HomeMy WebLinkAboutC-5344 - PSA for Strategic Outline for Solid Waste and Recycling Request for ProposalsPROFESSIONAL SERVICES AGREEMENT
WITH HF & H CONSULTANTS, LLC FOR
STRATEGIC OUTLINE FOR SOLID WASTE AND RECYCLING REQUEST FOR
PROPOSALS
THIS AGREEMENT FOR PROFESSIONAL SE�VICES ( "Agreement ") is made
and entered into as of this ?.IA day of 6ZQ1i'ar, 2012 ( "Effective Date ") by and
between the CITY OF NEWPORT BEACH, a California Municipal Corporation ( "City "),
and HF & H Consultants, LLC, a California limited liability company ( "Consultant "),
whose address is 19200 Von Karman Ave, Suite 360, Irvine, California 92612 and is
made with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of City.
B. City desires to engage Consultant to develop a strategic outline for solid waste
and recycling Request for Proposals ( "Project ").
C. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the professional services described in this Agreement.
D. The principal member of Consultant for purposes of Project shall be Laith Ezzet,
Senior Vice President.
E. City has solicited and received a proposal from Consultant, has reviewed the
previous experience and evaluated the expertise of Consultant, and desires to
retain Consultant to render professional services under the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned
parties as follows:
1. TERM
The term of this Agreement shall commence on the Effective Date, and shall
terminate on March 31, 2013 unless terminated earlier as set forth herein.
2. SERVICES TO BE PERFORMED
City and Consultant acknowledge that the above Recitals are true and correct
and are hereby incorporated by reference into this Agreement. Consultant shall
diligently perform all the services described in the Scope of Services attached hereto as
Exhibit A and incorporated herein by reference ( "Services" or "Work "). The City may
elect to delete certain Services within the Scope of Services at its sole discretion.
3. TIME OF PERFORMANCE
Time is of the essence in the performance of Services under this Agreement and
Consultant shall perform the Services in accordance with the schedule included in
Exhibit A. In the absence of a specific schedule, the Services shall be performed to
completion in a diligent and timely manner. The failure by Consultant to strictly adhere
to the schedule set forth in Exhibit A, if any, or perform the Services in a diligent and
timely manner may result in termination of this Agreement by City.
4. COMPENSATION TO CONSULTANT
4.1 City shall pay Consultant for the Services on a time and expense not -to-
exceed basis in accordance with the provisions of this Section and the Schedule of
Billing Rates or Progress Payments Schedule attached hereto as Exhibit B and
incorporated herein by reference. Consultant's compensation for all Work performed in
accordance with this Agreement, including all reimbursable items and subconsultant
fees, shall not exceed Fifteen Thousand Dollars and [00] 1100 {$15,444,00} without
prior written authorization from City. No billing rate changes shall be made during the
term of this Agreement without the prior written approval of City.
42 Consultant shall submit monthly invoices to City describing the Work
performed the preceding month. Consultant's bills shall include the name of the person
who performed the Work, a brief description of the Services performed and /or the
specific task in the Scope of Services to which it relates, the date the Services were
performed, the number of hours spent on all Work billed on an hourly basis, and a
description of any reimbursable expenditures. City shall pay Consultant no later than
thirty (30) days after approval of the monthly invoice by City staff.
43 City shall reimburse Consultant only for those costs or expenses
specifically identified in Exhibit B to this Agreement, or specifically approved in writing in
advance by City.
4.4 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra Work" means any
Work that is determined by City to be necessary for the proper completion of the
Project, but which is not included within the Scope of Services and which the parties did
not reasonably anticipate would be necessary at the execution of this Agreement.
Compensation for any authorized Extra Work shall be paid in accordance with the
Schedule of Billing Rates as set forth in Exhibit B.
»0 1 93"TUY.10; 7
5.1 Consultant shall designate a Project Manager, who shall coordinate all
phases of the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated Laith Ezzet, Senior Vice
President to be its Project Manager. Consultant shall not remove or reassign the
Project Manager or any personnel listed in Exhibit A or assign any new or replacement
personnel to the Project without the prior written consent of City. City's approval shall
not be unreasonably withheld with respect to the removal or assignment of non -key
personnel.
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5.2 Consultant, at the sole discretion of City, shall remove from the Project
any of its personnel assigned to the performance of Services upon written request of
City. Consultant warrants that it will continuously furnish the necessary personnel to
complete the Project on a timely basis as contemplated by this Agreement.
5.3 If Consultant is performing inspection services for City, the Project
Manager and any other assigned staff shall be equipped with a cellular phone to
communicate with City staff. The Project Manager's cellular phone number shall be
provided to the City.
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This Agreement will be administered by the Municipal Operations Department, Mark
Harmon, Municipal Operations Director, or his /her designee, shall be the Project
Administrator and shall have the authority to act for City under this Agreement. The
Project Administrator or his /her designee shall represent City in all matters pertaining to
the Services to be rendered pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
To assist Consultant in the execution of its responsibilities -under this Agreement,
City agrees to provide access to and upon request of Consultant, one copy of all
existing relevant information on file at City. City will provide all such materials in a
timely manner so as not to cause delays in Consultant's Work schedule.
8. STANDARD OF CARE
8.1 All of the Services shall be performed by Consultant or under Consultant's
supervision. Consultant represents that it possesses the professional and technical
personnel required to perform the Services required by this Agreement, and that it will
perform all Services in a manner commensurate with the highest professional
standards. For purposes of this Agreement, the phrase "highest professional
standards" shall mean those standards of practice recognized by one {1} or more first-
class firms performing similar work under similar circumstances.
8.2 All Services shall be performed by qualified and experienced personnel
who are not employed by City. By delivery of completed Work, Consultant certifies that
the Work conforms to the requirements of this Agreement; all applicable federal, state
and local laws; and the highest professional standard.
8.3 Consultant represents and warrants to City that it has, shall obtain, and
shall keep in full force and effect during the term hereof, at its sole cost and expense, all
licenses, permits, qualifications, insurance and approvals of whatsoever nature that is
legally required of Consultant to practice its profession. Consultant shall maintain a City
of Newport Beach business license during the term of this Agreement.
8.4 Consultant shall not be responsible for delay, nor shall Consultant be
responsible for damages or be in default or deemed to be in default by reason of strikes,
lockouts, accidents, acts of God, or the failure of City to furnish timely information or to
HF & H Consultants, LLC Page 3
approve or disapprove Consultant's Work promptly, or delay or faulty performance by
City, contractors, or governmental agencies.
9. HOLD HARMLESS
91 To the fullest extent permitted by law, Consultant shall indemnify, defend
and hold harmless City, its City Council, boards and commissions, officers, agents and
employees (collectively, the "Indemnified Parties ") from and against any and all claims
(including, without limitation, claims for bodily injury, death or damage to property),
demands, obligations, damages, actions, causes of action, suits, losses, judgments,
fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's
fees, disbursements and court costs) of every kind and nature whatsoever (individually,
a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or
indirectly) to any breach of the terms and conditions of this Agreement, any Work
performed or Services provided under this Agreement including, without limitation,
defects in workmanship or materials or Consultant's presence or activities conducted on
the Project (including the negligent and/or willful acts, errors and/or omissions of
Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants,
subcontractors, anyone employed directly or indirectly by any of them or for whose acts
they may be liable or any or all of them).
9.2 Notwithstanding the foregoing, nothing herein shall be construed to
require Consultant to indemnify the Indemnified Parties from any Claim arising from the
sole negligence or willful misconduct of the Indemnified Parties. Nothing in this
indemnity shall be construed as authorizing any award of attorney's fees in any action
on or to enforce the terms of this Agreement. This indemnity shall apply to all claims
and liability regardless of whether any insurance policies are applicable. The policy
limits do not act as a limitation upon the amount of indemnification to be provided by the
Consultant.
10. INDEPENDENT CONTRACTOR
It is understood that City retains Consultant on an independent contractor basis
and Consultant is not an agent or employee of City. The manner and means of
conducting the Work are under the control of Consultant, except to the extent they are
limited by statute, rule or regulation and the expressed terms of this Agreement. No
civil service status or other right of employment shall accrue to Contractor or its
employees. Nothing in this Agreement shall be deemed to constitute approval for
Consultant or any of Consultant's employees or agents, to be the agents or employees
of City. Consultant shall have the responsibility for and control over the means of
performing the Work, provided that Consultant is in compliance with the terms of this
Agreement. Anything in this Agreement that may appear to give City the right to direct
Consultant as to the details of the performance of the Work or to exercise a measure of
control over Consultant shall mean only that Consultant shall follow the desires of City
with respect to the results of the Services.
HF & H Consultants, LLC Page 4
11. COOPERATION
Consultant agrees to work closely and cooperate fully with City's designated
Project Administrator and any other agencies that may have jurisdiction or interest in the
Work to be performed. City agrees to cooperate with the Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project
direction with City's Project Administrator in advance of all critical decision points in
order to ensure the Project proceeds in a manner consistent with City goals and
policies.
13. PROGRESS
Consultant is responsible for keeping the Project Administrator and /or his /her
duly authorized designee informed on a regular basis regarding the status and progress
of the Project, activities performed and planned, and any meetings that have been
scheduled or are desired.
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Without limiting Consultant's indemnification of City, and prior to commencement
of Work, Consultant shall obtain, provide and maintain at its own expense during the
term of this Agreement or for other periods as specified in this Agreement, policies of
insurance of the type, amounts, terms and conditions described in the Insurance
Requirements attached hereto as Exhibit C, and incorporated herein by reference.
15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the Services to be
provided under this Agreement shall not be assigned, transferred contracted or
subcontracted out without the prior written approval of City. Any of the following shall
be construed as an assignment: The sale, assignment, transfer or other disposition of
any of the issued and outstanding capital stock of Consultant, or of the interest of any
general partner or joint venturer or syndicate member or cotenant if Consultant is a
partnership or joint- venture or syndicate or cotenancy, which shall result in changing the
control of Consultant. Control means fifty percent (50 %) or more of the voting power, or
twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint -
venture.
The subcontractors authorized by City, if any, to perform Work on this Project are
identified in Exhibit A. Consultant shall be fully responsible to City for all acts and
omissions of any subcontractor. Nothing in this Agreement shall create any contractual
relationship between City and any subcontractor nor shall it create any obligation on the
part of City to pay or to see to the payment of any monies due to any such
subcontractor other than as otherwise required by law. The City is an intended
beneficiary of any Work performed by the subcontractor for purposes of establishing a
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duty of care between the subcontractor and the City. Except as specifically authorized
herein, the Services to be provided under this Agreement shall not be otherwise
assigned, transferred, contracted or subcontracted out without the prior written approval
of City.
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17.1 Each and every report, draft, map, record, plan, document and other
writing produced (hereinafter "Documents "), prepared or caused to be prepared by
Consultant, its officers, employees, agents and subcontractors, in the course of
implementing this Agreement, shall become the exclusive property of City, and City
shall have the sole right to use such materials in its discretion without further
compensation to Consultant or any other party. Consultant shall, at Consultant's
expense, provide such Documents to City upon prior written request.
17.2 Documents, including drawings and specifications, prepared by
Consultant pursuant to this Agreement are not intended or represented to be suitable
for reuse by City or others on any other project. Any use of completed Documents for
other projects and any use of incomplete Documents without specific written
authorization from Consultant will be at City's sole risk and without liability to
Consultant. Further, any and all liability arising out of changes made to Consultant's
deliverables under this Agreement by City or persons other than Consultant is waived
against Consultant and City assumes full responsibility for such changes unless City
has given Consultant prior notice and has received from Consultant written consent for
such changes.
* AW 19 ♦ M7 :
All written documents shall be transmitted to City in formats compatible with
Microsoft Office and/or viewable with Adobe Acrobat.
19. CONFIDENTIALITY
All Documents, including drafts, preliminary drawings or plans, notes and
communications that result from the Services in this Agreement, shall be kept
confidential unless City expressly authorizes in writing the release of information.
20. INTELLECTUAL PROPERTY INDEMNITY
The Consultant shall defend and indemnify City, its agents, officers,
representatives and employees against any and all liability, including costs, for
infringement or alleged infringement of any United States' letters patent, trademark, or
copyright, including costs, contained in Consultant's Documents provided under this
Agreement.
21. RECORDS
Consultant shall keep records and invoices in connection with the Services to be
performed under this Agreement. Consultant shall maintain complete and accurate
records with respect to the costs incurred under this Agreement and any Services,
HF & H Consultants, LLC Page 6
expenditures and disbursements charged to City, for a minimum period of three (3)
years, or for any longer period required by law, from the date of final payment to
Consultant under this Agreement. All such records and invoices shall be clearly
identifiable. Consultant shall allow a representative of City to examine, audit and make
transcripts or copies of such records and invoices during regular business hours.
Consultant shall allow inspection of all Work, data, Documents, proceedings and
activities related to the Agreement for a period of three (3) years from the date of final
payment to Consultant under this Agreement.
22. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction
of the dispute with respect to such payment. Such withholding shall not be deemed to
constitute a failure to pay according to the terms of this Agreement. Consultant shall
not discontinue Work as a result of such withholding. Consultant shall have an
immediate right to appeal to the City Manager or his /her designee with respect to such
disputed sums. Consultant shall be entitled to receive interest on any withheld sums at
the rate of return that City earned on its investments during the time period, from the
date of withholding of any amounts found to have been improperly withheld.
23. ERRORS AND OMISSIONS
In the event of errors or omissions that are due to the negligence or professional
inexperience of Consultant which result in expense to City greater than what would
have resulted if there were not errors or omissions in the Work accomplished by
Consultant, the additional design, construction and /or restoration expense shall be
borne by Consultant. Nothing in this Section is intended to limit City's rights under the
law or any other sections of this Agreement.
24, CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the right to employ other Consultants in connection with the
Project.
25. CONFLICTS OF INTEREST
25.1 The Consultant or its employees may be subject to the provisions of the
California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to
disclose any financial interest that may foreseeably be materially affected by the Work
performed under this Agreement, and (2) prohibits such persons from making, or
participating in making, decisions that will foreseeably financially affect such interest.
25.2 If subject to the Act, Consultant shall conform to all requirements of the
Act. Failure to do so constitutes a material breach and is grounds for immediate
termination of this Agreement by City. Consultant shall indemnify and hold harmless
City for any and all claims for damages resulting from Consultant's violation of this
Section.
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26. NOTICES
26.1 All notices, demands, requests or approvals, including any change in
mailing address, to be given under the terms of this Agreement shall be given in writing,
and conclusively shall be deemed served when delivered personally, or on the third
business day after the deposit thereof in the United States mail, postage prepaid, first -
class mail, addressed as hereinafter provided. All notices, demands, requests or
approvals from Consultant to City shall be addressed to City at:
Attn: Mark Harmon, Municipal Operations Director
Municipal Operations Department
City of Newport Beach
3300 Newport Boulevard
PO Box 1768
Newport Beach, CA 92658
Phone: 949-644 -3055
Fax: 949 - 650 -0747
26.2 All notices, demands, requests or approvals from City to Consultant shall
be addressed to Consultant at:
Attn: Laith Ezzet, Senior Vice President
HF & H Consultants, LLC
19200 Von Karman Avenue, Suite #360
Irvine, CA 92612
Phone: 949 - 251 -8902
Fax: 949 - 251 -9741
Unless a shorter time is specified elsewhere in this Agreement, before making its
final request for payment under this Agreement, Consultant shall submit to City, in
writing, all claims for compensation under or arising out of this Agreement.
Consultant's acceptance of the final payment shall constitute a waiver of all claims for
compensation under or arising out of this Agreement except those previously made in
writing and identified by Consultant in writing as unsettled at the time of its final request
for payment. The Consultant and the City expressly agree that in addition to any claims
filing requirements set forth in the Agreement, the Consultant shall be required to file
any claim the Consultant may have against the City in strict conformance with the Tort
Claims Act (Government Code sections 900 et seq).
28. TERMINATION
28.1 In the event that either party fails or refuses to perform any of the
provisions of this Agreement at the time and in the manner required, that party shall be
deemed in default in the performance of this Agreement. If such default is not cured
within a period of two (2) calendar days, or if more than two (2) calendar days are
reasonably required to cure the default and the defaulting party fails to give adequate
assurance of due performance within two (2) calendar days after receipt of written
notice of default, specifying the nature of such default and the steps necessary to cure
HF & H Consultants, LLC Page 8
such default, and thereafter diligently take steps to cure the default, the non- defaulting
party may terminate the Agreement forthwith by giving to the defaulting party written
notice thereof.
28.2 Notwithstanding the above provisions, City shall have the right, at its sole
and absolute discretion and without cause, of terminating this Agreement at any time by
giving no less than seven (7) calendar days prior written notice to Consultant. In the
event of termination under this Section, City shall pay Consultant for Services
satisfactorily performed and costs incurred up to the effective date of termination for
which Consultant has not been previously paid. On the effective date of termination,
Consultant shall deliver to City all reports, Documents and other information developed
or accumulated in the performance of this Agreement, whether in draft or final form.
29. STANDARD PROVISIONS
29.1 Compliance with all Laws. Consultant shall at its own cost and expense
comply with all statutes, ordinances, regulations and requirements of all governmental
entities, including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all Work prepared by Consultant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be
subject to approval of the Project Administrator and City.
29.2 Waiver. A waiver by either party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition contained herein, whether
of the same or a different character.
29.3 Integrated Contract. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the parties hereto, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein. No verbal agreement or implied covenant shall be held to vary the provisions
herein.
29A Conflicts or Inconsistencies. In the event there are any conflicts or
inconsistencies between this Agreement and the Scope of Services or any other
attachments attached hereto, the terms of this Agreement shall govern.
29.5 Interpretation. The terms of this Agreement shall be construed in
accordance with the meaning of the language used and shall not be construed for or
against either party by reason of the authorship of the Agreement or any other rule of
construction which might otherwise apply.
29.6 Amendments. This Agreement may be modified or amended only by a
written document executed by both Consultant and City and approved as to form by the
City Attorney.
29.7 Severability. if any term or portion of this Agreement is held to be invalid,
illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall continue in full force and effect.
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29.8 Controlling Law and Venue. The laws of the State of California shall
govern this Agreement and all matters relating to it and any action brought relating to
this Agreement shall be adjudicated in a court of competent jurisdiction in the County of
Orange, State of California.
29.9 Equal Opportunity Employment. Consultant represents that it is an equal
opportunity employer and it shall not discriminate against any subcontractor, employee
or applicant for employment because of race, religion, color, national origin, handicap,
ancestry, sex, age or any other impermissible basis under law.
29.10 No Attorney's Fees. In the event of any dispute or legal action arising
under this Agreement, the prevailing party shall not be entitled to attorney's fees.
29.11 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which together shall
constitute one (1) and the same instrument.
(SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: 1 Z // I b ?-
By:r-
Aaron&. -4 -,Karp
City Attorney
ATTEST:
Date: 1.3-13
By:
�&-
Leilani I. Brown
City Clerk
��FoaN�
CITY OF NEWPORT BEACH,
A California mVnicipa�corporation
Date:
By:
Mark armon
Municipal Operations Director
CONSULTANT: HF & H Consultants, LLC,
a California limited liability company
Date: (Z /z / 1-2,0/L
By: -yemu�d= 4 ,
1-4ffi B. Ezzet
Senior Vice President
Date: 2 �e Pee- 29 I Z -
By: ��
Joh' Farnkop
Secretary
[END OF SIGNATURES]
Attachments: Exhibit A - Scope of Services
Exhibit B - Schedule of Billing Rates
Exhibit C - Insurance Requirements
HF & H Consultants, LLC Page 11
EXHIBIT A
SCOPE OF SERVICES
HF & H Consultants LLC - Provision of a Strategic Outline for Solid Waste
Request for Proposals for the City of Newport Beach
HF & H shall prepare a meeting document that will be used as a discussion document at a City
Council study session for the Council to provide direction on three key issues:
A. What service options should the RFP include for proposers to propose upon? Based on
preliminary discussions between City staff and HF & H, the RFP may include the following
three options:
The existing system of manual refuse collection with mixed waste processing. This will
allow for a direct comparison of private hauler proposed costs to the City's existing
municipally provided services on an "apples to apples" basis. The proposer may elect to
use the City's existing processing contract with CR &R, or may propose an alternative
processing facility so long as the proposed diversion equals or exceeds the existing
diversion achieved by the City. (Note: The existing CR &R processing contract expires in
2013 and will renew automatically on an annual basis until 2018 unless the renewal
option is terminated by the City).
2. Any system that the proposer believes is operationally feasible in Newport Beach that
will minimize the total cost of service. At a minimum, the proposed system must at least
achieve the existing diversion level achieved by the City's municipal operations.
3. Separated three - stream collection (refuse, recycling, and green waste). This option
would likely minimize the cost of the refuse component and may be the least costly for
the city's general fund if the recycling and green waste program costs are billed to
customers. Green waste would only be offered in areas of the City that generate
reasonable amounts of green waste, perhaps in the areas on the inland side of Pacific
Coast Highway.
B. What are the options for the City's transfer station? The City could lease it to a proposer, or
close it and use the site for another purpose. Proposers will need to know if they will be
allowed, or perhaps required, to use the City's transfer station, and whether the transfer
station could accept waste from outside the city limits. Alternatively, the City may have other
plans for the existing transfer station site and may require proposers to find other solutions.
This will need to be resolved before an RFP can be developed.
C. What are the City's plans for commercial solid waste collection? The existing 10 -year non-
exclusive waste hauling agreements expire in 2017. After 2017 the City could:
1. Continue the existing non - exclusive commercial waste hauling system.
2. Continue the non - exclusive commercial services but reduce the number of commercial
haulers allowed to operate in the City after the existing agreements expire.
HF & H Consultants LLC Page A -1
such change. If such change results in substantial additional cost to the Consultant, the
City and Consultant may renegotiate Consultant's compensation.
1.5.3 Enforcement of Agreement Provisions. Consultant acknowledges
and agrees that any actual or alleged failure on the part of the City to inform Consultant
of non-compliance with any requirement imposes no additional obligations on the City
nor does it waive any rights hereunder.
1.5.4 Requirements not Limiting. Requirements of specific coverage
features or limits contained in this Section are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided by any
insurance. Specific reference to a given coverage feature is for purposes of clarification
only as it pertains to a given issue and is not intended by any party or insured to be all
inclusive, or to the exclusion of other coverage, or a waiver of any type.
1.5.5 Self-insured Retentions. Any self-insured retentions must be
declared to and approved by City. City reserves the right to require that self-insured
retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be
considered to comply with these requirements unless approved by City.
1.5.6 City Remedies for Non Compliance If Consultant or any
subconsultant fails to provide and maintain insurance as required herein, then City shall
have the right but not the obligation, to purchase such insurance, to terminate this
agreement, or to suspend Consultant's right to proceed until proper evidence of
insurance is provided. Any amounts paid by City shall, at City's sole option, be
deducted from amounts payable to Consultant or reimbursed by Consultant upon
demand.
1.5.7 Timelv Notice of Claims. Consultant shall give City prompt and
timely notice of claims made or suits instituted that arise out of or result from
Consultant's performance under this Agreement, and that involve or may involve
coverage under any of the required liability policies.
1.5.8 Consultant's Insurance. Consultant shall also procure and
maintain, at its own cost and expense, any additional kinds of insurance, which in its
own judgment may be necessary for its proper protection and prosecution of the Work.
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EXHIBIT B
SCHEDULE OF BILLING RATES
HF & H Fee Schedule
HF & H billing fees shall be based on time and materials. The cost for this project is an estimated not -to -
exceed $15,000. Hourly rates for our consultants effective January 1, 2013 are as follows:
Sr. Vice President: $255
Director: $215
Manager: $189 to $209
Sr. Associate: $189
Associate: $125 to $135
Administrative: $80
Intern Consultant: $45
Mileage expenses will be billed at the prevailing IRS mileage rate, currently $0.555 per mile.
