[PAGE 1] 711 COUNCIL MINUTES SPECIAL WORKSHOP MEETING March 3, 2015 A special meeting of the City Council of the City of Jacksonville was held Tuesday, March 3, 2015 beginning at 5:30 PM in Meeting Rooms A and B of Jacksonville City Hall. Present were: Mayor Sammy Phillips, presiding; Mayor Pro-Tem Michael Lazzara and Council Members: Jerry Bittner, Randy Thomas, Bob Warden, Angelia Washington, and Jerome Willingham. Also present were: Richard Woodruff, City Manager; Ronald Massey, Deputy City Manager, Glenn Hargett, Assistant City Manager for Communications and Community Affairs; Gayle Maides, Finance Director, Wally Hansen, Public Services Director, Carmen Miracle, City Clerk; and John Carter, City Attorney. CALL TO ORDER Mayor Phillips called the meeting to order at 5:32 PM. ADOPTION OF AGENDA A motion was made by Mayor Pro-Tem Lazzara, seconded by Councilman Willingham, and unanimously approved to adopt the agenda as presented. COMMERCIAL GARBAGE COLLECTION BID DOCUMENT Using the PowerPoint presentation attached to the official minutes as Exhibit A, Mr. Woodruff provided an extensive review of the following: • Collection Alternatives with pros and cons, • Bid Document Issues, • Billing and Collection Pros and Cons, • Ad Hoc User Group • Potential Action Plan. Key discussion points during the presentation included that NC law did not require the City to provide Commercial Garbage Collection. In addition, because it was a service contract, there was no requirement for competitive bidding. Council could offer a franchise agreement and could negotiate a contract with one vendor or with multiple vendors if they chose to do so. The City was currently providing the service but they were projecting a $250,000 shortfall for the current year. This was due in large part to an unfortunate accident resulting in workers [PAGE 2] 712 compensation claims and overtime issues. Council discussed an important ‘pro’ to the City providing the service was that the City made recycling was a priority. In addition to environmental savings, decreasing the stream of waste going into the landfill helped extend the life of the landfill, ultimately saving money for the taxpayers. Also, whether the City continued to provide the service or it was provided by a vendor, it was important financially for the City to do the billing and collections. Due to how the landfill fee was calculated, it resulted in a surplus that helped offset the cost for residential collection. A franchise agreement, whether exclusive or nonexclusive was an option in which one or more vendors would provide the service. The Council could determine the criteria of the franchise and contract, set the rates, stipulate the level of recycling priority, or other criteria. A major issue to consider when contemplating a non-exclusive franchise or deciding to allow for the free market was the displacement law. Displacement law applied if the City opened up the service to various vendors and then decided to go back into the business themselves or exclusively with a vendor. Displacement law required the City to give an 18- month notice or provide payment to any current service providers that would be displaced before changing to a more exclusive service. Regarding the free market option, Councilman Bittner pointed out that the City would still be involved to some extent in order to enforce standards for health, safety, and welfare. Mr. Woodruff agreed, and that was one of the cons of a free market because if a business did not contract with a vendor to have his garbage picked up, the City would have to send out a code enforcement officer to issue citations. Discussion was held on the bid document issues raised by the major vendors. Recycling requirements was an issue for the vendors in the former bid document. While customers were not mandated to recycle, the vendor was required to provide recycling containers and pickup to any customer who wanted to participate. This created a financial exposure for the vendor in not knowing how many containers, which cost $600 to $900 each, they might be required to provide at any point in time. Suggestions to remedy this issue included the City providing the recycling container, customer providing the recycling container, or limiting the vendors to only having to provide a reasonable number of containers per year. [PAGE 3] 713 Councilman Bittner asked about State regulations on recycling. Mr. Terrell, Sanitation Supervisor, reported that the State had set recycling percentage goals, which were technically still in effect; however, those goals were not enforced, because the State had not been able to meet those goals in the last 10 plus years. Councilman Bittner asked how the County handled commercial garbage pickup and recycling. Mr. Woodruff said that the County operated under a free market system. For recycling, the County had drop off sites and there was no mandatory requirement by the County for a business to recycle. Councilman Willingham asked under a scenario with an exclusive franchise and mandatory recycling, what would the City do with the recycling dumpsters we currently own. Mr. Woodruff said if the City was out of the business, we could offer to sell them to the vendor who was awarded the contract, or continue to supply them as a way to encourage recycling, or sell them on the free market. He added that he thought the City owned about 60 recycling containers. Mr. Woodruff said that one other option that could be considered is for the vendor to pick up commercial garbage with the City continuing to pick up commercial recycling, possibly for a nominal fee, although any significant charge for recycling would discourage recycling. Councilman Warden asked if there was a limitation on some of the businesses to do recycling due to not having the space on the property for an extra