City-Wide Exclusive Franchise System for Municipal Solid Waste Collection and Handling City of Los Angeles LA Sanitation Enrique Zaldivar, Director Dan Meyers, Franchise Division Manager Current Waste Collection System • Private waste haulers collect from all multifamily and commercial establishments not collected by LASAN under a permit system • Permit system does not have requirements for: recycling, clean fuel vehicle, customer service standars or other environmental benefits • Approximately 144 private haulers collect from multifamily and commercial sites • Only 31 of the 144 private haulers collect from regular commercial accounts • Fifteen (15) top private haulers collect from 99% of the businesses 2 Why is Zero Waste LA Needed • Limitations of the existing hauler permit system – Unable to meet City landfill reduction goals – Unable to comply with state mandated recycling requirements – Permitted are Haulers not required to operate clean fuel vehicles – Inefficient vehicle routing – Insufficient material processing Infrastructure 3 What is Zero Waste LA • Zero Waste LA is the new public private partnership that establishes the new waste and recycling franchise system for all businesses, commercial, industrial, and large multifamily customers​ in the City of Los Angeles​ • ​For the first time, all the major sectors of residential, commercial, and large multifamily buildings in the ​City​ ​will recycle using the Blue Bin • Zero Waste LA does not include residential properties collected by LASAN 4 How Did We Get Here Action Council motion (CF# 10-1797) to explore the benefits of commercial franchise Council President Eric Garcetti, established the Ad-Hoc Committee on Waste Reduction and Recycling Date November 2010 2011 Mayor and Council approved 5-year notice to haulers, per State Statute (CPRC Section 49520-49524) December 2011 Mayor and Council instructed Sanitation to develop Exclusive Franchise Program Mayor and Council approved Zero Waste LA Franchise Implementation Plan (FIP) Mayor and City Council Ordinance and EIR November 2012 Board Of Public Works Approves RFP Proposals Received Evaluations Completed Negotiations Completed Board Considers LASAN’s Recommendations April 2013 April 2014 June 2014 October 2014 July 2015 August 2016 September 2016 5 Community Outreach and Involvement • • • • • • • • Over 25 Public Stakeholder Workshops A workshop solely for Zone Development Hauler survey and meetings 10+ Council Committee Meetings 5 City Council Meetings Multiple Board of Public Works Meetings Stakeholder Surveys – Mailed Stakeholder Surveys – Online 6 Goals of Zero Waste LA • Meet the City’s Zero Waste Goals • Meet state requirements for landfill reduction & mandatory recycling and organics recycling • Improve health and safety for solid waste workers • Improve efficiency of the City’s solid waste system • Improve the City’s air quality • Provide the highest level of customer service • Create consistent, fair and equitable rates • Create a system that ensures long term competition • Ensure sufficient staffing to meet Program goals • Ensure reliable system infrastructure 7 Additional Request for Proposals (RFP) Requirements • Eleven (11) Franchise Zones • Proposer could propose on one or all zones. • No Proposer could receive an award of more than 49% of the accounts in the system. 8 Additional RFP Requirements Of the 11 zones 3 are designated as single zones (Small Zones), which may not be bundled together with others franchise awards. – The Small Zones were established to allow all haulers regardless of their size the opportunity to compete through the process – The three Small Zones were established around the City’s Central LA Recycling and Transfer Station (CLARTS) – The utilization of CLARTS allowed proposer that did not own infrastructure the ability to compete 9 Proposals • LASAN received 15 Proposals. – No proposer proposed on all eleven zones – Some proposed on Small or Large Zone only, while others proposed on both Large and Small Zones AAA Rubbish Inc SVT Services, Inc Athens Services, Inc United Pacific Waste CalMet Services, Inc Universal Waste Systems, Inc Consolidated Disposal Service, LLC DBA USA Waste of California, Inc. DBA Waste Republic Services Management CR&R Ware Disposal, Inc NASA Services, Inc Waste Connections of California, Inc, DBA Green Team of Los Angeles Pacific Coast Waste, LLC DBA Pacific Waste Resources Los Angeles, Inc Coast Waste Recology 10 RFP and Evaluation • RFP and Evaluation tools were designed to support each other RFP Category 1. Qualifications Points 10 Samples: Management and company experience, litigation history, workplace safety, and references. 