Resolution 2014-321
RESOLUTION NO. 2014 32
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF GILROY APPROVING AND AUTHORIZING THE
CITY ADMINISTRATOR TO EXECUTE THE THIRD
AMENDMENT TO THE AGREEMENT BETWEEN THE
CITY OF GILROY AND SOUTH VALLEY DISPOSAL AND
RECYCLING FOR SOLID WASTE COLLECTION AND
MANAGEMENT SERVICES
WHEREAS, the City of Gilroy, a municipal corporation and charter city duly organized
and existing under and pursuant to the Constitution and laws of the State of California ( "City "),
is authorized to enter into contracts and agreements for the benefit of the City; and
WHEREAS, the City and South Valley Disposal & Recycling, Inc., ( "Contractor ") are
currently parties to an Agreement Between City of Gilroy and South Valley Disposal &
Recycling, Inc., dated September 2, 1997 (the "Franchise Agreement "), by which City granted to
Contractor the exclusive franchise to collect, transport and dispose of garbage and refuse
produced within the corporate limits of City; and
WHEREAS, the reasons supporting the entrance of the City into that certain agreement
described in, and that is the subject of, this Resolution are set forth in detail in that certain City
Council Staff Report entitled "Solid Waste Disposal Agreement, Franchise Amendment and Rate
Setting Methodology" submitted to the City Council by the City Administrator (the "Staff
Report") for City Council consideration at its meeting of June 16, 2014, the contents of which
Staff Report are incorporated herein by this reference; and
WHEREAS, the City acknowledges that South Valley Disposal & Recycling, Inc. now
conducts business as Recology South Valley; and
WHEREAS, the consideration by City Council of the adoption of this Resolution has
been duly noticed pursuant to applicable laws and has been placed upon the City Council
Meeting Agenda on the date set forth in the Staff Report, or to such date that the City Council
may have continued or deferred consideration of this Resolution, and on such date the City
Council conducted a duly noticed public meeting at which meeting the City Council provided
members of the public an opportunity to comment and be heard and considered any and all
testimony and other evidence provided in connection with the adoption of this Resolution; and
RESOLUTION NO. 2014 32
N
WHEREAS, requiring solid waste collection vehicles to utilize compressed natural gas
fuel will conserve oil resources and reduce air pollution; and
WHEREAS, the activities allowed under this Resolution are exempt from the California
Environmental Quality Act of 1970 ( "CEQA ") per CEQA Guidelines Section 15273; and
WHEREAS, the City Council determines that adoption of this Resolution is in the public
interest.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF GILROY DOES
HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:
Section 1. Recitals. The City Council does hereby find, determine and resolve that all
of the foregoing recitals are true and correct.
Section 2. Approval and Authorization. The City Council does further resolve, order
and/or direct as follows:
a. That the Third Amendment to the Franchise Agreement between the City and
Recology South Valley for the solid waste collection and management services
substantially in the form attached hereto as Exhibit A and incorporated herein by this
reference (the "Agreement ") is hereby approved.
b. That the City Administrator is hereby delegated authority to and is authorized and
directed to further negotiate and execute the Agreement substantially in the form
attached hereto as Exhibit A.
Section 3. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED this 16d' day of June, 2014 by the following roll call vote:
AYES: COUNCILMEMBERS: ARELLANO, BRACCO, LEROE- MUNOZ,
TUCKER, WOODWARD and GAGE
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: AULMAN
APPROVED:
�a""L'ya � -, q��
Donald Gage, Mayor
RESOLUTION NO. 2014 —32
THIRD AMENDMENT TO THE AGREEMENT
BETWEEN THE CITY OF GILROY
AND SOUTH VALLEY DISPOSAL AND RECYCLING
This Amendment to the Franchise Agreement dated September 2, 1997 the ( "Third
Amendment ") is entered this 1St day of July, 2014, by and between the City of Gilroy (the
"City "), a municipal corporation of the State of California, and South Valley Disposal and
Recycling ( "Contractor "), a California Corporation.
This Third Amendment is made with references to the following facts:
A. City and Contractor are currently parties to an Agreement Between City of Gilroy and
South Valley Disposal & Recycling, Inc., dated September 2, 1997 (the "Franchise
Agreement "), by which City granted to Contractor the exclusive franchise to collect,
transport and dispose of garbage and refuse produced within the corporate limits of City.
B. City acknowledges that South Valley Disposal & Recycling, Inc. now conducts business
as Recology South Valley.
C. City has solicited proposals from waste disposal facilities in order to reduce the air
pollution associated with hauling waste from Contractor's transfer facilities to disposal
facilities.
D. City has negotiated an agreement for waste disposal capacity with a disposal facility
operator that is closer to the Contractor's transfer facilities and City desires Contractor to
deliver waste to this closer facility in order to reduce air pollution.
E. City and Contractor mutually desire to have waste collected throughout the City's
incorporated limits using vehicles fueled by compressed natural gas in order to reduce air
pollution and enhance community health.
F. City and Contractor mutually desire to spread the capital costs of the compressed natural
gas vehicles and related fueling facility out over seven years in order to reduce the need
for a one -time steep adjustment to service rates.
G. City and Contractor have mutually determined that the annual rate review articulated in
and conducted pursuant to the Franchise Agreement is an administrative task that does
not require direct City Council intervention.
