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C I T Y O F O A K L A N D AGENDA REPORT

T O : F R E D B L A C K W E L LC I T Y A D M I N I S T R A T O RS U B J E C T : Zero Waste RFP

F R O M : BrookeA . LevinD A T E : May 16, 2014

CityAdministrator.Approval

Date

C O U N C I L D I ST R I C T : C ity-W ideRECOMMENDATIONStaffrecommendsthatthe CityC ounci ladopt a resolution authorizing the CityAdministratortoaccept the termsheetfor Waste Management ofAlameda County forthe Zero Waste Servicesfranchise contracts, andpreparetheratetableswithanyC ity Councildirected alternativesselected byC ity Counci lforinclusionintheratetables andbringthe Ordinances to City Councilforconsideration and approval.EX ECU TIV ESUMMARYIn2012, the CityC ounci lapproved the procurement by Request for Proposal(RFP)forthecontract services described in the Zero Waste SystemDesign,to replace theexisting SolidWasteFranchise andResidentialRecyclingAgreementsthatexpire on June 30, 2015. ThisRFPrepresentsoneoftheCity'slargest competitive procurements,withan estimated total value over$110millionper year. Althoughresidentialrecyclingservices inOaklandwere procuredthrough a competitive process, in 1993 and 1997, all other services provided through the currentsolidwaste franchiseagreementhave not been subject to a competitive procurementpreviously.PublicWorksDepartment(OPW)staff, pursuant topolicydirection providedby the CityCouncil,developed and issued the Zero Waste ServicesR F P,whichincludedthree fullydeveloped draftfranchisecontracts. Sixfirmsparticipated in the R FPprocess. TheC ityreceivedqualifiedproposalsfromtwofirms,CaliforniaWaste Solutions(C W S )and WasteManagement ofAlamedaCounty(W M A C );bothfirmsproposed on the twocollectionserviceagreements(MixedMaterials(garbage)andOrganics,andResidentialRecycling), while W M A Csubmitted the sole proposal forsolidwasteDisposal. Staffconducted an evaluation processresultinginproposalranking,and in June 2013, the CityC ounci ldirectedstafftoenterconcurrent contract negotiationswith C W Sand W M A C . Staffhas concluded negotiationswiththe proposers regarding the major contractfeaturesand has received abestandfinaloffer( B A F O )fromeach one.

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Thisagenda reportpresentsan analysisofthe customerrateimpacts ofthe two viable proposalcombinations forthethreefranchise contracts, and an analysisofthe two options (Table 1):(1) award ofal lthreefranchise contracts to W M A C ;and(2) awardofthe ResidentialRecycling (RR)contract to C W S ,and award the franchisecontracts forM ix edMaterials and Organics, andDisposalto W M A C .

Option1,whichwouldawardallthreefranchise contracts toW M A C ,acceptsW M A C ' s B A F O ,and thetermsand conditions it contains. This option provides the lowest cost to theratepayersof any combinationofproposals submitted, and is thestrongestoption relative to meeting theCity'sZero Waste goal andproviding reliable,quality service toOakland. While W M A Chasoffered discoimtedpricingfor selected contractprovisions,their B A F Ois conditioned upon staffrecommendationthatW M A Cbe awarded al lthreefranchise contracts, andthatthe City Councilaward them allthreefranchise contracts. W M A Cis notofferingthe B A F Oas a menu ofoptions, but as a complete packagethatis available only in its entirety. The negotiatedtermsonwhich W M A C ' s B A F Ois based, are summarized inthe Option1Term Sheet (Attachment A) .Option2wouldaward the ResidentialRecyclingfranchise contract to C W S and both the MixedMaterial& Organics andDisposalfranchise contracts to W M A C . Thetermsofthese agreementsare summarized on theOption2 Term Sheet (Attachment B ). This is not the low cost option andisnot recommended as the option to bring thebestvalue to theratepayer.

Table 1: ViableProposal CombinationsOption 1 Option2

W M A C awarded all3franchise contracts

C W S awarded ResidentialRecyclingfranchise contract

W M A C awardedDisposal,andM ixedMaterials &Organics franchise contractsIncludes discounts for Mul t icontract (3) award Refuse Rate Index (RRI) as

negotiated Carts (used/new) Specialassessmentprocess B A F O

Includes discounts for W M A C multi contract (2)

award Carts (used/new) RRIper W M A Cexception

It is recommendedthatthe City Councilauthorize the CityAdministratorto accept the Option 1TermSheet for Waste Management ofAlamedaCountyfo rthe Zero Waste Services franchisecontracts, andpreparetheratetableswith any CityC ouncildirected alternative selected byC ityCounci land bring the Ordinances to CityC ounci lfor consideration and approval to replace theexistingcontracts, which expireJune30, 2015.

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O U T C O M EApproval ofthis resolution authorizes the CityAdministratortopreparethreeordinancesforC ityCounci lconsideration and approval, awarding franchise contracts to W M A Cforsolidwastedisposal,residentialrecycling,andmixedmaterials and organicscollectionto provide servicebeginningJuly1, 2015.BACKGROUND/LEGISLATIVE HISTORYIn2006, the C i ty Counci ladopted the Zero Waste StrategicPlan, whichprovidedapolicy-levelroad map forachievingtheCity'sgoalofZeroWaste by 2020. Thisplanidentifieddevelopmentand adoptiono fa newwaste managementsystem designi npreparation for Oakland's nextcollectionand disposal franchises as a keystrategytoachievingthegoal. In 2012, the CityCounci lreceived a series of agendareportsregarding the Zero Waste System, adoptedthreeresolutions and passed one motion (summarized in AttachmentC ),establishing the Zero WasteSystemDesignandprovidingpolicydirectiontostaffinconducting the Zero Waste ServicesR FPprocurement process.TheCity Counci lprovidedpolicydirection onsolicitationofcostsfor service alternatives andoptions atthree stages: during development ofthe R FPinJune2012, uponauthorizingthe CityAdministratortoenterinto negotiationswiththe top-ranked proposers inJune2013, and shortlybefore negotiations concluded inMarch2014.TheC ity Coimcildirected alternatives are: (1) systemfor collectingdelinquent billpayments,specialassessmentor none; (2) customer callcenterin and out of county; (3) source-separatedorganicscollectionfrommuhi-familyhouseholds; (4) 20-year termpricingdiscount; (5)pricingto achievewagesforrecyclingworkers comparable tothoseearned byrecyclingworkers inFremont, SanJoseand SanFrancisco,and affordablefamilyhealthbenefits;(6)pricingforOutside the box bulkywasteservicesformulti-familyhouseholdsthatenhancetenantaccess;and (7)pricingfor deliveryof source-separated organics to EastBayM unicipal UtilityDistrict( E B M U D )forprocessing.Competitive ProcurementProcessPursuant toC ounci ldirection providedin 2012,O PWissued the Zero Waste ServicesR F P,andreceivedproposals in January 2013. The purpose of engaging ina competitive procurement wasto obtain thebestvalue for a package ofservicesthatare essential to community health andsafety, andthatdeliversignificantbenefits relative to theCity'sZero Waste and Greenhouse Gasreduction goals.Participation inthe procurement byallmajor service providers operating in theBay Area,includingsix companies forcollectionandfivecompanies fordisposal,indicatedthattheCity'sprocess had fostered an open and competitive environmentforproposalsubmission. TheRFP

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incorporatedallCouncil-approved policiesand options, and the responsive proposalsfullycompliedwithC ounci ldirectiononspecific policiesofinterest.TheZeroWaste ServicesR FPwas issuedintwostages. Thefirststage,released August 3,2012,solicitedproposalsfortheDisposalServices franchise contract. The secondstage,released September 5, 2012,solicitedproposalsforthe twocollectionservices franchisecontracts(ResidentialRecycling,andM ix edMaterialsandOrganics). O nJanuary 9, 2013, theCityreceivedqualifiedproposalsfromtwofirms,CaliforniaWaste Solutions (C W S )and WasteManagement ofAlameda County(W M A C );bothfirmsproposed on the twocollectionserviceagreements(MixedMaterials(garbage)andOrganics,andResidentialRecycling), while W M A Csubmitted the sole proposal forsolidwasteDisposal. Staffconducted a thorough evaluationprocess, consistentwithC ouncildirection,whichconcludedwithrankingo fthe proposalsreceivedforeacho fthethreefranchise contracts.PublicationoftheR F P ,includingthethreedraftfranchisecontracts itcomprised,allowedtheCitytospecifythe contracttermsand performancestandards,includingprovisionsthatstabilizerates, addressillegaldumping,provide service equity across customer sectors, and achievesolidwastediversioninthe short- and long-term.O nJune18, 2013, the City Councilauthorized the CityAdministratortoenterconcurrentcontract negotiationswith C W Sand W M A C .A N A L Y S I SThisreport is organized asfollows:

Presentationofnegotiationoutcomes, anddiscussionofthe key driverfor diversion -organicmaterials Overviewofthe M ix edMaterialand Organics (M & M O )services proposals OverviewoftheResidentialRecycling(RR)services proposals Discussionofcontractprovisionsaddressing illegaldumping,and economic benefits DescriptionofC i tyC ounci ldirected alternatives DiscussionofpricingandratesforOption1and 2

Staffbegan negotiationswiththe two proposers inJuly2013,followingauthorizationfromtheCity Council. These negotiations have beenconfidential,and theCity'steam has not revealedinformation providedby one proposer to theother,nor to Citystafforofficialsnot engaged inthe project. Thefocus ofthe negotiations has been to obtain discountedpricing,compared tooriginallyproposedpricing,forthe services and programs required by the R F P. In general, thishasinvolvedaddressing the proposers' risks and uncertainty related totheselong-term contracts.These risks run the gamutfromthevolatilityof fundamental operating costs, such as labor and

