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Councilmember Howe requested that the two bidders receive more than three minutes to speak and also have additional time for their closing statements.
Councilmember Chu disclosed he has had contact with both vendors in several social settings, but they have not discussed the bid.
Councilmember Hamilton disclosed she has had contact with both vendors over the last several months. She stated she had a brief discussion over the general terms of the agreement today with Jerry Nabhan from Bay Counties Waste Services.
Councilmember Swegles disclosed he has had contact with both vendors socially and received information from one vendor in a written document.
Councilmember Moylan disclosed both bidders contacted him after the request for proposals (RFP) process was over. He stated he has a letter and an e-mail from GTZanker and received a phone call from Bay Counties Waste Services yesterday.
Vice Mayor Spitaleri disclosed he has had contact with both vendors socially before the RFP process was over. Also, he received a letter from GTZanker and spoke to them about issues within the letter.
Mayor Lee disclosed he has met with both vendors socially, but has not had communications with either bidder during the past week.
Mayor Lee stated each bidder will receive five minutes for opening and closing statements. Members of the public will have three minutes each to speak on this issue.
Vice Mayor Spitaleri suggested each bidder be given ten minutes. Mayor Lee agreed.
Solid Waste Program Manager Mark Bowers presented the staff report and identified that as of this meeting, staff has received a proposal from Bay Counties Waste Services and a proposal from GTZanker (a joint venture company closely related to the incumbent operator of the SMaRT® Station, GreenTeam/Zanker). Staff has received a signed contract from Bay Counties Waste Services, but not from GTZanker.
Manager Bowers noted a correction to page 9 of the staff report (Table 2) under the Bay Counties Waste Services diversion line. The percent should be 14.8% instead of 15.7%, with the bottom line rating for Bay Counties Waste Services at 97.8% instead of 98.7%. Additionally, the rating for GTZanker should be 91.4% instead of 91.3%.
Councilmember Hamilton asked for clarification on the need to have signed contracts at tonight’s meeting. Manager Bowers stated staff requested this in order to present real proposals to Council that are ready for the city manager’s signature. Staff also wished to remove any ambiguity about whether the proposer is truly interested in implementing the proposal.
Councilmember Swegles confirmed that both proposers have included the Council approved minimum sorter wage of $18.52 per hour in their proposals. Staff discussed with each proposer how to complete the City forms properly in order to allow the City to confirm that the proper wages are actually being paid.
Councilmember Moylan inquired about the different proposals (one with a construction and demolition (C&D) sort line and one without) and Manager Bowers stated that comparing the different scenarios, the Bay Counties Waste Services proposal had the lowest net overall cost to the City.
Should a C&D sorting line be added in the future, Vice Mayor Spitaleri inquired as to who would pay for the equipment. Director of Public Works Marvin Rose stated anything added after awarding the contract is subject to further negotiation.
Mayor Lee identified that GTZanker’s diversion level (page 9 of the staff report) is higher than Bay Counties Waste Services’. Manager Bowers confirmed that GTZanker is proposing a higher diversion level.
Public hearing opened 7:59 p.m.
Jerry Nabhan, General Manager and Partner of Bay Counties Waste Services (commonly known as Specialty Solid Waste and Recycling), presented his opening remarks.
Councilmember Howe inquired as to the number of staff at Bay Counties Waste Services that were involved with the bid and Mr. Nabhan stated there were six to 10 working on the bid. Councilmember Howe confirmed with Mr. Nabhan that he was involved with every discussion held with City staff and that he was treated fairly by the City.
Vice Mayor Spitaleri confirmed with Mr. Nabhan that Mr. Nabhan has proposed and negotiated three separate tentative contracts for sorters, drivers and operators with the union. Mr. Nabhan stated the negotiations with the union took place over the last three months but the Memorandum of Understanding (MOU) was recently signed. Vice Mayor Spitaleri questioned having negotiations occur without a bid being approved and Mr. Nabhan stated he wanted to come before Council stating he had a seven-year contract already in place with the union. Vice Mayor Spitaleri stated he believed negotiations were going on at the same time with the current provider and the union.
A representative from GTZanker gave a brief Powerpoint presentation on the company. Todd Storti, General Manager of GreenTeam/Zanker, gave a Powerpoint presentation on the current situation at the SMaRT® Station and the benefits of adding a Ptarmigan sort line. He continued his discussion about diversion levels and addressed the staff report.