Reproduction costs over 15 pages per run will be billed at $0.15 per page black and white, $0.75 per
page color. Other out of pocket expenses, if any, will be billed at actual cost.
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EXHIBIT C
1. INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES
1.1 Provision of Insurance. Without limiting Consultant's indemnification of
City, and prior to commencement of Work, Consultant shall obtain, provide and maintain
at its own expense during the term of this Agreement, policies of insurance of the type
and amounts described below and in a form satisfactory to City. Consultant agrees to
provide insurance in accordance with requirements set forth here. If Consultant uses
existing coverage to comply and that coverage does not meet these requirements,
Consultant agrees to amend, supplement or endorse the existing coverage.
1.2 Acceptable Insurers. All insurance policies shall be issued by an
insurance company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders' Rating
of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the
latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
1.3 Coverage Requirements.
1.3.1 Workers' Compensation Insurance. Consultant shall maintain
Workers' Compensation Insurance, statutory limits, and Employer's Liability Insurance
with limits of at least one million dollars ($1,000,000) each accident for bodily injury by
accident and each employee for bodily injury by disease in accordance with the laws of
the State of California, Section 3700 of the Labor Code.
1.3.1.1 Consultant shall submit to City, along with the certificate
of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents,
employees and volunteers.
1.3.2 General Liability Insurance. Consultant shall maintain commercial
general liability insurance, and if necessary umbrella liability insurance, with coverage at
least as broad as provided by Insurance Services Office form CG 00 01, in an amount
not less than one million dollars ($1,000,000) per occurrence, two million dollars
($2,000,000) general aggregate. The policy shall cover liability arising from premises,
operations, products -completed operations, personal and advertising injury, and liability
assumed under an insured contract (including the tort liability of another assumed in a
business contract) with no endorsement or modification limiting the scope of coverage
for liability assumed under a contract.
1.3.3 Automobile Liability Insurance. Consultant shall maintain
automobile insurance at least as broad as Insurance Services Office form CA 00 01
covering bodily injury and property damage for all activities of the Consultant arising out
of or in connection with Work to be performed under this Agreement, including coverage
for any owned, hired, non -owned or rented vehicles, in an amount not less than one
million dollars ($1,000,000) combined single limit each accident.
HF & H Consultants, LLC Page C-1
1.3.4 Professional Liability (Errors & Omissions) Insurance. Consultant
shall maintain professional liability insurance that covers the Services to be performed
in connection with this Agreement, in the minimum amount of one million dollars
($1,000,000) per claim and in the aggregate. Any policy inception date, continuity date,
or retroactive date must be before the effective date of this agreement and Consultant
agrees to maintain continuous coverage through a period no less than three years after
completion of the services required by this agreement.
1.4 Other Insurance Requirements. The policies are to contain, or be
endorsed to contain, the following provisions:
1.4.1 Waiver of Subrogation. All insurance coverage maintained or
procured pursuant to this agreement shall be endorsed to waive subrogation against
City, its elected or appointed officers, agents, officials, employees and volunteers or
shall specifically allow Consultant or others providing insurance evidence in compliance
with these requirements to waive their right of recovery prior to a loss. Consultant
hereby waives its own right of recovery against City, and shall require similar written
express waivers from each of its subconsultants.
1.4.2 Additional Insured Status. All liability policies including general
liability, excess liability, pollution liability, and automobile liability, but not including
professional liability, shall provide or be endorsed to provide that City and its officers,
officials, employees, and agents shall be included as insureds under such policies.
1.4.3 Primary and Non Contributory. All liability coverage shall apply on
a primary basis and shall not require contribution from any insurance or self-insurance
maintained by City.
1.4.4 Notice of Cancellation. All policies shall provide City with thirty (30)
days notice of cancellation (except for nonpayment for which ten (10) days notice is
required) or nonrenewal of coverage for each required coverage.
1.5 Additional Agreements Between the Parties. The parties hereby agree to
the following:
1.5.1 Evidence of Insurance. Consultant shall provide certificates of
insurance to City as evidence of the insurance coverage required herein, along with a
waiver of subrogation endorsement for workers' compensation and other endorsements
as specified herein for each coverage. Insurance certificates and endorsement must be
approved by City's Risk Manager prior to commencement of performance. Current
certification of insurance shall be kept on file with City at all times during the term of this
Agreement. City reserves the right to require complete, certified copies of all required
insurance policies, at any time.
1.5.2 City's Right to Revise Requirements. The City reserves the right at
any time during the term of the Agreement to change the amounts and types of
insurance required by giving the Consultant sixty (60) days advance written notice of
HF & H Consultants, LLC Page C-2
such change. If such change results in substantial additional cost to the Consultant, the
City and Consultant may renegotiate Consultant's compensation.
1.5.3 Enforcement of Agreement Provisions. Consultant acknowledges
and agrees that any actual or alleged failure on the part of the City to inform Consultant
of non-compliance with any requirement imposes no additional obligations on the City
nor does it waive any rights hereunder.
1.5.4 Requirements not Limiting. Requirements of specific coverage
features or limits contained in this Section are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided by any
insurance. Specific reference to a given coverage feature is for purposes of clarification
only as it pertains to a given issue and is not intended by any party or insured to be all
inclusive, or to the exclusion of other coverage, or a waiver of any type.
1.5.5 Self-insured Retentions. Any self-insured retentions must be
declared to and approved by City. City reserves the right to require that self-insured
retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be
considered to comply with these requirements unless approved by City.
1.5.6 City Remedies for Non Compliance If Consultant or any
subconsultant fails to provide and maintain insurance as required herein, then City shall
have the right but not the obligation, to purchase such insurance, to terminate this
agreement, or to suspend Consultant's right to proceed until proper evidence of
insurance is provided. Any amounts paid by City shall, at City's sole option, be
deducted from amounts payable to Consultant or reimbursed by Consultant upon
demand.
1.5.7 Timely Notice of Claims. Consultant shall give City prompt and
timely notice of claims made or suits instituted that arise out of or result from
Consultant's performance under this Agreement, and that involve or may involve
coverage under any of the required liability policies.
1.5.8 Consultant's Insurance. Consultant shall also procure and
maintain, at its own cost and expense, any additional kinds of insurance, which in its
own judgment may be necessary for its proper protection and prosecution of the Work.
HF & H Consultants, LLC Page C-3
Agenda Item No. 27
November 27, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Municipal Operations Department
Mark Harmon, Municipal Operations Department Director
949 644 -3055, mharmon(&newaortbeagtgg ov
PREPARED BY: Mark Harmon, Municipal Operations Department Director
APPROVED:
TITLE: Study of City Refuse Collection Services
RECOMMENDATION:
Municipal Operations staff recommends that the City Council receive the attached
Residential Solid Waste and Recycling Study ( "Study ") and direct staff to; a) continue
refuse collection services as currently provided and file the Study, or, b) negotiate a
contract with HF &H Consultants, LLC, (Consultant) to develop a Request for Proposal
(RFP) to solicit proposals from private companies for providing this service.
FUNDING REQUIREMENTS:
There is no financial impact to the City in evaluating the information in this report. If the
Council directs staff to begin the RFP solicitation process, the additional fee for that
work would be negotiated with the Consultant and the City Manager would enter into an
agreement with Consultant to complete that process. The current adopted budget
includes sufficient funding in the Professional and Technical Services account (3150-
8080) to fund the Consultant's work in developing the RFP.
DISCUSSION/SUMMARY
On January 24, 2012, City Council entered into an agreement with Consultant to
analyze the services performed by the City Refuse Division (Attachment A). On
October 4, 2012, the Consulting Team submitted their report titled "Residential Solid
Waste and Recycling Study" (Study) for the City of Newport Beach (Attachment B). The
Study of City Refuse Collection Services
November 27, 2012
Page 2
purpose of this agenda report is to highlight and identify the objectives of this study, with
the detailed information and findings contained in the attached Study,
Objective 1- Existing Refuse Collection Program
The first step in the Study was to define the current operation as it is performed with
City staff and equipment. Pages 6 though 10 in the Study details the personnel and
equipment needed, the processing and disposal of materials collected, route
management, and other services provided such as limited bulk item collection.
Obiective 2- Current Solid Waste Operation Costs and Five Year Projection
This section identifies the incremental cost of the solid waste operation- the cost directly
attributable to the field operation. This is the amount ($4.9M) that would be eliminated if
the service was contracted out, or privatized. The remaining cost in the operations
budget includes the Newport Coast collection contract and the interdepartmental
allocations (i.e. IT charges, Administrative Services fees, etc.), or incremental costs,
that would have to be spread or allocated to other departments in the event that the
solid waste operation is contracted. These overhead charges that support other
operations would not be eliminated. The chart on the top of page 11 shows a five year
projection with all costs included. 1 The cost per unit for the fully loaded (budgeted)
operation is $17. 84 per month. The cost per unit less the incremental costs is $15.56
per month,
Objective 3- State Regulations 1 pactincSolid Waste Collection
The regulation that has the greatest impact on the current operation is identified in the
Study as AQMD Rule 1193 (page 15), Rule 1193 mandates that all future purchases of
solid waste collection equipment is powered by alternative fuel (CNG primarily). This
Rule has resulted in an increase of 25 to 35% in the cost of replacing our heavy -duty
collection vehicles, Table 5 of the Study (page 16) shows the projected cost of
purchasing equipment over the next three years if the equipment is replaced as
scheduled.
Obiective 4- Identify and Compare Local Municr'palities with Private Hauler Service
The City's current cost per unit/month and cost per ton were compared to the cost of
five (5) cities in Orange County: Laguna Beach, San Clemente, Irvine, Costa Mesa and
Huntington Beach. Charts on page 17 of the Study show the cost comparison.
Study of City Refuse Collection Services
November 27, 2012
Page 3
Objective 5- lndentifv and Compare Regional Cities with Municipal Residential Service
The City's current cost per unitlmonth and cost per ton were compared to the cost of
five (5) cities in the region. These included Westminster, Santa Monica, Pasadena,
Burbank and Beverly Hills. Charts on page 18 of the Study show the cost comparison.
Objective 6- Municipalities that have Privatized Residential Refuse Collection Services
The Study examines the case study of the City of Hemet, and their decision to work with
a private hauler to develop a strategy and funding mechanism for providing the service
to the residents while also providing jobs for displaced workers. The description of
"Other Services" provided (page 21) exemplifies many of the special functions that a
private company may offer when submitting a proposal for waste collection in a city.
Objective 7- Potential Services Alternatives
The major change to service alternative for the City of Newport Beach would be the shift
from manual collection to an automated collection system. While automation has
several benefits such as fewer trucks on the road, decreased worker comp claims,
uniform sealed containers and fewer code enforcement issues, the move to automated
collection is very costly. Following the analysis of routes, units and tonnage, the
Consultant determined that the City would need to purchase seven (7) automated trucks
at a cost of approximately $2M, and approximately $4M in automated carts for the
residents to maintain current service levels.
Obiective 8- Range of Savings from Privatizin
The Consultant uses several different methodologies to determine a potential costs
savings in privatizing the solid waste collection activity. Labor cost is a primary function
of the total per unit cost of providing service, and table 14 on page 27 shows the
difference in labor cost comparing private and municipal haulers. The city currently
contracts for service in the Newport Coast community at a rate of $12.74 per unit. If
that cost were applied to the current areas with municipal service, the savings would be
approximately $1.67M per year. Also noted in the report is the possible one -time cash
infusion of $4.9 to $5.3M due to the sale of existing equipment and the elimination of the
equipment replacement fund for the solid waste collection trucks.
Request for Proposal Process
If the City moves forward with the RFP process, it would be critical that the proposals
include a detailed plan on how the firm would work with the City to develop a strategy
on collection of solid waste. This strategic plan would include the type of service
(manual /automated), special services (green waste, special event collection, hazardous
waste including medical and electronic, extra collection for rental unit locations, and bulk
Study of City Refuse Collection Services
November 27, 2012
Page 4
item collection) and how to phase in the new services. The ability to work with the city to
develop a service/cost strategy for future waste management would be an important
measure or criteria in the proposal from a company.
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).
Submitted
Mark Harmon Y
Municipal Operations Director
Attachments: A. January 24, 2012 Agenda Report, Selection of a Vendor to
Evaluate City Refuse Services
B. City of Newport Beach, Residential Solid Waste and Recycling
Study
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Municipal Operations Department
Mark Harmon, Municipal Operations Department Director
949 644 -3055, mharmon @newportbeachca.gov
PREPARED BY: Mike Pisani, Deputy Municipal Operations Director
APPROVED:
TITLE: Selection of a Vendor to Evaluate City Refuse Services
ABSTRACT:
The City Manager has directed staff to evaluate key City services to insure they are
provided in an economical and efficient manner. To provide such an evaluation,
Municipal Operations staff completed an RFP process to select a qualified consultant to
perform a baseline study of refuse collection service operations and total costs, as well
as to analyze alternatives and "best practices" models.
RECOMMENDATION:
Authorize the Mayor to enter into an agreement with HF &H Consultants, LLC, of Irvine
to complete an analysis of the services performed by the City Refuse Division and to
perform the requested tasks at a cost of $99,500,
FUNDING REQUIREMENTS:
The current adopted budget includes sufficient 'funding for this contract. it will be
expensed to the Professional and Technical Services account in the Municipal
Operations Department (MOD), 3150 -8084.
DISCUSSION:
In recent years; the City has evaluated several important services to evaluate whether
an in- house, outsourced, or hybrid model is appropriate. These include airborne law
enforcement, street sweeping, parking meter management, beach refuse collection,
restroom maintenance, and more.
Refuse collection is one area that the City Manager believes deserves an analysis, too
— in part because:
Selection of a Vendor to Evaluate City Refuse Services
January 24, 2412
Page 2
7
• It is a $5.7 million annual cost item to the City;
• Personnel costs — including benefits and injury/claims compensation — remain a
significant part of any labor - intensive public operation;
• The current system where cans are non - standard and do not have fixed lids can
lead to code enforcement issues and limits automation where automation is
possible;
• Because of Compressed Natural Gas (CNG) requirements, the cost of air quality-
compliant refuse collection trucks is fairly high;
• It is relatively rare that cities provide this service directly, creating a strong group
of contracting companies in the marketplace;
• Significant portions of the community today are served by private- sector vendors
(Santa Ana Heights, Bonita Canyon, Bay Knolls, Newport Coast, all multi - family
residential units); and
• Single- family homes in portions of the community today with City - provided refuse
collection have the service funded via the 1% "Basic Levy" of their property tax,
while other portions of the community pay for refuse collection separately and in
addition to their property tax — making the City- provided refuse collection service
compete with operations in police„ fire, EMS, library, and other departments for
resources.
That noted, staff also recognizes that:
• This is a City service that is well - regarded by residents as a critical perquisite for
living in those portions of Newport Beach that have City - provided refuse
collection;
• Staff members who serve in the Refuse Division provide a very physical and
challenging job, and they do so with great professionalism and exemplary
customer service;
• The City's neighborhoods are very diverse — a refuse collection model for Balboa
Island may not work as well in the Port Streets, nor West Newport or the Balboa
Peninsula; and
• Any change to the current service — regardless of in -house versus contracted
model — should reduce costs while still meeting or exceed the current service
standards (unlimited cans, mixed waste recycling, customer care standards, and
more).
To evaluate whether refuse collections in MOD are provided in the most economical
and efficient fashion, the City Manager directed staff to conduct a study of refuse
collection operations. MOD and Finance Department staff prepared a Request for
Proposals (RFP) seeking a qualified firm to conduct a study of existing operations,
costs, level of service and a best practices in the refuse collection industry.
Selection of a Vendor to Evaluate City Refuse Services
January 24, 2012
Page 3
7
The RFP specified three primary tasks and one optional task. Task 1 is to completely
analyze the current City refuse collection program through the collection of cost and
operational (number of homes collected, tons of waste collected) data. This task will
also include an analysis of collection equipment, maintenance, workers comp and
liability costs, management costs and take into account future needs.
Task 2 will use this data to compare our costs to service delivery models in other
municipalities, using examples of cities where solid waste is collected by either city staff
or a private company. This task will also include an examination of the potential service
changes to City refuse collection (automated collection, source separated vs.
commingled recyclable collection, and more).
In Task 3, the consultant will develop a report of their findings, review their conclusions
with staff, and ultimately report the findings to the City Council. The report will provide
the City Council an independent, outside evaluation of the services provided by the City
and suggest opportunities for improved service and reduced costs, if any.
Task 4 is optional and will only be activated at the City Council's direction. This task is
to have the selected firm assist in administrating a separate RFP process to solicit bids
to provide refuse collection from private waste hauling firms, or from the current City
operations team. This task will only be requested if after receiving the Refuse Service
Report the City Council directs staff to begin an RFP solicitation process,
RFP Process:
do November 9, 2011, the RFP solicitation was publicly distributed.
A pre-proposal meeting was conducted on November 17, 2011 to allow interested
parties to discuss the scope of services requested in the RFP With City staff. At the
submittal deadline, the RFP solicitation generated proposals from three (3) consulting
firms: HF&H Consultants, SCS Engineers and Waste Systems Management. To
property evaluate the proposals, an internal evaluation panel was convened whose
members are knowledgeable of refuse operations and finance.
In accordance with the administrative procedures set forth in Council Policy F -14, a two-
step Qualifications-Based Selection process was utilized by the evaluation panel. In the
first step, proposals were evaluated on criteria that included: demonstrated
understanding of the services requested and the project at hand, experience in public
sector solid waste consulting services, qualifications of personnel assigned to the
project and overall project methodology. Using these criteria, the proposals were
evaluated and ranked against each other. The second step involved opening and
assessing the feasibility of the cost proposal of the highest qualified firm. The following
is a brief narrative on each proposal received, in order of rank:
Selection of a Vendor to Evaluate City Refuse Services
January 24, 2092
Page 4
7
HF &H Consultants:
This firm, based in Irvine, presented a proposal that reflected the firm's extensive
knowledge of the solid waste collection industry and experience in handling similar
studies for other local municipalities. HF &H Consultants' proposed project team
included dedicated experts in financial analyses, local government policy, accounting,
law and solid waste best practices. In their proposal, HF &H Consultants provided
samples of studies and reports performed for the cities of Beverly Hills and Long Beach
which impressed the evaluation panel. The RFP also contained a Statement of
Disclosure requiring all firms to disclose any prior business relationships with solid
waste collection hauling firms; HF &H Consultants had no reportable business activities
or relationships with any of these firms.
SGS Engineers:
This firm, based in Long Beach, also impressed the evaluation panel with demonstrated
knowledge of the solid waste collection industry and project history. However the
proposal from SCS Engineers proposed a collaborative effort with a firm named R3
Consulting Group in performing the requested analyses. Among the evaluation panel
there was some reservation regarding this proposed collaboration, resulting in a slightly
higher rank for HF &H Consultants due to their experienced and balanced proprietary
project staff. Furthermore, SGS Engineers disclosed some project history with a
number of private solid waste collection hauling firms.
Waste Systems Management:
While the proposal from this La Mirada -based firm demonstrated a working knowledge
of the project and the analyses required, it also appeared to present the least amount of
similar project experience of all the proposals received. Although highly skilled, there
were only two (2) staff members proposed to be assigned to this project and that
concerned the evaluation panel. Waste Systems Management had no reportable
business activities or relationships to disclose.
Final Ranking. After evaluating all three (3) received proposals, the evaluation panel
ranked HF &H Consultants as the most qualified firm for this project. The cost proposal
from HF &H Consultants was then opened and at Ninety Nine Thousand Five Hundred
dollars ($99,500.00) was concurrent with the projected cost for this project. The RFP
detailed three (3) key objectives to be performed by the selected consultant: (1) analysis
of the City's current refuse collection program, (2) analysis and comparison of the City's
service levels to those of other local municipalities and (3) development and reporting of
the findings of these analyses. The proposal also included the optional 4'" task to assist
in an RFP process if direction from Council is received. The cost proposal of
$99,500.00 from HF &H Consultants provides for 484 total hours to complete these
objectives.
Selection of a Vendor to Evaluate City Refuse Services
January 24, 2042
Page 5
Attached is a Professional Services Agreement with HF &H Consultants to perform the
requested services. Following City Council approval, the Agreement will be executed
by the City Manager.
Staff will not proceed into Task 4 unless directed to do so by formal vote of the City
Council upon completion and public discussion of the HFH report.
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).
Submitted by:
Mark Harmon, Director`
Municipal Operations Department
Attachments: A. Professional Services Agreement with HF &H Consultants, LLC for
Residential Solid Waste and Recycling Consultation Services
PROFESSIONAL SERVICES AGREEMENT WITH
H F & H CONSULTANTS, LLC
FOR RESIDENTIAL SOLID WASTE AND RECYCLING CONSULTING SERVICES
THIS AGREEMENT FOR PROFESSIONAL SERVICES ( "Agreement ") Is made
and entered into as of this day of January, 2012 by and between the CITY OF
NEWPORT BEACH, a Califomia municipal corporation and charter city ( "City"), and H F
& H CONSULTANTS, LLC, a Caliifomia limited liability company ( "Consultant"), whose
address is 19200 Von Karman Avenue, Suite 360, Irvine, California 92612 and is made
with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on Its business as It is now being
conducted under the statutes of the State of California and the Charter of City.
B. City currently provides residential solid waste and recycling services to many City
residents.
C. City desires to engage Consultant to assess the service level of the City's current
residential solid waste and recycling program, including comparison of the City's
service levels to those of other agencies and private refuse collection operational
models ( "Project").
D. Consultant possesses the skill, experience, ability, background, certification and
knowledge to provide the services described in this Agreement.
E. The principal member of Consultant for purposes of Project shall be Laith Ezzet,
Senior Vice President.
F. City has solicited and received a proposal from Consultant, has reviewed the
previous experience and evaluated the expertise of Consultant, and desires to
retain Consultant to render professional services under the terms and conditions
set forth in ,this Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned
parties as follows:
1. TERM
The term of this Agreement shall commence on the above written date, and shall
terminate on July 31, 2012 unless terminated earlier as set forth herein.
2. SERVICES TO BE PERFORMED
City and Consultant acknowledge that the above Recitals are true and correct and are
hereby Incorporated by reference. Consultant shall diligently perform all the services
described in the Scope of Services attached hereto as Exhibit A and incorporated
herein by reference ( "Work" or "Services "). The City may elect to delete certain tasks of
the Scope of Services at its sole discretion.
3. TIME OF PERFORMANCE
Time is of the essence in the performance of Services under this Agreement. and
Consultant shall perform the Services in accordance with the schedule included in
Exhibit A. The failure by Consultant to strictly adhere to the schedule may result in
termination of this Agreement by City.
4. COMPENSATION TO CONSULTANT
4.1 City shall pay Consultant for the Services on a time and expense not-to-
exceed basis in accordance with the provisions of this Section and the Schedule of
Billing Rates attached hereto as Exhibit B and Incorporated herein by reference.
Consultants compensation for all Work performed in accordance with this Agreement,
Including all reimbursable items and subconsultant fees, shall not exceed Ninety Nine
Thousand Five Hundred Dollars and no/100 ($99.500.00) without prior written
authorization from City. No billing rate changes shall be made during the term of this
Agreement without the prior written approval of City.
4.2 Consultant shall submit monthly invoices to City describing the Work
performed the preceding month. Consultants bills shall include the name of the person
who performed the Work, a brief description of the Services performed and /or the
specific task in the Scope of Services to which it relates, the date the Services were
performed, the number of hours spent on all Work billed on an hourly basis, and a
description of any reimbursable expenditures. City shall pay Consultant no later than
thirty (30) days'after approval of the monthly invoice by City staff.