NOW, THEREFORE, in consideration of the factual premises and the covenants and
conditions set forth in this Third Amendment, City and Contractor hereby agree as follows:
1. Section 4(e)(i) shall be amended and replaced in its entirety by the following:
(i) City shall have the right to direct Contractor to deliver Refuse to a landfill
or other waste management facility designated by the City provided that the
landfill or other waste management facility has agreed to accept waste from the
City. If the City does not choose to exercise this right, Contractor shall select and
use landfill sites for the transportation, sorting and disposal of Refuse, which sites
must be reasonably acceptable to the City.
2. Section 10(i) shall be added into the agreement as follows:
(i) Rate Adjustments Relating to Landfill Direction. If City has directed
Contractor to deliver Refuse to a landfill or other waste management facility,
Contractor and City shall negotiate a fair and reasonable adjustment to service
rates and charges that reflect all of the cost increases or decreases resulting from
the City's direction of the waste. Costs to be included in the negotiation include,
but are not limited to, tipping fees, labor, fuel, and equipment.
3. Section E shall be added to Exhibit E, COLLECTION VEHICLE SPECIFICATIONS, as
follows:
E. All collection vehicles shall be fueled by compressed natural gas by
December 31, 2018. The collection vehicle fleet shall be converted to compressed
natural gas between January 1, 2015 and December 31, 2018 with approximately
25% of the fleet converted each year.
4. Section 18 (a) Commencement and Term shall be amended and replaced in its entirety by
the following:
18(a) Commencement and Term. This Agreement shall commence on the
Effective Date, but the Contractor's services hereunder shall commence on July 9,
1997, or on such other date as the parties may mutually agree. The term of this
Agreement shall be eighteen (18) years in addition to the unexpired portion of the
term of the present franchise agreement between the parties, that is, until July 1,
2022.
5. Exhibit J, ANNUAL INDEX RATE ADJUSTMENTS, shall be amended as follows:
Section B shall be replaced in its entirety as follows:
B. The Base Rates shall be adjusted on the Adjustment Dates up or down by
a proportion equal to 40% of the Percentage Change in the Index and a further
proportion equal to 10% of the Percentage Change in the Motor Fuel Component
of the Index during the fourth year of this Agreement. The Base Rates shall be
adjusted on the Adjustment Dates up or down by a proportion equal to 70% of the
Percentage Change in the Index and a further proportion equal to 10% of the
Percentage Change in the Motor Fuel Component of the Index during all
subsequent years of this Agreement until 2017 (unless such rates are determined
by a rate review pursuant to Section 10). Beginning with the July 1, 2017
Adjustment Date, the Base Rates shall be adjusted on the Adjustment Dates up or
down by a proportion equal to 70% of the percentage Change in the Index and a
further proportion equal to 10% of the Percentage Change in the price of
compressed natural gas fuel during all subsequent years of this Agreement (unless
such rates are determined by a rate review pursuant to Section 10). Changes in the
price of compressed natural gas fuel shall be based on the United States
Department of Energy's Clean Cities Alternative Fuel Price Report issued each
January. If the publication of this report is suspended or if it otherwise becomes
unsuitable for use in determining price changes actually experienced by
Contractor, Contractor and City shall mutually agree on a methodology for
calculating the Percentage Change in the price of compressed natural gas fuel.
A new Section F shall be added to Exhibit J as follows:
F. The Base Rates shall be established pursuant to Section B and any increases or
decreases in the Base Rates shall be reviewed and approved annually by the City
Administrator.
6. Section 10(d)(iv) shall be added into the agreement as follows:
(iv) City and Contractor mutually agree that extraordinary costs related to the
conversion of the collection vehicle fleet warrant a supplemental 6.82% increase
in service rates. This supplemental increase shall be phased in over a two -year
period with 3.82% applied in 2015 and 3% applied in 2016. These supplemental
increases shall be applied in addition to any other rate adjustments Contractor is
eligible to request under the Franchise Agreement.
All other terms of the Franchise Agreement, the First Amendment to the Agreement, and
the Second Amendment to the Agreement, which are not in conflict with the provisions of this
Third Amendment shall remain unchanged in full force and effect. In case of a conflict in the
terms of the Franchise Agreement, the First Amendment to the Agreement, and the Second
Amendment to the Agreement, and this Third Amendment, the provisions of this Third
Amendment shall control.
The Parties acknowledge and accept the terms and conditions of this Third Amendment
as evidenced by the following signatures of their duly authorized representatives. It is the intent
of the Parties that this Third Amendment shall become operative on July 1, 2014.
Dated:.
CITY OF GILROY:
Donald F. Gage, Mayor
Thomas Haglund, City Administrator
ATTEST:
Shawna Freels, City Clerk
APPROVED AS TO FORM:
Linda A. Callon, City Attorney
RECOLOGY SOUTH VALLEY:
Phil Couchee, General Manager
I, SHAWNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the
attached Resolution No. 2014 -32 is an original resolution, or true and correct copy of a city
resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council
held on the 16`" day of June, 2014, at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
the City of Gilroy this 17`i' day of June, 2014.
S a Freels, MMC
City Clerk of the City of Gilroy
(Seal)