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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)