4.3 City shall reimburse Consultant only for those costs or expenses
specifically approved in this Agreement, or specifically approved in writing in advance
by City. Unless otherwise approved, such costs shall be limited and include nothing
more than the following costs incurred by Consultant:
4.3.1 The actual costs of subconsultants for performance of any of the
Services that Consultant agrees to render pursuant to this Agreement, which have been
approved in advance by City and awarded in accordance with this Agreement.
4.3.2 Approved reproduction charges.
4.3.3 Actual costs and/or other costs and /or payments specifically
authorized in advance in writing and incurred by Consultant in the performance of this
Agreement.
4.4 Consultant shall not receive any compensation for Extra Work performed
without the prior written authorization of City. As used herein, "Extra Work' means any
Work that is determined by City to be necessary for the proper completion of the
Project, but which is not included within the Scope of Services and which the parties did
not reasonably anticipate would be necessary at the execution of this Agreement.
H F & H Consultants, LLC Page 2
Compensation for any authorized Extra Work shall be paid in accordance with the
Schedule of Billing Rates as set forth in Exhibit B.
5. PROJECT MANAGER 7
5.1 Consultant shall designate a Project Manager, who shall coordinate all
phases of the Project. This Project Manager shall be available to City at all reasonable
times during the Agreement term. Consultant has designated Laith Ezzet, Senior Vice
President to be its Project Manager. Consultant shall not remove or reassign the
Project Manager or any personnel listed in Exhibit A or assign any new or replacement
personnel to the Project without the prior written consent of City. City's approval shall
not be unreasonably withheld with respect to the removal or assignment of non -key
personnel.
5.2 Consultant, at the sole discretion of City, shall remove from the Project
any of its personnel assigned to the performance of Services upon written request of
City. Consultant warrants that It will continuously furnish the necessary personnel to
complete the Project on a timely basis as contemplated by this Agreement.
6. ADMINISTRATION
This Agreement will be administered by the Municipal Operations Department. Mark
Hannon, Municipal Operations . Director, or his/her designee, shall be the Project
Administrator and shall have the authority to act for City under this Agreement. The
Project Administrator or his/her authorized representative shall represent City in all
matters pertaining to the Services to be rendered pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
7.1 in order to assist Consultant in the execution of its responsibilities under
this Agreement, City agrees to, where applicable:
7.1.1 Provide access to, and upon request of Consultant, one copy of all
existing relevant Information on file at City. City will provide all such materials in a
timely manner so as not to cause delays in Consultants Work schedule.
8. STANDARD OF CARE
8.1 All of the Services shall be performed by Consultant or under Consultants
supervision. Consultant represents that it possesses the professional and technical
personnel required to perform the Services required by this Agreement, and that it will
perform all Services in a manner commensurate with community professional
standards. All Services shall be performed by qualified and experienced personnel who
are not'employed by City, nor have any contractual relationship with City. By delivery of
completed Work, Consultant certifies that the Work conforms to the requirements of this
Agreement and all applicable federal, state and local laws and the professional standard
of care.
8.2 Consultant represents and warrants to City that it has, shall obtain, and
shall keep in full force in effect during the term hereof, at its sole cost and expense, all
H F & H Consultants, LLC Page 3
licenses, permits, qualifications, insurance and approvals of whatsoever nature that is
legally required of Consultant to practice its profession. Consultant shall maintain a City
of Newport Beach business license during the term of this Agreement.
7
8.3 Consultant shall not be responsible for delay, nor shall Consultant be
responsible for damages or be in default or deemed to be in default by reason of strikes,
lockouts, accidents, or acts of God, or the failure of City to furnish timely information or
to approve or disapprove Consultant's Work promptly, or delay or faulty performance by
City, contractors, or governmental agencies.
9. HOLD HARMLESS
9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend
and hold harmless City, Its City Council, boards and commissions, officers, agents,
volunteers, and employees (,collectively, the "Indemnified Parties ") from and against any
and all claims (including, without limitation, claims for bodily injury, death or damage to
property), demands, obligations, damages, actions, causes of action, suits, losses,
judgments, fines, penalties, liabilities, costs and expenses (including, without limitation,
attomey's fees, disbursements and court costs) of every kind and nature whatsoever
(individually, a Claim; collectively, "Claims "), which may arise from or in any manner
relate (directly or indirectly) to any breach of the terms and conditions of this
Agreement, any Work performed or Services provided. under this Agreement including,
without limitation, defects in workmanship or materials or Consultant's presence or
activities conducted on the Project (including the negligent and /or willful acts, errors
and /or omissions of Consultant, its principals, officers, agents, employees, vendors,
suppliers, subconsultants, subcontractors, anyone employed directly or indirectly by any
of them or for whose acts they may be liable or any or all of them).
9.2 Notwithstanding the foregoing, nothing herein shall be construed to
require Consultant to indemnify the Indemnified Parties from any Claim arising from the
sole negligence or willful misconduct of the Indemnified Parties. Nothing in this
Indemnity shall be construed as authorizing any award of attorney's fees in any action
on or to enforce the terms of this Agreement. This indemnity shall apply to all claims
and liability regardless of whether any insurance policies are applicable. The policy
limits do not act as a limitation upon the amount of indemnification to be provided by the
Consultant.
10. INDEPENDENT CONTRACTOR
It is .understood that City retains Consultant on an independent contractor basis and
Consultant is not an agent or employee of City. The manner and means of conducting
the Work are under the control of Consultant, except to the extent they are limited by
statute, rule or regulation and the expressed terms of this Agreement. Nothing in this
Agreement shall be deemed to constitute approval for Consultant or any of Consultant's
employees or agents, to be the agents or employees of City. Consultant shall have the
responsibility for and control over the means of performing the Work, provided that
Consultant is in compliance with the terms of this Agreement. Anything in this
Agreement that may appear to give City the right to direct Consultant as to the details of
H F & H Consultants, LLC Page 4
the performance or to exercise a measure of control over Consultant shall mean only
that Consultant shall follow the desires of City with respect to the results of the Services.
11. COOPERATION 7
Consultant agrees to work closely and cooperate fully with City's designated Project
Administrator and any other agencies that may have jurisdiction or interest in the Work
to be performed. City agrees to cooperate with the Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relating to policy and Project direction
with City's Project Administrator in advance of all critical decision points in order to
ensure the Project proceeds in a manner consistent with City goals and policies.
13. PROGRESS'
Consultant is responsible for keeping the Project Administrator and /or his/her duly
authorized designee informed on a regular basis regarding the status and progress of
the Project, activities performed and planned, and any meetings that have been
scheduled or are desired.
14. INSURANCE
14.1 Without limiting Consultant's indemnification of City, and •prior to
commencement of Work, Consultant shall obtain, provide and maintain at its own
expense during the tern of this Agreement, policies of insurance of the type and
amounts described below and in a form satisfactory to City.
14.2 Proof of Insurance. Consultant shall provide certificates of insurance to
City as evidence of the insurance coverage required herein, along with a waiver of
subrogation endorsement for workers' compensation. Insurance certificates and
endorsement must be .approved by City's Risk Manager prior to commencement of
performance. Current certification of insurance shall be kept on file with City at all times
during the term of this Agreement. City reserves the right to require complete, certified
copies of all required insurance policies, at any time.
14.2.1 Consultant shall procure and maintain for the duration of the
Agreement insurance against claims for injuries to persons or damages to property,
which may arise from or in connection with the performance of the Work hereunder by
Consultant, his agents, representatives, employees or subcontractors. The cost of such
Insurance shall be included In Consultant's bid.
14.3 Acceptable Insurers. All insurance policies shall be issued by an
Insurance company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders' Rating
of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the
latest edition of Best's Key Rating Guide, unless otherwise approved by the Cfty's Risk
Manager.
H F & H Consultants, LLC Page 5
14.4 Coveraae Requirements.
14.4.1 Workers' Compensation Coverage. Consultant shall maintain
Workers' Compensation Insurance (Statutory Limits) and Employer's Liability Insurance
(with limits of at least one million dollars ($1,000,000)) for Consultant's employees in
accordance with the laws of the State of California, Section 3700 of the Labor Code In
addition, Consultant shall require each subconsultant to similarly maintain Workers'
Compensation Insurance and Employer's Liability Insurance in accordance with the
laws of the State of Califomia, Section 3700 for all of the subcontractor's employees.
14.4.1.1 Any notice of cancellation or non - renewal of all
Workers' Compensation policies must be received by City at least thirty (30) calendar
days (ten (10) calendar days written notice of non - payment of premium) prior to such
change.
14.4.1.2 Consultant shall submit to City, along with the
certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its
officers, agents, employees and volunteers.
14.5 General Liability Coverage. Consultant shall maintain commercial general
liability insurance In an amount not less than one million dollars ($1,000,000) per
occurrence for bodily injury, personal injury, and property damage, including without
limitation, blanket contractual liability.
14.6 Automobile Liability Coverage. Consultant shall maintain automobile
insurance covering bodily injury and property damage for all activities of the Consultant
arising out of or in connection with Work to be performed under this Agreement,
Including coverage for any owned, hired, non -owned or rented vehicles, in an amount
not less than one million dollars ($1,000,000) combined single limit for each accident.
14.7 Professional Liability (Errors & Omissions) Coverage. Consultant shall
maintain professional liability insurance that covers the Services to be performed in
connection with this Agreement, in the minimum amount of one million dollars
($1,000,000) limit per claim and in the aggregate.
14.8 Other Insurance Provisions or Reauirements.
14.8.1 The policies are to contain, or be endorsed to contain, the following
provisions:
14.8.1.1 Waiver of Subrogation. All Insurance coverage
maintained or procured pursuant to this agreement shall be endorsed to waive
subrogation against City, its elected or appointed officers, .agents, officials, employees
and volunteers or shall specifically allow Consultant or, others providing insurance
evidence in compliance with these requirements to waive their right of recovery prior to
a loss. Consultant hereby waives its own right of recovery against City, and shall require
similar written express waivers and insurance clauses from each of its subcontractors.
14.8.1.2 Enforcement of Agreement Provisions. Consultant
acknowledges and agrees that any actual or alleged failure on the part of the City to
H F & H Consultants, LLC Page 6
inform Consultant of non - compliance with any requirement Imposes no additional
obligations on the City nor does it waive any rights hereunder.
14.8.1.3 Requirements not Limiting. Requirements of specific
coverage features or limits contained in this Section are not Intended as a limitation on
coverage, limits or other requirements, or a waiver of any coverage normally provided
by any insurance. Specific reference to a given coverage feature is for purposes of
clarification only as It pertains to a given issue and is not Intended by any party or
Insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type.
14.8.1.4 Notice of Cancellation. Consultant agrees to oblige
Its insurance agent or broker and insurers to provide to City with thirty (30) days notice
of cancellation (except for nonpayment for which ten (10) days notice is required) or
nonrenewal of coverage for each required coverage.
14.9 Timely Notice of Claims. Consultant shall give City prompt and timely
notice of claims made or suits instituted that arise out of or result from Consultant's
performance under this Agreement.
14.10 Additional Insurance. Consultant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which In its own judgment
may be necessary for its proper protection and prosecution of the Work.
15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specifically authorized under this Agreement, the Services to be provided
under this Agreement shall not be assigned, transferred contracted or subcontracted out
without the prior written approval of City. Any of the following shall be construed as an
assignment: The sale, assignment, transfer or other disposition of any of the Issued
and outstanding capital stock of Consultant, or of the Interest of any general partner or
joint venturer or syndicate member or cotenant If Consultant is a partnership or joint -
venture or syndicate or cotenancy, which shall result in changing the control of
Consultant. Control means fifty percent (50 %) or more of the voting power, or twenty -
five percent (25 %) or more of the assets of the corporation, partnership or joint - venture.
16. SUBCONTRACTING
The parties recognize that a substantial inducement to City for entering Into this
Agreement is the professional reputation, experience and competence of Consultant.
Assignments of any or all rights, duties or obligations of the Consultant under this
Agreement will be permitted only with the express written consent of City. Consultant
shall not subcontract any portion of the Work to be performed under this Agreement
without the prior written authorization of City.
17. OWNERSHIP OF DOCUMENTS
17.1 Each and every report, draft, map, record, plan, document and other
writing produced (hereinafter "Documents "), prepared or caused to be prepared by
Consultant, its officers, employees, agents and subcontractors, in the course of
Implementing this Agreement, shall become the exclusive property of City, and City
H F & H Consultants, LLC Page 7
shall have the sole right to use such materials in its discretion without further
compensation to Consultant or any other party. Consultant shall, at Consultant's
expense, provide such Documents to City upon prior written request.
7
17.2 Documents, including drawings and specifications, prepared by
Consultant pursuant to this Agreement are not intended or represented to be suitable
for reuse by City or others on any other project. Any use of completed Documents for
other projects and any use of incomplete Documents without specific written
authorization from Consultant will be at City's sole risk and without liability to
Consultant. Further, any and all liability arising out of changes made to Consultant's
deliverables under this Agreement by City or persons other than Consultant is waived
against Consultant and City assumes full responsibility for such changes unless City
has given Consultant prior notice and has received from Consultant written consent for
such changes.
18. CONFIDENTIALITY
All Documents, including drafts, preliminary drawings or plans, notes and
communications that result from the Services in this Agreement, shall be kept
confidential unless City authorizes in writing the release of information.
19. INTELLECTUAL PROPERTY INDEMNITY
The Consultant shall defend and indemnify City, its agents, officers, representatives and
employees against any and all liability, including costs, for infringement of any United
States' letters patent, trademark, or copyright infringement, Including costs, contained in
Consultant's drawings and specifications provided under this Agreement.
20. RECORDS
Consultant shall keep records and invoices in connection with the Work to be performed
under this Agreement Consultant shall maintain complete and accurate records with
respect to the costs incurred under this Agreement and any Services, expenditures and
disbursements charged to City, for a minimum period of three (3) years, or for any
longer period required by law, from the date of final payment to Consultant under this
Agreement. All such records and invoices shall be clearly identifiable. Consultant shall
allow a representative of City to examine, audit and make transcripts or copies of such
records and Invoices during regular business hours. Consultant shall allow Inspection
of all Work, data, Documents, proceedings and activities related to the Agreement for a
period of three (3) years from the date of final payment to Consultant under this
Agreement:
21. WITHHOLDINGS
City may withhold payment to Consultant of any disputed sums until satisfaction of the
dispute with respect to such payment. Such withholding shall not be deemed to
constitute a failure to pay according to the terms of this Agreement. Consultant shall
not discontinue Work as a result of such withholding. Consultant shall have an
Immediate right to appeal to the City Manager or his/her designee with respect to such
disputed sums. Consultant shall be entitled to receive interest on any withheld sums at
H F & H Consultants, LLC Page 8
the rate of return that City eamed on Its investments during the time period, from the
date of withholding of any amounts found to have been improperly withheld.
22. ERRORS AND OMISSIONS 7
In the event of errors or omissions that are due to the negligence or professional
inexperience of Consultant which result in expense to City greater than what would
have resulted if there were not errors or omissions in the Work accomplished by
Consultant, the additional design, construction and/or restoration expense shall be
bome by Consultant. Nothing in this paragraph is intended to limit City's rights under the
law or any other sections of this Agreement.
23. CITY S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the right to employ other Consultants in connection with the Project.
24. CONFLICTS OF INTEREST
24.1 The Consultant or its employees may be subject to the provisions of the
Califomia Political Reform Act of 1974 (the "Act "), which (1) requires such persons to
disclose any financial interest that may foreseeably be materially affected by the Work
performed under this Agreement, and (2) prohibits such persons from making, or
participating in making, decisions that will foreseeably financially affect such interest.
24.2 If subject to the Act, Consultant shall conform to all requirements of the
Act. Failure to do so constitutes a material breach and is grounds for immediate
termination of this Agreement by City. Consultant shall indemnify and hold harmless
City for any and all claims for damages resulting from Consultant's violation of this
Section.
25. NOTICES
25.1 All notices, demands, requests or approvals to be given under the terms of
this Agreement shall be given in writing, and conclusively shall be deemed served when
delivered personally, or on the third business day after the deposit thereof in the United
States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All
nodoes, demands, requests or approvals from Consultant to City shall be addressed to
City at:
Attn: Mark Harmon, Municipal Operations Director
Municipal Operations Department
City of Newport Beach
3300 Newport Boulevard
PO Box 1768
Newport Beach,. CA 92658
Phone: 949- 6443055
Fax: 949 -650 -0747
25.2 All notices, demands, requests or approvals from City to Consultant shall
be addressed to Consultant at
H F &-H Consultants, LLC Page 9
Attention: Laith Ezzet, Senior Vice President
H F & H Consultants, LLC
19200 Von Karmen Avenue, Suite #360 7
Irvine, CA 92612
Phone: 949 -251 -8902
Fax: 949- 251 -9741
26. CLAIMS
The Consultant and the City expressly agree that in addition to any claims filing
requirements set forth In the Agreement, the Consultant shall be required to file any
claim the Consultant may have against the City in strict conformance with the Tort
Claims Act (Government Code sections 900 et seq.).
27. TERMINATION
27.1 In the event that either party fails or refuses to perform any of the
provisions of this Agreement at the time and In the manner required, that party shall be
deemed in default In the performance of this Agreement. If such default Is not cured
within a period of two (2) calendar days, or if more than two (2) calendar days are
reasonably required to cure the default and the defaulting party fails to give adequate
assurance of due performance within two (2) calendar days after receipt of written
notice of default, specifying the nature of such default and the steps necessary to cure
such default, and thereafter diligently take steps to cure the default, the non - defaulting
party may terminate the Agreement forthwith by giving to the defaulting party written
notice thereof.
27.2 Notwithstanding the above provisions, City shall have the right, at its sole
discretion and without cause, of terminating this Agreement at any time by giving seven
(7) calendar days prior written notice to Consultant. In the event of termination under
this Section, City shall pay Consultant for Services satisfactorily performed and costs
Incurred up to the effective date of termination for which Consultant has not been
previously paid. On the effective date of termination, Consultant shall deliver to City all
reports, Documents and other information developed or accumulated in the
performance of this Agreement, whether in draft or final form.
28. STANDARD PROVISIONS
28.1 Compliance With all Laws. Consultant shall at its own cost and expense
comply with all statutes, ordinances, regulations and requirements of all governmental
entities, Including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all Work prepared by Consultant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be
subject to approval of the Project Administrator and City.
28.2 Waiver. A waiver by either party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant or condition contained herein, whether
of the same or a different character.
H F & H Consultants, LLC Page 10
28.3 Integrated Contract. This Agreement represents the full and complete
understanding of every kind or nature whatsoever between the parties hereto, and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein. No verbal agreement or implied covenant shall be held to vary the provisions
herein.
28A Conflicts or Inconsistencies. In the event there are any conflicts or
inconsistencies between this Agreement and the Scope of Services or any other
attachments attached hereto, the terms of this Agreement shall govern.
28.5 Interpretation. The terms of this Agreement shall be construed in
accordance with the meaning of the language used and shall not be construed for or
against either party by reason of the authorship of the Agreement or any other rule of
construction which might otherwise apply.
28.6 Amendments. This Agreement may be modified or amended only by a
written document executed by both Consultant and City and approved as to form by the
City Attorney.
28.7 Severability. If any term or portion of this Agreement is held to be invalid,
Illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall continue in full force and effect.
28.8 Controlling Law and Venue. The laws of the State of Califomia shall
govern this Agreement and all matters relating to it and any action brought relating to
this Agreement shall be adjudicated in a court of competent jurisdiction in the County of
Orange, state of California.
28.8 Equal Opportunity Employment. Consultant represents that it is an equal
opportunity employer and it shall not discriminate against any subcontractor, employee
or applicant for employment because of race, religion, color, national origin, handicap,
ancestry, sex, age or any other impermissible basis under law.
28.10 No Attorney's Fees. In the event'of any dispute or legal action arising
under this Agreement, the prevailing party shall not be entitled to attorney's fees.
28.11 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
[SIGNATURES ON NEXT PAGE]
H F & H Consultants, LLC Page 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the dates written below.
7
APPROVED AS TO FORM: CITY OF NEWPORT BEACH,
CITY ATTORNEY'S OFFICE A California municipal corporation and
charter city
Date: I /I z. At- Date:
By: �lf C for } By:
Aaron C. ,lip, Dave Kiff
City Attorney \1`\ City Manager
ATTEST: CONSULTANT: H F & H Consultants,
Date: LLC, a California limited liability company
Date:
By:
Lellani I. Brown
City Clerk
By:
Leith B. Ezzet
Senior Vice President
Date:
By:
John Famkopf
Secretary
[END OF SIGNATURES]
Attachments:. Exhibit A — Scope of Services
Exhibit B — Schedule of Billing Rates
H F & H Consultants, LLC Page 12
EXHIBIT A — SCOPE OF SERVICES
7
Objective 1: Analysis of current City refuse collection program
Consultant shall perform a comprehensive operational and financial analysis of the
City's existing residential refuse collection program.
As part of this objective, the Consultant shall review the City's existing In -house
operations for residential refuse collection services. Operationally, the Consultant shall
define the current service level being provided by assessing the service levels of the
existing refuse collection operation, including schedules, routes, and more, and
analyzing recent program satisfaction ratings by residents relative to the service levels
currently provided. The Consultant shall also assess current and projected facility
requirements based on the existing operations. Financially, the Consultant shall
calculate the City's current program costs and projected cost increases for the in -house
refuse collection services provided by the City, including a valuation of the City's
existing solid waste collection equipment.
Consultant shalt perform the following specific tasks which comprise Objective 1:
1A. Prepare a preliminary data request for City staff;
1B. Prepare for and conduct a study kickoff meeting with City staff;
1C. Identify and document the City s existing refuse collection program;
1D. Calculate current solid waste operation costs and prepare a five (5 }year
projection of costs; and
1E. Identify and discuss changes in State of California regulations related to
waste collection and diversion.
Objective 2: Best practice models
Consultant shall explore residential refuse collection service levels of other local
municipalities and Identify possible service alternatives and service provision options
from other contracts.
As part of this objective, the Consultant shall report on what programs other local
municipalities have undertaken to effectively and• creatively provide refuse collection.
This provision may include discussions regarding those cities that have transitioned
from In -house operations to working with a private residential refuse collection service,
or any cities that have actually replaced outsourced providers. The Consultant shall
review these contracts and/or agreements to privatize and identify any services,
operating models, service enhancements or alternatives that may be feasibly adopted
by the City, that might include, but not be limited to:
• Automated collection,
• Environmentally - friendly (i.e. "green ") collection practices,
• Collection practices that might allow one resident to curbside recycle desptte
another on the same block wishing not to do so;
• Quieter collection practices,
• Bulk item collections,
• Alley collections.
This review will also include looking at other municipalities for any examplew that
demonstrate alternative service delivery approaches that enable the City to provide
refuse collection at levels that meet or exceed current standards. The Consultant shall
also evaluate :and compare the contract rates and costs for those local municipalities
that have privatized residential refuse collection, the City's current program cost, as well
as the costs incurred by municipalities that currently operate residential refuse collection
programs In- house.
Consultant shall perform the following specific tasks which comprise Objective 2:
2A. Identify and compare the residential refuse collection service levels and
cost metrics in five (5) selected local municipalities and rates charged to
customers;
2B. Identify and compare the residential refuse collection service levels and
cost metrics in five (5) regional cities with municipal residential refuse
Collection and the rates charged to customers;
2C. Describe other municipalities that have privatized refuse collection;
2D. Describe the potential service aftematives that could be provided by the
City; and
2E. Review the City's existing commercial refuse collection program.