dumpster. Mr. Woodruff said yes, it was definitely an issue. The UDO required a corral or an enclosure for the dumpsters. Several businesses would like to have a recycling dumpster, but they did not want it sitting outside and their enclosure was too small for a second container. Another bid document issue was the bond requirement. The vendors reported that the most recent bid required a performance bond of $400,000 in order to make sure the bidders were all qualified. The purpose of a performance bond was to guarantee performance, however, bonds were difficult and took time to collect. The large companies (Waste Management and Waste Industries) felt a bond was unnecessary and an added expense for them. He suggested instead of requiring the bond, they could place pre-qualification standards in the bid documents. A discussion was held regarding number of pickups per week and Saturday service. The current contract provided for twice per week service although some businesses said they did not need it twice, while others wanted it five times a week. Restaurants in particular generally [PAGE 4] 714 seemed to need a pickup on Saturday. The City currently had enough commercial accounts to justify a Saturday pickup, but under the old contract, if a business wanted Saturday service, they had to negotiate it directly with the vendor and the prices were substantial. Considering that it was more costly to run a route on Saturday, Mayor Phillips asked if scheduling changes in the Monday through Friday routes so that restaurants were picked up Friday would help. Mr. Woodruff said their heaviest route days were Monday and Friday. Even with a tip on Friday, the volume of business often generated full dumpers at restaurants on Saturday. Saturday service was optional for those businesses who needed it; however, he recommended the bid document require a fixed price for Saturday service, because of the exorbitant prices charged in the past. Councilman Bittner initiated a discussion about container size with variable number of pickups. He said that based on experience the City should know which businesses could get by with pickups once a week, five days a week, or that required Saturday service. That data could be used to create a formula that allowed for the least cost to the consumer and operating costs for the vendor. Mr. Terrell said they could go through their customers and gather that data, but also pointed out that customers migrating to once a week pickup often called in for unscheduled pickups, which affected route scheduling and it was less efficient to make special trips. Regarding the City performing the billing and collecting, Mr. Woodruff said from his standpoint if the City did not perform the billing and collection, they would take a large financial hit relative to the offset for residential accounts. This was because the City billed based on a full container volume but when it went to the landfill, it was charged based on weight and the City received the difference. In terms of the User Meeting, Mr. Woodruff said that the participants were encouraged to answer the survey freely. Important findings included that 90% were against the free market; 100% thought the City was providing dependable service, and if cost were the same, 88% preferred the City provide the service. In terms of container purchase, they felt the City’s price was too high but if it were lower, they would use them. Councilman Bittner asked if the City’s cost for the containers was a legitimate criticism. Mr. Woodruff said yes. The City had calculated the fee based on a 12-month return on investment whereas they had learned the vendors calculated it over 3 to 5 years. Councilman [PAGE 5] 715 Bittner asked the average lifespan of the container. Mr. Terrell said approximately ten years. Mr. Woodruff reviewed the recommendations and action plan as outlined in Exhibit A and asked Council to provide him with any feedback. Councilman Willingham asked about the criteria of the Bid document. He felt it was important to be able to compare apples to apples in terms of the level of service the City was giving and the private sector having an opportunity to provide that service for less. Councilman Willingham felt that in terms of recycling, not having a requirement would set the City back in environmental efforts and he felt it should definitely be a component in a way that encouraged more recycling. Mayor Pro-Tem Lazzara agreed and felt the issue for businesses was more to do with a capacity for a second dumpster on site. Councilman Warden suggested looking at whether they needed to make changes from a site plan standpoint. Mr. Massey said that had been done in the UDO, but it did not apply to existing businesses prior to the adoption of the UDO. Regarding the City handling the existing billing, Mr. Warden said it did bother him that the commercial side was supporting the residential side. Discussion was held on specific criteria of the bid document and a majority of Council supported the following: • Eliminating the performance bond requirement; • Keep the minimum level of service at twice per week; • City continue with billing and collections; • Franchise approach; • Recycling pickup by the vendor Mr. Carter clarified that the City would bid on the franchise contract in accordance with the bid documents the same as any other vendor and Council responded yes. [PAGE 6] 716 ADJOURNMENT A motion was made by Mayor Pro-Tem Lazzara, seconded by Councilman Warden, and unanimously adopted to adjourn the meeting at 6:42 PM. Adopted by the Jacksonville City Council in regular session this 7th day of April, 2015. ______________________________ Sammy Phillips, Mayor ATTEST: ______________________________ Carmen K. Miracle, City Clerk [PAGE 7] Jacksonville City Council Agenda 1. Commercial Garbage Program Special