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fuel,to unforeseen changes in the economythatcouldaffecttheability ofthe contractor tomeetthediversionrequirement.W M A Ccitedfinancialrisk as oneofthe primary driverso ftheirrateproposal,specifically,thoseassociatedwiththe contract requirements fordiversionperformance,abilityto collectdelinquent payments from residential customers, and changes inthe economythatcouldaffectthe character, quantity, and marketability of waste materials intended fordiversion.A srefiectedinthe Option1Term Sheet (Attachment A ),the CityandW M A C reachedagreementon a number of issues requiringclarification,refinement, orsignificantchange to theoriginallanguage inthe draftfranchisecontracts. These amendments haveimplicationsfor laborpeace, annualrateadjustments, contractor indemnification,and consequences for substandardcontractor performance.Staffspentsignificanteffort negotiatingwith W M A Cregarding changes to the Refuse RateIndex (RRI) published in the RFP,whichwillbe used for annualrateadjustments. Cityconcessionsallowf orchanges in labor costs contained inW M A C ' s collectivebargainingagreementswiththeir represented employees to beincludedin therateadjustment process. Thisconcession is projected to have asmalleffectonrateadjustments, butwouldcontribute to laborpeaceover the term ofthe contract.Option1,which wouldawarda llthreefranchisecontracts toW M A C ,accepts W M A C ' s B A F O,and thetermsand conditions it contains. This option provides the lowest cost to theratepayersof any combination ofproposals submitted, and is the strongest option relative to meeting theCity'sZero Waste goal andproviding reliable,quality service to Oakland.Opportunity for HighDiversionDiversionof organic materials fromlandfilldisposalrepresentsOakland's largest opportunity forachievingthe Zero WasteGoal. Organic materials make up an estimated 48% ofOaklanddiscardsthataresentto landfill. TheR FPprovided the opportunity for companies to submitproposals forthe Mix e dMaterialand Organics(M M & O )collectionand processing franchisecontract,whichuse the latest technologies and methods fordivertingorganic discards, to achievethefullestavailable climate and environmental benefits.TheCityrequired proposers to propose and commit tominimumannualdiversionratesfo reachyear through 2025, and tomeetaminimum diversionrateof 40% by 2022. Forthe purpose ofthe M M & Ocontract diversion refers tothatportion ofallmaterial collected under the contractthatis notsentto landfill(whether categorized as disposal or beneficialreuse ), or fortransformation (asdefinedbyPublicResources Code Section 40201). M M & Oannual diversionas defined inthe contract and describedinthis report is calculated bydividingdiversiontonnagebythe totaltonnagecollected under the M M & Ocontract. This differsfromthediversionratethatcities commonly cite as an achievement relative toA B939 requirements. TheA B 9 3 9

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diversionratefigureencompassesal l solidwaste generatedin ajurisdiction,whilethe diversiondiscussed inthis report islimitedto the materials handled by the M M & O contractor. Calculatedonthe basis used inthe M M & Ofranchise contract, and adjusted fortheslightlydifferentportfolioofmaterials covered inthe current and new contracts, today's diversionrateunder thecurrent franchise contract is approximately 26%.The two responsive proposals f o r M M & Oservices, C W S M M & O Plan B proposal andW M A C M M & Oproposal, are described in thefollowingsections.CW S Mixed Material Organics ProposalC W S submitted responsive proposals forbothcollectionfranchise contracts. ResidentialRecycling (RR) andM ix edMaterials and Organics( M M & O ) . These two proposals werepremised on the acquisition ofCity-ownedland at theNorthGateway portionofthe formerOaklandA r m yBase, and construction ofamajorsolidwasteandrecycling facilityatthatsite, tobe completed byA p r il2015. The newfacilitywould serve as a processingcenterforrecyclables, mixed materials, and organics collected through the Oakland franchises, and as atransfer facilityforsolidwasteand organics.Feasibilityofthe proposed schedule came into focus in September 2013 when it emergedthatC W S ' acquisitionofthe landwouldbe delayed by two orthreeyears. Subsequently, C W Ssubmitted PlanB , an alternative proposalthatallows for use ofotherfacilitiesduring the firstthreeyearsofthe contract, whileC W S ' newfacilityis being constructed and commissioned. ForR Rcontract PlanB ,during the firstthreecontract years, C W S would make use ofitstwoexistingrecyclingplants,withmodifications,on 1O*'Streetand onWoodStreetin west Oakland.F o r M M & O ,PlanBwouldinvolve:

Direct deliveryofmixedmaterials and organics (yard trimmings andfoodscraps) viaroutetruckfromOakland to theGoldenBear Transfer Station (Republic Services) inRichmond Transferofmixedmaterials via long-haul truckfromGoldenBear Transfer Station to theAltamontLan dfill Transfer of organic materials via long-haul truckfrom GoldenBear Transfer Station toC W S composting subcontractors inNapa and Zamora ParkingofC W S routetrucks on Oakland A r m yBase property leased to OaklandMaritimeSupport Services, Inc. Delayof Mix e dMaterialsprocessinguntilnewC W S facilityis in operation

C W S madea substantial, cooperative, and good-faitheffortto develop PlanB ,and respond tothe due diligence investigation staff conducted tofullyunderstand the Plan B proposal. StaffbelievesthatC W S is capable ofprovidingthe ResidentialRecyclingservices under the Plan Bproposal. However,staff viewsthe Plan B proposal for Mix e dMaterials& Organics franchisecontract to be highly problematic andrisky.Setting aside the factthatdelay inM ix edMaterials

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processingwouldnotmeetthe requirements ofthe M M & Ofranchise contract,thereis noassurancethatthe realestatetransaction willbe completed on the schedule proposed inPlan B .Shouldthe conveyance ofthe property to C W S occur as proposed inPlan B, forthreeyears, theM M & O services for Oakland's residents and businesses willhinge on athirdparty relationshipwithRepublicServices at an out-of-countyfacility. This is ahighly riskypropositionthatstaffcannot recommend.C W S submitted a responsive proposalforthe M M & Ofranchise contract. However,theoriginalproposal and thePlanBproposal are weak, and not backed by a companywithstrong experienceinhandling the types of materialsspecifiedand by the methods proposed. Inaddition,C W S hasverylimitedexperience in operating afullservicecallcenter, orin billingtherangeof customersfora broad suite of services.W M A CMixedMaterials Organics ProposalFollowingis a ftilldiscussion ofthe W M A C M M & Oproposal componentsthatwouldbedeliveredwiththe selection ofOption1. TheC ityreleased the RFP forZero Waste Serviceswiththe expectationthatproposerswoulddraw upon theirinnovation,technology, and capital todeliverconsiderably increased material recovery andlandfilldiversionthan imder the currentsystem. TheW M A Cproposalfiilfillsthis expectation bycommittingto very high annualdiversionrates,and by demonstrating theabilityto provide the services andfacilitiesnecessaryto achieve and potentially exceedthose rates.Minimum Annual Diversion RatesFigure 1shows theminimumannualdiversionW M A Chas proposed andwouldbe required toachieve under the M M & O franchise contract. A schedule ofminimumannualdiversion foreachyear after 2025wouldbe submitted two years in advance ofthe award ofeachofthe five-yearcontract extensions.

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Figure1

70%

60%

50%

^0%

30/

20%

10%

0%

WMACMinimumAnnualDiversion

2 0 2 2 M i r iR e q u i re dD iv e - s io -

CurrentI ranrhi.>e1)vers ion

Figure 1shows an aggressive schedule ofdiversionthatfiiUycomplieswiththe goals oftheCity's RFP forZero Waste Services. B ycomparison, and calculated on thesamebasis, andadjusted fortheslightlydifferentportfolioofmaterials covered in the current and new contracts,today'sdiversionrateunder the current franchise contract is approximately26% . W M A Cproposes to achieve an aggressive schedule fordiversionwitha comprehensive program ofsource-separated collectionofresidential and commercial organic material, combined with post-collectionprocessing ofmixedmaterials to recover organic material and recyclable items,supported by an extensive community outreachstrategy. Thefollowingsections describehighlightsofthesefeatures.Material Handlins and Processins FacilitiesW M A C proposes aportfolioofprocessingfacilitiesat its 52-acre facilityonDavisStreetin SanLeandro, and its AltamontfacilityineasternAlameda County. The proposed combination ofactivities onthesesitesissufficientto achieve, and possibly exceed, the diversion performancetowhichW M A Cwouldbe contractually required to achieve. W M A Chas well-developed plans,includingenvironmental permitting andfinancingfor additional processingfacilitiesat DavisStreetand atAltamont,capable of superiordiversionperformance.TheW M A Cproposal describesthatmost processing of organic material willoccurwithinAlamedaCoimty,using both existing and plannedfacilitiesatDavisStreetandAltamont. Theproposal includes a broad array ofprocessing capabilitiesformanaging diverse organicstreams,includingresidential yard trimmings andfoodscraps, commercialfoodscraps, and compostablematerial recovered from mixed material processing.



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OrganicMaterialProcessingA state-of-the-art, fullyenclosed, atmospherically controlled Organics Transferbuildingwascompleted atDavisStreetin 2012. Thisbuilding,already in useforhandling Oakland'sresidential and commercial discards, willconnect with and become integral to the plaimedMix e dMaterialsRecoveryFacility ( M M R F ) ,scheduled to come on line in 2018-19. Thisfacility willhave the capability to process the fullspectrum ofmaterialstreams,fromclean,source-separated organics to mixed materialthatisrichin organics. Organic materialrecovered at the M M R Fwould either besentdirectly for aerobic composting, or forprocessingviaa high solids anaerobic digestion(H S A D )facilityto be located at Altamont(see details intheCommercialOrganicMaterialProcessing section below).CommercialSource-Separated OrganicsCollectionW M A C wouldprovide source-separated commercial organicscollectionservice for Oaklandbusinesses. This service would enable al lOakland businesses, particularlyrestaurants,foodprocessors, hospitals and educational institutions withfoodservice, and others, to complywiththeAlamedaCoxmtyMandatoryRecyclingOrdinance, Phase 2 (for organic material),andwiththeAlamedaCounty ban onlandfiUingplant debris. In addition, selecting W M A Cto process Oakland's commercial organic material offers a unique opportunity to derivecarbon-negative vehiclefuelto power its Oaklandcollectionfieet (seeVehicles, VehicleFuelandCommercialOrganics section).CommercialOrganicMaterialProcessingW M A C proposes to process Oakland's source-separated commercial organic material viahighsolids anaerobic digestion( H S A D ) ,a technologythathas developed in thepastdecadespecificallyfor materials handled inmunicipaldiscardscollectionsystems. Likeanaerobicdigesters inmunicipalwastewater treatmentplants, H S A Dproduces biogas suitable forenergy production. However,H S A Daccommodates a broaderrangeofthe largelysolidmaterials collected bymunicipaldiscards systems, without the need andexpenseofadditionalpre-processing to produce the slurry required by conventional anaerobic digestersatmvmicipalwastewater treatmentplants. H S A Dfacilitieswere built and came on line inMontereyand in SanJosein 2013 and 2014, respectively.TheW M A Cproposal includes the unique opportunity to refine biogas produced by itsH S A D facilityto a natural gas vehiclefiielthatwouldbe used byW M A CcollectionvehiclesinOakland,and the transfer vehicles serving Oakland (see details intheVehicles, VehicleFuelandCommercialOrganics section). The remainingdigestate(solids)fromH S A Dfacilitywouldbefiirtherprocessed via aerobic composting at Altamont into marketablecompost.