Objective 3: Develop and present report of findings
Consultant shall compile the Information gathered from the previous Objectives and
develop a formal report presenting the findings, highlighting strengths of the City's
current refuse collection program and discussing potential options for service
improvement. '
The Consultant shall develop a formal report detailing the findings from Objectives 1
and 2. The report shall also discuss the City's current in house service model;
comparing service levels relative to other agencies, highlighting strengths of the current
refuse collection program and providing potential areas of improvement of the current
refuse collection program. The Consultant shall assess and quantify the future needs of
the City's . refuse collection program, such as resource and facilities requirements
needed to sustain the current in house program. The report shall also discuss the cost
and benefits of outsourcing options detailing how a private option could address the City
.of Newport's service level expectations. The report should also address any service
level enhancements from recent refuse collection contracts that the City may feasibly
Implement, including any potential benefits. Any examples of cost savings proposed
must also be accompanied with an analysis of both the magnitude and sustainability of
the proposed cost savings. The Consultant shall be required to present the report and
its corresponding findings to the Newport Beach City Council at up to two (2) Council
meeting sessions. These meetings are held on the second and fourth Tuesdays of
each month. As part of the response to the requirements of this Objective, the
Consultant shall also provide its methodology for compiling the report and presenting
the findings to a formal body, including content and approach.
H F & H Consultants, LLC Page 14
Consultant shall perform the following specific tasks which comprise Objective 3:
3A. Prepare a draft report of findings; 7
313. Review draft report with City staff;
3C. Prepare the final report; and
3D. Present findings to the City Council at up to two (2) meetings.
H F & H Consultants, LLC Page 15
EXHIBIT B — SCHEDULE OF BILLING RATES
R4 ey fH
iT
- 2 9 4 85 $1
_ . _
CODIECTIVE�f':'ANALYSLS;OF NPREN7iC1TYCPEFUSE :CDLLEGTION;P,ROGRAML' ,..4 ,_c ... ,s,'L,.'��'_,�2.i____. ��:. ',.� ��.
Task 1: Provide a Comprehensive Analysis of the Existing Refuses Collection S tem
1A
Prepare a preliminary data request for City staff.
1.
2
2
2
7
IB
Prepare for and conduct a study kickoff meeting with City staff.
4
8
4
2
0
18
lC
Identify and document thin Cltys existing refuse collection program.
8
8
16
32
1D
Calculate current so lid waste operation costs and prepare
five -year projection of costs
8
8
16
32
IE
Identify and discuss changes In State of California regulations
related to waste collection and diversion.
8
4
12
24
Total Hours Task -1
29 1 0 1 30
1 6 1 36
1 12
113
Total Estimated Cost -Task 1.
7,221$ -$ 1 6,270$ 1 11 1 6,660$ 1 2,268$
23,649$
goEDEl71VE 2.' rANALYSIS 'Of$ESLF,WI=IICE.MODEISI �'mbr i+�-' r: -'T uw"u =°�.'. �e� "."ya ' "•' ., s.:"P`M,z ..' x�'., Ni
Task 2: Identify residential refuse collection service level of other local murd patties and potential sevice alternatives and service provision o pitions In other contracts.
2A
Identify and compare the residential refuse collection service levels
and cost metric In five selected local municipalities and rates
charged to customers. 1
8
12
2
51
2
75
28
Identify and compare the residential refuse collection service levels
and cost metrics In five regional cities with municipal residential
refuse collection and the rates charged to customers.
8
12.
2
so
2
74
2C
Describe other municipalities that have privatized refuse collection.
4
4
4
12
20
Describe the potential service alternatives that could be provided by
the Clt .
3
B
2
16
2
31
2E
Review the Ct 's exktln commercial collection ro ram.
I Optional Task
Total Hours -Task 2
23 0 36
10 117 6 192
Total Estimated Cost -Task 2
FOMEOIIVEi DEVELOP. ?AaD.'PRESEkl IAO'Cr i KF1A -61 ill i.?1. ,Ci
111 51 -$ 7,524$ 2,050$ 21,645$ 1,134$ 38,080$
-- • wss. ..n _- �::,i1
Task 3: Develop and Present a Report documenting our findings
3A Prepare a draft report of findings!
16
2
32
4
40
4
98
38 Review draft report with City staff.
3
3
3
9
3C Prepare the Mal report.
6
8
16
30
3D Present findings to the City Council. (Up to 2 meetings)
8
2
16
16
42
Total Hours -Task 3
33
4
59
4
75
4
179
Total Estimated Cost -Task 3 8,217$ 996$
Total Hours 85 1 4 1
12,331$
125
820$
20
13,875$
228
756$
22
36,995$
484
Total Estimated Cost
21,165$ 1 996$ 1
26,125$
41
42,180$ 1
4,158$
98,724$
Other Expenses or Charges Total Estimated Project Cost
776
99,500$
H F & H Consultants, LLC Page 16
October 4, 2012
This document is printed on 100% post- consumer content recycled paper
19200 Von Karman Avenue; Suite 360
Irvine, California 92612
Telephone: 949/251-8628
Fax: 949/251 -9741
www.hfh-consuitcints.com
October 4, 2012
Mr. Mark Harmon
General Services Director
City of Newport Beach
3300 Newport Boulevard
P.O. Box 1768
Newport Beach, California 92658
Dear Mr. Harmon,
Managing Tomorrow's Resources Today
Residential Solid Waste and Recycling Study
Robert D. Hilton, CIVIC
John W. Farnkopf, PE
Laith B. Ezzet, CIVIC
Richard J. Simonson, CIVIC
Marva M. Sheehan, CPA
We have completed the City of Newport Beach's ( "City') residential solid waste and recycling study. The
enclosed report describes the study's background, objectives, scope of work and findings. An executive
summary follows the cover letter.
We are pleased to have had the opportunity to assist the City of Newport Beach with this study. We
would like to express our appreciation for the assistance provided by Mike Pisani, Dan Matusiewicz,
Tracy McCraner and Evelyn Tseng. If you have any questions, please call Laith at (949) 251 -8902 or
Darrell at (949) 251 -0231.
Very truly yours,
HF &H CONSULTANTS, LLC
Laith B. Ezzet, CIVIC Darrell L. Bice, CPA
Senior Vice President Director of Solid Waste and Recycling Audits
This page intentionally left blank
of Newport Beach Table of Contents
Residential Solid Waste and Recycling Study
TABLE OF CONTENTS
EXECUTIVE SUMMARY .................................................................. ..............................1
SECTION I: BACKGROUND, OBJECTIVES, AND SCOPE OF WORK ........................4
Background................................................................................. ............................... 4
StudyObjectives .......................................................................... ..............................4
Scopeof Work ............................................................................ ............................... 5
SECTION II: FINDINGS .................................................................... ..............................6
TABLE OF TABLES
Table 1:
Solid Waste Operation Costs — Budget FY 2011/12 (1) (2) .............................. ...............................
9
Table 2:
Five Year Projection — FY 2012/13 to FY 2016/17 (1) (2
11
Table 3:
Estimated Incremental Solid Waste Operation Costs M .................................. .............................11
Table 4:
Costs that would be Reallocated to Other Departments i1i ............................. .............................12
Table 5:
Anticipated Vehicle Replacements in FY 12/13, FY 13/14 and FY 14/15 (l) ..... .............................16
Table 6:
Comparison of Adjusted Cost per Residential Dwelling Unit per Month (Orange County Cities)
('�
.......................................................................................................................................
.............................17
Table 7:
Comparison of Adjusted Cost per Ton Collected (Orange County Cities (l) (z)
17
Table 8:
Comparison of Adjusted Cost per Residential Dwelling Unit per Month (Municipal Residential
Service)
(l) ....................................................................................................................... .............................18
Table 9:
Comparison of Adjusted Cost per Ton (Municipal Residential Service) " )") ... .............................19
Table 10:
Summary of Payments by CR &R to Hemet Over 20 Years ............................ .............................20
Table 11:
Comparison of Current System to Alternative Rate Structure ....................... .............................24
Table 12:
Distribution of Proposed Rate Revenues above the Lowest Price ( 1) ............. .............................25
Table 13:
Estimate Savings (Costs) from Privatization ................................................... .............................26
Table 14:
Estimated Savings from Private Sector Labor Cost 11i .................................... .............................27
Table 15:
Estimated Savings from Private Sector Cost Net of Private Sector Profit (1) ( z ) ............................27
Table 16:
Estimate Annual Savings based on Commercial Net Receipts per Ton .......... .............................28
Table 17:
Estimate Annual Savings based on Newport Coast per Ton ........................ ...............................
29
TABLES OF FIGURES
Figure 1: Newport Beach Historical Diversion ........................
Figure 2: Distribution of Budgeted Costs * ..............................
Figure 3: Orange County Residential Collection Methods......
EXHIBITS
.................................... ............................... 9
.................................. ............................... 13
.................................. ............................... 23
Exhibit 1: Projection of Solid Waste Operations Cost
Exhibit 2A: Comparison with Orange County Cities
Exhibit 2B: Comparison of Cities with Municipal Residential Services
Exhibit 2C: City Services Cost Adjustment Factors
Exhibit 3: Calculation of Projected Savings (Costs) of Waste Collection Drivers
City of Newport Beach i October 4, 2012
City of Newport Beach Table of Contents
Residential Solid Waste and Recycling Study
Exhibit 4: Estimate of Annual Depreciation Cost for Solid Waste Vehicles and Equipment
Exhibit 5: Refuse Vehicle Original Cost, Net Book Value and Valuation
APPENDICES
Appendix A: Assumptions
Appendix B: Comparison of Orange County Municipalities Summary of Key Services
Appendix C: Comparison of Cities with Municipal Residential Collection Summary of Key Services
Appendix D: Summary of Solid Waste Collection Costs /Revenue
Appendix D: Competitive Procurement Results
City of Newport Beach ii October 4, 2012
of Newport Beach Executive Summary
Residential Solid Waste and Recycling Study
EXECUTIVE SUMMARY
Objective 1: Identify and Document the City's Existing Refuse Collection
Program
Finding 1: The City's municipal refuse collection program consists of 24 employees, 18 refuse collection
vehicles and a small volume transfer station in the Corporation Yard. The residents receive unlimited
refuse collection in containers provided by the resident and are not charged for callback service.
Residents are charged $2.96 per home per month for mixed waste processing service to recover
recyclables. Residents in Newport Coast are served by a private hauler, CR &R, Incorporated.
Objective 2: Calculate Current Solid Waste Operation Costs and Prepare a
Five -Year Projection of Costs
Finding 2A: Total solid waste operation cost, including the Newport Coast contract cost, other contract
costs and interdepartmental charges, is $6,379,000 in the FY 2011/12 budget, and is projected to
increase from 1.0% to 3.0% per year per year through FY 2016/17.
Finding 213: The cost of solid waste operations performed by the City that would be eliminated if the
operations were privatized ('incremental cost ") is estimated at $4,949,000 for FY 2011/12, excluding
Newport Coast and interdepartmental charges that would be reallocated to other City departments if
solid waste collection is privatized.
Finding 2C: Labor costs that would be eliminated initially if solid waste operations were privatized
represent 39% of the total budgeted solid waste operations cost for FY 2011/12, and 50% of incremental
solid waste operations cost. The estimated one -time labor cost payoff, if the solid waste operations
were privatized, would be approximately $505,000.
Finding 2D: The estimated market value of the solid waste vehicles and equipment ranges between $1.0
million and $1.4 million, and there is an additional $3.9 million in the vehicle replacement reserve.
Therefore, privatizing residential solid waste collection could provide a one -time cash infusion of
approximately $4.9 million to $5.3 million.
Objective 3: Identify and Discuss Changes in State of California Regulations
Related to Solid Waste Collection and Diversion
Finding 3: Legislation that may affect solid waste operations and rates include:
• AB 341, also known as the "Jobs and Recycling Act," was signed by Governor Brown on October
6, 2011. This legislation includes an increased goal for statewide diversion to 75% by 2020,
mandatory commercial recycling requirements plus additional changes to current legislation.
• Proposition 26 - In November 2010, the voters of California passed Proposition 26, which
requires that certain state fees be approved by a two - thirds vote of the Legislature and certain
local fees be approved by two - thirds of the voters.
• Rule 1193 — Clean On -Road Residential and Commercial Refuse Collection Vehicles was adopted
by the Southern California Air Quality Management District ( "AQMD ") in June 2000. Rule 1193
City of Newport Beach 1 October 4, 2012
of Newport Beach Executive Summary
Residential Solid Waste and Recycling Study
was designed to reduce toxic air emissions associated with older diesel powered sold waste
refuse collection vehicles. In July 2010, Rule 1193 was amended by the AWMD based on court
decisions, and identifies the timing in which owners of public and private fleets of solid waste
collection vehicles are required to obtain compliant refuse vehicles.
Objective 4: Identify and Compare the Residential Refuse Collection Service
Levels and Cost Metrics in Five Selected Local Orange County Municipalities
with Private Hauler Service
Finding 4A: The cost per residential dwelling unit per month for the City's municipal residential
collection for FY 2011/12 is $15.56 on an incremental basis and $17.84 on a full -cost basis and is at the
high end of the range of rates billed to residential customers for the five Orange County cities' included
in the comparison that ranged from $9.96 to $16.96 per residential dwelling unit per month. However,
some other cities residential costs may benefit from integrated residential and commercial contracts
and rate structures.
Finding 46: The cost per ton collected of $146 on an incremental basis and $167 on a full -cost basis are
higher than the cost per ton reported in four Orange County cities included in the comparison that
ranged from $88 to $109 per ton. However, other cities residential costs may benefit from integrated
residential and commercial contracts.
Objective 5: Identify and Compare the Residential Refuse Collection Service
Levels and Cost Metrics in Five Regional Cities with Municipal Residential
Collection
Finding 5A: The cost per residential dwelling unit per month for the City's municipal residential
collection for the FY 2011/12 is $15.56 on an incremental cost basis and $17.84 on a full -cost basis and
are at the low end of the range of rates charged to residential customers for the five cities with
municipal residential collection included in the comparison that ranged from $14.25 to $65.09 per
residential dwelling unit per month.
Finding 513: The cost per ton collected is $146 on an incremental basis and $168 on a full -cost basis for
the City's municipal residential collection are in the middle of the range for the five cities with municipal
residential collection in the comparison that ranged from $102 to $260 per ton.
Objective 6: Describe Other Municipalities that have Privatized Residential
Refuse Collection
Finding 6: The City of Fresno ( "Fresno ") privatized commercial refuse services in October 2011 and the
City of Hemet ( "Hemet ") privatized its solid waste collection services (residential and commercial) at the
end of calendar year 2011.
Objective 7: Describe the Potential Service Alternatives that Could be
Provided by the City
Finding 7A: The City has several options for modernizing residential refuse collection and potentially
increasing its diversion level, including:
City of Newport Beach 2 October 4, 2012
of Newport Beach
Executive Sum
Residential Solid Waste and Recycling Study
• Maintaining the existing manual collection system with mixed waste processing and adding a
separate green waste collection container,•
• Converting the existing manual collection system to a two -cart automated collection system with
one cart for refuse, with continued mixed waste processing, and one cart for separate green
waste collection; and
• Converting the existing manual collection system to a three -cart automated collection system for
the separate collection of refuse, recyclable materials and green waste, eliminating the mixed
waste processing requirement.
Finding 7B: By implementing a two - container or three - container collection system, the City may be able
to allocate a larger share of solid waste costs to customers through billing for recycling services.
Objective 8: Estimate the Range of Savings or Costs from Privatizing
Residential Solid Waste Collection
Finding 8A: The City would see a significant range of costs from private proposers to take over
residential solid waste operations. Based on recent proposals from private haulers in other cities, the
difference between the low and high cost proposals ranged from 31% to 128 %.
Finding 8B Using several alternative methods to estimate potential savings from privatization results in a
maximum estimate of between $1.5 million and $1.7 million annually and could be substantially less or
even result in a small cost increase depending on the bids received and the programs selected. The high
end of the range of $1.5 to $1.7 million represents 26% to 29% of the annual Refuse Division budget.
City of Newport Beach 3 October 4, 2012
City of Newport Beach Section I: Background, Objectives, and Scope of Work
Residential Solid Waste and Recycling Study
SECTION I: BACKGROUND, OBJECTIVES, AND SCOPE OF WORK
Background
Two of the 34 cities in Orange County provide municipal residential refuse collection service: the City of
Newport Beach ( "City ") and the City of Westminster (service performed by Midway City Sanitary
District). The City's refuse collection program consists of 24 employees and 18 refuse collection vehicles
servicing approximately 26,500 residential accounts on a weekly basis. The residents receive unlimited
manual refuse collection in containers provided by the resident. Residential recycling is achieved
through mixed waste processing, where the refuse is collected and transported to a material recovery
facility (CRT MRF in Stanton) for processing and diversion of recyclable materials. Approximately 15% of
the cities in Orange County utilize residential mixed waste processing to achieve their recycling goals.
While the Municipal Code contains a provision that refuse collection costs are funded from ad valorem
tax revenue, residents are billed a $2.96 surcharge each month to fund the additional cost of the mixed
waste processing program to recover recyclables.
Based on a customer satisfaction survey conducted in 2010, 92% of City residents are satisfied or very
satisfied with the refuse collection service. Although satisfaction with the service provided by City crews
was high, 61% of the residents that responded were in agreement that the City should contract out
residential trash collection to non -City employees.
In addition to the municipal solid waste collection services, the City contracts with a private company,
CR &R, to provide solid waste and recycling collection services to the recently annexed Newport Coast
community. Newport Coast includes approximately 4,200 single family accounts that receive refuse
collection at no charge and these customers do not pay the monthly recycling surcharge.
Study Objectives
The City's objectives for this study were to
1. Identify and document the City's existing refuse collection program.
2. Calculate current solid waste operation costs and prepare a five -year projection of costs.
3. Identify and discuss changes in State of California regulations related to solid waste collection
and diversion.
4. Identify and compare the residential refuse collection service levels and cost metrics in five
selected local Orange County municipalities with private hauler service.
5. Identify and compare the residential refuse collection service levels and cost metrics in five
cities in the counties of Orange and Los Angeles with municipal residential collection.
6. Describe other municipalities that have privatized residential refuse collection.
7. Describe the potential service alternatives that could be provided by the City.
8. Estimate the range of savings or costs from privatizing residential solid waste collection.
City of Newport Beach 4 October 4, 2012
City of Newport Beach Section I: Background, Objectives, and Scope of Work
Residential Solid Waste and Recycling Study
Scope of Work
In order to achieve the City's objectives, we:
1. Prepared a preliminary data request for City staff;
2. Prepared for and conducted a study kickoff meeting with City staff on February 22, 2012;
3. Identified and documented the City's existing refuse collection program;
4. Calculated current operational costs and prepared a five -year projection of costs;
5. Identified and discussed changes in State of California regulations related to waste collection
and diversion;
6. Identified and compared the residential refuse collection service levels and costs in Newport
Beach to five local municipalities in Orange County with private hauler service;
7. Identified and compared the residential refuse collection service levels and costs in Newport
Beach to five cities in the counties of Orange and Los Angeles with publicly - provided residential
refuse collection;
8. Described other municipalities that have privatized refuse collection; and
9. Described the potential service alternatives that could be provided by the City.
City of Newport Beach 5 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
SECTION II: FINDINGS
Objective 1: Identify and Document the City's Existing Refuse Collection
Program
Finding 1: The City's municipal refuse collection program consists of 24 employees, 18 refuse
collection vehicles (eight 1 -man front load and ten 2 -main rear load) and a small volume transfer
station in the Corporation yard. The residents receive unlimited refuse collection in containers
provided by the resident and are not charged for callback service. The Municipal Code contains a
provision that refuse collection costs are funded from ad valorem tax revenue. Residents are
billed a $2.96 surcharge per dwelling unit each month to fund the additional cost of the mixed
waste processing program to recover recyclables. No separate green waste collection services
are provided. Residents in Newport Coast are served by a private hauler, CR &R, Incorporated.
Overview of Collection Services
The Refuse Division is part of the Municipal Operations Department. The City provides residential solid
waste collection in most areas of the City, except for the Newport Coast community, which is collected
under contract by CR &R Incorporated ( "CR &R "), and the Santa Ana Heights area, which is served by the
Costa Mesa Sanitary District. Commercial collection is provided by a variety of private haulers under a
non - exclusive franchise system. The City provides manual refuse collection to approximately 26,500
residential accounts on a weekly basis. The City's refuse collection program consists of 24 employees,
18 refuse collection vehicles and a small volume transfer station in the Corporation Yard. The residents
receive unlimited refuse collection in containers provided by the resident and are not charged for
callback service.
Processing and Transfer
The residential solid waste collected by City personnel is brought to the City's transfer station at the
Corporation Yard to be transferred for processing and disposal. The City entered into an agreement with
CR &R for residential solid waste transfer services and material processing and recycling in June 2008
( "Processing Agreement "). The Processing Agreement requires that CR &R perform all of the solid waste
transfer, processing and disposal for material collected at the City's transfer station. The term of the
Processing Agreement is ten years, with five one -year extensions at the City's discretion. CR &R is
required to recover a minimum of 40% by weight of the materials received under the Processing
Agreement and dispose the remaining solid waste in the Orange County landfill system. The current
processing rate, including disposal, is $46.32 per ton. The City receives a per load credit of $92.51 for
the transfer of the solid waste collected from the City's transfer station to CR &R's material recovery
facility ( "MRF ") in Stanton. The rates paid to CR &R are adjusted as follows:
1. The processing fee, less the disposal cost shall be adjusted by the change in the Consumer Price
Index ( "CPI ") with a maximum 4% increase.
2. The City's transportation cost per load shall be adjusted by the change in the Consumer Price
Index ( "CPI ") with a maximum 4% increase.
The Processing Agreement should not impact the City's ability to privatize the solid waste operation.
Section 28B of the Processing Agreement states, "Notwithstanding the above provisions, City shall
have the right, at its sole discretion and without cause, of terminating this Agreement at any time by
City of Newport Beach 6 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
giving one hundred eighty (180) calendar days prior written notice to Hauler. Upon termination,
City shall pay to Hauler that portion of compensation specified in the Agreement that is earned and
unpaid prior to the commencement date of termination"
Vehicles and Equipment
Of the 18 trucks owned and operated by the City, ten are front load trucks and eight are rear load
trucks. The front load trucks are used on one -man routes and the rear load trucks are used on two -man
routes. The City purchased four compressed natural gas ( "CNG ") vehicles (two front load trucks and two
rear load trucks) in 2010. The average age of the refuse collection vehicles, including the four trucks
acquired in 2010, is approximately 10 years. The City is projecting the replacement of the existing
vehicles that have reached or exceeded their useful lives. The vehicles will be replaced with CNG
vehicles (four in Fiscal (FY) 2012/13, three in FY 2013/14 and three in FY 2014/15. The remaining diesel
vehicles will be replaced with CNG vehicles after reaching their useful lives beyond FY 2016/17.
The City operates three additional pieces of equipment at the Corporation Yard; a yard mule, a tractor
and a backhoe.
We estimate the current total value of the City vehicles ranges from $1.0 million to $1.4 million. The
low end estimate is based on the net book value of each vehicle or $25,000 salvage value for each fully
depreciated vehicle. The upper end estimate is based on the current on -line advertised prices for most
similar vehicles (year, body style and size, if available) from a national company. If there were no
advertisements for a vehicle's year, the closest later year was used. There were no front load vehicles
advertised with a 27 cubic yard packer. The advertised prices for front load vehicles with a 40 cubic yard
packer were used. If only one advertisement was available for a vehicle, the advertised price from the
one advertisement was used for the low and the high value.
Routes
The City operates 14 truck routes per day five days per week. During the summer month, the City runs
eight additional routes (half -day) on Saturdays in the West Newport and Balboa areas, and for the
Balboa Island residents who pay Transient Occupancy Tax ('TOT "). The Refuse Division has one Refuse
Superintendent and one Refuse Supervisor. On Mondays, the Refuse Division operates seven front load
routes (one -man) and seven rear load routes (two -man). On Tuesday through Friday the Solid Waste
Department operates nine front load routes and five rear load routes. One of the front load routes is
roughly'' /: day and that operator assists with transfer station operations for the remainder of the day. If
the front load drivers finish their routes early, they will often move to assist on one of the rear load
routes.