2. Customer Service/Transition Plan 25 Samples: Customer service staffing, outreach and education, billing, technology, and transition planning 3. Service Plan 20 Samples: Collection services, routing, and facilities 4. Diversion Plan/Innovation 25 Samples: Diversion plan feasibility, organics diversion plan, organics infrastructure, and innovations 5. Cost 20 Total 100 11 Evaluation Procedures • Established Evaluation Teams for each Scoring Category – Teams ranged from 4 to 6 members – Teams members were made up City and private sector experts – Consulting members provided research and technical support but did not vote on scoring or were involved in the scoring process – No members were from management • All Team Members agreed to confidentiality 12 Evaluation Procedures Team meetings – Teams were not allowed to talk about proposal or scoring with other teams – Teams met separately but concurrently • Met for 3 months • Met at least twice per week • Reviewed proposal data daily when not meeting – 1 month of Proposer interviews 13 Evaluation Procedures Clarification opportunities – LASAN issued 3 separate requests for clarification form Proposers – Opportunity for proposers to clarify all aspects of the proposal during Interview 14 Evaluation Scoring Scoring – Each Team was given a unique scoring input tool developed for their scoring category – Teams were not allowed to see or have access to scoring from other teams – Scores available only to Team Lead until they were finalized 15 Scoring and Ranking • After Teams scored their categories, scores were compiled into a single score • After scoring proposers were ranked within two categories – Those that proposed on Small Zones; and – Those that proposed on Large Zones 16 100 Average Overall Score Proposers on Small Zones I 4 mimmem CITY OF LOS ANGELES PCW WCN CalMet UPW Wa re (Only 10 of the 15 Proposers proposed on Small Zones) UWS NASA ?l7 Average Overall Score Proposers on Large Zones 100 lam-ION (Only 12 of the 15 Proposers proposed on Large Zones) CITY OF LOS ANGELES Shortlisting Process Initial Short Listing for Negotiations Small Zones • Small Zones awards could not be bundled with other zones • Identified the top three ranked Proposers for negotiation on the Small Zones – NASA – UWS – UPW 19 Shortlisting process Large Zones • Assumed for initial shortlist that negotiations would be based on a two-zone bundle • Two-zone bundle allowed for negotiations that would help ensure the necessary infrastructure development while minimizing rates • New facilities require a sufficient amount of incoming material to be feasible 20 Shortlisting process • Identified the top four ranked Proposers for Large Zones – Athens – Republic – Waste Management – Recology 21 Negotiation Process • Extensive negotiations occurred over 12 months • LASAN developed two negotiations teams – One for Small Zones – One for Large Zones • Teams consisted of City staff and private sector experts • All negotiations confidential 22 100 Withdrawal of Recology IIE 3 @mimm@m ITATION CITY OF LOS ANGELES CalMet Wa re Recology NASA WM Repub?c Athens 23 100 Withdrawal of Recology Impact on Large Zones CITY OF L05 ANGELES Recology WM Repub?c Athens 24 Withdrawal of Recology Impact on Large Zones 100 CITY OF L05 ANGELES Revised Shortlisted Proposers on Large Zones 100 90 80 70 60 50 40 30 20 10 Athens Republic WM UWS UPW Ware CR&R CalMet WCN WR 0 26 Withdrawal of Recolgy Impact on Small Zones 1000 903 803 703 603 503 403 303 203 103 00 @tmmcem ITATION 27 I 0 0 A 0 NASA PCW WCN Ca lMet Ware Withdrawal of UPW Impact on Small Zones 1000 903 803 703 603 503 403 303 203 103 00 4 .5 - ra 9'13! .0 Av?u-Y .M- ?7 rant . ?CITY OF LOS ANGELES NASA PCW WCN Ca lMet Ware Revised Shortlisted Proposers on Small Zones 100 90 80 70 60 50 40 30 20 10 NASA Ware CalMet WCN AAA PCW WR SVT 0 29 Recommended Zone Award • Highest ranked proposers received larger overall zone awards based on the number of accounts within those zones • The location, current availability, and timeliness of completion of new infrastructure were also factors in zone assignments. This new infrastructure is necessary to meet the City’s long term diversion goals 30 Recommended Zone Award Recommended Small Zone Award Initial Ranking Proposer