Tracy Adams, a representative from GTZanker, spoke about the financial aspects and recycling benefits of adding a Ptarmigan sort line.
Councilmember Hamilton inquired which contract GTZanker would be willing to sign and Mr. Storti stated they are willing to sign the contract tonight; however, they did not feel it was the best representation of their proposal to the City.
Councilmember Hamilton asked for an explanation from GTZanker about their preference. Mr. Storti stated the RFP did not indicate that adding equipment would identify their bid as an unresponsive proposal. The RFP encouraged the use of innovation and creative ideas to increase recycling. He stated his company is trying to increase recycling to meet City Council policy goals.
Councilmember Howe confirmed with Mr. Storti that Mr. Storti was present at all the meetings between his company and the City, and that he was treated fairly during those encounters.
Mayor Lee inquired how closely would the use of the Ptarmigan sort line get the City to zero waste. Mr. Storti stated there are a number of factors that play into reaching zero waste, and at this time he would not be able to answer that question.
Mayor Lee asked how GreenTeam/Zanker’s diversion rate has changed since they took over the operations from Waste Management. Mr. Storti stated that Waste Management’s average annual diversion was 12% to 14%, and since GreenTeam/Zanker has taken over, they have consistently reached 18% on both a monthly and annual basis.
Richard Leasia passed on speaking.
Fritz Sparks, owner and president of Multi Material Management and Marketing, stated his company assists GreenTeam/Zanker and the SMaRT® Station market their waste paper products. He stated the SMaRT® Station (as presently operated) is a unique business with a product that is consistently of good quality. Mr. Sparks stated GreenTeam/Zanker is committed to generating more volume of a consistently high-quality product in a safe environment.
Fred Fowler, former Sunnyvale Councilmember, stated during his time on Council he voted for the contract award to GreenTeam/Zanker. This is a vote he wished he could have reversed once he heard about how their employees were being treated. He disclosed that he has been lobbied by both sides to speak this evening on their behalf. Mr. Fowler stated he studied the staff report and is in agreement with staff’s conclusion. He also agrees that the Ptarmigan option is the one to pursue as it will increase the diversion amount.
William Turley, Executive Director of Construction Materials Recycling Association, spoke in favor of a mechanized sorting system (a C&D sorting system such as the Ptarmigan sort line). He urged Council to choose a stronger C&D recycling option when choosing a waste handler.
Joe Favilla, driver for Bay Counties Waste Services, expressed his support for Bay Counties Waste Services to be the operator of the SMaRT® Station.
Nancy Tivol stated she supports Bay Counties Waste Services’ commitment to community service. She mentioned they put on the “Dinner at the Dump” event each year and the next one will be June 30, 2007. Additionally, staff from Bay Counties Waste Services serve on four nonprofit organizations.
Glenn Roberts, Director of the City of Palo Alto Public Works, stated Palo Alto is in support of the staff recommendation. He stated it is a difficult choice, but their decision was based on cost effectiveness.
Chris Webb, a recycling buyer and former owner of Gold Coast Recycling, stated he previously owned two Ptarmigan sortline machines and explained the benefits of this equipment.
Margaret Lawson stated she supports Bay Counties Waste Services as the operator of the SMaRT® station.
Arthur Schwartz stated he supports GTZanker and the Ptarmigan sort line.
Bob Morales, Teamsters Local 350, representing the unionized employees at the SMaRT® Station, stated GreenTeam/Zanker has broken their MOU, because they still do not have a collective bargaining agreement for their sorters. He stated whenever a city or county goes out to bid for recycling and/or trash, the union automatically meets with all the bidders to have them sign a MOU. This practice is in place so that whoever becomes the successful bidder, they will sign an MOU stating that they will retain all the employees and will contact the union to start negotiations for a contract. Mr. Morales stated he is not recommending any bidder, but wanted Council to know all the facts.
Lori Topley, City of Mountain View Solid Waste Program Manager, stated that the City of Mountain View is in support of staff’s recommendation.
Councilmember Hamilton confirmed with Ms. Topley that the City of Mountain View is interested in any improvements to C&D recycling. They are interested over the long-term in pursuing the proposal of a Ptarmigan sortline.