Other Services
There is no formal bulky item collection, but the City will collect items that can be easily broken up. This
service is provided after the resident contacts the City to obtain approval for the items to be collected.
Appliances are not included in the bulky item collection. Additionally, the City collects abandoned items.
The City is unable to collect household hazardous waste ( "HHW "), or sharps (syringes, needles, lancets,
etc.) Residents are directed to Orange County Household Hazardous Waste Collection Centers in several
locations in the County that accept HHW, and the City provides a Sharps and Medication Disposal
Directory to residents.
City of Newport Beach 7 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
The City partners with Goodwill Industries to provide electronic waste ( "e- waste') collection events.
Residents drop -off a -waste at the City's Corporation Yard. Goodwill Industries is a state - certified e-
waste collector.
Street Litter Containers
The servicing of the City's street litter containers is provided by City staff for approximately $300,000 per
year funded by the Operations Support Division. During FY 2010/11, street litter containers accounted
for 845 tons of solid waste, which was disposed of at the City transfer station and processed at CR &R's
MRF.
City Facilities Collection
Solid waste collection from City facilities is contracted to Ware Disposal for $31,950 per year charged to:
• $16,400 — Other City Divisions; and
• $15,550 — Refuse Division
The Refuse Division amount of $15,550 is based on the following:
o $500 — Corporation Yard;
o $13,750— Washington Street bin area; and
o $1,300 —City Hall.
Ware Disposal provides the containers.
Beach Collection
The City contracts with Rainbow Disposal for beach container collection for $127,441 per year. This cost
is funded from the Operations Support Division and not the Refuse Division. Rainbow Disposal provides
the containers.
Solid Waste Operation Costs
As reflected in Table 1, adjusted solid waste operation costs for FY 2011/12 are $5,673,000. This is
based on a total budget of $6,379,000, net of the $612,000 budgeted contract costs for the refuse
collection service provided by CR &R in the Newport Coast area of the City, $20,000 in other contract
costs and the net difference between the vehicle replacement interdepartmental charge and estimated
annual depreciation for the fleet. Based on the adjusted solid waste operations costs, the current level
of services costs the City $17.84 per unit per month or $168 per ton of refuse collected.
City of Newport Beach 8 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 1: Solid Waste Operation Costs – Budget FY 2011/12 (1) (2)
Exhibit 1
ZI Rounded to thousands
Exhibit
Diversion Rate
The citywide diversion rate in 2010 was approximately 71% based on CalRecycle statistics. As shown in
Figure 1, the City is exceeding the AB 939 requirement and is close to meeting the AB 341 statewide
diversion goal of 75% by 2020 based on the State's current reporting methodology.
Figure 1: Newport Beach Historical Diversion
City of Newport Beach
Diversion % by Year
80
70
m ho
so
a 40
— Diversion %
30
20
OHO Opt ODti OQM h 'b� �6 1 00 O°j tie ,ti0
'L b 'L 'L 'L � 'L� le 4 ti�
City of Newport Beach 9 October 4, 2012
%of Total Solid
Line
Description
Budget
Waste
Operation
FY 2011/12
Costs
1
Salaries & Benefits
$ 2,488,000
39%
2
Operating Expenses
3,322,000
52%
5,810,000
91%
3
Total Refuse Collection Expenses
4
Interdepartmental Allocation
569,000
9%
6,379,000
100%
5
Total Solid. Waste Operation Costs
6
Vehicle Replacement Charge
(410,000)
-6%
7
Estimated Depreciation of Refuse Vehicles (')
336,000
5%
8
Less:
9
Newport Coast Contract Cost
(612,000)
-10%
10
Other Contract Costs
(20,000)
0%
11
Adjusted Solid Waste Operation Costs
$ 5,673,000
89%
26,500
12
Residential Units
13
Solid Waste Operation Cost /Unit /Month
$ 17.84
14
Tans Collected
33,800
15
Solid Waste Operation Cost /Ton
$ 168
Exhibit 1
ZI Rounded to thousands
Exhibit
Diversion Rate
The citywide diversion rate in 2010 was approximately 71% based on CalRecycle statistics. As shown in
Figure 1, the City is exceeding the AB 939 requirement and is close to meeting the AB 341 statewide
diversion goal of 75% by 2020 based on the State's current reporting methodology.
Figure 1: Newport Beach Historical Diversion
City of Newport Beach
Diversion % by Year
80
70
m ho
so
a 40
— Diversion %
30
20
OHO Opt ODti OQM h 'b� �6 1 00 O°j tie ,ti0
'L b 'L 'L 'L � 'L� le 4 ti�
City of Newport Beach 9 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
2010 Newport Beach Community Survey
In August 2010, the City commissioned a survey of the Newport Beach Community with ETC Institute
( "ETC "). A similar survey was performed in 2007. According to the survey report, "The purpose of the
survey was to assess citizen satisfaction with the delivery of major City services to ensure that the City's
priorities are aligned with the needs of the residents." ETC sent the survey to a random sample of 3,500
households in the City. A total of 727 households completed the survey. The residents were asked to
respond to 31 questions. Two of the 31 questions involved the residential refuse service. The specific
questions and results relating to residential refuse collection were:
Question 12a. Residential Trash Collection Service. Please rate your satisfaction using a scale of 1 to 5
where 5 means "very satisfied" and 1 means "very dissatisfied."
The residents (excluding those that responded "don't know ") responded 66% "very satisfied" and 26%
"satisfied." Accordingly, 92% of the respondents were satisfied or very satisfied with the residential
trash collection service.
Question 21b. "Contracting Out of Services. Using a scale of 1 to 5 where 5 means "strongly agree" and
1 means "strongly disagree," please rate contracting out residential trash collection.
The residents (excluding those that responded "don't know ") responded 35% "strongly agree" and 26%
"somewhat agree" In summary, 61% of the respondents somewhat agreed or strongly agreed with
contracting out of services.
Residential Solid Waste Collection and Recycling Services in Newport Coast
On August 14, 2007, the City of Newport Beach entered into an agreement with CR &R for the residential
solid waste collection and recycling services in Newport Coast ( "Newport Coast Agreement "). The
Newport Coast Agreement began on August 14, 2007 and terminates on October 1, 2017, unless
terminated earlier according to the terms of the agreement. The Newport Coast Agreement will be
automatically extended for five (5) additional one (1) years terms, unless the City notifies CR &R at least
one hundred eighty (180) days prior to the end of the initial term or any extended term of its intent to
terminate the agreement. There are approximately 4,200 single family residents that receive solid
waste collection and recycling under the Newport Coast Agreement. The cost of the Newport Coast
solid waste collection is specifically excluded from this study.
Objective 2: Calculate Current Solid Waste Operation Costs and Prepare a
Five -Year Projection of Costs
Finding 2A: Total solid waste operation cost, including the Newport Coast contract cost other
contract costs and interdepartmental charges, is $5,379,000 in the FY 2011112 budget and is
projected to increase from 1.0% to 3.0% per year per year through FY 2016/17.
As shown in Table 1, total solid waste operation cost based on the budget for FY 2011/12 is $6,379,000.
Table 2 provides a five -year projection of solid waste operating costs using assumptions provided by City
staff, assuming that the existing municipal solid waste program continues with current services and
collection methods. The total solid waste operation cost is projected to increase by 1.0% to 3.0% per
year. Projection assumptions are described in Appendix A.
City of Newport Beach 10 October 4, 2012
City of Newport Beach
Section II: Findings
Residential Solid Waste and Recycling Study
Table 2: Five Year Projection — FY 2012/13 to FY 2016/17111(2)
Line
Description
Projected Costs
FY 2012/13
FY 2013/14
FY 2014/15
FY 2015/16
FY 2016/17
1
2
3
4
5
6
Salaries & Benefits
Operating Expenses
Total Refuse Collection Expenses
Interdepartmental Allocation
Total Solid Waste Operation Costs
Projected Percent Increase Over Prior Year
$ 2,506,000
3,355,000
$ 2,493,000
3,439,000
$ 2,569,000
3,541,000
$ 2,647,000
3,648,000
$ 2,728,000
3,757,000
5,861,000
580,000
5,932,000
595,000
6,110,000
613,000
6,295,000
631,000
6,485,000
650,000
6,441,000
6,527,000
6,723,000
6,926,000
7,135,000
1.0%
1.3%
3.0%
3.0%
3.0%
"' See Exhibit 1 for detailed calculations.
(2) Rounded to thousands
Finding 2B: The cost of solid waste operations performed by the City that would be eliminated if
the operations were privatized ('incremental cost') is estimated at $4,949,000 for FY 2011112,
excluding Newport Coast and interdepartmental charges that would be reallocated to other City
departments if solid waste collection is privatized.
As shown in Table 3, the incremental cost of the City's solid waste operation is approximately
$4,949,000 based on the FY 2011/12 budget or $15.56 per residential dwelling unit per month. This
reflects the estimated costs that would "go away" if the solid waste operation was eliminated. This
amount would be fully or partially offset by the cost that would be incurred by the City to contract with
a private hauler for solid waste collection and recycling, as discussed later in the report.
Table 3: Estimated Incremental Solid Waste Operation Costs (1)
Line
Description
Budget FY
2011/12
1
Salaries & Benefits
$ 2,488,000
2
Operating Expenses
3,322,000
5,810,000
3
Total Refuse Collection Expenses
4
Interdepartmental Allocation
569,000
6,379,000
5
Total Solid Waste Operation Costs
6
Vehicle Replacement Charge
(410,000)
7
Estimated Depreciation of Refuse Vehicles
336,000
8
Less:
9
Newport Coast Contract Cost
(612,000)
10
Other Contract Costs
(20,000)
5,673,000
11
Adjusted Solid Waste Operation Costs
12
Less Cost to be Reallocated to Other Departments (2)
(724,000)
13
Estimated Incremental Solid Waste Operation Costs
$ 4,949,000
26,500
14
Residential Units
15
Incremental Solid Waste Operation Cost /Unit /Month
$ 15.56
16
Tons Collected
33,800
17
Incremental Solid Waste Operation Cost /Ton
$ 146
"' Rounded to thousands
(2) Table 4
One of the potential options for the City is to contract with a private hauler for the residential collection
and recycling of solid waste — "privatization." Based on discussions with City staff and an evaluation of
the items included in the solid waste operations cost, it was assumed that in the event of a privatization
of the solid waste operations, only the Interdepartmental Allocations and a portion of equipment
City of Newport Beach 11 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
maintenance overhead (Table 4) would remain. It was assumed that privatization would not result in a
reduction of costs in other departments (reflected as interdepartmental charges in the solid waste
operations budget). Based on discussions with management, we understand these costs would be
retained by the City and potentially transferred or redirected to other areas of the City government.
Table 4: Costs that would be Reallocated to Other Departments Ill
Department
Allocated Costs
City Council
$ 10,000
City Manager- PIO
25,000
Personnel
44,000
Risk Management
30,000
Fiscal Services
5,000
Information Techonology
21,000
Revenue
12,000
Accounting
48,000
General Services - Administration Izl
365,000
PW -Admin
9,000
569,000
Subtotal: Interdepartmental Charges
124,000
Equipment Maintenance (estimated) (3)
Information Techonology- ISF
31,000
Total Costs to be Reallocated
$ 724,000
"' Rounded to thousands
ai General Services - Administration costs (overhead) allocated to the Refuse
Division.
(3) Equipment maintenance overhead included in Operating Expenses.
Finding 2C: Labor costs that would be eliminated initially if solid waste operations were
privatized represent 39% of the total budgeted solid waste operations cost for FY 2011/12, and
50% of incremental solid waste operations cost. The estimated one -time labor cost payoff, if the
solid waste operations were privatized, would be approximately $505,000.
Labor cost is the single largest expense in the solid waste operation. As shown in Figure 2, labor cost
(Salaries & Benefits) is 39% of the total budgeted solid waste operation cost (including Newport Coast).
Labor cost is 50% of the incremental Solid Waste Operation Costs from Table 3 ($2,488,000 - $4,949,000
= 50 %). These labor costs could be eliminated if the solid waste operations were privatized. Some
future benefits for existing employees have not been funded. If the solid waste operations are
privatized and solid waste employees are laid -off, benefits paid to these employees in excess of the
accrued benefits (unfunded liabilities) would be allocated to other City operations.
It is estimated that the one -time labor cost payoff to privatize the solid waste operations would total
approximately $505,000, including $229,000 for the payoff of accrued vacation and sick leave and
$276,000 for severance payments.
City of Newport Beach 12 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
SO%
re c: wistnoution or ouugeteu Lusts
g% ■ Salaries & Benefits
C£'
■ Equipment Maintenance
69% Vehicle Replacement
"Total Solid Waste Operation Costs = $6,379,000
■ CR &R Processing
■ Newport Coast Contract
Cost
■ Other Operating
Expenses
■ Interdepartmental
Allocation
Finding 2D: The estimated market value of the solid waste vehicles and equipment ranges
between $1.0 million and $1.4 million, and there is an additional $3.9 million in the vehicle
replacement reserve. Therefore, privatizing residential solid waste collection could provide a
one -time cash infusion of approximately $4.9 million to $5.3 million.
We estimated a range of market value for the solid waste vehicles and equipment between $1.0 million
and $1.4 million (Exhibit 5). The low end of the market value was estimated using a minimum of
$25,000 for fully- depreciated vehicles and net book value for the most recently acquired vehicles. The
high end of the market value was determined by obtaining advertised prices for the most similar solid
waste vehicles of the nearest year and body type.
Annually the Refuse Division is charged for vehicle replacement in order to accumulate funds for future
vehicle acquisition. As of June 30, 2012, there is $3.9 million in the Vehicle Replacement Reserve for the
future purchase of Refuse Division vehicles and equipment. Should the solid waste operation be
privatized, the Vehicle Replacement Reserve could be redirected to the General Fund.
Objective 3: Identify and Discuss Changes in State of California Regulations
Related to Solid Waste Collection and Diversion
Finding 3: Legislation that may affect solid waste operations and rates include:
• AB 341, also known as the "Jobs and Recycling Act," was signed by Governor Brown on October
6, 2011. This legislation includes an increased goal for statewide diversion to 75% by 2020,
mandatory commercial recycling requirements plus additional changes to current legislation.
• Proposition 26 - In November 2010, the voters of California passed Proposition 26, which
requires that certain state fees be approved by a two - thirds vote of the Legislature and certain
local fees be approved by two - thirds of the voters.
• Rule 1193 — Clean On -Road Residential and Commercial Refuse Collection Vehicles was adopted
by the Southern California Air Quality Management District ( "AQMD ") in June 2000. Rule 1193
City of Newport Beach 13 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
was designed to reduce toxic air emissions associated with older diesel powered sold waste
refuse collection vehicles. In July 2010, Rule 1193 was amended by the AWMD based on court
decisions, and identifies the timing in which owners of public and private fleets of solid waste
collection vehicles are required to obtain compliant refuse vehicles.
Regardless of whether the City continues to perform the residential solid waste activities or privatize it,
the City has a responsibility to manage and comply with certain legislative and regulatory requirements
surrounding its solid waste system. A summary of certain relevant legislative and regulatory
requirements is presented below. This summary is not intended to be exhaustive, but instead to
identify some of the major requirements that will need the City's attention in the future and in the
event of privatization of the solid waste operations.
AB 939, known as the California Integrated Waste Management Act of 1989, requires that all cities in
the State must divert no less than 50% of their waste stream through waste reduction, reuse, recycling,
and composting. Failure to meet this target and /or implement adequate recycling programs can lead to
fines from the State of up to $10,000 per day. In addition to the operational programs, each local
government throughout the state is required to submit a detailed annual report documenting each
program and its effectiveness. Since AB 939 was passed, the City has implemented numerous diversion
programs designed to meet this State target. While the City could contract for the operation of the
programs, the City will still bear the responsibility of managing and monitoring the programs, submitting
the annual report, and paying any fines levied by the State.
AB 341, known as the "Jobs and Recycling Act," was signed by Governor Brown on October 6, 2011. This
legislation includes an increased goal for statewide diversion, mandatory commercial recycling
requirements plus additional changes to current legislation. Specific impacts are provided below.
Diversion
This bill makes a legislative declaration that it is the policy goal of the state that not less than 75% of
solid waste generated be source reduced, recycled or composted by the year 2020, and requires
CalRecycle to provide, by January 1, 2014, a report to the Legislature that provides strategies to achieve
that policy goal (41780 -01(a) and 41780.02(a)). It is anticipated that the report would provide the basis
for future legislation required to achieve the goal.
Section 41780.01(b) of the bill states that "the department (CalRecycle) shall not establish or enforce a
diversion rate on a city or county that is greater than the 50 percent diversion rated established
pursuant to Section 41780." As such, the pounds per capita target established for each agency will not
be adjusted as a direct result of AB 341.
While AB 341 does not increase the current diversion requirement of 50 %, a 75% statewide requirement
is likely to ultimately require that local jurisdictions increase the diversion of the large remaining
segments of the current waste stream (e.g., organics, construction debris, etc.). The City's citywide
diversion rate for calendar year 2010 was approximately 71 %.
Annual Reporting
AB 341 changes the due date of the AB 939 Annual Reports from September 1 to May 1 of each year,
beginning on May 1, 2012 for reporting year 2012.
City of Newport Beach 14 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Commercial and Multi - Family Recycling
AB 341 provides CalRecycle authority to implement the mandatory commercial recycling program
contained in AB 32. The legislation requires businesses that generate 4 or more cubic yards of
commercial solid waste per week, and multi - family dwelling units of five units or more to arrange for
recycling services, on and after July 1, 2012.
The bill requires jurisdictions, on and after July 1, 2012, to implement a commercial solid waste recycling
program that meets requirements specified in the bill. Jurisdictions that already have a commercial
recycling program that meets the requirements of AB 341 are not required to implement a new or
expanded commercial recycling program or update their Source Reduction and Recycling Element
( "SRRE ").
Jurisdictions shall report the progress achieved in implementing its commercial recycling program,
including education, outreach, identification, and monitoring, and if applicable, enforcement efforts, by
providing updates in the AB 939 Annual Reports.
Cost Incurred by Jurisdictions
AB 341 provides that no reimbursement is required. However, the legislation authorizes the local
agency to charge and collect a fee from a commercial waste generator to recover the costs incurred by
the agency in complying with the commercial recycling requirements.
The Solid Waste Collection Vehicle Rule ( "SWCV ") was passed in September 2003 to reduce the impacts
from diesel fueled collection trucks. The SWCV requires all of the owners of diesel -fuel commercial and
residential solid waste and recycling vehicles to use California Air Resources Board ( "ARB ") verified
controls that reduce diesel particulate matter. The ARB verified control methodology is referred to as
the Best Available Control Technology (BACT). This regulation may require acquisition of new alternative
fuel vehicles.
Rule 1193 - The Southern California Air Quality Management District ( "SCAQMD ") governs solid waste
refuse vehicles through Rule 1193. Rule 1193 requires that public agencies with fleets of 15 or more
vehicles purchase rule compliant vehicles at the time of replacement or addition.
The City acquired four CNG refuse collection vehicles in FY 2010. Assuming that the City continues
providing residential solid waste collection, it would be required to replace the remaining collection
vehicles. As summarized in Table 5, assuming the City continues residential refuse collection in the
current form, Municipal Operations management estimates that the City would need to replace four
collection vehicles in FY 2012 -13, three collection vehicles in FY 2013 -14 and three in FY 2014 -15. The
purchase price of rear load vehicles is estimated to be $225,000 per vehicle. The purchase price for the
front load vehicle is estimated at $275,000 per vehicle. By the end of FY 2014/15, 14 of the City's 18
vehicles are projected to be CNG vehicles. The City has 14 active routes each week.
City of Newport Beach 15 October 4, 2012
City of Newport Beach
Section II: Findings
Residential Solid Waste and Recycling Study
Table 5: Anticipated Vehicle Replacements in FY 12/13, FY 13/14 and FY 14/151 '1
Type of Vehicle
Fiscal Year
Qty
2012/13/1
Qty
2013/14
Qty
2014/15
Rear Load
Front Load
Total Projected Vehicle Purchases
2
2
$
450,000
550,000
3
$ 825,000
1
2
$
$
225,000
550,000
4
$ 1,000,000
3
$ 825,000
3
$
775,000
1 �1 Appendix A
Izl Not budgeted for 2012/13; would require a budget amendment.
In FY 2009/10, the City reported to the ARB that it was in compliance with the Waste Collection Vehicle
Regulation. The City installed the required diesel engine control strategies (DECS) on all of the solid
waste collection vehicles that were acquired prior to 2008.
Proposition 218
In November 1996, the voters of California passed Proposition 218, the "Right to Vote on Taxes Act."
This constitutional amendment limits the methods by which local governments can create or increase
taxes, fees and charges without taxpayer consent. The measure requires voter approval prior to the
imposition or increase of taxes, fees or charges.
Proposition 26
In November 2010, the voters of California passed Proposition 26, which requires that certain state fees
be approved by a two - thirds vote of the Legislature and certain local fees be approved by two - thirds of
the voters.
Objective 4: Identify and Compare the Residential Refuse Collection Service
Levels and Cost Metrics in Five Selected Local Orange County Municipalities
with Private Hauler Service
Finding 4A: The cost per residential dwelling unit per month for the City's municipal residential
collection for FY 2011112 is $15.56 on an incremental basis and $17.84 on a full -cost basis and is
at the high end of the range of rates billed to residential customers for the five Orange County
cities' included in the comparison that ranged from $9.96 to $16.96 per residential dwelling unit
per month. However, some other cities residential costs may benefit from integrated residential
and commercial contracts and rate structures.
Table 6 compares the residential monthly cost in Newport Beach to some other Orange County cities.
The Orange County cities were selected by City staff primarily based on geographic proximity to
Newport Beach, population and coastal proximity. Franchise fees and other fees remitted to the cities
are deducted so only the hauler compensation is shown. All of the cities except Newport Beach and
Costa Mesa may benefit from integrated residential and commercial solid waste agreements with
private haulers, whereas Costa Mesa and Newport Beach both have non - exclusive commercial systems
with multiple haulers. The rates charged in other cities may also be affected by the size of container
used by residents. The solid waste services provided in the cities selected for comparison are
summarized in Appendix B.
City of Newport Beach 16 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 6: Comparison of Adjusted Cost per Residential Dwelling Unit per
Month (Orange County Cities) I'I
Ill Exhibit 2A. Excludes franchise fees and other fees required to or
remitted by the cities.
Finding 48: The cost per ton collected of $146 on on incremental basis and $168 on a full -cost
basis are higher than the cost per ton reported in four Orange County cities included in the
comparison that ranged from $88 to $109 per ton. However, some other cities residential costs
may benefit from integrated residential and commercial contracts and rate structures.
Table 7 compares the residential cost per ton in Newport Beach to the rate revenue per ton in some
other Orange County cities. Franchise fees and other fees remitted to the cities are deducted so only
the hauler compensation is shown. All of the cities except Newport Beach and Costa Mesa may benefit
from integrated residential and commercial solid waste agreements with private haulers, whereas Costa
Mesa and Newport Beach both have non - exclusive commercial systems with multiple haulers. We also
note that master - planned communities, such as Irvine, may be less congested and therefore less costly
to service. The solid waste services provided in the cities selected for comparison are summarized in
Appendix B.
Table 7: Comparison of Adjusted Cost per Ton
Collected (Orange County Cities) (1) (2)
City (Contractor)
Cost per Residential
City (Contractor)
$
Dwelling Unit per
San Clemente (CR &R)
$
Month
Irvine (WMOC)
$
9.96
Laguna Beach (WMOC)
$
12.34
San Clemente (CR &R)
$
15.31
Newport Beach - Incremental Cost (Table 3)
$
15.56
Huntington Beach (Rainbow Disposal)
$
16.08
Costa Mesa (CR &R)
$
16.96
Newport Beach- Full Cost
$
17.84
Ill Exhibit 2A. Excludes franchise fees and other fees required to or
remitted by the cities.