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Mix e dMaterialProcessingInW M A C ' sproposal, commercial mixed materialwouldbe processed for material recoverypriorto being transferred forlandfilldisposal, at its recently upgraded D ryMaterialsRecoveryFacility(DryM R F )located atDavisStreet. Thisfacilityprimarilyrecovers itemsthatare not included in commercialrecyclingprograms, such as pallets and otherwood,rigidplastic items, filmplastic and metal items. UnderW M A C ' sproposal, no commercialmaterialwouldbesentforlandfilldisposal without first being processed for recovery,effective July 1, 2015,ifnot sooner. Mix e dMaterialprocessingwouldboost diversion fromOakland's commercial and institutional sector by complementing conventional, source-separatedcommercialrecyclingservice, not replacing it. W M A Chas processed most ofthecommercialmixed materialfromOakland at the D ryM R Fsince 2008. In 2014 W M A Ccompleted an $11millionupgradeto thisfacility,whichwillincrease W M A C ' scapacity torecover materialfromOakland'sbusinessesand institutionswellbefore July 1, 2015.Diversion- SummaryW M A C w i l lbring on line additional new,state-of-the-artfacilitiesby July 1, 2015, adding toits existing holdings, to maximize recoveryfromboth source-separated and mixed materials.W M A Chas welldeveloped plans, permits andfinancing forproposed processingfacilities,which willplace its combinedAlamedaCountyfacilities(DavisStreetand Altamont) amongthe largest and most advanced resource recovery systems inthe country, with Oaklandpositioned as its anchortenant . TheW M A Cproposal fullycomplieswiththe goals oftheCity's R FPfor Zero Waste Services,providingthe services, outreach campaign, andfacilitiesnecessary formeaningful progress toward Oakland's zerowastegoals throughprovisionofhighperformingcollectionservices to all sectors.

Vehicles. Vehicle FuelandCommercial OrganicsW M A Cproposes to use natural gas-powered vehiclesforallcollectionservices under theM M & OandR Rcontracts. Itwouldalso use natural gas-powered transfervehicles. W M A Chasthe unique capacity to produce afuelfor a natural gas vehiclefromOakland's commercialorganic material, at its biogas refinery located the AltamontL andfillineasternAlamedaCounty.Buil tin 2009, the refinery is ajointventure of Waste Management andLindeNorthAmerica,aleadinggas and engineering company. It is the onlyfacilityofitskind inNorthAmerica.Originallybuilt to refinelandfillgas captured at AltamontLandfill ,the refinery provides aunique opportunity to derive vehiclefiielfromOakland's commercial organic material viaW M A C ' sproposed H S A D facility,whichwillbe co-located atAltamont.The biogas producedvia H S A Dwouldbe refined into vehiclefuelalong withlandfillgas. The remainingdigestate(solids) fromH S A Dwould be further processed viaaerobic composting into marketablecompost.It is important tonote thatOakland's residential and commercial organic discardswouldnot beplacedinthe AltamontL andfillto produce landfillgas. W M A Chasstatedthat thereissufficientlandfillgasfrommaterial already inplace inthe AltamontL andfillto produce natural gasfuel

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forthe next thirty years. H S A Dyields a cleaner, more energy-rich gas than landfillgas, makingita premium feedstockforthe jointventurerefinery.TheCaliforniaA irResourcesBoard (C A R B )ratesvehiclefiielsforcarbon intensity, ameasureoftheamounto fcarbon emissions produced by vehiclefuels. Fuelproduced viaH S A D ,whenthe residual solids aremadeinto compost, produces theonlyvehiclefuelrated byC A R Bascarbon-negative, meaningthatthe production and use ofthisfuelresultsinnet negative carbonemissions. Figure 2 belowcomparesthe carbon intensity offiielproduced viaH S A Dtotraditionallyextracted and refined pipeline natural gasfuel.

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Figure2

806040200

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CarbonIntensity ofVehicleFuelsG r a m sofC 0 2 Emit tedperUnitof Energy(gC02e/Mj)

Ultra-Low Sulfur Diesel Compresses K? t j 'B Ga : (CNSrr pipeline sC'i.rces

15*HighSolidsAnaerobicDigesr o" i- SiC : j3 zo"-z-osz z-' 'es djsisare'' e-'e'gv 'e:o'e'ySources:1)Propoied Low Carbon.-jt:' yz-^o:-: .Z-t -7Z~-'7t_':>-':>s^~':''rf Z'- r Z'Hf ' Z ' 5 ^Anaerobic Digestion(HSAD)ofOrg:- 3-^:' Il rr:f; i-i-i-z ..-tli 1CarbonIntensityLookup TableforI'.-iiie 'j i . : '>^z- :.u Z- tit Zi = -si ; ' . " -:

TheW M A Cproposal to process Oakland'scommercialorganic material at itsH S A D facilityatAltamontwouldenableOaklandto have one ofthe first discardscollectionand transferfleetsnthe country to nm onlocally-producedbio-fuel witha carbon intensity ratingsignificantlylowerthan any othercommerciallyavailable vehicle fiiel.Bulky PickupAppointment-basedbulkypickupservice for al lsingle-family(SF)andmulti-family(MF)households willprovide convenient,safeand legalcollectionofhousehold itemsthatare nottypicallycollected in routine weekly services, aswellas larger quantities ofitemsthataretypicallycollectedweekly. The servicewillinclude a pay-as-you-go appointment system forto supplement the servicesthatare provided through the regularrates.Oaklandswitchedfroma neighborhood cleanup styleofbulkypickupservice, to anappointment-based service in 2005,inorder to stem the blight and massive illegaldumpingthatthe neighborhood cleanup style serviceattractedin theyearsprior to 2005. Appointment-basedbulkypickupserviceallowedresidents to schedulebulkypickupappointments at any timeduringthe year (except January, whenbulkyservice is suspended each year to enablecitywideholidaytreecollection),at residents' convenience and as the needarose. Appointment-basedservice alsofacilitateddramatically increasedrecyclingofmaterials set outforbulkypickups.Thecitywidebulkypickuprecyclingrateincreasedfromunder10% forthe neighborhoodcleanup-based service, to 50% under the appointment-based service. Under the neighborhoodcleanup-based system,therewasrampantillegaldumpinginthe neighborhoods scheduled forcleanup, by contractors andotherswho werewellversedinthe published service schedule.



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Bulky PickupforMulti-Family HouseholdsBulkypickupservice formulti-familyhouseholds was included in the draft contract released intheCity's RFP. The contract required proposers to provide bulky pickup service to M Fhouseholds intwo ways:

EachM Fhousehold willbeeligible forone annual bulky pickup appointment at nocharge to the resident, and at no additional charge to thebuildingmanager/owner.Annualbulky pickups would be coordinated bybuildingowners/managers, workingcloselywithW M A Ccustomer service androute managementstaff, forindividualormultiplehouseholds and move-outs. This could include placement of large debris boxesforbulkypickup appointments scheduled formultiplehouseholds and/or move outs.

M Fhouseholdsthatneed additionalbulkypickupcould order pay-as-you-go bulkypickupappointments directlyfromW M A C ,atratesprovidedinthe M M & O contract.

The costofarmual pickup service is included inM Fmonthlyrates. The cost forthe pay-as-you-go bulky pickup appointments wouldbebilledto the household ordering the servicev iacreditcard.BulkypickupservicewouldallowSFandM Fhouseholds to set out thesameitems as arecurrently set out by SF households:

Non-recyclablebulky items, which include but are notlimitedtofiimiture,homeremodeling debris, and other household itemsLargehousehold appliances (recycled*)Mattresses or box springs (recycled)TVsand computer monitors (recycled*)Tiresincludingtires on rims (recycled)Carpets (expected to be recycled in future, T BD)Computers (recycled*)Consumer electronic products (recycled)*Smallappliances (recycled*)Scrap metal (recycled)Corrugated cardboard (recycled)Unpainted wood (recycled)Plant debris (recycled**)

*These items bannedfrom landfillb ystate law**These items bannedfrom landfillb yAlameda County ordinance



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Inaddition to the M Fbulkypick up services described above and includedintheoriginalcontract, the City Counci lrequestedthatthe proposer provide costing for an optionthatwouldallow bulkypick up appointments to be ordered byindividualhouseholds, through directtenantaccess, to be included in the monthlyrate. W M A Chas providedpricing fortwo optionsresponsive to thisrequest,and an additional alternative service forM Fresidents. The sectiontitledPricing& Rates providesinformationforthis option.Community Outreach StrategyW M A C proposes aCommunityOutreach Strategy using community basedsocialmarketing toincrease participation in source-separated recyclingservices. It is a comprehensive programthatincludes the services ofOaklandish,an Oakland-based designcollectiveknown for itscommunity work and branding projects, and CascadiaConsulting Group,a Seattle-based firmwithofficesin San Jose, andstaffbased inOakland. Cascadia is currently the lead contractor forthe StopWaste Business Partnership, a program of StopWaste. They have been on the ground inOaklandhelpingbusinessescomplywiththeAlamedaCounty MandatoryRecyclingOrdinancesince 2011. Cascadia has extensive expertise in community based social marketing, recyclingtechnical assistance, andwastecharacterization studies. Cascadia partnered with WasteManagement in Seattle andK i ngCounty,W Ato providerecyclingtechnicalassistancetobusinessesandapartmentand condominium residents.W M A C ' sCommunity Outreach Strategy involves many other diversepartners,includingOaklandU nifiedSchoolDistrict,East Bay RentalHousingAssociation,TheCaliforniaEndowment,Youth Uprising,al lChambers of Commerce, Oakland's Business ImprovementDistricts,Keep OaklandBeautiful,Unity Council,OaklandAssociationof Realtors, East BayHabitat for Humanity,Y M C AofEastBay,and others.W M A C ' splan includes six keystrategies:

1. Understand neighborhoodprofiles,needsand opportunities2. Targetspecificsectorsand materialstreamsformaximum return3. Engagevitalcommunitypartners4. Mobilizea Zero Waste Ambassador Corps and providejob training5. Incentivize participants6. Utilizetechnology andsocialmedia platforms

W i t hitspartnersW M A Cwould implement agrassrootscampaign,buildingzerowastebehaviors in a neighborhood-by-neighborhood approach. Itwouldcombine conventionaloutreachstrategieswith community based social marketing to increase participation (householdsusingrecyclingservices), andutilization(thedegreetowhichhouseholds place alltheirrecyclable and compostable items into the appropriate containers). This approach aligns withthatbeing used by StopWaste topursue75%recyclinginAlameda County,which is based on



