CITY OF SIGNAL HILL Cherry Avenue Signal Hill, CA

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1 November 12, 2009 CITY OF SIGNAL HILL 2175 Cherry Avenue Signal Hill, CA AGENDA ITEM TO: FROM: SUBJECT: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL KENNETH C. FARFSING CITY MANAGER ADOPTION OF ORDINANCE NO GRANTING AN EXCLUSIVE FRANCHISE TO EDCO TRANSPORT SERVICES Summary: Ordinance No was introduced at a regular City Council meeting held on Tuesday, November 3, 2009, and is now ready for second reading and adoption. Recommendation: Waive further reading and adopt Ordinance No , entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, GRANTING AN EXCLUSIVE FRANCHISE TO OPERATE A MATERIALS RECOVERY FACILITY/TRANSFER STATION TO EDCO TRANSPORT SERVICES LLC Background and Analysis: This exclusive franchise is the final agreement related to the facility proposed for Patterson Street and California Avenue. The franchise has a term of 15 years, establishes a time period for negotiating an extension to the franchise, and precludes EDCO from opening a competing facility with certain distances from the Signal Hill facility.

2 ORDINANCE NO. _ _ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, GRANTING AN EXCLUSIVE FRANCHISE TO OPERATE A MATERIALS RECOVERY FACILITY/TRANSFER STATION TO EDCO TRANSPORT SERVICES, LLC WHEREAS, the City of Signal Hill ("City") desires to provide its residents and businesses with the highest quality of solid waste management services while implementing waste diversion strategies that will enable the City to comply with State law; and WHEREAS, the City finds that the provision of City-wide waste management services is best achieved by the granting of an exclusive franchise to a single service provider since such exclusive franchises maximize the City's ability to regulate and oversee the quality of refuse services and to maintain uniform and consistent levels of services throughout the City, thus furthering the public health, safety, and well-being. To this end, the City has retained EDCO Transport Services, LLC ( EDCO ) as its waste management services provider; and WHEREAS, EDCO is in the process of developing a state-of-the-art Materials Recovery Facility and Transfer Station (the MRF/TS or Project ) in order to better meet the City s waste management needs and in response to the fact that the Puente Hills Landfill, a major solid waste disposal facility for the region, is required by permit conditions to reduce the quantities of waste accepted and to close by the year 2013, resulting in the need for additional waste processing facilities and transfer stations to be developed in the region in order to meet the solid waste management needs of jurisdictions and protect public health and safety. The City adopted the General Industrial Specific Plan (the Specific Plan ) to promote industrial development in the General Industrial Area (generally bounded by California Avenue, Spring Street, Atlantic Avenue, and 27th Street and referred to herein as Street the Specific Plan Area ), a blighted area due to environmental constraints such as oil wells (both active and

3 abandoned), oil field pipelines and facilities, soil contamination, lack of public infrastructure, and small parcel sizes inhibiting land assembly for modern development. The MRF/TS Project is one component of the Specific Plan to be located in the Specific Plan Area. Concurrently with adopting the Specific Plan, and at the cost of approximately $9 Million, the Redevelopment Agency acquired an approximately 2-acre site within the Specific Plan Area and relocated a concrete batch plant to the location ( A&A Plant ). This is the first significant investment within the Specific Plan Area since oil exploration commenced in the late 1920s. For purposes of developing the Project, EDCO or an affiliate of EDCO now leases or owns the a ± 3.87-acre site located at Patterson Street and California Avenue ( EDCO Parcel ) and across Patterson from the A&A Plant. The EDCO Project and the A&A Plant will together represent an investment in excess of $20 million in the Specific Plan Area and will revitalize the area; and WHEREAS, City has determined that it is in the best interest of City to delegate the responsibility for constructing, managing and operating waste disposal and recycling facilities to a private company, like EDCO, with experience and expertise in the construction, management and operation of materials recovery facilities and transfer stations.. EDCO and its related companies are well known and have provided waste and recycling service in the State of California since EDCO and its related companies have built and currently operate thirteen (13) MRF/TS facilities ranging in capacities from 174 tons per day to 5,000 tons per day. In addition, an affiliate of EDCO, Signal Hill Disposal, has had the exclusive franchise contract to collect and dispose of refuse in Signal Hill since 1986; and WHEREAS, Since early 2006, the City and EDCO have worked together to plan the construction of a MRF/TS in the Specific Plan Area near California Avenue and Patterson Street. The goal of the Project is to reduce blight and promote industrial development in the Specific Plan Area, expand and diversify the City s revenue base, and to aid in the City s ability to comply with State mandated recycling regulations; and