Finding 48: The cost per ton collected of $146 on on incremental basis and $168 on a full -cost
basis are higher than the cost per ton reported in four Orange County cities included in the
comparison that ranged from $88 to $109 per ton. However, some other cities residential costs
may benefit from integrated residential and commercial contracts and rate structures.
Table 7 compares the residential cost per ton in Newport Beach to the rate revenue per ton in some
other Orange County cities. Franchise fees and other fees remitted to the cities are deducted so only
the hauler compensation is shown. All of the cities except Newport Beach and Costa Mesa may benefit
from integrated residential and commercial solid waste agreements with private haulers, whereas Costa
Mesa and Newport Beach both have non - exclusive commercial systems with multiple haulers. We also
note that master - planned communities, such as Irvine, may be less congested and therefore less costly
to service. The solid waste services provided in the cities selected for comparison are summarized in
Appendix B.
Table 7: Comparison of Adjusted Cost per Ton
Collected (Orange County Cities) (1) (2)
City (Contractor)
Cost per Ton
Laguna Beach (WMOC)
$
88
San Clemente (CR &R)
$
100
Irvine (WMOC)
$
102
Costa Mesa (CR &R)
$
109
Newport Beach - Incremental Cost (Table 3)
$
146
Newport Beach - Full Cost
$
168
Ill Exhibit 2A. Excludes franchise fees and other fees required to or
remitted by the cities.
Izl Rounded to the nearest dollar
City of Newport Beach 17 October 4, 2012
of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Objective 5: Identify and Compare the Residential Refuse Collection Service
Levels and Cost Metrics in Five Regional Cities with Municipal Residential
Collection
Finding 5A: The cost per residential dwelling unit per month for the City's municipal residential
collection for the FY 2011112 is $15.56 on an incremental cost basis and $17.84 on a full -cost
basis and are at the low end of the range of rates charged to residential customers for the five
cities with municipal residential collection included in the comparison that ranged from $14.25 to
$65.09 per residential dwelling unit per month.
Table 8 compares the residential monthly cost in Newport Beach to some other cities with municipal
residential service. In Westminster the residential refuse is collected by the Midway City Sanitary
District and is the only other city in Orange County with municipal collection. The other cities in the
comparison are located in Los Angeles County and we understand these cities have been used by
Newport Beach to benchmark some other city services.
Table 8: Comparison of Adjusted Cost per Residential Dwelling Unit per
Month (Municipal Residential Service) I'I
i'i Exhibit 2B
Finding 5B: The cost per ton collected is $146 on an incremental basis and $168 on a full -cost
basis for the City's municipal residential collection are in the middle of the range for the five
cities with municipal residential collection in the comparison that ranged from $102 to $260 per
ton.
Table 9 compares the residential cost per ton in Newport Beach to some other cities with municipal
residential service.
City of Newport Beach 18 October 4, 2012
Adjusted Cost per
,i
Residential Dwelling
Unit per Month
Westminster
$
14.25
Newport Beach - Incremental Cost (Table 3)
$
15.56
Newport Beach - Full Cost
$
17.84
Santa Monica
$
23.68
Pasadena
$
26.69
Burbank
$
30.57
Beverly Hills
$
65.09
i'i Exhibit 2B
Finding 5B: The cost per ton collected is $146 on an incremental basis and $168 on a full -cost
basis for the City's municipal residential collection are in the middle of the range for the five
cities with municipal residential collection in the comparison that ranged from $102 to $260 per
ton.
Table 9 compares the residential cost per ton in Newport Beach to some other cities with municipal
residential service.
City of Newport Beach 18 October 4, 2012
of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 9: Comparison of Adjusted Cost per Ton
(Municipal Residential Service) I'I tzl
City
Adjusted Cost
perTon
Westminster
$
102
Newport Beach - Incremental Cost (Table 3)
$
146
Pasadena
$
147
Newport Beach - Full Cost
$
168
Beverly Hills
$
213
Burbank
$
235
Santa Monica
$
260
"' Exhibit 2B
Izl Rounded to the nearest dollar
Objective 6: Describe Other Municipalities that have Privatized Residential
Refuse Collection
Finding 6: The City of Fresno ( "Fresno ") privatized commercial refuse services in October 2011
and the City of Hemet ( "Hemet) privatized its solid waste collection services (residential and
commercial) at the end of calendar year 2011.
City of Hemet
Background
In CY 2011, the City of Hemet developed and issued an RFP for franchising Hemet's residential and
commercial waste collection and disposal. In FY 2011/12, Hemet's General Fund was facing a $4.8
million deficit, which it ultimately balanced using a temporary loan from the Equipment Replacement
Fund. Hemet was also projecting a minimum General Fund deficit of approximately $4.5 million for FY
2012/13. The budget for the refuse operation for FY 2012, prior to privatization, reflected a deficit of
approximately $0.9 million, consisting of $9.8 million in revenue and $10.7 million in expenses. As a
result, the city evaluated privatizing the municipal solid waste collection and disposal services. Hemet
decided to privatize the solid waste collection for two reasons:
1. The primary reason was to develop an ongoing, consistent and legitimate source of revenue for
the General Fund through franchising payments; and
2. To obtain enhanced services for customers compared to Hemet's current operations.
Process Overview and Results
Hemet privatized its solid waste collection services (residential and commercial) in October 2011.
Hemet entered into a comprehensive franchise agreement with CR &R Incorporated on October 11, 2011
valued at approximately $10 million per year. Assuming an average annual increase of 5% for inflation
and growth, the total estimated value over the 20 -year term is approximately $300 million. The term of
the franchise agreement is 20 years, beginning December 1, 2011 and expiring on November 30, 2031.
The term may be extended through a negotiation prior to the expiration of the agreement during an
Exclusive Negotiating Period. The Exclusive Negotiating Period begins November 1, 2028 and ends
October 31, 2030.
City of Newport Beach 19 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Hemet will receive nearly $95 million, as shown in Table 10, over the 20 -year term of the agreement.
According to the agreement, CR &R is to make the following payments and reimbursements to the City:
• A $25 million franchise fee over the 20 -year contract term; an initial payment of $12.5 million
plus $657,895 annually in 19 annual payments;
• Approximately $65 million in monthly payments beginning at $225,000 per month and
increasing over the term of the agreement;
• A one -time $340,000 transition payment;
• $2,760,000 for the purchase of all personal property used in the provision of refuse services in
the City;
• $51,333 15 days after the start of the agreement and $88,000 per year for a Compliance Officer
($1,760,000); and,
• Additionally, CR &R agreed to pay the salaries for a Refuse Superintendent and an Office
Specialist 11 on a time and materials basis for up to 90 days after the effective date of the
agreement.
Table 10: Summary of Pavments by CR &R to Hemet Over 20 Years
Description
Amount
Franchising Payments:
Initial Payment
$ 12,500,000
Annual Payments ($657,895 peryear)
12,500,005
Monthly Payments (varies by year)
65,010,900
90,010,905
Total Franchising Payments
Transition Cost
340,000
Purchase of Personal Property
2,760,000
Compensation for Solid Waste Compliance Officer
1,760,000
$ 94,870,905
Total Payments to Hemet
All of Hemet displaced employees were to be offered employment, including street sweeping personnel.
Retained employees would maintain current seniority levels and current hourly pay. Employees were
guaranteed a minimum of six month compensation. Employees were also to receive a guaranteed one
month severance policy after six months and a $1,000 retention bonus for all employees meeting the
minimum employment term of six months.
Description of Services
Residential solid waste collection service includes:
• A three -cart system (black container with a black lid for refuse, grey or black container with a
blue lid for mixed recyclables and a green or black container with a green lid for organic waste).
• The refuse carts may be 32, 64 or 96- gallon automated containers and are collected weekly.
• The recycling carts may be 64 or 96- gallon automated containers and are collected bi- weekly.
City of Newport Beach 20 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Commercial solid waste collection service includes collection of refuse, recyclables, food waste and
green waste.
Temporary bins and roll -off containers are available for cleanup projects and other disposal needs.
Other Services
Bulky Item Collection
CR &R will provide on -call bulky item pick -up from single family dwelling at no cost up to two times per
year. CR &R will provide on -call bulky item pick -up from multi - family dwellings based on agreed -upon
rates.
Household Hazardous Waste Pick -up
CR &R will provide on -call household hazardous waste pick -up from both single family dwellings and
multi - family dwellings based on agreed -upon rates.
Electronic Waste Pick -up
Electronic or E -Waste is collected on request for special pick -up.
City Facilities
CR &R will provide collection of solid waste, recyclable materials and organic waste from city facilities,
including public facilities, at no charge.
Other special services provided at no charge:
• Collection services for Code Enforcement;
• City- sponsored Events
• Abandoned Waste Collection
• Composting — CR &R will provide a minimum of two composting workshops in the first year of
service;
• Neighborhood Watch Program — CR &R will implement a neighborhood watch program in
coordination with a city representative and train drivers on how to safely report potential
incidents of crime, vandalism or child safety.
• Local Purchase Preference Program — CR &R will provide a 5% purchase preference to businesses
located within the city's boundaries.
Street Sweeping Services
CR &R will provide street sweeping services to the City at no charge (CR &R offered to donate the street
sweeping service as corporate goodwill).
City of Newport Beach 21 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
City of Fresno
Background
After having cut more than $80 million and 600 employees from the general fund budget in two years,
the city was faced with another $12 million gap as it planned the fiscal year 2011 budget. The City
Manager's office, working with the Mayor, identified "franchising" of the commercial solid waste
activities as a potential opportunity to help close the budget gap.
In April 2010, HF &H was engaged by the City of Fresno to conduct a procurement for commercial and
multi - family solid waste, recycling, and organics collection and processing services. Fresno had
historically provided these services with municipal staff through its Department of Public Utilities
( "DPU ").
As part of this process, the city wanted to make progress towards their Zero Waste goal and existing
mandatory recycling policies by improving on the existing diversion programs, pricing signals, and
education provided to the commercial and multi - family sectors.
Results
The RFP resulted in proposals from five companies. Each proposal significantly expanded on the
programs and services offered to multi - family and commercial customers. The proposals included the
purchase of City equipment ($8 million) and will provide approximately $2.5 million annually in franchise
fees. The top three proposals received also offered a rate reduction between 3% and 11% to commercial
customers than the rates charged by the City (though multi - family rates would increase because of the
historic subsidy to those customers).
At the end of the process, the final negotiated rate revenues were approximately revenue neutral (0.1%
rate revenue decreases in the north zone, 0.3% rate revenue increase in the south zone) compared to
the current system.
Objective 7: Describe the Potential Service Alternatives that Could be
Provided by the City
Finding 7A: The City has several options for modernizing residential refuse collection that may
potentially increase its diversion level and potentially reduce costs, including:
• Maintaining the existing manual collection system with mixed waste processing and adding a
separate green waste collection container,•
• Converting the existing manual collection system to a two -cart automated collection system with
one cart for refuse, with continued mixed waste processing, and one cart for separate green
waste collection; and
• Converting the existing manual collection system to a three -cart automated collection system for
the separate collection of refuse, recyclable materials and green waste, eliminating the mixed
waste processing requirement.
Automating residential solid waste collection service where operationally feasible will increase
productivity, reduce worker injuries and may reduce collection costs. Figure 3 shows the breakdown of
residential collection methods in Orange County for refuse, recycling and green waste. Three of 34 cities
City of Newport Beach 22 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
or 9% have manual refuse collection service similar to Newport Beach. Most of the cities in Orange
County have automated collection service:
a 91% of the cities have automated refuse service;
a 82% have automated recycling collection service; and
a 73% have automated green waste collection.
Six of the 34 Orange County cities do not offer separate green waste collection service.
Figure 3: Orange County Residential Collection Methods
Refuse
Recycle
Yardwaste
9%
Is%
3%
12%
3% 6%
3%
40
3%
ft
73 %
91%
82%
■Automated
■ Automated
■ Manual
■Automated ■Manual
■Manuel /Auto
Manual /Auto
■N /A -Mixed Waste Processing
■Mulched Onsite
a N/A -Mixed Waste Processing
■ N/A -Not offered
Finding 7B: By implementing a two - container (refuse and recycling) or three - container (refuse,
recycling and green waste) collection system, the City may be able to allocate a larger share of
solid waste costs to customers through billing for recycling services.
Potential Automated Service
Table 11 provides a comparison of the costs of the existing system to an example of the potential costs
of a three -cart automated system, assuming that all of the City's residential collection operations were
converted. This comparison is based on industry averages and is shown for example purposes only. If
the City were to automate part or all of the residential service, it would need to replace or modify its
current fleet to collect automated containers, and it would need to buy containers. City operations staff
estimates it would need to acquire at least seven (7) automated side loaders and modify the retained
rear loaders with cart tippers to handle the automated carts. The acquisition of the seven new
automated vehicles would cost approximately $2 million. Assuming three containers per customer (one
container each for refuse, recycling and green waste), the purchase cost for containers would be
approximately $4 million at an average cost of approximately $50 per cart. The trucks and carts could
be financed or lease- purchased to reduce up -front costs.
City of Newport Beach 23 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 11: Comparison of Current System to Alternative Rate Structure
I11 Including adjustments for Newport Coast contract cost and the difference between vehicle replacement cost and the estimated annual depreciation
expense as shown i n Table 1.
Because of the geographic diversity in the City, there are areas in the City that would not be conducive
to a three -cart system and may as a result continue with the current manual collection system. Based
on discussions with City staff, approximately 85% of the City could reasonably be converted to a three -
cart system.
Under a three -cart system, if the City could bill customers for the commingled recycling and green waste
recycling service, the remaining refuse cost paid by the General Fund may be reduced. In this example,
although the total cost per home per month would increase by $2.00 per month, the City could
potentially bill $6.40 per home per month for recycling - related services, as shown in Table 11, versus the
$2.96 per home per month billed currently for recycling processing. The net cost paid by the General
Fund would decrease from $14.88 per home per month to $13.38 per home per month and reduce the
General Fund burden by $477,000 per year. The City could choose to privatize recycling collection
and /or green waste collection while retaining municipal refuse collection. The City of Long Beach has a
similar system, with publically provided refuse collection and contracted recycling service.
Objective 8: Estimate the Range of Savings or Costs from Privatizing
Residential Solid Waste Collection
Finding 8A: The City would see a significant range of costs from private proposers to take over
residential solid waste operations. Based on recent proposals from private haulers in other
cities, the difference between the low and high cost proposals ranged from 31% to 128 %.
As reflected in Table 12, the difference between the low and the high cost proposals in five recent
competitive proposal processes for solid waste collection services ranged from 31% and 128 %. This
demonstrates the wide difference in the rate revenues proposed by various private haulers and
accentuates the point that there is no one absolute price for a private solid waste operation. The low
cost proposer was the winning proposer in only one of these five cities.
City of Newport Beach 24 October 4, 2012
"H.m.t'�,
$ 4,732,000
26,500
$ 941,000
26,500
$ 5,673,000
26,500
$ 4,255,000
26,500
$ 763,000
26,500
$ 1,272,000
26,500
$ 6,290,000
26 ,500
$ 14.88
$ 2.96
$ 17.84
$ 13.38
$ 2.40
$ 4.00
$ 19.78
%of Total COSts
83%
17%
100%
68%
12%
20%
100%
I11 Including adjustments for Newport Coast contract cost and the difference between vehicle replacement cost and the estimated annual depreciation
expense as shown i n Table 1.
Because of the geographic diversity in the City, there are areas in the City that would not be conducive
to a three -cart system and may as a result continue with the current manual collection system. Based
on discussions with City staff, approximately 85% of the City could reasonably be converted to a three -
cart system.
Under a three -cart system, if the City could bill customers for the commingled recycling and green waste
recycling service, the remaining refuse cost paid by the General Fund may be reduced. In this example,
although the total cost per home per month would increase by $2.00 per month, the City could
potentially bill $6.40 per home per month for recycling - related services, as shown in Table 11, versus the
$2.96 per home per month billed currently for recycling processing. The net cost paid by the General
Fund would decrease from $14.88 per home per month to $13.38 per home per month and reduce the
General Fund burden by $477,000 per year. The City could choose to privatize recycling collection
and /or green waste collection while retaining municipal refuse collection. The City of Long Beach has a
similar system, with publically provided refuse collection and contracted recycling service.
Objective 8: Estimate the Range of Savings or Costs from Privatizing
Residential Solid Waste Collection
Finding 8A: The City would see a significant range of costs from private proposers to take over
residential solid waste operations. Based on recent proposals from private haulers in other
cities, the difference between the low and high cost proposals ranged from 31% to 128 %.
As reflected in Table 12, the difference between the low and the high cost proposals in five recent
competitive proposal processes for solid waste collection services ranged from 31% and 128 %. This
demonstrates the wide difference in the rate revenues proposed by various private haulers and
accentuates the point that there is no one absolute price for a private solid waste operation. The low
cost proposer was the winning proposer in only one of these five cities.
City of Newport Beach 24 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 12: Distribution of Proposed Rate Revenues above the Lowest Price (')
Proposals
lowest to highest)
Lawndale
Manhattan
Beach
Inglewood
Redondo
Beach
Rancho
Palos Verdes
Lowest Price
0%
0%
0%
0%
0%
Proposal
2A Lowest
16%
21%
4%
46%
3rd Lowest
1 21%
15%
31%
23%
80%
4th Lowest
34%
69%
24%
120%
5`h Lowest
42%
31%
121%
6`h Lowest
49%
126%
7m Lowest
59%
------ -------- --------- ----------�_��
.--- ------
128%
ili Winning proposer in each city is identified in bold font.
Finding 88: Using several alternative methods to estimate potential savings from privatization
results in a maximum estimate of between $1.5 million and $1.7 million annually and could be
substantially less or even result in a small cost increase depending on the bids received and the
programs selected. The high end of the range of $1.5 to $1.7 million represents 26% to 29910 of
the annual Refuse Division budget.
The projections of the savings (costs) were estimated using several approaches, including:
1. Estimated savings from private sector labor cost;
2. Estimated savings from private sector labor, less estimated private sector profit;
3. Estimated savings based on the net commercial hauling revenue per ton in the City of Newport
Beach as reported by the private haulers (gross receipts net of franchise fees);
4. Estimated savings based on Los Angeles County industry data for municipal and private hauler
residential operations;
5. Estimated savings based on the city of Costa Mesa cost per ton collected; and
6. Estimated savings based on the results of competitive proposal processes for private hauler
contracts in other cities.
The estimated savings or costs from privatization based on the approaches identified above range from
an increase in annual costs of $171,000 to a savings of approximately $1,476,000 to $1,670,000
annually. The estimated annual value of savings or costs, and the estimated annual value as a percent of
the existing annual solid waste operations budget is summarized in Table 13.
City of Newport Beach 25 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
Table 13: Estimate Savings (Costs) from Privatization
.. ..
Estimated Annual Estimated Annual Value as a
Value Savings Percent of
of or
Costs (1) •.
1. Private sector labor cost
$394,000 to $670,000 7% to 12%
savings iii
2. Private sector labor savings less
$(171000) to $448,000
(3)% to 8%
private sector profit Izl
3. Estimated savings based on the
$1,476,000
26%
City's net commercial hauling
revenue per ton.
4. Estimated savings based on Los
$1,305,000
23%
Angeles County industry data
S. Estimated savings based on the
$1,281,000
23%
Costa Mesa cost per ton
collected
6. Estimated savings based on the
$964,000
17%
results of competitive proposal
processes in other cities (4)
7. Estimated savings based on the
$1,670,000
29%
Newport Coast cost per ton
collected
ry7 Rounded totnousanns
(2) Based on a budget of $5,673,000 for FY 2011/12, net of Newport Coast contract and adjusted vehicle replacement
cost. Excludes estimated one -time labor cost payoff of $505,000 as described in Finding #2C.
ldl Exhibit 3
(4) Appendix D
1. Estimated Savings from Private Sector Labor Cost
It is anticipated that the hourly rate for private solid waste vehicle drivers will be lower than the average
hourly rate for the City drivers. As shown in Exhibit 3, the City drivers' current average hourly rate,
including benefits, is $38.64 per hour. The hourly rates proposed for solid waste vehicle drivers in a
recent RFP process, ranged from $26.46 per hour to $33.10 per hour for union labor, with an average
hourly rate of $30.04, including benefits. The non -union driver hourly rates ranged from $23.43 per
hour to $25.00 per hour, with an average hourly rate of $24.00.
As shown in Table 14, the estimated annual savings from private sector labor ranges from $394,000 if a
union labor is used, to $670,000 if non -union labor is used, assuming no change in labor efficiencies. If
private operators could obtain other operating efficiencies, then overall costs would be reduced.
City of Newport Beach 26 October 4, 2012
City of Newport Beach
Section II: Findings
Residential Solid Waste and Recycling Study
Table 14: Estimated Savings from Private Sector Labor Cost (')
Description
Union Labor
Non -Union
Labor
Newport Beach Average Hourly Rate
$
38.64
$
38.64
Private Sector Average Hourly Rate
$
30.04
$ 5,673,000
24.00
Difference Between Newport Beach and Private Sector
$
8.60
$
14.64
Percent of Newport Beach Averaage Hourly Rate
22%
$ 5,104,000
38%
Total Man Hours
13 =11 -12
45,760
45,760
$
394,000
$
670,000
Estimated Savings from Private Sector Labor Cost (2)
I'i Exhibit 3
l2) Rounded to thousands
Employee Impact
The City's refuse collection program consists of 24 employees. If services were privatized, these
positions would no longer be required. Some of the solid waste employees may be able to find positions
in other departments in the City, which may displace other City employees. Other employees may
choose to retire,
Generally, in the contracting of services, the City may require the private company to offer employment
to those laid off due to privatization. Those employees that meet the private company's requirements
may be offered employment. In most cases, their compensation would be lower, because of the
differences in wage rates and benefits between the private and public sectors. As demonstrated in
Table 14, the City pays approximately 22% to 38% more in hourly wages and benefits than the private
sector.
2. Estimated Savings (Costs) from Labor, Less Estimated Profit
The impact from the lower driver wages of approximately $9 per hour for union drivers and $15 per
hour for non -union drivers is estimated to be fully or partially offset by the anticipated profit that would
be built into a contract with a private hauler. The estimated average operating profit for private haulers
ranges from 5% to 12% of rate revenue, but could be higher or lower in individual cities. Net costs
(savings) are shown in Table 15. This assumes no change in overall operating efficiencies. If private
operators could obtain other operating efficiencies, then overall costs would be reduced.
Table 15: Estimated Savings from Private Sector Cost Net of Private Sector Profit (') (')
Line
Description
Formula
Union Labor
Non -Union Labor
1
Adjusted Solid Waste Operation Costs (Table 1)
$ 5,673,000
$ 5,673,000
2
Less Interdepartmental Charges
(569,000)
(569,000)
$ 5,104,000
$ 5,104,000
3
Total Newport Beach Operating Cost
13 =11 -12
4
Estimated Savings from Private Sector Labor Cost
394,000
670,000
$ 4,710,000
$ 4,434,000
5
Newport Beach Operating Cost Net of Private Sector Labor Cost
L5= 13. -L4
6
Private Sector Profit Ranee
7
Private Sector Profit
5%
12%
5%
12%
8
Estimated Private Sector Profit
L8 =LSXL7
$ 236,000
$ 565,000
$ 222,000
$ 532,000
$ 158,000
$ (171,000)
$ 448,000
$ 138,000
9
Estimated Savings (Costs) from Private Sector Labor Cost, Net of Profit
L9 =L4 -18
Exhibit 3
(�) Rounded to thousands
City of Newport Beach 27 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
3. Estimated Savings Based on the City's Net Commercial Hauling Revenue
If the City's residential collection operations were performed at the same cost per ton as the commercial
operations in the City of Newport Beach done by the private haulers, estimated savings would be
$1,476,000 annually or approximately 26% (Table 16). There are different collection features between
residential and commercial services, and in some communities' commercial collection is relatively more
cost effective than residential collection due to larger waste quantities per customer. This may be offset
by reduced commercial efficiency in the City due to overlapping collection routes of different
commercial haulers.
