met with Key Disposal to discuss
compliance with the 2020 Franchise Agreement. Key Disposal and the City agreed to the
following task list:
Task 1 — By April 5, 2024, identify a mixed -waste recovery facility for utilization until
the end of calendar year 2024.
Task 2 — Conduct a waste characterization audit and supply report.
Task 3 — Document outreach.
Task 4 — Develop an implementation plan to place external source separated
containers and to assist the commercial business with internal source
separation.
Task 5 — Submit Exhibit E Report.
The aforementioned tasks were intended to gain compliance with fundamental terms of
the 2020 Franchise Agreement. Namely, Section 6 (Diversion and Disposal of Municipal
Solid Waste, Recyclable Materials, Food Scrap and Green Waste), Section 8
(Franchisee's Application; Records; Audits), Section 12 (AB 341 Recycling Program for
Commercial Premises and Multifamily Dwellings), Section 13 (AB 1826 Food Scrap
Diversion Program for Commercial Premises), Section 14 (AB 1826 Commercial and
Multifamily Green Waste and Wood Waste Collection Program) and Exhibit E.
Key Disposal identified a mixed -waste recovery facility for waste diversion in the timeline
specified. The City approved the selection and deemed Task 1 complete.
Key Disposal conducted a waste characterization audit at its facility, located at
5202 Industry Avenue in Pico Rivera, on April 11, 2024. City representatives were present
to monitor the audit. The compactor contents, which up to this date were typically just
sent to the landfill, consisted mainly of divertible/recyclable material which does not
comply with Section 6 of the 2020 Franchise Agreement. Key Disposal was to supply a
report that included:
10-3
Ordinance No. 2024-14: Terminating a Non -Exclusive
Franchise Agreement for Commercial Solid Waste
May 14, 2024
Page 4
1) The date and time the material was collected
2) The location and name of the inspection facility
3) Images from the waste inspection that included any contamination and the
transported container
4) The waste characterization
5) Weight tickets from the selected material recovery facility
The City did not receive an update or report from Key Disposal and therefore emailed the
waste hauler on April 17, 2024, to remind its staff that the report was due and what it
should include. Key Disposal acknowledged its staff was working on the report. As of
April 24, 2024, the City had not received an update or response from Key Disposal and
requested report submission. Due to the limited communication from Key Disposal, the
City also set a revised deadline for the remaining deliverables of Friday, April 26, 2024.
On April 24, 2024, Key Disposal submitted a report that omitted the location and name of
the inspection facility and images from the waste inspection. Additionally, the waste
characterization results supplied by Key Disposal varied significantly from those of the
City's monitors. City staff asked Key Disposal to update and resubmit the report with the
remaining deliverables.
As of the end of business, Friday, April 26, 2024, Key Disposal submitted its response to
address Tasks 2 through 5. The City reviewed the responses and deemed Tasks 2 and
5 as complete and Tasks 3 and 4 as incomplete. Due to inconsistent communication with
and information supplied by Key Disposal, City staff communicated with a representative
from Key Disposal's single client, the Logistics and Fulfillment Supervisor, on Monday,
April 29, 2024, for verification. City staff confirmed that educational material was not
supplied to store personnel, a scheduled walkthrough with store personnel did not
transpire, and implementation attempts were not made.
Staff has spent considerable time and effort working with Key Disposal to obtain
compliance with the fundamental terms of the 2020 Franchise Agreement. Yet, two of the
tasks that would help ensure waste diversion requirements mandated by State law are
being met are still not complete. Considering that the 2020 Franchise Agreement clearly
states ongoing hauler requirements and implementation expectations, in conjunction with
the number of ongoing compliance issues with Key Disposal & Recycling, Inc., staff
recommends termination of the 2020 Franchise Agreement.
FISCAL IMPACT:
This franchise hauler currently represents a single account, which will most likely be
picked up by one of the other franchise commercial haulers. Nominal revenue loss is
anticipated.
10-4
Ordinance No. 2024-14: Terminating a Non -Exclusive
Franchise Agreement for Commercial Solid Waste
May 14, 2024
Page 5
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:
Attachment A
— Ordinance No. 2024-14
Attachment B
— Notice of Default
Attachment C
— Notice of Intent to Terminate
Attachment D
— Franchise Agreement
10-5
ATTACHMENT A
ORDINANCE NO. 2024-14
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, TERMINATING A
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 Key Disposal & Recycling, Inc.
("Franchisee");
10-6
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 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
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 hearing was given in accordance with California
Government Code Section 54950 et seq. ("Ralph M. Brown Act") and Section 1301 of
the City Charter. Evidence, both written and oral, was presented to, and considered by,
the City Council at this hearing;
WHEREAS, at the hearing, the City Council granted an extension to April 9,
2024, for Franchisee to resolve violations of the 2020 Franchise Agreement;
WHEREAS, the City requested an additional continuance to May 14, 2024, for
Franchisee to resolve outstanding violations of the 2020 Franchise Agreement;
WHEREAS, the City worked with Franchisee from March 26, 2024, to April 29,
2024, to gain compliance however, Franchisee was unable to resolve all of the
outstanding violations of the 2020 Franchise Agreement;
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 Franchisee has failed to comply with supplying records as requested,
including a diversion plan and implementing a three -container source separation
program; and
10-7
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 Key Disposal & Recycling, Inc. is in the public interest.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows:
Section 1: The 2020 Franchise Agreement with Key Disposal & Recycling, Inc.
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.
M.
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 14th day of May, 2024, and adopted on the 28th day of
May, 2024, by the following vote, to -wit:
AYES:
NAYS:
ABSENT:
WILL O'NEILL, MAYOR
ATTEST:
LEILANI I. BROWN, CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
AAR . HARP, CIV ATTORNEY
10-9
Attachment B
CITY OF NEWPORT BEACH
�IFORr'i
John Katangian, President
Key Disposal & Recycling, Inc.
5202 Industry Avenue
Pico Rivera, CA 90660
592 Superior Avenue
Newport Beach, California 92663
949 644-3055 1 949 650- 0747 FAX
newportbeachca.gov/refuse
February 26, 2024
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 5.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:
10-11
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
10-12
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.
10-13
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
10-14
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
10-15
Attachment C
CITY OF NEWPORT BEACH
FOR,'%
John Katangian, President
Key Disposal & Recycling, Inc.
5202 Industry Avenue
Pico Rivera, CA 90660
592 Superior Avenue
Newport Beach, California 92663
949 644-3055 1 949 650-0747 FAX
newportheachca.gov/municipaloperations
March 8, 2024
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 D
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
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