Workshop Meeting March 3, 2015 Slide #21 Vendor Meeting Tuesday, February 24, 2015 Commercial Garbage Purpose Discuss Potential Bid Collection Documents & Service User Meeting Service Thursday, February 26, 2015 • A service Contract Purpose –No requirement to bid Input & Suggestions • No Requirement for City to provide Service • Free Market Slide #25 [PAGE 8] Option Analysis Presentation Collection Alternatives 1. Collection Alternatives 1. City ServiceBilling & Collection  With Pros & Cons 2. City Franchise Provide Service 2. Bid Document Issues  Collection by 1. Exclusive Franchise 3. Billing and Collection Pros & Cons 2. Non-Exclusive Franchise 4. Ad Hoc User Group  Billing & Collections by 1. City 5. Recommendation 2. Vendor  Potential Action Plan 3. Free market–no arrangement Slide #27 Slide #28 City Provides Service, Billing & Collection City Provides Service, Billing & Collection Pros Cons • Quality of Service • Offset for Billing & • Cost of Service must • Billing & Collecting • Management of Personnel Collection cover any shortfall • Rate Adjustments • Missed Service Control • Recycling Priority • Personnel Issues • Insurance Claims for • Back Up Service Plan • Appearance of Equipment • Fleet Maintenance Damage • City Establishes Accounts • City Audits routes & • Worker’s Compensation • Painting of Cabs • Collections Guaranteed service Claims • City Manages System & • City Collects Landfill fees • Employee Time & Time • Rates Controlled by City • Emergency Service Option Account Setup • The “Unknown” Slide #29 Slide #30 City Franchise Exclusive Service City Franchise Exclusive Service Pros Cons • All Costs by Others • Bulk Purchasing for • Quality of Service • Damage Claims • Fixed rates to customers Customers • Customer Complaints • Level of Collection • Vendor responsible for: • Rates Set by Council • Back up plan by others Equipment – Personnel • Competition for Bid & • City Responsible, but… • Level of Recycling Priority – Equipment Service • Rates set by Council • Limited Emergency – Repairs • Level of Recycling Priority Service • Management of Contract – Fuel – Staff Time – Route Management – Assess penalties – Cost verses Service Slide #31 Slide #32 [PAGE 9] City Franchise Non-Exclusive Service Free Market Service Pros Cons Pros • Competition between • Rates may be higher • City not a player Vendors • Possible Customer • Market fixes rates • All of the pros from Confusion • Customer in control Exclusive Service • Displacement Issue • Competition of vendors • Additional Vehicles on Streets • All Cons from Exclusive Service Slide #33 Slide #34 Free Market Service Bid Document Key Issues Organizational Structure Cons • City Not a Player • Not available for 1. Franchise vs. Free Market System • Rate set by Market Emergency Service • No Bulk Purchasing • Additional Large Trucks 2. Franchise Benefit on Streets  Exclusive • Quality Control • Loss of revenue  Non-exclusive • Code Enforcement • Billing Staff 3. Billing & Collections Method • Displacement Issue • Landfill Offset for Residential  City  Vendor Slide #35 Slide #36 Bid Document Key Issues Bid Document Key Issues 3. Billing & Collections 4. Recycling Pick Up  City  Mandatory by Vendor  Vendor  Who pays for containers Slide #37 Slide #38 [PAGE 10] Bid Document Key Issues Bid Document Key Issues 5. Bond Requirement 6. Term & Extensions  $400,000  5 Year Base  Pre-Qualify Vendors  2 One-Year Extensions approved by Council Slide #39 Slide #40 Bid Document Key Issues Bid Document Key Issues 7. Cost of Living Adjustment 8. Service Level  Annual Adjustment with Council  Current Minimum: 2 Per Week Approval  No Minimum: Market Sets  Automatic 1% with additional  Saturday Service part of Contract considered by Council  Other Slide #41 Slide #42 City Performs Billing & Collections Bid Document Key Issues 9. Missed Service Pros • City Accounts established • Accuracy in Bills & Service  Fines after a set number • Utility Fund minor offset • Reduced write offs  Incomplete Route Fines • Guaranteed Collection • One Comprehensive • City Customer Service Utility Bill • Revenue Offset for Residential • Audit of Service • Variable Payment Plans Slide #43 Slide #44 [PAGE 11] City Performs Billing & Collections Billing & Collections by Vendor Cons Pros • Staff time and setup of • Cost of Sending Bills • Vendor covers all costs accounts and bills • Employee turnover • Not a City function • Increase in Utility bill for – No City account info Commercial Customers • Frees Utility Billing Staff • Financial Accountability • Landfill Fees Paid by and Audit Trail Vendor • Customer Complaints • Reduces City Utility Bill • Vendor handles Billing Complaints Slide #45 Slide #46 Billing & Collections by Vendor User Meeting Thursday, February 26, 2015 Cons General Discussion • Will increase customer • Vendor controls funds bills, mail & staff time • Vendor controls customer • Quality of Service • Complaints: No City service • Fee for Service involvement • Customers must setup • Contracting or City • No offset to Utility Fund new accounts operates • Eliminates Residential • City accounts must be • Free Market Operation Collection Offset purged User Group Issues • No Audit Trail 20Invited • Recycling 11 Attended • Containers Slide #47 User Meeting User Meeting Surveys Surveys Service & Customer Service 8.6 out of 10 City Fee too High Containers Reduce $, Will Use Dependable Service 100% DesireCombined Rate 10%For Free Market Option 50% Cost 90%Against The Service 50% Quality Min Twice Week 56% Service Level City 88% Min Once Week 44% If Cost is theSame Vendor 12% NominalFee Recycling Free Service Why? Customer Service More Containers [PAGE 12] Recommendations & Action Plans 1. Finalize Bid Documents 2. Prepare Ordinance Changes 3. Pre-Qualify Bidders 4. Advertise & Receive Bids 5. Council Action or Direction Slide #51