4 WHEREAS, given EDCO's professional and high-quality performance of refuse services in past years, the City desires, and finds that it is in the best interests of its citizens, to continue utilizing EDCO as the City's exclusive provider of waste management services and to utilize EDCO as the operator of the MRF/TS such that waste hauling services can be fully and efficiently integrated with the operations of the MRF/TS; and WHEREAS, as reflected in the terms of a Memorandum of Understanding ( MOU ) between the Parties dated July 8, 2009, the Parties agreed that EDCO's MRF/TS Facility should be designed, constructed and operated in such capacity as to fulfill the City's long-term needs for a processing plant for Mixed Municipal Waste ( MMW ) and recyclables. Because EDCO's MRF/TS facility will fully serve the MRF/TS needs of the City, and in order to protect the City's residents and businesses from the potential health and safety hazards of having multiple MRF/TS plants in the City, the Parties have agreed that EDCO's MRF/TS shall be the exclusive MRF/TS operation within City limits and immediately surrounding the City. To this end, the City intends to grant EDCO an exclusive fifteen (15) year franchise to operate a large-scale MRF/TS in the City. EDCO will agree, so long as it retains the exclusive right to operate a MRF/TS within the City, not to open or operate a competing facility within thirteen (13) miles of the MRF/TS except that, within Orange County, the distance limit shall be ten (10) miles. This grant of a site franchise and other terms relating to the operation of EDCO s MRF/TS will be memorialized in a MRF/TS Facility Franchise Agreement (the Proposed Agreement ); and WHEREAS, the City is authorized to enter into the Proposed Agreement and by this Ordinance and approve the granting of the franchise established by the Proposed Agreement pursuant to (i) Public Resources Code Section because it relates to matters of local concern, including the provision of solid waste handling services, and (ii) Chapter of the Signal Hill Municipal Code, which expressly authorizes the Council to enter such exclusive franchise by four/fifths vote based upon adoption of the findings specified therein; and

5 WHEREAS, pursuant to Resolution No , the City Council of the City of Signal Hill, at its regular meeting held on October 6, 2009 declared and published notice of its intent to grant said franchise; and WHEREAS, at its regular meeting on October 20, 2009, after holding a duly-noticed public hearing and hearing and passing upon all protests, the City Council determined that the public interest and necessity justify the approval of granting to EDCO the exclusive franchise right to operate a MRF/TS in the City pursuant to the Proposed Agreement. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIGNALHILL, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: Section 1. That the foregoing Recitals and findings made therein are hereby adopted by this reference into the terms of this Ordinance. Section 2. Pursuant to Section , at its regular meeting on October 20, 2009, the City Council, by a four/fifths vote, made and adopted each and every of the following findings as a prerequisite of granting an exclusive franchise to EDCO: A. That the qualifications, experience and financial standing of the franchisee, EDCO, make franchisee uniquely qualified to provide the franchised services. EDCO and its related companies are well known and have provided waste and recycling service in the State of California since EDCO and its related companies have built and currently operate thirteen (13) materials recovery and/or transfer stations ranging in capacities from 174 tons per day to 5,000 tons per day. In addition, an affiliate of EDCO, Signal Hill Disposal, has had the exclusive franchise contract to collect and dispose of refuse in Signal Hill since On October 6, 2009, the City and Signal Hill Disposal have entered into a new 15-year exclusive franchise agreement for the collection and disposal of refuse.