Table 16: Estimate Annual Savings based on Commercial Net Receipts per Ton
Description
FY 2011
Estimated Commercial Gross Receipts
$
12,943,000
Franchise Fees Remitted by Commercial Haulers
1,359,000
$
11,584,000
Net Commercial Gross Receipts
Commercial Solid Waste Tonnage
112,726
$
102.76
Net Commercial Gross Receipts perTon
Newport Beach Residential Solid Waste Tonnage Collected
33,800
$
3,473,000
Estimated Annual Residential Cost
Newport Beach Incremental Solid Waste Operation Costs
4,949,000
$
(1,476,000)
Estimated Annual Savings
4. Estimated Savings Based on Los Angeles County Industry Data
Based on industry data for Los Angeles County, the net residential revenue per ton averages $119 for
cities with private residential haulers in cities without integrated residential and commercial contracts
and $154 per ton for cities with municipal residential solid waste collection. The residential revenue per
ton for cities with private haulers is 23% less that the residential revenue per ton for cities with
municipal residential service. The estimated annual savings based on Los Angeles County industry data
is approximately $1,305,000 based on 23% of the City's total solid waste operation cost of $5,673,000.
S. Estimated Savings Based on the Costa Mesa Residential Cost per Ton
If the City of Newport Beach residential collection operations were performed by private haulers at the
City of Costa Mesa's net residential cost per ton of $109 per ton (Exhibit 2A), estimated annual savings
would be $1,281,000or approximately 23 %. The City of Costa Mesa residential customers are serviced
by the Costa Mesa Sanitary District through a contract with CR &R and the commercial refuse collection
service is provided by the open competition of private companies. Costa Mesa was selected for
comparison as the city with the closest service characteristics and is adjacent to the City of Newport
Beach.
6. Estimated Savings Based on the Results of Other Competitive Proposal Processes
Competitive proposal processes for private hauler solid waste contracts have resulted in a median cost
savings of 17% in cities that competitively re -bid their contracts. Assuming a 17% annual savings based
on the City's total solid waste operations cost of $5,673,000, annual cost savings would be
approximately $964,000. The results of these RFP processes are shown in Appendix D. It should be
City of Newport Beach 28 October 4, 2012
City of Newport Beach Section II: Findings
Residential Solid Waste and Recycling Study
noted that the proposals identified were typically for both residential and commercial solid waste
services.
7. Estimated Savings based on the Newport Coast Cost per Ton
If the City of Newport Beach residential collection operations were performed by private haulers at the
Newport Coast residential cost per ton of $97 per ton (Exhibit 3), estimated annual savings would be
$1,670,000 or approximately 29% (Table 17). The Newport Coast area may be easier to serve with
automated collection vehicles than other parts of the City that currently receive manual service. Thus
this figure is considered a maximum estimate at the top of the range of estimated savings.
Table 17: Estimate Annual Savin¢s based on Newport Coast per Ton
Description
FY 2011/12
Estimated Newport Coast Cost
$
612,000
Estimated Residential Tonnage Collected Ill
6,318
$
97
Net Cost per Ton
Newport Beach Residential Solid Waste Tonnage Collected
33,800
$
3,279,000
Estimated Annual Residential Cost Ill
Newport Beach Incremental Solid Waste Operation Costs Izl
1
4,949,000
$
(1,670,000)
Estimated Annual Savings Izl
Iil Residential tonnage collected by CR &R in the Newport Coast area during FY
2011/12 (actual data for January 2012, accordingly this month was estimated)
Izl Rounded to thousands
City of Newport Beach 29 October 4, 2012
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EXHIBITS
This page intentionally left blank
EXHIBIT 1
Projection of Solid Waste Operation Cost
FY 2011/12 Budget and Projections for FY 2012/13, FY 2013/14, FY 2014/15, FY 2015/16 and FY 2016/17
Line
Reference or
Formula
Acct#
Description
FY 31 -12
Budget
Assumption
FY 12 -13
(Budget(
Assumption
FY 13-14
Assumption
FY 14-15
Assumption
FY 15 -16
Assumption
FY 1 &17
Row
A
B
C
0
E
F
G
H
I
J
K
Reference or Formula
Input
Input
E =(1 +D)
G =(1 +F)
1 =(1 +H)
K=(1 +J)
1
Salaries & Benefits
2
7000
Salaries - Misc.
$ 1,406,877
$ 1,444,514
2.50%
$ 1,480,627
3.00%
$ 1,525,046
3.00%
$ 1,570,797
3.00%
$ 1,617,921
3
7040
Overtime, Misc.& 1 /2Time
150,000
150,000
2.50%
153,750
3.00%
158,363
3.00%
163,114
3.00%
168,007
4
7059
One Man Packer Pay
100,000
100,000
2.50%
102,500
3.00%
105,575
3.00%
108,742
3.00%
112,004
5
7063
Certification Pay
5,000
5,000
2.50%
5,125
3.00%
5,279
3.00%
5,437
3.00%
5,600
6
7099
Salary Savings
-
7
7114
Cell Phone Stipend Exp
-
1,920
2.50%
1,968
3.00%
2,027
3.00%
2,088
3.00%
2,151
8
7210
Health /Dental/Vision
376,992
392,452
3.25%
405,207
3.25%
418,376
3.25%
431,973
3.25%
446,012
9
7223 &
Annual OPEB & Merp $2.50 Contribution
67,841
12,450
3.25%
12,855
3.25%
13,273
3.25%
13,704
3.25%
14,149
7227
10
7290
Life Insurance
2,507
2,520
2.50%
2,583
3.00%
2,660
3.00%
2,740
3.00%
2,822
11
7295
Emp Assistance Program
550
550
2.50%
564
3.00%
581
3.00%
598
3.00%
616
12
7370
Workers'Comp, Misc.
82,113
82,113
2.50%
84,166
3.00%
86,691
3.00%
89,292
3.00%
91,971
13
7373
Compensated Absences
49,241
50,558
2.50%
51,822
3.00%
53,377
3.00%
54,978
3.00%
56,627
14
7425
Medicare Fringes
22,389
20,596
2.50%
21,111
3.00%
21,744
3.00%
22,396
3.00%
23,068
15
7439
PERS Employee Contribution (1)
46,774
35,857
12.00%
40,160
3.00%
41,365
3.00%
42,606
3.00%
43,884
16
7440
PERS Employer Contribution
177,552
1
1 207,188
Input
1 130,999
Input
1 134,929
1 Input
138,977
1 Input
17
L17= L2:L16
Total Salaries & Benefits
2,487,836
2,505,718
2,493,437
2,569,286
2,647,442
2,584,832
18
Operating Explainses
19
8010
Alive, &Pub Relations
1,000
1,000
2.50%
1,025
3.00%
1,056
3.00%
1,088
3.00%
1,121
20
8020
Automotive Service
100,000
100,000
2.50%
102,500
3.00%
105,575
3.00%
108,742
3.00%
112,004
21
8022
Equip Maint ISF
414,538
414,538
2.50%
424,901
3.00%
437,648
3.00%
450,777
3.00%
464,300
22
8024
Vehicle Replace ISE
410,300
410,300
2.50%
420,558
3.00%
433,175
3.00%
446,170
3.011%
459,555
23
8030
Maint &Repair - Equip
10,000
10,000
2.50%
10,250
3.00%
10,558
3.00%
10,875
3.011%
11,201
24
8033
Printer Maint /Supplies
300
300
2.50%
308
3.00%
317
3.00%
327
3.00%
337
25
8080
Services - Prof &Tech NOC
20,000
5,000
2.50%
5,125
3.00%
5,279
3.00%
5,437
3.00%
5,600
26
8085
Services - NPT Coast Refuse
611,385
627,500
2.50%
643,188
3.00%
662,484
3.00%
682,359
3.00%
702,830
27
8088
Services - Contact
20,000
21,000
2.50%
21,525
3.00%
22,171
3.00%
22,836
3.00%
23,521
28
8100
Travel & Meetings NOC
200
200
2.50%
205
3.00%
211
3.00%
217
3.011%
224
29
8105
Training
400
400
2.50%
410
3.00%
422
3.00%
435
3.011%
448
30
8112
Utilities - Telephone
1,000
-
2.50%
-
3.00%
-
3.00%
-
3.00%
-
31
8200
Special Dept. Supplies HOC
5,000
5,000
2.50%
5,125
3.00%
5,279
3.00%
5,437
3.00%
5,600
32
8204
Uniform Expense
14,000
14,000
2.50%
14,350
3.00%
14,781
3.00%
15,224
3.00%
15,681
33
8240
Tools, Instruments, Etc.
250
250
2.50%
256
3.00%
264
3.00%
272
3.00%
280
34
8250
Special Dept. Expense NOC
1,500,000
1,500,000
2.50%
1,537,500
3.00%
1,583,625
3.00%
1,631,134
3.00%
1,680,068
35
8298
Other Agency Fees
-
15,000
2.50%
15,375
3.00%
15,836
3.00%
16,311
3.00%
16,800
36
8318
IT ISF Operating Charge
26,359
47,058
2.50%
48,234
3.00%
49,681
3.00%
51,171
3.00%
52,706
37
8319
IT ISF Strategic Charge
4,539
-
2.50%
-
3.00%
-
3.00%
-
3.00%
-
38
8340
General Insurance
183,041
183,040
2.50%
187,616
3.00%
193,244
3.00%
199,041
3.00%
205,012
39
L40= L13L38
Total Operating Expenses
3,322,312
3,354,586
3,438,451
3,541,606
3,647,853
3,757,288
5,810,148
5,860,304
5,931,888
6,110,892
1
1 6,295,295
6,342,120
40
1 141= L1] +L39
1
1 Total Refuse Operating
City of Newport Beach 14 101412012
EXHIBIT 1
Projection of Solid Waste Operation Cost
FY 2011/12 Budget and Projections for FY 2012/13, FY 2013/14, FY 2014/15, FY 2015/16 and FY 2016/17
Line
Reference or
Formula
Acct#
Description
FY 31 -12
Budget
Assumption
FY 12 -13
(Budget)
Assumption
FY 13-14
Assumption
FY 14-15
Assumption
FY 15 -16
Assumption
FY 1 &17
Row
A
B
C
0
E
F
G
H
I
J
K
Reference or Formula
Input
Input
E =(1 +D)
G =(I +F)
1 =(1 +H)
K =(1 1J)
41
Interdepartmental Allocation
42
0110
City Council
10,350
2.00%
10,557
2.50%
10,821
3.00%
11,146
3.00%
11,480
3.0096
11,824
43
0320
City Manager - PIO
25,050
2.00%
25,551
2.50%
26,190
3.00%
26,976
3.00%
27,785
3.00%
28,619
44
0410
Personnel
43,411
2.00%
44,279
2.50%
45,386
3.00%
46,748
3.00%
48,150
3.00%
49,595
45
0420
Risk Management
30,244
2.00%
30,849
2.50%
31,620
3.00%
32,569
3.00%
33,546
3.00%
34,552
46
0620
Fiscal Services
5,021
2.00%
5,121
2.50%
5,249
3.00%
5,406
3.00%
5,568
3.00%
5,735
47
0530
Information Technology
20,578
2.00%
20,990
2.50%
21,515
3.00%
22,160
3.00%
22,825
3.00%
23,510
48
0540
Revenue
12,166
2.00%
12,409
2.50%
12,719
3.00%
13,101
3.00%
13,494
3.00%
13,899
49
0650
Accounting
48,300
2.00%
49,266
2.50%
50,498
3.00%
52,013
3.00%1
53,573
3.00%
55,180
50
3140
GS- Operations Support
364,987
2.00%
372,287
2.50%
381,594
3.00%
393,042
3.00%1
404,833
3.00%
416,978
51
5050
PW - Admin
8,753
2.00%
8,928
2.50%
9,151
3.00%
9,426
3.CD%l
9,709
3.00%
10,000
52
L52= L42:L51
Total Interdepartmental Allocation
568,860
1
1 580,237
1 594,743
1 612,587
630,963
649,892
53
154= 146,1_52
Total Solid Waste Operations
6,379,008
6,440,541
6,526,631
6,723,479
6,926,258
6,992,012
1.0%
1.396
3.0%
3.0%
0.996
54
Percent Increasefrom Prior Year
55
Adjustments:
56
L56 =L22
8024
Vehicle Replace ISF (2)
(410,300)
(410,300)
(420,558)
(433,175)
(446,170)
(459,555)
57
Input
Depreciation of Refuse Vehicles (2)
336,000
336,000
336,000
336,000
336,000
336,000
58
L58 =L26
8085
Services - NPT Coast Refuse
(611,385)
(627,500)
2.50%
(643,188)
3.00%
(662,484)
3.0%
(682,359)
3.00%
(702,830)
Services - Contact
(20,000)
(21,000)
2.50%
(21,525)
3.00%
(22,171)
3.00%
(22,836)
3.00%
(23,521)
59
159 = 156:158
Total Adjustments
(705,685)
(722,800)
(749,271)
(781,830)
(815,365)
(849,906)
60
L60= L53 +L59
Total Adjusted Solid Waste Operations
5,673,323
0
5,717,741
0
5,777,360
0
5,941,649
0
6,110,893
0
6,142,106
61
Percent ncreasefrom Prior Year
0.8%
1.096
2.8%
2.8%
0.596
62
Input
Total Residential Units
26,500
26,500
,500
2618.1]
26,500
26,500
26,500
$ 1].84
$ 1].98
$
IS 18.68
1 $ 19.22
1
19.31
63
L69= L60 +L62
Total Solid Waste Operations /Unit /MO
64
Input
Total Residential Tons Collected (3)
33,800
34,000
34,000
34,000
34,000
34,000
65
175= 160=1_64
Total Cost per Ton Collected
$ 16].85
$ 168.17
$ 1
1 $ 174.75
$ 1]9.]3
1
$ 180.65
(1) PERS Employee Contribution reflects the portion of the PERS Employee Contribution covered by the City and is projected to change accord! ng to cha rues in the PERS Employer Contribution.
(2) The Vehicle Replace ISF charge is replaced with the estimated depreciation for all the complete fleet assuming that the useful life is increased to reflect the actual period used.
(3) Projected tonnage for FY 12/13, FY 13/14, FY 14/15, FY 15/16 and FY 16117 is based on the annualized average of the monthly tans for FY 08/09, FY 09/10, FY 10/11 and six months of FY 11/12 (through December 2011)
City of Newport Beach 1 -2 101412012
Mai 3A
Comparison with Orange County Cities
III Receipts delliatetl a.. on 21,531 average unite and 519.95 per month for CY 2011 tonnage dates an calendar year)
(2) Indor., CH, Fee,of$140 per homepa,manq -$]89, 466,$ 0.3, 0.3015]5,000 pe, year for cad. eMarcemens plus CPI) antl$0.3,850 east 3/2 of$150,000 No. pe ...... no CPI).
(3) RerelPt, talc lath n dared on IR,11R home, at $1].73 per Month ($I6.. to+ 09)
(d) Bored ad as F.
(5) Appendix
16] Fxhist1
Adjustment For Billlng $ 050 Per Home per MaMh
Adjustment for On - uy.m., HHW $ 050 I.r HOmeper MOMh
City O /Newpostemm ZA 2141202
Omnge Counp'I.-
1
Tot al Gmss Rendis s/Cast per Year
$ S,B,o,000
fat
$ 6134$11
(1)
$ 10,51694]
$ 5,916A59
$ 2,012,4]3
$ 3,Bfi],553
2
Clty antl Nexua Fees
]]$,538
95],Ififi
121
295,823
326,362
202�8fi6
2)
3
Poe[Annual COS[, Excluding O[y Fees
$ S,fi]3,000
$ d�383,983
$ 9,559,]81
$ S,fi20,fi 3fi
$ l,fi8fi�111
$ 3,fi64,fi85
pesltlenti al
9
Type MServim
ppsltlenflal
0.epltlendal&
Resltlentlal&
0.epltlpn[lal&
0.esitlen[ial&
Only
Only
Commercial
Village
Wmmercnl
Commercial
.,Marc.,
5
Yes/NO
Adjustment
Yeal
Adj.as
Adjustment
Yes/HO
Ad], as
Adjustment
Yes /Na
Adj.%
Adjustment
Yep/N.
Adj.%
Adjustment
Yes /NO
Adj. %
Adjustment
6
Aandaems iri:
]
G)Y Faal Hles at no audit....I made
No
$ -
No
Ofi%
$ -
Yes
0.2%
$ )39]10)
Yes
B.E%
$ )31.1431
Yes
O.E%
$ 13,3721
Yes
03%
$ )],329)
8
Read, n oon containers at no adtlltlonal cha Re
No
-
No
5.2%
-
Ye,
IA%
352,95fi1
Yes
t.fi%
(e'..)
Yes
I.I.
F,.)
Yes
1.6%
158,635)
9
Beach cantalners at no additional charge (debris)
No
-
NO
21%
-
No
0.7%
-
No
B.]%
-
NO
oma
-
Yes
B.]%
115,653)
10
Street sweeping tlehdc at no additional Charlie
No
-
No
I4%
-
Yee
O4%
130,239)
No
O4%
-
No
04%
-
Yee
04%
)14,659)
11
Billing.. -on-it by Haukr
No
-
(4)
No
$050 /mo.
-
(4) Yee
$050 /m0.
2a1,952)
Yee
So . /mo.
263,]4a)
Yee
$050 /m0.
)62,M61
Yee
$050 /mo.
(109,068)
3E
Free Eom-[o umr HHW Pickup
No
No
$O50/ma,
No
$0.50 /mo.
No
$0.50 /m o.
Yes
$0.50 /m o.
162,.6)
Yes
$050 /ma,
(3091068)
13
Total Adjustments
$
$
$ (492 257)
$ 1364,9]9)
$ 1350441)
$ 1324,433)
14
Net Annual Cost, Includes Adjustments
$ C, ,taW
$ 43a1983
it 9,067,514
5 5,255,]1]
$ 1,531,669
$ 3,340,213
IS
Tone C011eded
33.8.
40381
Not Anil.
SI,6B$
1],44]
33437
16
Number of Homes
26,500
21,531
46,992
43,958
10,341
ill".
1]
a Tone C011ardid per Home Per Month
118
LAA
Not Arall.
118
169
1.84
3B
Net Cost, Including Adjustments
39
Pec TOn COIIeRN
$ Had
$ 1.
Not Aran
$ 301
$ BB
$ 100
20
I . Per Home Per Month
$ 1].84
I
I
$ 3696
$ 1608
$ 9.%
$ 12'.
$ 3531
III Receipts delliatetl a.. on 21,531 average unite and 519.95 per month for CY 2011 tonnage dates an calendar year)
(2) Indor., CH, Fee,of$140 per homepa,manq -$]89, 466,$ 0.3, 0.3015]5,000 pe, year for cad. eMarcemens plus CPI) antl$0.3,850 east 3/2 of$150,000 No. pe ...... no CPI).
(3) RerelPt, talc lath n dared on IR,11R home, at $1].73 per Month ($I6.. to+ 09)
(d) Bored ad as F.
(5) Appendix
16] Fxhist1
Adjustment For Billlng $ 050 Per Home per MaMh
Adjustment for On - uy.m., HHW $ 050 I.r HOmeper MOMh
City O /Newpostemm ZA 2141202
EXHIBIT28
Comparison with China with Municipal Residential Servlte
1
2
3
Total Gross accentual per-Year
Ciry and Nexs Fees
Net Annual Cory Excluding Ciry Fees
$ 5,61
(6)
$ 3,324,414
(1)
$ kfi50,555
250000
Cities with
t e
Municipal Service
$ 9,561,476
clause
5 B,fi86656
(2)
$ 9,099,2%6
$ 5,Ei -0
$ 3,324,414
$ 6408,555
$ 9,311,426
$ 6,guyban
$ 9,099,286
4
Type of Service
Residential
Residental
Residential
Rezidenrial Only
Proctorial and
Residential and
Onlv
only
Onty(111
7(2)
Commercial
Commercial
5
Yea/No
Adjustment
Yes /NO
Adj IS
Adjustment
Yedi
Am is
Adjustment
wove.
Adj.%
Adjustment
Ad(.$
Adjustment
Yee /NO
Adj.%
Adjustment
6
Adjustments l° t2
City [ankles at no additional charge
No
$
06%
$ -
Yes
$. (12,812)
No
06%
$ -
0.2%
$ -
No
R
Street later... Circle at no additonal charge
No
-
52%
-
vez
(102,532)
No
5.2%
-
16%
-
No
9
Al containers at no additional charge debnzl
No
-
2 2%
No
-
No
2 Z%
0.2%
-
No
Street sweeping door's.1 no adandrel charge
No
-
14%
-
No
Budges
arl
No
(546,000)
0.4%
No
-
11
BIIIIng Performed by Thai orot oa tax roll)
No
-
$0.50/mo.
(I1] 6921
Yes
$0.50/mo.
(421
Yes
Budget
(294,000)
(10)
Yes
$050 /moo
(159,244)
Yea
Bu "
(38,212)
(6)
12
Free OOor- to-OOOr HHW pick-up
No
$0.50 /moo
No
$0.50/mo.
No
$0.50/m0.
NE
$050 /m o.
Yes
WE. /moo
(18],324)
13
Tmal Adjustments
$
$ (112,6921
$ (222,924)
$ (1,340,000)
$ 1159 2441
$ (226,086)
14
Net Annual Coal, nudes Adjustments
$ "fuld'000
Si 3,211,222
$ 6,1.5,6.1
$ 2,921,426
$ 6S26,912
$ 8,R231W
15
Tom Collected
33,.00
31632
29,060
19,060
52,851
34,153
16
Number of Iran.
26.500
10,282
2,920
]920
26,624
31,229
12
• Tear Collected per H.me Per Month
L2.
168
any
362
2.12
109
f.
Net Cost, Including Adjustments'.
19
a Perkin Coloued
$ 168
$ 102
$ 213
$ 224
$ 142
$ 260
20
a Per Home Per MOniF
$ 12.84
$ 14.25
$ 65.09
$ Ill
$ 26.69
$ 23.60
(1) Bared on the number of units 110,202)tlmez 5122 pen year.
(2) Based on the budgeted reachandal now revenue for FV 2018/11.
(3) The City of Newport Beam reflects the whose nice,, disposes of beach hman from mechanical beach cleaner and disposes the street zweeping debris, all disposed at the Frank Bowerman Goodall.
(4) Milan on the Cx roll.
(5) The City of Beverly Hills manzfers$ful annually to the Storm Water Fund to cover m—cat of street sweeping debris.
(6) Based on the N 2r1.111 cudialSil651 war budgeted for lltl101ea BIIIIng 5ervlces for the ...me Recovery 9 Recycling Fund, Residential Cte revenue accounted for 4A sE mine rate CVenuefor FY2010 /11. The amount dedurted(or bill, 1540 %of the budget for ONltty BIIIIng Services.
VI Miamorx
(e) lancet
(9) AmerdlrgCCry craft, ztteeuvicaungmztz are mtluced In the 6ea minMtoo ofsan waste rates. Street sweeping coats were allocated between residential and commercial based on the awarded how 'new revenue.
(10) Based on 06 %ol me FV 2010/11 Budget for.tiling sprvlre. Residential rate revenues account for approximately 06 %.f the maldentoll and commercial rate revenues.
(11) Although Beverly Hllla provldes only munitlpal residential Parsce, the Cry 61115 for both residential and commensal Seri.