Recommended Small Zone Award Number of Accounts 1 NASA Downtown 1,771 2 Ware Southeast 1,817 3 CalMet East Downtown 1,013 Recommended Large Zone Award Initial Ranking Proposer Recommended Large Zone Award Number of Accounts 1 Athens West LA, North Central, and Harbor 21,864 2 Republic Northeast Valley and South LA 16,820 3 WM West Valley and Southeast Valley 15,526 4 UWS Northeast 6,106 31 Increased Recycling to Meet Zero Waste Goals • Franchisees are required to reduce disposal in landfills by 1 million tons annually by 2025 • Blue Bin for All - All customers will receive a blue bin for recycling as part of their basic service • Green Bin organics recycling will be offered to all customers, at a reasonable additional cost • Partnership with food rescue and reuse organizations required 32 Increased Recycling to Meet Zero Waste Goals • Mandatory outreach, education and training through the term of the contract • Monthly disposal and diversion reporting • Numeric landfill reduction targets through the contract term • Failure to meet disposal reduction targets will result in heavy penalties 33 Excellent Customer Experience Customer Service Standards Performance Requirements Excellent Customer Experience Enforceability Monitoring and Enforcement 34 Excellent Customer Experience Accountability • Customer Service Standards set in contract – Examples • • • • Customer Service Center in every zone Bilingual assistance Notification standards Outreach and education • Performance Standards – Time limits for service requests – Operational standards 35 Excellent Customer Experience Accountability Enforceability • All customer service and performance standard supported by penalties (liquidated damages) for not meeting requirements for: – – – – – Implementation of Franchise System Provision of Services to customers Segregation and Delivery of Collection Materials Reporting Diversion Requirements – Landfill Reduction, Recycling and Organics Programs – Payment and Reporting Requirements 36 Excellent Customer Experience Monitoring and Enforcement • LASAN Customer Care Center is first point of contact • City-Franchisee integrated IT systems – City tracking of all customer service requests and complaints • Detailed reporting standards 37 Excellent Customer Experience Monitoring City oversight • City approved Staffing Plan for Zero Waste LA – Contract oversight – Facility certification – Customer Care Center – Information technology needs – Zero Waste and landfill diversion – Customer field inspection 38 New or Improved Infrastructure to Meet City and State Requirements • The Contractors for the Franchise have proposed to utilize 39 facilities • Of these, 13 facilities will need to be constructed or improved to meet the City certification requirements • This program will bring over $200 million in new infrastructure to the region to meet the needs of the Franchise System and to recycle organic material 39 Cleaner Air • The Zero Waste LA requires new, clean-fueled vehicles for all solid waste collection • A total of 384 trucks are expected to be used for this program • Reduced traffic • Reduced vehicle miles traveled 40 Services at Equitable and Transparent Customer Rates • Maximum rates established through exhaustive analysis of proposer provided cost proforma data and known industry standards • Industry experts with a combined nearly 80 years of experience in waste system rate analysis negotiated the contracted maximum rates • Rates change predictably. Rate increases methods are set in the franchise contracts 41 Conceptual Rate Objectives 1. 2. 3. 4. 5. 6. Uniformity Equity Transparency Ease of Administration Stability Incentive to Recycle Cost of Service Approach 42 Cost of Service Approach • Waste Industry Approach / Best Practices • Lessons Learned from California cities (prevent death spiral) • Organics flexibility 43 Base Rate (Solid Waste + Recycling) Components Include: 1. 2. 3. 4. 5. 