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reducing the amoimt of recyclable and compostable itemsfromhouseholdgarbageto less than10%, supported by itsReady,Set,Recycle publiceducation campaign.W M A C ' s complete28-pageCommunityOutreach Strategy is included as Attachment Dto thisreport.ResidentialRecycling(RR)ProposalsWMACR R ProposalUnderOption1, onJuly1, 2015W M A Cwouldprocesscitywideresidential recyclables at itsRecycleAmerica facilityatDavisStreet. Thisfacilityis currently scheduled to be completelyrebuiltwithal lnew,state-of-the-artprocessing equipment and technology, scheduled forcompletioninDecember 2014. W M A Cwoulddispatcha ll25R Rcollectionvehicles,withwhichit proposes to provideCitywideR Rservice,fromts 15-acre facilityon 98* Avenue inOakland.C W S RR ProposalUnder Option2, onJuly1, 2015,C W S wouldprocessCitywideresidential recyclables at its twoexistingfacilitiesin westOakland,primarilyby adding additional processing equipment and asecondshiftat itsfacilitylocated at 10*and PineStreets. This facilityoperatesunder aconditionaluse permit (CUP) thatallowsC W S to expand its processing hours to 9p.m., enablingasecond shift. C W S woulduse additional processing capacity as needed at itsWoodStreetfacility.Inadditionto expanded processing hours at 10*Street,awardofthe R Rcontract toC W S wouldincrease shipments ofrecycledcommodities inoverseasshipping containers, and intrucks serving domestic markets. A sproposed underPlan B , C W S wouldshift all RR operationsincludingdispatch, processing, andshippingto its new Gatewayfacilityon the formerOaklandA r m yBase in year fourofthe contract (2018-19). C W S currently providesrecyclingservices inthe west and northhalfofOaklandusing18collectionvehiclesthatare dispatchedfromits 10*Streetfacility. Because the R Rcontract starting in 2015wouldbe forthe entire City,award ofthe R Rcontract to C W S wouldincrease the number ofcollectionvehicles dispatchedfrom10Streettoal l43collectionvehicleswith whichit proposes to provideCitywideR Rservice,through 2018, oruntilits Gatewayfacilitycomes online.Table2: ResidentialRecyclingProposal ComparisonW M A C C W SCollectionvehicles run onlocally-producednatural gas fiiel Collectionvehicles run on conventional naturalgasfuelA llcollectionvehicles dispatchedfrom 98 ^Avenue A l lcollectionvehicles dispatched from10 '&PineStreetsfor 3-years,fromGatewayfacilitythereafter.A llprocessing at newfacilityatDavisStreet(expected to be completed by end of 2014)

A l lprocessing at 10 ^& PineStreetswithadditional shiftfor 3years,fromGatewayfacilitythereafter.



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Non-Exclusive Commercial RecyclinsTheR FP required proposers to provideratesforcommercialrecycling collectionservicethattheywouldprovide tobusinesseson a subscription basis. Award ofthis non-exclusive line ofbusiness willrequire the selected contractor to provide subscriptionrecyclingservice atrates.Itisrecommendedthat theseservices be provided through the R R contract.ContractProvisions- IllegalDumpingandEconomicBenefltsMM&O Provisions toAddress Illegal DumpingTheM ix edMaterialsand Organics franchise contract provides severalfeatures thatcouldaffectthe incidence ofillegaldumping inOakland,andthatcouldbesignificantcontributors to acomprehensive Ci typrogram onillegaldumping. Thesefeaturesincludeprovisionofillegaldumpingabatementservices to supplement OPW services,streetlitter containers service onSundays as directed by the City,commercialcollectionservices on Sundays,bulky collection forthe entire residential sector, and enforcement oftheexclusivefranchiseto prohibitillegalhauling.Thebulkypickupservice forsingle-familyresidential (SF) customers is unchangedfromthecurrent system. In the new system, thebulkypickupservice is extended tomulti-familyresidential (MF) customers. The basic service forSFandM Fis one annual bulkycollectionperdwellingunit, scheduled by the customer. The cost ofthe service is embedded intherate,butany resident may order additionalbulkyservicefromthe contractor on a pay-as-you-go basis.Mattresses remain apartofthebulkypickupservice, andstatelegislationthatrequires retailertake-back willbe implementedJuly1, 2014.

TheCity Counci lrequestedalternatives formulti-family bulkypickupoptions are discussed inthe section titled C ity CoimcilDirectedAlternatives thatfollows.Last,two essential requirementsthatare addressed inthe M M & Ofranchise contract and intheOaklandMunicipalCode are theexclusivityofthe franchise and the requirementthatresidentsandbusinessesobtaincollectionservicethatissufficient forthewastetheygenerate.TheM M & Ofranchise contract acknowledgesthatthe Cityand the contractor are obligated to defendtheexclusivity ofthe franchise against encroachment byillegalhaulers. It is believedthatmanysuch haulers are responsible forasignificantportionofthe illegaldumpingactivityinOakland.Inaddition,asignificantportion ofillegaldumping can be ascribed to thefailureof somebusinessesand residents to subscribe toadequateservice.Economic BenefitsTheC ity C oimcilsetspecificpolicydirection for economic benefitsprovisionsto beincludedineachofthe newfranchisecontracts. This section provides additionalinformationon competitivewagesand benefits,localhireprovisions,and the requirement ofthe new contractors to provide

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employment preference to the current employees ofthe incumbentsolidwaste franchise andresidentialrecyclingcontractor.

LocalHireThe awardedfirmis required to hireC ityofOaklandresidents forat least 50% ofallnewhires. The50% localhire requirement willbeappliedtoa llemployeesofthe proposer, whoare associatedwiththe contract forcollectionandprocessing,except management. Theselong-termcontracts willhave somevariability inemployment opportunity overtime,and theprocessidentifiedinthe contractsensurescompliance over the termofthe contracts.Current ContractsOverall,W M A Chas a total of832 fiill-timeequivalent(FTE) workingat itsfacilitiesinAlamedaCounty. O fthe 832FTE, 175 areOaklandresidents, or21%, as showninTable3. Currently,W M A Chas the equivalento f273FT Eallocated to work on theOaklandcontract. W M A Creportsthatthe averagetenureofitsemployees is seven and ahalfyears fordrivers andfiveandhalfyears for sorters. W M A Creportsthatin any givenyear it participates injobsfairsthroughout the county andgoesto the unionhall fornewemployees. UnderOption1, it is expectedthatW M A C w i ll W M A C w i lladd 70-80 newjobs and asmixedmaterial sorting efforts ramp up.

Table3: Oakland1esidentsEmployedby W M A CFacility # W M A CEmployees # ofOaklandresidents Oakland% ofTotal98 Ave. 461 56 12%DavisStreetTransfer 315 115 37%AltamontLandfill 56 4 7%Total 832 175 21%

Currently,C W S has a total of83employees who work at its twoOaklandfacilities.Ofthe 83 employees, 57 areOaklandresidents, or69% ofthe total workforceis composedofOaklandresidents, as shown belowinTable 4. O fthe 83 employees, 58.5FT Eareattributed to the work on theOaklandcontract. C W Sreportsthatthe averagetenureof itsemployees is 10years. It also reportsthatin anygivenyear it may go to theunionhallfornew employees anywherefromone tofourtimes.



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Table4: OaklandResidentsEmployedby C W SFacility #cws # ofOakland Oakland% ofEmployees residents Total10' Street 54 29 54%WoodStreet 29 28 97%Total 83 57 69%

A tthestartofthe franchise contract term, it is expected under either optionthattheselectedResidentialRecyclingcontractor willretain a number ofqualifiedworkersfromthe former incumbent contractor.Compliance of New Franchise Contractswith50%L ocalHireAtwo-step process for compliancewiththe 50%localhire requirement is necessary fortheselong-termcontracts toallowthe contractor to correct any short-termfailuretomeetthegoal,and to provide a remedyshouldthe contractor persistentlyfailto abide by the contractrequirement.The reporting sectionofthe franchiseagreementrequires the contractor to submit monthlyreports onhiring, includingtotal number ofpositionsand total number ofvacancies.Thecontractorwillbe required to submit an annual reportidentifyingthe number ofpositionsthatcame openduringthe reportingperiod,and the number ofOaklandresidentshired,providingdocumentationofthoseemployeesthatincludes their address,classification,basicrateofpay, and hiredate. ThepercentageofOaklandresidents should be equal to orgreaterthan50% ofthe totalnewlyhiredstaffforthe year. Ifthe annualpercentage doesnotmeetthestandard, then the contractor is required to workwiththeCity'sOfficeofContractComplianceto develop a planforcorrective actioninthefollowingyear. The annualhiringreports willallowforoversight oncompliancewiththe 50%localhire requirement,correctinganydeficienciesfromone year to thefollowingyear.Additionally,therewillbe anassessmentofthe contractor's compliancewiththe 50% localhireprovision inyear sevenoftheagreement. TheC itymay at itsdiscretionnot grant anextensionas a penalty forfailingtocomplywiththe 50%localhire requirement andfailureto correctcompliance.WorkerRetentionT he M M & OandR Rcontractors are required to provide employment preference to thecurrent employeesofthe incumbentsolidwaste franchisee and residentialrecyclingcontractor. Forclarification,the useofthe term preference insteadof retention meansthatthe contractor or contractors awarded the Zero Waste Services contracts mustofferopenpositionsto the current employeesofthe incumbent companiesthatdo not receive contractawards, and it is up to the employee whether to accept thepositionoffered.Using

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employment preferenceallowsthe employee to choose whether to take apositionwiththenew company,staywiththe oldcompany,or sever employment.Inthesetypesofcontracts,forgarbage andrecyclingservices,thejob classificationsthattypicallyareidentifiedforretention aredrivers,sorters, mechanics and customer servicerepresentatives. In the case ofcustomer service representatives,onlylocalpositionswouldbe subject to preference. There is a 90-dayprovisionforworkerswho areofferedemployment,to bedismissedonly forcause, otherwise after 90-days the employee is apermanent employeeofthe company.UnderOption1, theResidentialRecyclingdisplacedemployees ofC W S wouldbeofferedemploymentpreference byW M A C accordingto the terms describedinthefranchisecontract. UnderOption2, theResidentialRecyclingdisplacedemployees ofW M A Cwouldbeofferedemployment preference by C W S .

