The City of Sparks holds a Franchise Agreement with Waste Management (attached to this staff report) that was negotiated over a period of more than 18 months in 2007/2008 and became effective in July of 2008.  The term of the existing franchise is for 10 years with 2 (each) mutually agreeable options to extend the agreement for additional 5-year terms.  The scope of the franchise agreement is for the exclusive right to haul commercial and residential “garbage” (as legally defined in the agreement and the Washoe County Health Department) as well as the materials generated from the residential curbside recycling program.

The hauling of commercial solid waste that is not classified as “garbage” is not included in the scope of the current franchise.  Those materials may include construction/demolition wastes, trash, yard wastes and commercially generated recyclable materials.  Historically, the City Council has maintained a position that the City should strive to leave an open-market for competition wherever possible and has  left this segment to be serviced by multiple non-franchised haulers.

In November of 2012, the City of Reno executed 4 new franchise agreements that changed the scope of their agreement from a similar “garbage only” model to a more fully inclusive scope while also installing a new residential “single-stream” recycling program.  This program removed the existing crate system for sorting and placement of recyclables at the curb and replaced it with the installation of a 2^nd rolling toter to be used for recyclable materials.  This additional 96-gallon bin allows for the comingling of all recyclable materials in one container that is later sorted at the hauler’s facility. 

Per the direction of the Sparks City Council at a workshop in January of 2013, staff from the City of Sparks monitored the adoption and rollout of the new agreements in Reno in order to gain insight for an expected similar program in Sparks.  At a City Council Workshop in September of 2013, City staff were directed to pursue a program “like Reno” that specifically addressed the residential recycling program.  In the intervening period, staff has met with representatives from Waste Management for the exchange of general concepts and concerns in an effort to create a program that will be best suited to the City of Sparks.  While the end result of replacing multiple containers for one large container is the same as in Reno, many of the details of the plan come from the lessons learned in that rollout and should make the proposed program successful for the City of Sparks.

Waste Management has provided a document (attached) which is a proposal to amend the existing franchise agreement.  This document outlines specific changes that would be made to the document that have been discussed to this point in time.  Further discussion and feedback from the City Council is required in order to make redline changes to the existing Franchise Agreement, which would be returned to the City Council at a future meeting for final approval.

The proposed changes have no effect on the scope of the franchise document.  There are no changes to the scope that might affect the ability of existing commercial haulers to continue to compete for the same segments of business they do today.  The proposed amendment is almost entirely about changes to residential services with a few minor clean-up items and changes to rates charged on franchised commercial businesses (mostly reductions).

The attached proposal document includes 14 points spread over 4 pages and is rather clear in its language.  Highlights of some of the items are included here, matching the numbers on the attachment:

ITEM 1 - Scope of Franchise – The scope of the agreement remains the same under any proposed amendment.

ITEM 2 - Recycling – The new program will allow for an expansion in the types of materials that may be recycled by residential customers.

ITEM 3 - Additional Residential Services – This represents one of the significant changes that residential customers will notice.  At the moment, customers are allowed to place up to 6 additional bags of waste next to their garbage can for pick up every week.  Under the proposed amendment, this practice would be stopped with the hope/intention that more materials could be recycled.  Reducing the allowable non-recyclable items available for free pick-up every week will help in causing customers to consider what they can now recycle.

In those instances where extra materials still occur, Waste Management will institute a “tag program” whereby each address will be given 20 tags/year that will allow them to tag these extra items for free pickup as they may be needed.  Additionally, a 4-week period in the fall and  a 4-week period in the spring would be designated where residents could place extra materials next to their cans for removal that would not require the use of a tag.  Finally, customers would be allowed up to 4 free trips/year (at their convenience) to the transfer station or Lockwood Landfill to dispose of materials.

ITEM 5 - Commercial Services – Franchised commercial rates will be reduced to account for removal of a rate subsidy that has been in place for the memory of this and previous franchise agreements (detailed in Item 9).  Waste Management is also requesting the correction of a commercial rate that is in place for those businesses that use the smallest service possible (96-gallon toter) and resulted from a proofing error on the part of Waste Management.

Additionally, Waste Management is requesting that the City of Sparks not issue any additional business licenses for the hauling of solid waste or recyclables during the term of the franchise.  Existing haulers would continue to operate under this proposal and may be sold, but new haulers would be excluded.

ITEM 6 – Services Provided to City Facilities – This value of this item is capped under the current agreement.  The proposal removes this cap.

ITEM 7 – Term of Agreement – Waste Management is seeking an extension of the current term of an additional 10 years, taking the agreement through July 20, 2028, with mutually agreeable options available beyond that date.

ITEM 9 – Customer Rates – Regionally, the rates paid by commercial customers of franchise agreements have subsidized the costs associated with the collection of residential waste.  In other words, the residential customer has (historically) not paid the full cost of providing these services.  This subsidy has been a stumbling block in past negotiations, but the proposed amendment seeks to change that within the City of Sparks.  Removal of this subsidy will result in a 2% rate REDUCTION for the rates of franchised commercial customers.

The rate impact to residential customers will include the cost of the change in subsidy as well as the increased costs associated with the installation and use of the new single-stream recycling program.  Under the proposed amendment, the total cost of residential services would increase by $.98/month.  Current standard residential rates would move from $19.37/month ($58.11/quarter-billing) to $20.35/month (61.05/billing-quarter).  New rates would become effective at the quarterly billing following the delivery and servicing of the new recycling container.

This item also speaks to some other minor rate issues including the establishment of rates for animal resistant (bear) cans, senior citizen rates and a new compactor yardage rate for franchised commercial customers.

ITEM 10 – Master Billed Communities – Waste Management has identified regional issues that have made the billing of services specific to multi-unit housing facilities (mobile home parks, condominiums, etc.) difficult for them and their customers due to the variable nature in how they may be managed with respect to the billing of utilities (including garbage services) and the transient nature of the residents.  The proposed amendment details a process by which services may be established, maintained, measured and billed for these communities.  This solution grew from a discussion Waste Management had with the local property management industry when similar issues arose within the City of Reno.

ITEM 11 – Delivery to Approved Facilities – This allows for the materials collected under the franchise to be delivered to any facility approved for the receipt of the material at hand.  This would include any licensed transfer station, landfill or other facility permitted now or in the future to collect and process the wastes in question.  It would also allow for flexibility that is needed as market conditions for the value of any particular material change over time.

ITEM 12 – Transitioning to Single Stream – This item details the communication tools and staffing that Waste Management will employ should the City Council approve an amendment to the Franchise Agreement that includes the Single Stream Recycling component.  This item details the distribution of stickers (no earlier than January 2016), distribution of carts and educational materials and the staffing of a local telephone number with representatives trained in the distinctive nature of the Sparks Franchise Agreement.

1. The City Council may direct for the City Manager to return at a future City Council meeting with an amendment to the Franchise Agreement that matches the offer provided by Waste Management.
2. The City Council may direct for the City Manager to return at a future City Council meeting with an amendment to the Franchise Agreement that includes items discussed during the presentation of this item that may include items from the offer provided by Waste Management.
3. The City Council may choose to direct the City Manager to proceed no further in negotiating an amendment in order to wait until the conclusion of the current term of the Franchise Agreement.

I move to direct the City Manager to move forward with negotiating an amendment to the Franchise Agreement with Waste Management as discussed and return that amendment to the City Council for discussion and possible approval.