6. Collection Cost of Solid Waste Disposal Cost of Solid Waste Collection Cost of Recycling Processing Cost of Recyclable Materials Administrative / Customer Service Costs Operating Margin 44 Pro Forma / Operational Analysis Process 1. Proposals Submitted – October 2014 2. Requested additional performance and supplementary cost data January 2015 3. Analyzed costs and refined method of rate evaluation 4. Requested additional cost and operation data from short listed proposers – June 2015 5. Pro Forma evaluation method used to estimate the actual cost of service – – – – Proposers input costs and performance data Method generated the necessary components of the rate Determined the reasonableness of rates proposed Basis for proposed uniform rates 45 Rate Negotiations / Rate Uniformity 1. Exchange of costs and operational information between City and proposers a. Evaluated using the Pro Forma Rate Model b. Several iterations to refine the rate components c. Model results used to establish final negotiated rates 2. Met with proposers to solicit their approval and acceptance of final negotiated rates 3. Citywide maximum collection rates finalized in January 2016 46 What is included in Zero Waste LA Rates • Base Rates are inclusive of many services including : – Blue Bin Collection – Material reuse and food rescue – Bin cleaning – Graffiti removal – Community Benefits • Customer Costs for additional requested services is set in contract. 47 How Zero Waste LA Rates Compare LASAN staff researched over one hundred California cities with franchise system • Over one-third of all the cities researched have rates that are within +/-10 percent of the Monthly Rate for Solid Waste and Recycling proposed Franchise 3 cubic yard bin collected System maximum rate once per week (1-3-1) Minimum $69.09 Maximum $1,198.88 Median $206.80 Mean (Average) $250.78 City of Los Angeles $216.72 48 Services at Equitable and Transparent Customer Rates Sample Rates of Commercial Exclusive Franchises in California $500 $462 $432 $450 $401 $400 $350 $300 $250 $200 $201 $152 $161 $213 $216 $216 $221 $237 $175 $150 $100 $50 $- * Rate for Oakland does not include collection of commingled recyclables 49 Transition One year transition and implementation • At contract execution – Begin procurement – Purchase of Clean Fuel Trucks – Purchasing of Bins – Develop account and billing databases and testing – Develop account transition plan and strategies – Meet with Franchisees to develop plans for smooth transition (January 2017) • Nearly 85% of the current customers are serviced by one of the seven franchisees • Begin customer transition (July 2017) 50 What’s Next Upon Board Approval • Contracts Executed – End 2016 • City Notification to Customers – June 2017 • Franchisees Begin Account Setup and Customer Transition – July 2017 • All Customers Receive Franchise Service – January 2018 51 LASAN’s Recommendations 1. Approve and forward this report with transmittals to the Mayor and City Council (Council) with the request that the Board of Public Works (Board) be authorized to execute a Personal Services Contract for exclusive Franchise System for commercial and multifamily solid waste collection and handling with: – Large Zones: – Arakelian Enterprises, Inc. (dba Athens Services aka Athens) – Consolidated Disposal Service, LLC (dba Republic Services or Republic) – Universal Waste Systems, Inc. (aka UWS) – USA Waste of California, Inc. (dba Waste Management aka WM) – Small Zones: – CalMet Services, Inc., (aka CalMet) – NASA Services, Inc. (aka NASA) – Ware Disposal Inc (aka Ware) 52 LASAN’s Recommendations 2. Return the executed contract to the Bureau of Sanitation (LASAN) for further processing. 3. Upon the Mayor’s and Council’s authorization, the President or two members of the Board will execute the contract. 4. Recommend that the City Council find it is in the City’s best interest to award one of the exclusive franchise contracts for commercial and multifamily solid waste collection and handling to Republic, an Arizona based company, for the reasons outlined in the report. 5. Request the City Attorney, in collaboration with LASAN, to draft an Ordinance creating a special fund for the Zero Waste LA revenues, excluding AB 939 fees. 53 END I 7 0 0 A ES 6 envircenment CIYY L05 ANOELES CALABASAS DOWNEY COM PTON Franchise Zones with Accounts Total Accounts Percent of Total LAKEWOOD 1,196 64,917 COMMERCIAL WASTE FRANCHISE ZONES with Accounts PASADENA 1' 392 . 1.. q. 1,013,920?; 3% 9.8? 15% 9,320 14% 0,151 14% TORRANCE 1.781 6.940 6.106 3,393 1 .31 7 LONG 1.771 1,013 55 CITY . 105 ANGCLES COMMERCIAL WASTE FRANCHISE ZONES Haulers with Accounts 6,940 accts Axum) - . 13? Hq? Ii 1,013 accts mall 11,8113ccts 2% 3% rug Franchise Zones with Accounts - Athens (WLAINCIHB) 21,864 - 1,013 - NASA (DT) 1.771 - Republic (NEVISLA) 16,820 - uws (NE) 6.106 - WM 15.526 Ware (SE) 1.311 ?E?cagunu: 64,917 Hauler Accounts Percent 100% 3, 3,3?3 accts l. +193 0 1.25 2.5 5 7.5 10 Miles Document Palh: Map 56