CityCouncilDirectedAlternativesThe City Councilrequested a number ofalternativesto considerduringthe awardofthethreefranchise contracts. Followingis alist ofthe alternatives and thereafter adescription.ThefollowingsectionPricingand Ratesprovidestheratesofthe alternatives.o SpecialAssessmentfor DelinquentAccountso C al lCentero Multi-FamilyHousehold GreenCartServiceOptionso Additional BulkyPickupOptionso E B M U DOrganicsProcessingo Local6 Wages andBenefitsMM&O Special Assessment fo rDelinquent AccountsThe City Councilprovidedpolicydirectionthatrequired proposalsforthe M M & Ofranchisecontract toincludetwo cost optionsfo raddressing delinquentbillpayment (bad debt) bysingle-familyandmulti-familycustomers: a nolien process, inwhichthe M M & Ofranchisecontractor absorbs the bad debt, and an alternate lien processthatrecovers bad debt through aspecialassessment.The Oakland MunicipalCoderequires ownerso fproperties wheresolidwaste is generated tosubscribe to not less thanweeklygarbagecollection fromtheCity'scontractor. Inaddition,itlaysout alienprocessthatensuresthe contractor ispaid forservice,regardless ofresidentialcustomerbillpayment, sothatthe contractorwillcontinue garbagecollection,an essentialserviceto protect thepublichealth and safety. The current processallowsthe contractor toforwardto the Cityafter the closeof a billingperiod,anyuncollectedamount duefromresidentialcustomers,whilecontinuingtoprovidegarbagecollectionservice. TheC itypays thecontractor the delinquent amount, then liens the property tocollectthe unpaidbillandallowableadministrativecosts.

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Underthe recommended specialassessmentprocessincluded inthe M M & Ofranchise contractissuedwiththe RFP, should aresidentialcustomer failto pay their garbage bill,the Citywouldsubscribe to service onthatcustomer'sbehalftoabatethe nuisance, and the contractorwouldcontinue to provide garbagecollectionservice. TheC itywouldthen place aspecialassessment(not alien)on the property.However,unlikethe current system, the contractorwouldberesponsiblefor collectingthe first delinquentbill(the specialassessmentwouldapply to thefollowingbillingperiod),and the contractorwouldnot receive paymentuntilthe Cityreceivesthe specialassessmentproceedsfromtheCountyAssessor's Office .Underthe nolienprocess alternative, the M M & Ocontractor absorbs the fi i llcostofresidentialdelinquentbillpayment bad debt, whilecontinuingto provide garbagecollectionservice.Asaddressed inthePricingand Rates section, thiswouldraiseratesand is not recommended.Call CenterThe City Counci lsetpolicydirectionto require proposers forthe M M & Ocontract toidentifythatthe customer servicecallcenter be locatedinAlamedaCounty. The proposerscouldprovidean alternative foracallcenter outsideofthe county. W M A C ' s proposal underOption 1providesforacallcenter outsideofAlameda County.W M A C ' s current callcenter is located inWashington. UnderOption2, the proposed W M A C callcenter inAlamedaCountywouldhavearateimpact.Multi-Family Buildings Green Cart Service OptionsThe RFP, aspublished,required proposers to provideratesfor source-separated organic materialcollectionservice (green carts) atmulti-familyhouseholds (MF) for two alternatives. The firstalternativerate(RFP Default)wouldembed the cost ofelectivegreen cart serviceinthe monthlyrateformixedmaterialcollectionservice. The second alternativerate(RFP Alternative- OptIn )wouldshow the cost ofelectivegreen cart serviceseparatefromthe costs ofmixedmaterialscollection. Thiswas intended to provide a transparent comparison ofthesecosts to provideelectivegreen cartservice,whetherpaidbyal leligiblecustomers or by subscribersonly. In June2013, uponauthorizingstaffto negotiatewiththe top proposers. CityC ouncilrequestedthatarateforathirdalternative (City CouncilAlternativeNo. 1- Opt Out ) be required. InMarch2014, C ity C oimcilrequestedthatarateforafourthalternative (CityC ouncilAlternative No. 2 - No-Opt )be required. Table5summarizesallfouralternatives.

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Table5: Multi-FamilyBuildingsGreen CartAlternativesA Defaultservice as

required in RFP GreencartprovideduponcustomerrequestCostembedded in MFrates

B Alternativeas requiredin RFP Opt-In Greencartprovideduponcustomerrequest Costnot embedded in MFrates;subscriptionratesprovidedC Council-requestedalternativeNo. 1 Opt-Out

Greencartprovidedunlesscustomeroptsout Costembedded inM Frates

D Council-requestedalternativeN o.2 N o-OptOutGreencart toa llcustomers Costembedded inM FDrates

City Council Requested Multi-Family Bulky OptionsInadditionto the M Fbulky pickup services describedinthe earlier section onillegaldumping,andincluded intheoriginalcontract. City Counci lrequestedthatthe proposers provide costing,to beincluded inthe monthlyrate,foranoptionthatwould allowbulkypickup appointments tobe ordered byindividualhouseholds. W M A Chasprovidedpricing forthreeoptions responsiveto thisrequest,and anadditionalalternative service for M F residents:

(1)tenantsinindividualunitsi nbuildingswith 5or moredwellingunits may scheduleone annualbulkypickupappointment perdwellingunit;(2)tenantsinindividualunitsi nbuildingswith 5to 30 units may schedule one annualbulkypickupappointment perdwelling,andbuildingswithmore than 30dwellingunitsmay order oneroll-offbox per year through the property manager; and(3)tenantsinindividualunits inbuildingswith 5or moredwellingunits mayrequestacouponto dispose at theDavisStreet TransferStation,up to 44,000 coupons per year(approximately 75% ofthe M Fhouseholds).

Pricing fortheseoptions isprovided inTable 10 inthePricingand Rates section.EBMUD Processins ofCommercial Orsanic MaterialInadditionto the organicdiversionservices requested through the RFPprocess, upon approvingconcurrent negotiations, the CityC ounci lrequested the proposers tomeetwithE B M U Dandseek to develop a business relationship toallowE B M U Dto process M M & Ofranchise contractorganicmaterials at the E B M U D faciHty. W M A Chasconfirmedthatit has a businessrelationshipand termsheetfromE B M U Dto process organic materials;C W S is not discussed inthis sectionbecauseany it is not proposedthatC W S be awarded the M M & Ofranchise contract.E B M U D wouldacceptcommercialorganic materialcollectedby Oakland'sM M & Ocontractor,to feed anaerobic digesters ( A D ) at its wastewatertreatmentplant onWake AvenueinOakland.MaterialdeliveredtoE B M U Dwouldrequire preprocessing by athirdparty operating a facility

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co-located onE B M U D ' sproperty. Preprocessing would convert delivered commercial organicmaterial into a slurry suitable for use inE B M U D ' sanaerobic digesters. Thedigesterswouldproduce biogasthatwould be converted to electricity via internal combustiongeneratorslocatedonsite, and would supply the energy for use in thewastewatertreatmentfacility. The remainingdigestate(solids) would be land-applied as asoilamendmenton non-food agricultural lands.However,StopWaste has yet to determine i f EB M UD ' sproposalforland-applicationofdigestatewouldconformto theAlamedaCounty MandatoryRecyclingordinance.TheE B M U Doption may nominally benefit theirwastewatercustomersby reducing the cost ofenergy for thewastewateroperations. In addition, the E B M U Doption may provide the Citywithrevenuesfromrenewable energy credits should E B M U Dshare thosecredits with the City.However,thesebenefits accrue at theexpenseof Oakland'sbusinesses,as the E B M U Doptionwouldincrease the cost of service compared to thebaserateproposal in Option1 and Option 2.TheE B M U Dproposal would nominally affect truck miles driven in Oakland and outsideOakland. See Table 6 for a summary comparison.Processing Oakland's commercial organic material at W M A C ' shigh solids anaerobic digestion( H S A D ) facilityat Altamontrepresentsa unique opportunity toutilizethe material collected atOaklandbusinessesto produce vehiclefiieland compost, allwithinAlamedaCounty. The costforthis processing is included inW M A C ' sproposedratesfor Oakland'sbusinesses.Table 6: Processing ofCommercialOrganic MaterialW M A C - H S A Dat Altamont E B M U D - A Dat Wake A v e .Nominallyfewer truck miles driven in Oakland Nominallymore truck miles driven in OaklandNominallymore truck miles driven outsideOakland

Nominallyfewer truck miles driven outsideOaklandProduces vehiclefuelfor Oakland collectionvehicles Produces electricity forwastewatertreatmentplant

Produces compostfromaerobic composting ofdigestate Produces soilamendmentfor land-applicationfromdigestateN oadditional Cityrevenues Potential forC itytoshareE B M U Drenewableenergy creditsN oadditional cost to Oaklandbusinesses Additionalcost forcollectionservices to

OaklandbusinessesCompetitive Wages andBene fitsforRecycling SortersOnJune12, 2012 the CityC ounci ladopted languagerequiring the new franchiseagreementstorequire contractors to pay competitivewagesand benefits, defined aswagesand benefitsequivalent to orbetterthancollectivelybargainedcontractsin use inAlameda,Contra Costa, SanFrancisco,SantaClaraand San Mateo counties. Thisdefinitionprovided the flexibilityto allowforthe workers on the proposers' contractstohavethe right to berepresentedby labor unions oftheir choice and tocollectivelybargain labor contracts. It also allowed the companies topropose



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using theirexistingcollectivelybargained wages and benefitsagreementswiththe labor unionlocalsthat representtheir employees. These negotiatedfranchiseagreementsprovide forcompetitive and equitable worker wages and benefits.Representatives and members o f I L W U Local6,whichrepresentstherecyclingsortersemployedby CW S andW M A C ,havetestifiedat thePublicWorksCommittee and the CityC ouncilthattherecyclingsortersare inadequately compensated compared to other types ofworkersi ntheindustry,forworkthatis hard, dirty, and dangerous. Local6 currently has open contractswithW M A C and C W S .OnMarch18, 2014, the CityC oimciladoptedlegislationthatrequiresthatallworkers whoproviderecyclingservices to the CityofOaklandits residents and businesses, pursuant to anynewC ityexclusivefranchiseagreementor renewal/extension ofany existingexclusiveC ityfranchiseagreement,be provided wages comparable tothosewagesthatrecyclingworkers inFremont, San Jose and SanFranciscocurrently earn or are scheduled to earn under existingagreements,whilemaintaining wagedifferentials.Additionally,thelegislationdirectedthatrecyclingservices franchisees andrecyclingservices franchisees renewing and/or extending theircontracts be required to providequality,affordablefamilyhealth coverage to allemployees.Thislanguage excluded citiesinAlamedaCounty served byW M A Cas a comparable. It alsoremovedcollectivelybargained contracts as a comparable, changing the languagefromwhat theCounci lhad adopted on June 12, 2012 and what was used inthe R FPonwhichproposers basedtheirrateproposals.TheIL W U Local6 contractswith W M A CandC W S providedifferingwages and benefits to therecyclingsorters. TheL ocal6 contractwith W M A Cprovides starting wages forrecyclingworkers at $12.50 per hour,whileits contractwith C W S provides starting wages at $11.97 perhour. The health benefits are also different for eachofthesecontracts; the Local6 contractwithW M A C includesfamilyhealth benefitswhileits contractwith C W S provides health benefitssolely forthe employee.Bothfirms were provided theMarch18, 2014 CouncilResolutionand asked to provide the costtomeetthe requirement ofthe resolutionforrecyclingsorter wages andbenefits.W M A Cprovidedafigureofanadditional 22centsper32-galloncan per month for M M & OandR R,foran average total of$2.64inthe first year per residential customer. Thisfigurencludesallworkperformed by the approximately 170recyclingsorters,whiletheOaklandworkrepresentsonly35% ofthe total work performed andwouldapply to Option 1. ForOption2, W M A Cprovided afigure ofan additional 17centsfor M M & O ,andC W S provided afigureofanadditional 44centsfor RRtotaling61centsper32-galloncan per month for M M & Oand RR, foran average total of$7.32inthe first year per residential customer.