Adjustment For Bllling $ 0.50 Per HOmeper Month
Adjustment for 0oorvt. -0oor HHW $ C.I. Per HO me per MOMh
Onx.fNewporfeeocd 2B 10/4/2022
EXHIBIT 2C
City Services Cost Adjustment Factors
Fiscal Year 2010/11
MPPN lruino
(Z) Disposal only at Bowerman Landfill (2,597 tons at $30.30 per ton)
City of Newport Beach 2C 101412012
EXHIBIT 3
Calculation of Projected Savings (Costid Waste Collection Vehicle Drivers
Line
Description
Costs FY 2011/12
Budget
1
Total Salaries, excluding overtime and special pay (FY 2011/12 Budget)
$ 1,661,877
2
Route supervisor
(85,238)
3
Refuse superintendent
(113,902)
4
Salaries not budgeted by position
(255,000)
$ 1,207,737
5
Total route salary (w /o overtime, special pay and benefits)
22
6
Number of Route Personnel
7
Straight Annual Hours
2,080
8
Total Route Hours
45,760
9
Average Hourly Rate before Benefits
$ 26.39
10
Benefits (FY 2011/12 Position worksheet)
12.25
11
Average Hourly Rate with Benefits
$ 38.64
Union
12
Private Sector (Recent Competitive Proposal)
Nan -Union
$ 32.55
$ 23.58
13
Private Sector Hauler
14
Private Sector Hauler
28.00
25.00
15
Private Sector Hauler
26.46
23.43
16
Private Sector Hauler
33.10
17
Private Sector Hauler
30.07
18
Private Sector Average
$ 30.04
$ 24.00
19
Calculation of Savings per Hour
20
Newport Beach Average Hourly Rate
$ 38.64
$ 38.64
21
Private Sector Average Hourly Rate
30.04
24.00
22
Difference Between Newport Beach and Private Sector
$ 8.60
$ 14.64
23
Potential Savings Based on Direct Labor Cost
$i
$ _6701M
$ 5,673,000
$ 5,673,000
24
Newport Beach Solid Waste Operations Cost
25
Interdepartmental Allocations
(569,000)
(569,000)
26
Total Newport Beach Cost
$ 5,104,000
$ 5,104,000
27
Less Potential Savings Based on Direct Labor Cost
(394,000)
(670,000)
28
Newport Beach Cost Less Labor Cost Savings
4,710,000
4,434,000
29
Private Sector Profit (Range 5% to 12 ° %)
5%
12%
5%
12%
30
Private Sector Profit Amount
236,000
565,000
222,000
532,000
31
Estimated Net Annual Savings (Cost)
$ 158,000
$ (171,000)
$ 448,000
$ 138,000
$ 5,673,000
$ 5,673,000
$ 5,673,000
$ 5,673,000
32
Newport Beach Solid Waste Operations Cost
33
Estimated Net Annual Savings (Cost) Percentage
3%
-3%
8%
2%
City of Newport Beach 3 -1 101412012
EXHIBIT 4
Estimate of Annual Depreciation Cost for Solid Waste Vehicles and Equipment
Vehicle #
Fuel
Year
Purchased
Acquisition
Cost
Expected
Life (1)
Estimated
Annual Cost
Rear Loader
Diesel
2008
$ 81,226
14
$ 6,000
Replacement - 5020
CNG
2015
$ 225,000
12
19,000
Replacement - 5021
CNG
2013
$ 225,000
12
19,000
Replacement - 5023
CNG
2013
$ 225,000
12
19,000
5026
CNG
2010
$ 203,691
12
17,000
5027
CNG
2010
$ 203,691
12
17,000
5030
Diesel
2003
$ 93,414
14
7,000
5031
Diesel
2003
$ 112,049
14
8,000
Front Loader
Replacement - 5007
CNG
2013
$ 275,000
12
23,000
Replacement - 5010
CNG
2014
$ 275,000
12
23,000
Replacement - 5011
CNG
2013
$ 275,000
12
23,000
Replacement - 5014
CNG
2013
$ 275,000
12
23,000
Replacement - 5019
CNG
2014
$ 275,000
12
23,000
5032
Diesel
2003
$ 112,049
14
8,000
Replacement - 5033
CNG
2015
$ 275,000
12
23,000
5034
CNG
2010
$ 244,461
12
20,000
5035
CNG
2010
$ 244,461
12
20,000
Replacement - 5036
Diesel
2015
$ 275,000
12
23,000
Additional Equipment
5005 -Yard Mule
Diesel
1995
$ 76,366
14
5,000
5038- Tractor
Diesel
1997
$ 70,930
14
5,000
5025 Rear Load
Diesel
2003
$ 65,882
14
1 5,000
1 $ 336,000
Total Annualized Cost
1
(1) Based on the historical period that vehicles are operated in the City.
City of Newport Beach 4 -1 101412012
EXHIBITS
REFUSE VEHICLE ORIGINAL COST, NET BOOK VALUE, AND VALUATION
Descrip0on /Vehicle Number
In Service
Date
Year
Fuel
Body Style
Original Cost
NOV 6 /30/11
Estimates) Value
Estimated Truck Values ( www.trashrucksonline.cam) (21131
Law
High
Au
Low
High
Two-Man Trucks
5003
11/21/2007
2008
Diesel
Rear Load
$ 61,225
$ 40,613
$ 40,613
$ 891
$ 95,000
$ 92,450
2007 Freightliner /McNeilus 20 Yd, RL
2009 International /Heil 16 Yd. RL
5020
1011/1997
1997
Diesel
Rear Load
$ 69,695
$ -
$ 25,000
$ 23,900
$ 60,000
$ 41,950
1998 Mack 16 Yd. RL
1998 GMC /McNellus 17 Yd. RL
5021
1011/1997
1997
Diesel
Rear Load
$ 89,895
$ -
$ 25,000
$ 23,900
$ 60,000
$ 41,950
1998 Mack 16 Yd. RL
1998 GMC /McNellus 17 Yd. RL
5023
1011/1997
1997
Diesel
Rear Load
$ 89,895
$ -
$ 25,000
$ 23,900
$ 60,000
$ 41,950
1998 Mack 16 Yd. RL
1998 GMC /McNeilus 17 Yd. RL
5026
3122/2010
2010
CNG
Rear Lead
$ 203,691
$ 152,768
$ 152,768
$ 153,000
$ 153,000
$ 153,000
5027
3/22/2010
2010
CNG
Rear LOad
$ 203,691
$ 152,768
$ 152,768
5 153,000
$ 153,000
$ 153,000
5030
11/18/2002
2003
Diesel
Rear LOad
$ 93;414
$ -
$ 25,000
$ 391
$ 55,000
$ 47,450
2003 Freightliner/Leach 16 Yd. RL
2003 Freightliner /Hell RL 15 Yd,
5031
11/18/2002
2003
Diesel
Rear Lead
$ 112.49
$ -
$ 25,000
$ 39,900
$ 55,000
$ 47,450
2003 Freightllner /Leach 16 Yd. RL
2003 FreightOner/Heil RL 16 Yd.
One -Man Trucks
5007
Aug -94
1994
Diesel
Front Wad
$ 112,486
$ -
$ 25,000
$ 30,000
$ 30,000
$ 30,000
1994 Peterbuilt /Heil 40 Yd. FL
1994 Peterbullt/He1I 40 Yd. FL
5010
11/20/1997
1997
Diesel
Front Lead
$ 133,443
$ -
$ 25,000
$ 15,000
$ 38,000
$ 26,500
1998 Petebuilt /Heil 40 Yd, FL
1998.AUtocar /He1140 Y8. FL
5011
Aug 94
1994
Diesel
Front Load
$ 112486
$ -
Si 25,000
$ 30,000
$ 30,000
$ 30,000
1994 Peterbuilt/Hed 40 Yd. FL
1994 Peterbuilt /Hell 40 Yd. FL
5014
11/20/1997
1997
Diesel
Front Load
$ 133;443
$ -
$ 25,000
$ 15,000
$ 38,000
$ 26,500
1998 Peterbuilt/Heil 40 Yd. FL
1998 AUtocar /Heil 40 Yd. FL
5019
3/16/1999
1999
Diesel
Front Load
$ 133,442
$ -
$ 25,000
$ 29,500
$ 33,500
$ 31,500
1999 Mack /Heil 40 Yd. FL
1999 Mack/Heil 40 Yd. FL
5032
2/11/2003
2003
Diesel
Front Load
$ 112,049
$ -
$ 25,000
$ 59,900
$ 1051
$ 82,450
2003 Mack/Heil 40 Yd. FL
2003 Autocar/Wittke 40 Yd. FL
5033
1/30/2001
2000
Diesel
Front Wad
$ 129,873
$ -
$ 25,000
$ 24,900
$ 33,500
$ 29,200
2000 Mack /Heil 40 Yd. FL
2000 V.1v. /McNeilus 40 Yd, FL
5034
3/25/2010
2010
CNG
Front Wad
$ 244,461
$ 183,346
$ 183,346
$ 183,000
$ 183,000
$ 183,000
5035
3/25/2010
2010
CNG
Front Lead
$ 244,461
$ 183,346
$ 183,346
$ 183,000
$ 181
$ 183,000
5035
3/28/2000
2000
Diesel
Front Load
$ 129,873
$
Si 25,000
$ 24,900
$ 33,500
$ 29,200
2000 Mack /Heil 40 Yd. FL
2000 VBlvo /McNeilus 40 Yd. FL
$ 2.449,773
$ 712,841
1 $ 1,037,041
$ L142,600
1 $ 1,398500
1 $ 1,270,550
Total Refuse Vehicles
Addhi0nal Equipment
5005
1112112007
1995
Diesel
$ 76,366
$ -
$ 25,000
$ 25,000
$ 251
$ 25,000
5038
7/9/1997
1997
Diesel
$ 70,930
$ -
$ 25,000
$ 251
$ 25,000
$ 25,000
5-0-60
1 8/19/2003
1 2003
1 Diesel
$ 65,882
$ 13,176
$ 13,135
$ 13,135
$ 13,135
$ 13,135
Total
5 2,662,951
$ 725,017
$ 1,100,976
$ 1,205,735
1 $ 1,461,635
1 $ 1,333,685
131 The estimated value was based on the Net Book Value (NBV) at 6/30/11 or $25,000 for vehicles that were fully depreciated.
III Vehicle valuations were based on advertised prices in wwwtvashtrucksonline.com. When the exact vehicle ) manufacturer, body style, packer size and mileage)wa, not available, the closest
match far the year, body style and packer size was used. If a vehicle year was not available, the closest earlier year available was used. For front load vehicles no similar packer size was available, a
40 cubic yard packer was used. If a vehicle had only one advertised price, the one advertised price was used for both the low and the high value.
Im The net book value was used for vehicles acquired in 2010.
City of Newport Beach 5 -1 10/4/2012
APPENDICES
This page intentionally left blank
APPENDIX A
Assumptions
Financial Assumptions for 5 -Year Projection
FY 2012/13, Far 2013/14, FY 2014 /15, FY 2015/16 and FY 2016/17
(Financial Assumptions Provided by and Discussed with City Staff)
Une
'pec4rip¢
FY 2012/13
FY 2013/14
FY 2014/5
FY 2015/16
FY 2016/17
1
Protection of Expenses
2
Input
Salaries and Benefits
Budget
2.50%
3.00%
3.00%
3.00%
3
Input
PERS(perce at of base salary)
7.248%
8.248%
8.248%
8.248%
8.248%
4
PERS(Cost)
Budget
$ 130,999.
$ 134,929
$ 138,977
$ 143,146
5
Input
Health /Dental/Vision
Budget
125%
3.25%
3.25%
125%
6
Input
Health
Budget
3.25%
3.25%
3.25%
3.25%
7
Input
Operating Expenses
Budget
2.50%
3.00%
3.00%
3.00%
8
Input
Interdepartmental Allocations
2.00%
2.50%
3.00%
3.00%
3.00%
9
10
Replacement of Refuse Vehicles wpl
11
Rear Load Units to be Replaced
12
Input
#5021
#5020
N/A
N/A
13
Input
#5023
N/A
N/A
14
Front Load Units to be Replaced
15
Input
#5007
#5010
#5033
N/A
N/A
16
Input
#5011
#5014
#5036
N/A
N/A
17
Input
#5019
N/A
N/A
18
19
Number of Vehicles Replaced:
20
Count
Rear Load
2
1
-
-
21
Count
Front Load (Units 5007 & 5011)
2
3.
2
-
-
22
23
Projected Unit Cost:
24
Input
Rear Load
$ 225,000
$ 225,000
$ -
$ -
25
Input
Front Load
$ 275,000
$ 275,000
$ 275,000
$ -
$ -
26
27
Projected Purchase Cost:
28
1.28= 120.124
Rear Load
$ 450,000
$ 225,000
29
129= L21'125
Front Load
550,000
825,000
550,000
30
1.30 =128 +129
Total Projected Purchase Cost
$ 1,000,000
1 $ 825,000
$ 775,000
1 $
$
a All refuse collection vehicles to be replaced were fully depreciated as of lune 30, 2011.
Ill No vehicles are projected to be replaced in FY 15/16 and FY 16/17.
(3) The useful life of the refuse vehicles is based 96 months (8 years) on the useful life used for the most recent vehicle acquisitions. Also assumed 112 year depreciation in first
year of acquisition.
City o /Newport Beach A -1 101412011
APPENDIX B
Comparison of Orange County Municipalities
Summary of Key Services
Population
Newport Beach
86,000
110,000
193,000
224,000
23,000
64,000
lA
Residential Collector
City of Newport Beach
CR &R (1)
Rainbow
Waste Management (2)
Waste Management
CR &R
1B
Commercial Collector
Multiple Haulers
Multiple Haulers
Rainbow
Waste Management
Waste Management
CR &R
2
Residential Collection Method
Manual /MWP(3)
Automated /MWP
Automated
Automated
Automated
Automated
3
Refuse Cart Size
N/A
35, 69, 90
35, 65, 95
35, 64, 96
35, 64, 96
35,67
4
Recycling Can Size
N/A
N/A
35, 65, 95
35, 64, 96
35, 64, 96
35,67
5
Green Waste Cart Size
N/A
N/A
35, 65, 95
35, 64, 96
35, 64, 96
35,67
6
Residential Rate Structure
No Billing (Gen Fund)
Based on the number of carts
Flat Monthly Rate
Based on number of carts
Based on number of carts
Based on number and size of
carts
7
Residential Billing Performed By
No Billing (Gen Fund)
Tax Roll Billing
City Utility Billing
Hauler
Hauler
Hauler
8
City Facility/Park Collection Services at no
No -Ware Contract- $31,950(4)
No
No- $870,000 for various city
Yes - All public buildings, parks
Yes - All buildings, parks,
Yes - All public buildings, parks
additional charge?
facilities (max 2006- adjusted
and bus stops
playgrounds, etc. at no cost
and bus stops at no charge
by contractor rate increase)
9
City Street Litter Container Collection at no
No -City collects - $300,000
No
No (Included in $870,000 for
Yes- All public bus stops
No
Yes -AII beaches at no charge
additional charg0
city facilities)
10
Beach Container Collection at no additional
No - Rainbow Contract-
No
No
No
No
Yes -AII beaches at no charge
charge?
$127,441
11
Street Sweeping Service at no additional
No - Athens& Sunset Properties
No
Debris Only (included in
No
No
Debris Only
charge?
Street Sweeping Services -
$870,000 for city facilities)
$503,817
12
Bulky Item Pickup at no additional charge?
On -call, no limit
Yes - Twelve free pickups of
Yes - On- call - up to 4 per year
Yes - Maximum of 2 per year at
Yes - Commercial &Residential
Yes - Curbside - Up to per
extra boxes and furniture.
at no charge
no charge
On Call - Up to 2 per year at no
year at no charge
Annual summer collection of
charge
large items plus one call -in per
year at no charge
13
Collection of Abandoned Items at no additional
City collects when it occurs, no
No
No
No
No
Yes - 20 Calls per month at no
cost?
cost estimate
charge
14
Household Hazardous Waste - Door -to - Door at
No
No
No
No
Yes - Onefree door -to -door
Yes - On -call up to 4 per year
no additional cost
pickup per year
(1) CR &R is contracted through the Costa Mesa Sanitary District. Through the CMSD CR &R also provides residential collection to the Santa Ana Heights area that is included in the incorporated city boundaries of Newport Beach.
(2) Waste Management provides the Irvine residential and Village commercial collection services, the remainder ofthe commercial collection service is non - exclusive.
(3) MWP - Mixed waste processing (refuse material is collected and delivered to a MRF for processing and diversion).
(4) Contracted to Ware Disposal at $31,950 per year, $15,550 per year- Refuse Division ( including $500 per year - Corporate Yard, $13,750 per year - Washington Street bin area and $1,300 per year - City Hall)
City of Newport Beach B -1 101412012
APPENDIX C
Ccomparison of Cities with Municipal Residential Collection
Summary of Key Services
Population
Newport Beach
86,000
Westminster
91,000
Beverly Hills
34,000
Burbank
104,000
Pasadena
139,000
Santa Monica
90,000
IA
Residential Collector
City
MVSD
City
City
City
City
30
Commercial Collector
Multiple Haulers
Rainbow
Crown Disposal
Multiple Haulers
Multiple Haulers
City
2
Residential Collection Method
Manual /MWP(2)
Automated
Automated /MWP
Automated
Automated
Automated
3
Refuse Can Size
N/A
35, 64, 96
35, 64, 95
35, 64, 101
32, 60, 100
68,95
4
Recycling Cart Size
N/A
35, 64, 96
N/A
35, 64, 101
60
95
5
Green Waste Cart Size
N/A
N/A
95
35, 64, 101
100
95
6
Residential Rate Structure
No Billing (Gen Fund)
Flat Rate/Tax Roll
Varies based on lot size
Varies by size
Varies by size
Varies by size and quantity
7
Residential Billing Performed By
No Billing (Gen Fund)
MVSD
City
City
City
City
8
City Facility/Park Collection Services at no
additional charge?
No -Ware Contract- $31,950(4)
Commercial contractor -full
charge
Yes
City
$277,540 -Not included in
rates
City
9
City Street Litter Container Collection at no
additional charge?
No -City collects- $300,000
Yes
City
N/A
City
10
Beach Container Collection at no additional
charge?
No- Rainbow Contract-
$127,441
N/A
N/A
N/A
N/A
City
11
Street Sweeping Service at no additional
charge?
No - Athens& Sunset Properties
- Street Sweeping Services-
$503,817
No
No
Fully Included in Residential
Rate
$973,757 (Rate Model- - Nat
included in rates
City
12
Bulky Item Pickup at no additional charge?
On -call, no limit
Yes - City -2 Time each Month
- No Charge
Two free per year
City
$31,458 (Rate Model)
City
13
Collection of Abandoned. Items at no
additional cost?
City collects when it occurs, no
cast estimate
Commercial contractor- no
charge'
Not Available
City
14
Household Hazardous Waste- Door -to -Door
at no additional cost?
No
No
No
No
No
HHW Collection Center and Pilot
Program for Door -to -Door
(1) Waste Management provides the Irvine residential and Village commercial collection services, the remainder of the commercial collection service is non - exclusive.
(2) MWP - Mixed waste processing (refuse material is collected and delivered to a MRF for processing and diversion).
(3) Contracted to Ware Disposal at $31,950 per year, $15,555 per year -Refuse Division ( including $500 per year - Corporate Yard, $13,750 per year - Washington Street bin area and $1,300 per year - City Hall)
(4) Solid Waste Rate Model (10/12/11) -Budget FYE 2011 -This is reflected in the rate model as "Commercial -Bins (Municipal). This is interpreted as "City Facilities," it is unknown as of 4/5/12 if it also includes street litter containers. See
Pasadena Zero Waste Strategic Plan binder.
City of Newport Beach C -1 101412012
APPENDIX D
City of Newport Beach
Summary of Solid Waste Collection Costs /Revenue
Fiscal Year 2011/12
FY 2011/12
Total Department Costs /Receipts $ 6,379,000
Less Newport Coast and Other Contract Costs (632,000)
Less Overhead Allocated from Other City Departments (568,860)
Less City Facilities Paid by the Refuse Department (1,300)
Newport Beach Base Cost 5,176,840
Newport Coast and Other Contract Costs 632,000
Total Residential Refuse Cost 5,808,840
Commercial Gross Receipts (1) 12,941,000
Total Newport Beach Residential and Commercial Service Costs $ 18,749,840
Adjustment Factors to Decrease Other Cities Costs if they have any of the following in their costs /revenues:
Residential Only Residential &
Commercial
Total Cost for FY %of Total Residential Total Newport Beach
2011/12 Cost Refuse Revenue
5,808,840 $ 18,749,840
City Facilities
$ 31,950 0.6%
0.2%
Street Containers
$ 300,000 5.2%
1.6%
Beach Containers
$ 127,441 2.2%
0.7%
Street Sweeping Service - Debris Only (2)
$ 78,694 1.4%
0.4%
Billing
$0.50 per month per household
Door -to -Door HHW Collection
$0.50 per month per household
(1) Gross receipts is estimated based on $1,359,000 in
franchise fees at 10.5% of gross receipts for fiscal year 2011.
(2) Street sweeping debris is dumped at the Corporate Yard and hauled to the Bowerman landfill by the Field Maintenance
Division.
The cost is not charged to the Refuse Division.
City of Newport Beach D -1 101412012
APPENDIX E
Competitive Proposal Results
Jurisdiction
EI Centro
Year
2007
# of
Proposers
4
Contract
8 years
• .
$34,209,000
$39,134,000
$0
0%
Inglewood (2)
2012
3
10 years
$99,510,000
$103,534,000
$0
0%
Manhattan Beach
2011
4
7 years
$24,187,000
$27,088,000
$0
0%
Manhattan Beach
2002
7
7 years
$22,400,000
$21,800,000
$600,000
3%
Imperial Beach
1999
4
7 years
$13,692,000
$13,153,000
$539,000
4%
Rancho Palos Verdes
1999
7
7 years
$22,034,000
$20,647,000
$1,387,000
6%
Redondo Beach
2011
5
8 years
$48,112,000
$45,064,000
$3,048,000
6%
Lawndale - Residential
1997
5
1 5years
$6,127,000
$5,476,000
$651,000
11%
Mission Viejo
2000
5
8 years
$54,784,000
$48,395,000
$6,389,000
12%
Palm Desert
2000
6
7 years
$46,252,000
$40,553,000
$5,699,000
12%
Santa Clarita - Commercial
2003
6
9 years
$39,256,000
$34,099,000
$5,157,000
13%
Lawndale - Residential
2002
5
7 years
$7,546,0001
$6,349,0001
$1,197,000
16%
Median
17%
Riverside — Residential
2001
7
7 years
$20,272,000
$16,793,000
$3,479,000
17%
Pico Rivera
2012
8
7 years
$48,489,000
$38,451,000
$10,038,000
21%
West Hollywood
2003
9
8 years
$42,376,000
$33,512,000
$8,864,000
21%
Lawndale
2010
7
7years
$23,849,000
$18,841,000
$5,008,000
21%
Rancho Palos Verdes
2009
7
7 years
$36,466,000
$28,357,000
$8,109,000
22%
Lake Forest
1996
5
1 7 years
$29,500,000
$22,800,000
$6,700,000
23%
Bellflower
2004
5
8 years
$49,688,000
$38,400,000
$11,288,000
23%
Rancho Santa Margarita
2004
5
8 years
$28,704,000
$20,864,000
$7,840,000
27%
Santa Clarita — Residential
2003
6
7 years
$100,204,000
$70,409,000
$29,795,000
30%
Riverside — Commercial
2001
6
7years
$97,506,000
$64,354,000
$33,152,000
34%
Orange
2009
4
8years
$139,768,000
$82,752,000
$57,016,000
41%
Tustin
2000
8
7years
1 $42,392,0001
$25,011,0001
$17,381,000
41%
(1) Over term of contract
(2) Net of one -time up -front fees.
City of Newport Beach E -1 101412012