Councilmember Hamilton asked staff to explain why the “put or pay” payment listed on page 11 of the staff report under Table 3 is dramatically different between Bay Counties and GTZanker. Manager Bowers explained that the City’s disposal contract with Waste Management obligates the City to bring to the landfill a certain number of tons each calendar year. The City must pay the landfill operator’s charges for the pre-determined amount of refuse. In a landfill situation, most of the costs are fixed and the landfill operator is seeking to ensure the fixed costs of developing the site are recovered.
Manager Bowers stated the City currently is making modest “put or pay” payments because the economy is weak and the City’s garbage collection is down due to a number of vacant buildings. GTZanker’s proposal for a larger diversion (which creates less trash to the landfill) would increase the City’s minimum “put or pay” payments to the landfill. However, the City actually saves more money when they divert waste because they do not have to pay taxes on the trash (more than $19 a ton in taxes); rather the City pays the operator’s minimum payment.
Councilmember Hamilton asked if the “put or pay” is renegotiated and Manager Bowers stated the City has an opportunity in 2011 to modestly lower the City’s minimum tonnage requirements for future years, but the maximum they could be reduced would be by 10%. Director Rose added that the “put or pay” payments are for waste that was not delivered. He stated that once the City refuse returns to more than the “put or pay” level, a credit will be issued for past payments the City has made (when the trash was below the minimum level). The credit will be used against future tonnage received over the contract minimum. To further clarify, the credit to the City will be equal to the payments the City has made for trash that was not delivered during the times when the waste was below the minimum. Manager Bowers expressed caution that the more tons that are put into the bank, the less likely they would all be able to be used in a future year.
Tim Risch, former Councilmember, stated his support for staff’s recommendation.
Todd Storti gave closing statements. He stated in regard to the labor agreement at the facility, all of the settlement agreement items that were discussed in 2006 have been implemented one hundred percent and all monies have been paid out.
The attorney for GreenTeam/Zanker stated he supplied Mr. Morales from the union with a four-page document of compromises they agreed to February 7, 2007, and as of today, he has not heard back.
Mayor Lee left the dais.
Councilmember Hamilton asked Mr. Storti to comment on how the larger diversion his company is proposing will actually cost the City more money. Mr. Storti stated he understood that the RFP requested the proposer provide a proposal that included the most cost-effective recycling for the community (the highest diversion factor), which is what GTZanker did with their proposal. Mr. Storti feels the fact they met this requirement in their proposal is now being used as a negative against GTZanker.
Mayor Lee returned to the dais.
William Dobert, with Bay Counties Waste Services, explained the difference in anticipated revenues between the two proposals. Mr. Dobert stated they would like to have a Ptarmigan sortline, but they believe the City should make that decision.
Mr. Nabhan made closing statements in support of their proposal.
Public hearing closed 9:18 p.m.
Councilmember Moylan confirmed with staff that the fraction of income from the sale of recyclables the contractor receives was specified in the RFP. Manager Bowers stated the sliding scale is set in Exhibit P of the agreement.
Councilmember Moylan asked if staff agreed that both the fraction of the revenue going to the contractor and the “put or pay” payment actually penalize the bidder for having a higher diversion rate. Manager Bowers stated higher diversion rates do increase the City’s costs. Councilmember Moylan confirmed with Manager Bowers that staff was concerned with the net cost to the City when comparing the two bids. Director Rose stated proposers are offered incentives to encourage higher diversion levels and the sliding scale incentive for revenue share for the contractors has been raised to encourage a diversion rate as high as 25%.
Councilmember Hamilton stated there are two proposals from each proposer, one as the RFP is written and one with the Ptarmigan sort line. She inquired if the proposal with the Ptarmigan would be a permanent or trial installation. Director Rose stated the second proposals were for a permanent installation of the Ptarmigan sort line, but it was the consultant who had recommended the City install a temporary Ptarmigan after a contract is awarded in order to see if this machinery actually will be cost-effective. Staff is in full support of a Ptarmigan sort line and its ability to enhance C&D recycling, but one concern of both staff and the consultant is the amount of floor space the equipment will use. Therefore, staff is recommending the equipment be tested over a trial period to allow for any concerns over floor space to surface and/or to try different configurations if necessary.