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Pricingand RatesThe pricingoffered inthe fiillyresponsiveoriginalproposals submitted to the Citywouldrepresentabout a75% increase inratesfo rthetypicalOaklandresidentialcustomer(32-gallongarbagecontainer). Thisissignificantlymore than therateincreaserangeprovidedtoC ouncilby informationmemo January 12,2012,whichdescribed a25-45%rangeofrateincrease forlocaljurisdictionsentering new or extendedagreementsfor solidwaste andrecyclingservices.The largest singlefactorcontributingto the proposedrateincrease isthatsince 1995,Oaklandgarbagerateshave been adjusted by80% ofthe change inthe annualConsumerPriceIndex(CPI). ThoughC PIhashistoricallybeen acommoncontract escalator, itdoesnotreflectthetruecosts experiencedinthesolidwasteindustry,where thepriceoffueland the requirements ofcollectivebargainingagreementsareheavilyweighted. Overthe course of 20years, Oakland'sannualrateincreases have not kept pacewithservice providers expenses. Excludinganychanges to current programs andservices,arate reset alone may accountforan increase of asmuchas30% over currentrates.A sdirected by the City Council,the RFP includedannual adjustmentofcustomerratesusing aRefuseRate Index(RRI). RRI is based onmultiplepublished indicesthatare suited tosolidwaste industrystandardsand tiedirectlyto major cost categories ofsolidwastecollectionserviceproviders:solidwastedisposal,materialsprocessing,labor,fiiel,and maintenance, repair andreplacement ofvehiclesand equipment. TheRRI componentindicesarepublishedby agenciesthatincludethefederalBureauofLaborStatistics and theCaliforniaEnergyCommission.Useofthe RRI as apriceescalatorallowsservice providersto reduce theirbasepricingbecausetheirfiiturefinancialriskislower,whichisparticularlyimportantwithlonger-term contracts likethetwo collectioncontractsincluded inthe RFP.Figure3shows thecumulativepercent change over thepast20-years forthreemethods foradjustingrates;the current method80% of C PI; 100% ofCPI;andusingtheRefuseRate Indexthe method adopted byC oimcil forthe newM M & OandR R franchisecontracts.

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igure 3.CumulativeChange inRR I, CPI(100%) and C PI(80%) 1993-201380.00%70.00%

RRICPI(100%)CPI(80%)

10.00%0.00% r o ^ L n i D r ^ o o C T i O r H r M m ' * L n i X ) r ~ ^ o o C T i o < H r M mO l O l C n C T l C T l O I C T l O O O O O O O O O O T H i H i H T Ho i c n c n o i o i C T i c T i o o o o o o o o o o o o o o

Source: BureauofLaborStatistics(BLS)website;CPI - SeriesID :cuura422sa0 ConsumerPriceIndex, A llUrbanConsumers, AllItems- BayArea.RRIconsistsof 5indices:LaborSeriesID :ceu6056210008 Service Producing Industries;Diesel FuelSeriesID :wpu057303 #2DieselFuel;VehicleReplacement SeriesID :pcu336211336211Truck,bus, car, and othervehiclebodies,forsale separately;VehicleMaintenanceSeriesID :pcu3339243339243 Parts andattachments forindustrialworktrucks; A llOtherSeriesID :cuura422saOConsumerPriceIndex,AllUrbanConsumers, A llItems- BayArea.Compared to CPI , RRIprovides a morefairand equitablerateadjustmentmethodthatsustainsthefinancialviability ofthiscriticalpublicservice,whichreducesratevolatility inthe long-term.R R Iis in widespread and increasing usebyjurisdictionsinCaliforniaand throughout thecountry,whileC PIhas become an unacceptable contract escalator to service providersi nthesolidwasteandrecyclingindustry.Cityconcessions during negotiationswith W M A Callowforchangein laborcostscontained inW M A C ' scollectivebargainingagreementswiththeirrepresentedemployees to beincludedintherateadjustmentprocess. The result is lowerinitialcustomerrates,witha projected smalleffectonfiiturerateadjustments,and a contribution to laborpeaceover the termofthe contract.Other factors contributing to the proposedpricingare related to capitalneeds(carts, trucks,facilities),expansion ofservices(e.g., commercial andmulti-familyorganics), and additionaleffort to achievewastediversiongoals.DiscussionofRatesfor Option 1& Option 2Option1- Thisoption awards al lthreefranchise contracts toW M A C .Option1comprisesdiscounts forawardofmultiplecontracts, negotiatedadjustmentsto the Refuse Rate Index, use



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ofexistingcartswitha higherfirstyear replacementrate,and thespecialassessmentprocess forresidentialbaddebt,packaged as abestandfinaloffer.Option2 - Thisoptionawards theResidentialRecyclingfranchise contract to C W S , and theMix e dMaterialandOrganicsandDisposalfranchise contracts toW M A C .Itincludesamulti-contract discountfromW M A C ,useofexistingcartswitha higherfirstyear replacementrate,useofexistingtrucks as reservesfrom C W S , and theRefuseRate Index as submittedintheW M A Cproposal.Neitherproposeroffereda discountfo rchangingthefranchisecontract term to 20 years,althoughC W S offereda one-time payment of one milliondollarsfora 20-yearResidentialRecyclingfranchisecontract, and one and ahalfmilliondollarsfora 30-yearResidentialRecyclingfranchisecontract.TotalRate ImpactsThe pricingoffered intheoriginalproposalsfromW M A C represented total annualraterevenueof $135 million,anoverallincrease of64%fromcurrentlevels. Totalannualraterevenuenegotiated forOption 1is estimated to be $110million,representing anoverallincrease of 32%fromcurrentlevels,cuttingtherateimpactinhalfcompared to theoriginalproposal.Single-Familv,M ulti-Familv,andCommercialServiceRate ImpactsTable7belowshows examplesofexistingand proposedM ix edMaterials(garbage)collectionrates,andrateimpacts,foratypicalsingle-familycustomer(SF), multi-familycustomer (MF),and commercialcustomer.

ForSFcustomers, the costforweeklyrecyclingand organicscollectionis embedded inrates,shown inthis table for 32-gallonweeklyM ix edMaterialscollection.For MFcustomers, theratesfor Mix e dMaterialscollectionunder the new contract willbe based on thelevel ofweeklyservice (e.g., onecubicyard)withaminimumservicerequirement of 20 gallons ofgarbageperhousehold,withthe costo fweeklyrecyclingcollectionembedded intherate.. CurrentM Fratesare based onnumber of households,withaminimumservice requirement of32gallons ofgarbageperhousehold,and overagecharges forservice above theminimum.Underthe newM Fratestructure, customerswillhavegreaterflexibilityto scale servicelevelstomeettheirneeds,and tominimizetotal costs byoptimizing recyclingandcomposting services.There arefourcost and service alternativesforprovisionof source-separated organicscollectiontoM Fhouseholds;inthe example inTable7, the cost oforganicscollectionis embedded intherateshown,per the RFPdefaultoption.For commercialcustomerscollectionoforganics andrecyclablesis aseparatefee-forserviceactivity,and therateshownforweeklycollectionof aonecubicyard containerapplies toM ix edMaterialsonly.

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Fred Blackwel l , Ci tyAdministratorSubject: Zero Waste RFPDate: May 16, 2014 Page 27

Table 7: CustomerMonthlyRates and Rate Impacts (Base Rate Without Alternatives)

ServiceCurrentMonthly

RateF Y2013/14

OptiW M A C : RR/M

on 1M O/Disposal

Option2CWS:RR

W M A C : M M O /DisposalerviceCurrentMonthly

RateF Y2013/14 MonthlyRate RateImpact MonthlyRate RateImpactSingleFamily(32-galloncart) $29.30 $43.93 49.93% $48.72 66.28%MultiFamily'(20-unit bldg.) $466.20 $583.89 25.25% $665.15 42.68%Commercial(1-cu.yd.bin) $137.54 $167.66 21.90% $175.65 27.71%

M Frateshown is forMultiFamilyBuildingsGreen Cart ServiceAlternativeA(RFPDefault)

A sshowninTable 7, therateimpact forSFcustomers isgreaterthan for M FandCommercialcustomers. For a varietyo freasons, SFratesare the most affected by arate reset thatrefiectsthetruecost ofservice. The mostsignificantreason isthatthe SF sector, compared toM FandCommercialsectors whereroutesserve agreaterdensity of large-volume customers, making itthe mostfiaeland labor-intensive customer sector per ton collected.Table8 and Table 9 show the SF andM Fratespresented in Table 7, broken down into theirM M & OandR Rcomponents. These are fullydiscountedratesthatrepresentthe lowest possibleratesunderOption 1andOption2. The discounts include the negotiated discounts detailed inthe TermSheets(Attachments A andB ),and the Mult iServiceDiscounts.Table8: Single-Family 32-GallonCartMonthlyRate-BreakdownM M & Oand R R

