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HomeMy WebLinkAboutAGENDA REPORT 1996 0904 CC REG ITEM 07DiT -D. _.. CITY OF MOORPARK CITY COUNCIL REPORT TO: The Honorable City Council FROM: Mary K. Lindley, Assistant to the City Manager , -,\ DATE: August 21, 1996 (CC Meeting of September 4) SUBJECT: Consider G.I. Rubbish's Request to Transfer Solid Waste Franchise Agreement. Background 7 The City Council is being asked to consider the request from G.I. Rubbish to transfer its Solid Waste Franchise Agreement to USA Waste Services. As you know, G.I. is currently in bankruptcy and received a purchase offer from Western Waste. Western Waste has since been purchased by USA Waste Services Inc.; there is no longer a company known as Western Waste. USA Waste is a large solid waste company with collection, landfill, transfer, and recycling operations in 21 states. Its headquarters is in Dallas, Texas, and it owns or operates 29 landfills, 42 collection operations and 21 transfer stations (prior to the purchase of Western Waste). G.I.'s most current Bankruptcy Plan includes the sale of G.I. to USA Waste. The Plan was presented to the Bankruptcy Judge who chose to delay her decision to approve it pending the approval of the jurisdictions that have service agreements with G.I. To date, the City of Simi Valley and the County have approved G.I.'s transfer request; the City of Thousand Oaks will consider the matter on September 3. In response to the Judge's direction, G.I. and USA Waste representatives met with our City staff on June 13 and the Solid Waste Ad Hoc Committee and City staff on August 14. At both meetings, details of how local solid waste collection services may or may not be impacted by the proposed transfer were discussed. Of primary concern to the Ad Hoc Committee and staff was USA Waste's commitment to maintain a representative /office locally with the authority to address and resolve operational, system, and program problems when they arise. The need to be able to address special collection problems on a case -by -case basis, such as a financial hardship case was also discussed. USA Waste indicated that it plans to leave the existing G.I. operational structure intact. In a letter, Western Waste (USA Waste) stated that Mike Smith will continue to be the City's contact and pursuant to our current agreement, will continue to operate out of the Simi Valley office. They also indicated the Mr. Smith will retain the authority to address operational C:\DOC S \SOLIDW S'r\GISALE.AGD G r• G.I. Rubbish's Transfer Request 2 and service problems without delay In addition to the aforementioned issues, the Ad Hoc Committee expressed concerns about Western Waste's reputation of corruption on the part of high level staff. Whether founded or unfounded, the Committee felt that all of these issues combined caused it to have reservations about the transfer. To address their reservations, the Committee members requested that USA agree to an amended term of the Solid Waste Agreement which is currently five years from the December 23, 1995 effective date (2000), with a three -year extension (2003). The Committee proposed a term of two years to begin following the sale of G.I. to USA Waste and an extension to the year 2000 if the City Council does not take action to find that USA Waste has not performed pursuant to the terms of the Agreement. The additional three -year extension beyond the year 2000 would remain as it is currently written in the Agreement (2003). Provided that the City finds USA Waste's performance satisfactory, the expiration of the Agreement, as transferred to USA Waste, would coincide with the City's Agreement with Anderson Disposal. USA Waste representatives expressed agreement with the request made by the Solid Waste Ad Hoc Committee. Pursuant to the Agreement and upon the City's approval of the transfer request, a transfer fee is required in the amount of $25,000 or 5 percent of gross revenues from the last 12 months, whichever is greater. Staff s estimate of 5 percent of the most recent 12- months revenue is approximately $80,000. The Ad Hoc Committee has requested that G.I. deposit $80,000 with the City to demonstrate its intention to comply with the terms of the franchise transfer contained in the Franchise Agreement and as a "good faith" gesture. The deposit would be made, pending the City Council's approval of staff recommendation, five days following the Bankruptcy Judge's approval of the sale of G.I. to USA Waste, scheduled for October 7, 1996. If G.I. fails to meet any condition of approval adopted by the City Council, the deposit will not obligate the City to proceed with the franchise transfer. Additionally, if for any reason the sale of G.I. to USA Waste does not take place, the City will refund the $80,000 deposit back to G.I. If the final franchise fee is determined to be greater than $80,000, G.I. will pay the City the additional fee cost. If, on the other hand, the fee is determined to be less than $80,000, the City will reimburse G.I. the difference. The terms of the franchise fee deposit will be documented (language to be approved by the City Attorney and City Manager) and signed by the involved parties. As noted previously, the sale of G.I. Rubbish to USA Waste has not been approved by the Bankruptcy Judge and as a result, there is not a specific date as to when the transfer would be effective. Therefore, staff recommends that if the City Council wishes to approve the transfer, it do so pending: the approval of the sale by the Bankruptcy Judge; the deposit of a franchise transfer fee in the amount of $80,000 by G.I. with the City; G.I. Rubbish's approval of an C:\D0CS\S0L1DWST\G1SALE.AGD ... ,� G.I. Rubbish's Transfer Request 3 amendment to the Solid Waste Franchise Agreement amending the term, as requested by the Ad Hoc Committee; and G.I. Rubbish's and USA Waste's approval of a franchise transfer document which will record the transfer. Staff will communicate the City Council's actions to the Bankruptcy Judge. The Judge is scheduled to review G.I. Plan and the actions taken by the jurisdictions on October 7. If the sale is approved, staff will draft the Agreement amendment and the transfer document for the City Council's approval. Recommendation The Solid Waste Ad Hoc Committee and staff recommend that the City Council approve G.I. Rubbish's request to transfer its Solid Waste Franchise Agreement to USA Waste pending the following conditions: The Bankruptcy Judge approves G.L's Bankruptcy Plan; 2. G.I. Rubbish deposits a franchise transfer fee in the amount of $80,000 with the City five days following the Bankruptcy Judge's approval (scheduled for October 7, 1996) of the sale of G.I. to USA Waste, pursuant to the conditions and documentation identified in the body of this agenda report; G.I. Rubbish approves and signs an amendment to the Solid Waste Franchise Agreement amending the term as stated in the body of this agenda report; and 4. G.I. and USA Waste approve and sign a franchise transfer document that records the transfer. C:\DOCSSOLIDWST\GISALE.AGD i)i)(b1C6