6 B. That the City has engaged in a reasonable process to determine franchisee s qualification and the qualifications of other potential franchisees. The City is uniquely familiar with EDCO's qualifications due to its long term relationship with EDCO. Moreover, this franchise has been subject to over a year of in-depth negotiations between the City and EDCO. Throughout the lengthy negotiations surrounding this franchise, the City has had reasonable opportunities to review, compare and discuss franchise arrangements that may be available through potential franchisees. C. That the nature of the franchised services, of the needed investment and the requirements of the franchise agreement are such that the community will best be served by a single franchisee rather than by providing competitive services. City has determined that it is in the best interest of City to delegate the responsibility for constructing, managing and operating waste disposal and recycling facilities to a private company with experience and expertise in the construction, management and operation of MRF/TS sites. Solid waste and the efficient, safe handling of solid waste items are both issues with significant implications for the public health and safety. The City finds that the use of a competitive services model with respect to MRF/TS facilities in the City could result in an over-concentration of multiple solid waste sites in the City, much to the detriment of public health and safety. By approving EDCO's MRF/TS in the form of an exclusive franchise, the City will significantly reduce or eliminate the risk of exposing City citizens to such health and safety threats attributable to the presence of multiple MRF/TS facilities in the City. Further, by consolidating the provision of constructing, managing and operating waste disposal and recycling facilities to a private company with experience and expertise in the construction, management and operation of MRF/TS facilities to a single service provider, an exclusive franchise prevents the risk of subjecting the community to discordant or conflicting solid waste practices. By consolidating the management and operation of and in-city MRF/TS under the franchise of a single, high-quality service provider, the City is better able to oversee and regulate the services of that one provider than it would be if numerous entities were competitively operating similar MRF/TS facilities. D. That the franchise agreement with the conditions required in Signal Hill Municipal Code Section will fully protect the interests of the public; and

7 The Proposed Agreement contains numerous conditions related to the lawful performance of EDCO's MRF/TS operations, including required compliance with all State and local permit requirements. The Proposed Agreement also protects the health and safety of the public through detailed provisions regarding environmental compliance (i.e., noise, odor, traffic circulation, dust, pest control, etc.), insurance, security and indemnification of the City. Further, the Proposed Agreement provides for City review of transfers (i.e., restricting EDCO's ability to transfer its MRF/TS franchise to another entity), financial audits, inspection and monitoring of EDCO's MRF/TS operations. With respect to all provisions, the Agreement provides detailed rights of enforcement (including administrative procedures and liquidated damages for public nuisances). E. That there are adequate provisions in the franchise agreement to permit updating the agreement during the whole term of the agreement for changes in service needs, changes in law, advances in technology, changes in the market place, and other factors. The Proposed Agreement provides that it may be amended by signed agreement of both parties. The Proposed Agreement also requires EDCO to comply with all applicable laws even as they may be amended in the future, including without limitation AB 939 (for waste diversion standards) and any permit conditions issued with respect to the MRF/TS operations. Section 3. That the terms and conditions governing the grant-offranchise adopted pursuant to this Ordinance are set forth in the Proposed Agreement, which Proposed Agreement is attached hereto as Exhibit "A" and fully incorporated into the terms of this Ordinance by this reference. Further particulars with reference to the grant of franchise and the Proposed Agreement are on file in the office of the Deputy City Manager of the City of Signal Hill, California. Based upon the foregoing findings and following a public hearing thereon, at which hearing any persons having any interest in the franchise or Proposed Agreement or any objections to the granting thereof were given an opportunity to appear before the City Council to be heard, the Council by four/fifths vote on October 20, 2009, granted an exclusive franchise to EDCO to operate a large scale MRF/TS concurrent with the Council's adoption of the Proposed Agreement. Section 4. That the general terms and conditions upon which the Proposed Agreement were granted are that (i) the City grants an exclusive franchise to EDCO to operate a large-scale MRF/TS in the City for a period of fifteen (15) years, and (ii) EDCO will agree, so long as it retains the exclusive right to operate a MRF/TS within the City, not to open or operate a competing facility within thirteen (13) miles of the

8 MRF/TS except that, within Orange County, the distance limit shall be ten (10) miles. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Signal Hill, California, on this day of. ATTEST: ELLEN WARD MAYOR KATHLEEN L. PACHECO CITY CLERK STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SIGNAL HILL ) I, KATHLEEN L. PACHECO, City Clerk of the City of Signal Hill, California, hereby certify that Ordinance No. was adopted by the City Council of the City of Signal Hill at a regular meeting held on the 20th day of October, 2009, and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: KATHLEEN L. PACHECO CITY CLERK

9 EXHIBIT "A"