ServiceAlternativeOption1

W M A CA llThreeContractsR R / M M O /Disposal

Option2CWS: RR

W M A C :MM&O/DisposalM M & O FullyDiscounted $36.21 $38.01R R FullyDiscounted W M A C R R :$7.72 C W S R R :$10.71Total FullyDiscountedRate 43.93 48.72

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Table 9: Multi-Family (20-unit bldg.) FullyDiscounted Monthly Rate - M M O and R R

ServiceAlternativeOption1

W M A CAllThreeContractsR R / M M O /Disposal

Option2CWS:RR

W M A C :MM&O/DisposalM M & O FullyDiscounted $429.39 $450.94R R FullyDiscoimted W M A C RR:$154.50 C W SRR:$214.22Total FullyDiscountedRate $583.89 665.16* M Frateshown is forM ultiFamilyBuildingsGreen Cart Service Alternative A(RFP Default)Multi-FamilvBuildingsGreen Cart Service OptionsTheR FP requestedcostproposals fortwomulti-family(MF) greencartservice alternatives, andinJune2013 andMarch2014, the City Coimcilrequestedtwo additionalcostproposalalternativesfortheseservices. A l lfouralternativesinclude recovery of organic materialsthrough post-collection mixed material processing.TheR FP requiredproposersto provideratesforsource-separatedorganic material collectionservice(greencarts)at M Fbuildings for two alternatives: Default (Service Alternative A inTable 10) with thecostofelectivegreencartserviceembeddedin the monthlyratefor mixedmaterial collection service, and Opt In (Service Alternative B) with thecostof electivegreencartserviceseparatefrom thecostsofmixedmaterialscollection. InJune2013 the CityCounciladdeda third alternative Opt Out (Service Alternative C) and inMarch2014 the City Counciladdeda fourth alternative No-Opt (Service AlternativeD ),with thecostofgreencartserviceembeddedin the monthlyratefor mixed material collection service for bothaddedalternatives.Theratesshown in Table 10 include recycling andgreencartserviceexceptfor Opt In(Service OptionB ),where greencartservice is not included inM ix edMaterials(garbage)ratesbutratheris aseparatesubscription servicerate.Service OptionB( Opt-In )is the overall lowestcostM Fmixed material(garbage)collectionservice option;greencartservice for Service OptionBis provided at an additional subscriptioncost.The Default (Service OptionA )is the lowestcostoptionthatincludes thegreencartservicecost embeddedin the monthlyratefor mixed material collection service. Table 10 showsratesfor the fouralternativesprovided in Option 1and Option 2, for a 20-unit M Fcustomer.

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Fred Blackwell , Ci tyAdministratorSubject: Zero Waste RFPDate: May 16,2014 Page 29

Table 10: M F(20-unit bldg.) Green Cart Alternatives

Green CartServiceAlternativeMixedMaterialProcessing

Green CartDistributionGreenCartCost

Option 1W MAC All

ThreeContractsRR/MM O/DisposalMonthlyRate

Option 2CWS:RRW M A C :MM&O/Disposal MonthlyRate

AR FP Default Yes Greencart providedupon customerrequest.Costembedded inrateforal lcustomers. $583.89 $665.15

B

RFPAlternative( Opt-In )Yes Greencartprovidedupon customerrequest.BaserateforMixedMaterialsonly.

Total fornon-subscribers. $ 550.52 $629.68B

RFPAlternative( Opt-In )Yes

Additionalgreen cartsubscriptioncost $77.16 $82.01

B

RFPAlternative( Opt-In )Yes

Total forsubscribers $627.68 $711.69

CCouncil-requestedAlternativeN o.1( Opt-Out )

Yes Greencartprovidedunless customeroptsout. Cost embedded inrateforal lcustomers.

$641.30 $722.55

DCouncil-requested

AlternativeN o.2( No-Opt-Ouf)

Yes Greencart provided toal lcustomers, no opt-out. Cost embedded inratefor al lcustomers. $644.10 $725.35



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FredB lackwell, C ityAdministratorSubject: Zero WasteRFPDate: May16,2014 Page 30

Table 11 shows the monthly cost difference between the R FPDefault option(M FGreen CartServiceOptionA )and theotherM Fgreencartservice options, for a 20-unit M Fbuilding.Table 11: M F(20-unit bldg.) Green Cart Alternatives - Cost Compared to R FPDefault Option

GreenCartServiceAlternative Option 1W M A CAllThreeContractsMM&O/RR/Disposal

Option 2CWSRR,

W M A C M M O/DisposalA R FPDefault 0.000.00% $0.000.00%B

RFPAlternative( Opt-In )

MixedMaterialsonly ( 33.37)(6.06%) ( 35.48)(5.64%)

BRFP

Alternative( Opt-In )

Greencartsubscription

cost$77.16 $82.01

BRFP

Alternative( Opt-In )

Total forsubscribers $43.79+6.98 $46.54+ 6.5^%C CounciAltema

( Op-requesteditiveN o.1It-Out ) $57.41+ 5.95% $57.40+7.94

D Council-requestedAlternativeN o.2( No-Opt-Out ) $60.21+9.35 $60.20+8.30C ity C oimcilOptions and AlternativesTable 12, Table 13, and Table 14 show the additiverateimpacts ofthe City Counci ldirectedalternatives which are discussed in the section ofthisreporttitled Ci tyC ounci lDirectedAlternatives. A l lthreetablesincluderateimpacts of:

1. Locatingthe contractor's customer service callcenterlocated in Alameda County, whichwas solicited as an option in the RFP.

2. Havingthe M M & Ocontractorabsorbthe fullcost ofresidential delinquent billpaymentbaddebt, while continuing to providegarbagecollection service.3. Requiringthatfranchise contractor providerecyclingworkerswagesand benefitscomparable to recycling workers in Fremont, SanJoseand San Francisco, and quality,affordablefamilyhealth coverage.

Inaddition. Table 13 shows the additiverateimpacts for additionalM Fbulky services designedtoenhancetenantaccess. Last, Table 14 Ashows the additive impact to Commercial Organicsratesfor delivery ofsource-separatedcommercial organics toE B M U D 's localbio-waste-to-

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Fred Blackwel l , C i t yAdministratorSubject: Zero Waste RFPDate: May 16,2014 Page 31

energy facilityforprocessing. Electingthis optionwouldresult inCommercialOrganicsratesthatare higher thanM ix edMaterialsrates.able 12:Single-Family City CouncilDirectedAlternativesAlternative MonthlyRateImpactM M & O local callcenter + $ 0.47No L i e n Process - Contractorabsorbsdelinquent billbaddebt + $2.21RecyclingWorkers Wage & Benefits -Option1 + $ 0.22RecyclingWorkers Wage &Benefits-Option2 + $0.17 W M A C+ $ 0.44 CWS+ $ 0.61 Total

'able 13.M ulti-Family*(20-iinitbldg.)C i ty CoimcilDirectedAlternativesAlternative MonthlyRateImpactM M & O local callcenter + $5.62No L i e n Process - Contractorabsorbsdelinquentbillbaddept + $26.19

RecyclingWorkers Wage & Benefits -Option1 + $2.88RecyclingWorkers Wage & Benefits - Option2 + $2.03 W M A C+ $ 8.80 CWS+ $10.83 TotalTenant B ulkyAccess Option#1:Eachhouseholdschedules independently + $132.80Tenant BulkyAccess Option#2: (a) Complexesbelow30 units -Eachhousehold schedulesindependently; (B) Complexes 30 units and above- One time debris box scheduled by propertymanager

+ $177.80

Tenant BulkyAccess Option#3: Couponsavailablefor each household to dispose atDavisStreetTransfer Station. Availableforfirst44,000requests(of58,000total M FunitsCitywide).

+ $41.80

Rate impact shown is for MFGreen Cart ServiceAlternativeA(RFPDefault)

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Fred B lackwell, C ityAdministratorSubject: Zero Waste RFPDate: May 16,2014 Page 32

able 14: Commercial**(1-cu. yd./wk.)C ity Counci lDirected AlternativesAlternative MonthlyRateImpactM M & O local callcenter + $2.19

No L i e n Process - Contractorabsorbsdelinquentbillbaddept + $10.21RecyclingWorkers Wage & Benefits + $ 0.76 W M A C

**Rate impact shown isforCommercialMixedMaterialsserviceonly. Forcommercialcustomerscollectionoforganicsand recyclables is aseparatefee-forservice activity.

able 14A: Commercial Organics (1-cu. yd./wk.) C i t y C o u n c il Directed AlternativesAlternative MonthlyRateImpact

Source-Separated Organics atL ocalBio-waste-to-Energy Facility + $23.48***Rate impact shown isforCommercialOrganics serviceonly. Forcommercialcustomerscollectionoforganics and recyclables is aseparatefee-forservice activity.

PUBLICOUTREACH /INTERESTThisitem did not require any additional public outreachotherthan the required posting on theCity'swebsite.COORDINATIONPublicWorks Department staffhas coordinated closely with theOffice ofthe CityAttorney, theDivisionof ContractCompliance,the RiskManagement Division,and the Revenue Divisionforthisreportand the development ofthe Franchise Contracts.COSTSUMMARY/IMPLICATIONSThe Franchise Fees willbe adjusted per the franchise contracts.

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FredB lackwell, C ityAdministratorSubject: Zero WasteRFPDate: May16,2014 Page 33

SUSTAINABLEOPPORTUNITIESEconomic: Expanding and actively supporting use of discarded materials driveslocaleconomicandworkforcedevelopment with 'greencollar'jobs and value added production.Environmental: Waste reduction andrecyclingconserves natural resources,reducesair andwaterpollution,protectshabitat, andreduces greenhousegas (GH G)emissions.Socia lEquity: Theratesnegotiated are thebestvaluefortheratepayer.Forquestions regarding this report,pleasecontact Susan Kattchee,A ctingAssistant Director,510-238-6382.

RespectfiiUysubmitted.

B R O O K E A . L E V I NInterimDirector,PublicWorksAgencyReviewedby:Susan Kattchee,A ctingAssistant DirectorPrepared by:Becky Dowdakin,A ctingEnvironmentalSvcs.Manager

Attachments:AttachmentA Option1Term SheetAttachment B Option2Term SheetAttachmentC Summary of Council PoliciesAttachmentD WMAC s Community Outreach Strategy



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ATTACHMENT ADescriptionofContractRequirement NegotiatedTerm

com pany is an incum bent and has exist ing carts incom mu nity, discount was provided and existingcarts will be used.Contam inat ion of M ater ia ls Col lected - Contractrequires company to provide public education toassistwith customers' proper preparat ion ofma terials placed in their recycling and organics(green) carts. Contract also requires company toimp leme nt a tag-it-or-take-it prog ram , whe reby ifa cart is "contam inated by imp roper ma ter ia ls"company can notice customer to correct and leavethe cart behind.