Vice Mayor Spitaleri stated it appears that a contractor offering a higher diversion level is being penalized and he does not understand that concept. Also, why didn’t staff give a specific diversion number to both proposers in order to allow for an accurate comparison of the two proposals? Manager Bowers stated a future RFP process could offer that, but the more scenarios involved, the harder it is to evaluate the proposals. Director Rose stated staff decided to offer a minimum number so as not to tie the hands of the proposer as to how they would operate the station. Staff believes not mandating a specific diversion number gave the proposers a better opportunity to show the City what they could do.
Vice Mayor Spitaleri stated staff requested within the RFP that the proposer attempt to do better than the minimum set, yet when a proposer submitted a bid with recycling enhancement equipment, it was held against them. He stated that it would seem staff would want to know what it would cost to meet a higher recycling goal. Vice Mayor Spitaleri asked why anyone would want to offer a higher recycling level since it apparently would work against them. Director Rose stated the proposer can offer that information to the City after the bid is awarded.
Councilmember Chu asked what the net cost to the City would be if Bay Counties Waste Services MSW Diversion rate was the same as GT Zanker (21.85%). Manager Bowers stated the net cost to the City for Bay Counties Waste Services with a 21.85% diversion rate would be approximately $17.4 million, $600,000 lower than GTZanker.
Vice Mayor Spitaleri asked if Council can set a diversion rate number and ask both parties to submit new proposals looking at that number only. City Attorney David Kahn stated that at this point in the process, allowing the rates to be changed would be an issue in terms of the process. The recommendation is to deal with the numbers as submitted in the RFP.
Vice Mayor Spitaleri stated he does not want to reopen the process, rather to look at the cost for the operation at a given number. City Manager Chan stated staff could supply that information this evening.
Vice Mayor Spitaleri confirmed with Manager Bowers that staff believes Bay Counties Waste Services would purchase the Ptarmigan sort line themselves in their second proposal.
MOTION: Councilmember Hamilton moved and Councilmember Chu seconded to approve Alternative No.1: Council awards the SMaRT® Station operations contract to Bay Counties Waste Services and authorizes the city manager to execute the operating agreement referenced in this report
including the following addition to the alternative: to immediately begin negotiations to explore installing the Ptarmigan sort line with direction to staff to discuss with the operator what is the best installation; staff should then return to Council with what decision is reached.
Manager Bowers inquired if the brand name of the equipment could be left out of the motion and Councilmember Hamilton agreed to change the motion to reflect C&D recycling equipment.
Restated MOTION: Councilmember Hamilton moved and Councilmember Chu seconded to approve Alternative No.1: Council awards the SMaRT® Station operations contract to Bay Counties Waste Services and authorizes the city manager to execute the operating agreement referenced in this report
including the following addition to the alternative: to immediately begin negotiations to explore installing C&D recycling equipment with direction to staff to discuss with the operator the best installation; staff should then return to Council with what decision is reached.
Vice Mayor Spitaleri stated he will not be supporting this motion due to concerns over possible cost for equipment being passed on to the City and that a real diversion number was not set to get real costs.
Councilmember Moylan offered a friendly amendment to require that when the term of this particular contract is up and the City issues an RFP, the weighting of the criteria be included in the RFP when it come before Council for approval (with the criteria ultimately to be set by Council) before the RFP is released.
Friendly amendment accepted.
Mayor Lee offered a friendly amendment to express the City’s interest in the contractor striving for a 22% minimum diversion rate rather than the minimum rate stated in the contract.
Friendly amendment accepted.
Councilmember Hamilton asked Vice Mayor Spitaleri if he desired to add a time limit for installation of the C&D equipment. City Attorney Kahn stated a date for installation of the C&D equipment could be added as an amendment to the contract; however, due to the technical nature of this installation, it would be best for Council to request installation occur as soon as possible.
Vice Mayor Spitaleri inquired if Councilmember Hamilton wished to include in her motion his request to have the contractor pay for the equipment. Councilmember Hamilton stated she did not have enough information to agree to add that to her motion.
VOTE: 6-1 (Councilmember Spitaleri dissented)
Mayor Lee and Vice Mayor Spitaleri stated appreciation for both Bay Counties Waste Services and GreenTeam/Zanker’s involvement and work within the community.
Mayor Lee called a recess.
Mayor Lee reconvened the meeting and called for consensus to complete the remaining items on the agenda.
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