2. To further address potential high levels ofcontamination in the recycling and organicscarts. City and company wil l meet to discussand, if necessary. City can direct company toremove organics or recycling containers toabate a nuisance.

Charges and RatesContract language required bi-monthly bil l ing. CityRevenue D epartment, which manages the SpecialAssessment,a nd W M A C both requested to usequarterly bil l ing.The Refuse Rate Index (RRI) replaces CP Ifor annualcalculation for rate adjustment in the newcontracts. Co m ponents of the RRIwere negot iatedto achieve a lower rate for the custome rs. M ostsignificantly, rather than using an index for labor,the negotiated RRI t ies the labor component toW M A C collective bargaining agreements (CBA).

1. Bil ling cycle shall be qua rterly.2. Changes to Refuse Rate Index

a. The annu al RRI ceil ing wil l be 6% andanything less than 8% wil l carryforward to next year

b. Floor wi l l be -5 %c. Franchise and Gov ernme nt Fees will

be included in weighted average andnot subject to any cap or carryfo rward.

d. Any rate increase in Local 70 LaborCostCategorythat is greater thanwhat w ould be al lowed under currentLocal7 0 CB A wil l be included equallyover three years. Differential increasewi l l be exempt from annual cap andcarry-forward.

3. Diversion requireme nt adjustment impact wi l lbe l imited to one year.

4. In any year whe n C ontractor gross revenuesdecrease from the prior year, substantiated bybil l ing audit funded by Contractor the City wil lnot increase the Franchise Fee com po nent ofRRI.

5. First franchise fee paym ent wil l be due August15 ,2015. Fol lowing payments w i ll be due on20**"of the m onth.

Qual i ty of P erformance of C ontractorThe contract specifies 51 l iquidated damages toensure standards of service are me t . Ne got iatedlanguage either clarified the standard, quantity ort ime per iod for correct ion.

1. Liquidated damages as negot iated.2. P rior to assessing certain l iquidated damages

City will give W M A C notice and offer to discusscorrect ing performance.

Insurance Exceptions to language reviewed and acceptedby Risk M anage me nt .May 12, 2014TermSheet Option 1 Page 2


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ATTACHMENT ADescriptionofContract Requirement NegotiatedTerm

IndemnificationContract language requires company to indemnifyCity across a broad group o f items . Indem nificationdoes not extend to maximum service rates. Duringapendency of service rate challenge, the City willbear its losses and the company theirs. Thecompany is required to provide s ervice. Contractprovidesthat i f service rates are impacted due tocourt action, contractor and City will meet andconfer over requirement to pay Franchise Feesuntil determinat ion.

If Con tractor dem ons trates actua l losses dueto service rate lawsuit . Citywill takeimmediate act ion toattempt to recoverproven losses for the services rendered. Thiscould inc lude: m odif ications to programrequirement; adjustment to maximum servicerates.Should Contractor not be able to recover theirlosses in 2 years fol lowing atrial courtdetermination affecting its abil i ty to obtainrates setforth in agreement, it could provide12-m onth notice to cance l the contract.Should the C ityfind i t necessary to procureservices, i t shall procure services fromContractor at com me rcia l ly reasonable rates.

Defense of Contractor's RightsThe franchise co ntract is exclusive for thecollection and disposal of garbage and organicma terials. Ne gotiated language includes City toensure the exclusiveright to these materials areconveye d in the O . M . C . , and conveys other certainrights to co mp any to assist Citywith removal ofi l legal hauling companies apparatus^

City shall set forth, through municipalregulation. Contractor's rights under franchise,to inc lude impounding vio lator 's equipment,and allowing fees to ad dress such actions.

Obligation to Provide ServiceContract requires company to provide serviceregardless of any con dit ionsthat are notconsidered Force M ajeu re, such as naturaldisasters. T he RFP language does not specifyspecifically that labor disruption qualify as ForceM ajeure. Neg ot iated language recognizescircumstances where services may be affected,without being a default onparto f company .

3,

Force M ajeure - does include certain labordisruption labor strike or stoppage init iated byCo ntractor 's Union employees for designatedperiod oftime in certain condit ions, andcertain sympathy strikes unrelated to thiscontract.Contractor to provide a labor plan for restoringservices in the event of a strike prior to start ofne w services. A shorttermsus pension ofl iquidated damageswillbe provided for alabor strike as defined in Force M ajeu re.During any pendency of labor action, City andContractor agree to immediately meet andconfer to negotiate any modifications toContractor's obligation to ensure basiccollection services.

Default of ContractThe contract requires company to meet its annualdiversion requirements. Failure to meet annualdiversion requirement can result in a l iquidateddamage being assessed. Negotiated languagespecific percentage for tr igger for l iquidateddamage assessment and the am ount .

1. Failure to me et Exhibit 8 annual diversionrequ ireme nt by m ore than 5%, City may putContractor on corrective action plan to achievecompliance. Failure to meet corrective actionplan may result in l iquidated damages not toexceed $150 per day.

2. Rep etitive Co m pliance Issueswill replace theMay 12, 2014 TermSheet-Option 1 Page3


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ATTACHMENT ADescriptionofContract Requirement NegotiatedTerm

term Habitual Vio lator . Under thecircumstances of repetit ive materialcompl iance issues. City and contractor wil lmeet and confer; contractor wi l l implement aremed ial act ion p lanwitha comp l iance date.Only after failure during this process lead todefaul t .

Contract M odif icat ions and Changes in LawThe contract language required company to meetannual diversion requirem ent regardless ofpotential changes in ma rket. Ne gotiated languagerecognizesthat there may be significant changes inthe world economy or legislat ive impacts thatwarrant reviewing changes to the diversion goals.

1. Should there be a change in the M ixedMater ia ls and/or Organic Mater ia ls quant i ty,com pos it ion, or qual i ty that affects theContractor's abil i ty to meet the DiversionRequirements, City wil l negotiatewithCon tractor, an appropr iate mo dif icat ion to theannual Diversion requirement .

2. Should there be a change in the recyclingcommodit ies marketsthat affects theContractor's abil i ty to meet the Diversionrequirements. City wil l negotiatewithContractor a reasonable modification to theannual Diversion requirement .

3. Should Co ntractor dispose of mater ia l in alandfi l l , no add it ional co st wil l be borne by Cityrate payers. Should disposal of the material bein conflictwithapplicable laws. City andcontractor shall meet and confer. ShouldW M A C provide demonstrated addit ional costs.City shall take action to address.

Disposal Contract Franchise FeeThe disposal contract requires a $360,000franchise fee. W M A C asked to remove the feebecause it caused vola ti l ity to the disp osal po rt ionof the rate in the outer years of the contract dueto declining tons.

The franchise fee for the Disposal franchisecontract w i l l be remo ved as a requirement .

May 12, 2014 TermSheet- Option 1 Page 4


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A T T A C H M E N T BOption2

CityNegotiatedTermsWithCaliforniaWasteSolutions and

WithWaste ManagementofAlamedaCountyDescr ipt ion o f Cont rac t Requi rem ent O pt ion B - Ne got ia ted TermCW Sto p rovide Res ident ia l Recycl ing

W M A C t o p r o v ide M i x ed Ma t e r i a l &Organics & disposal

ServiceStandardsContract required all new carts to allow for fair costcomparisons between proposals. Since bothcompanies are incumbents and have exist ing carts inthe com mu nity, discount was provided and existingcarts will be used.

Contract required all new trucks to allow for fair costcomparisons between proposals. CW Sprovided adiscount for use of exist ing trucks as spare in thefleet.RFP a llowed propo sers to provide a CallCenter outof countywith pricing.

CW S- Co ntract wo uld allow for cart replacem ent ofup to 10% per year for 10 years .W M A C - In year one of contract, 20% of each carttype shall be replaced withne w. Fol lowing years ofcontract replacement shall be as needed, up to 3%.CW S- Co ntract wil l al low use of existing trucks asspares in the fleet.W M A C - Lower pricingwithCall Center out ofcounty and higher pricingwithCall Center in county.

Charges and RatesContract language required bi-monthly bil l ing. CityRevenueD epartment which m anages the SpecialAssessment an d W M A C both requested to usequarterly bil l ing.The Refuse Rate Index (RRI) replaces CP Ifor annualcalculation for rate adjustment in the new contracts.W M A C p rovided a discount for excep t ions to theRRI, most notably the change in labor costs andabil ity of company to recover labor costs withachange in Local 70 labor ag reem ent.

W M A C - Bil l ing cycle shall be qua rterly.W M A C - Changes to Refuse Rate Index

a. The annu al RRI ceil ing wil l be 7.5%b. Any year whe re adjustm ent is greater

than 7.5% up to 10% wil l carry forwa rdto fo l lowing year

c. Floo r wil l be 0d. Franchise and Gov ernme nt Fees will be

included in weighted average and notsubject to any cap or carry-forward.

e. Any rate increase in Local 70 Labor CostCategory that al lowed under currentLocal7 0 CB A wil l be included.

Insurance W M A C - Exceptions to language rev iewed andaccepted by City Risk M anag em ent .i , v . t | j i . c u u y > _ n . y n i j i \ i v i a i l d g e i I I C I H .CW S - offered a $1 mil l ion incentive payment for a20-year contract and $1.5 mil l ion for a 30 yearcontract.

Other

Disposal Contract Franchise FeeThe disposal contract requires a $360,000 franchisefee. W M A C asked to remove the fee because itcaused volat i l i ty to the disposal port ion of the rate inthe outer years of the contract due to declining tons.

The franchise fee for the Dispos al franchise contractwi l l be rem oved as a requireme nt .

May 12, 2014 TermSheet - Option 2


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A T T A C H M E N T CZeroWaste SystemDesignandRFP PolicyDecisionsSummary

.January -.lune2012

PolicyDecisionApprovedtheZeroWaste SystemDesignthatshallinclude a singlefranchise forcitywidegarbageand organics(G&O) collectionserviceswhichcomprises;a. Singlefamily dwellinggarbageand organicscollectionand processing withoutchangesto theexistingthree-cartsystemb. Multifamilydwelling(MFD) garbageand organicscollectionand processingwith: a two-container system; one containerforrecyclables and the other container forallother discards ( mixed materials ),whichwillbe processed at a materialrecoveryfacility(MRF) to recover organic materials for composting three-container service optionsforcollectionof source-separated organicsfromM F D s

Commercialrecycling collectionand processingwillbe required service

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