To:   HONORABLE MAYOR AND                   From:   Carl W. Mosher

                        CITY COUNCIL

 

   Subject:   SEE BELOW                                               Date:   11-17-03

 

 

COUNCIL DISTRICT:  City-wide

 

 

SUBJECT: Adoption of a resolution authorizing the city manager to negotiate and execute NON-PROFIT recycling and reuse AGREEMENTS

 

 

RECOMMENDATION

 

Adopt a resolution authorizing the City Manager to negotiate and execute the Reuse and Recycling Agreements with the following non-profit organizations through June 30, 2004.

 

1.      Goodwill Industries of Santa Clara County in an amount not to exceed $400,000.

 

2.      The Salvation Army in an amount not to exceed $140,000.

 

3.      St. Vincent de Paul Society in an amount not to exceed $26,000.

 

4.      Hope Services in an amount not to exceed $20,000.

 

 

BACKGROUND

 

For the past nine fiscal years, the City has entered into Reuse and Recycling Agreements with Goodwill Industries of Santa Clara, The Salvation Army and St. Vincent de Paul Society.  Beginning last year, the City also entered into a Reuse and Recycling Agreement with Hope Services.  These agreements have provided financial assistance to help offset the disposal costs of residue from the Non-profit Recyclers’ collection, processing and distribution centers located in San Jose.  This has been done in recognition of the important role that Goodwill Industries, The Salvation Army, St. Vincent de Paul, and Hope play in redirecting reusable and recyclable materials from local landfills.

Since 1996, the City has used the following criteria to identify Non-profit Recyclers eligible for this financial assistance:

 

The organization (i) must be a charitable organization, as defined in Section 501 c(3) of the Internal Revenue Code, (ii) must reuse and recycle donated goods or materials, and (iii) must receive more than 50% of its revenues from handling and sale of those donated goods or materials.

 

The City has identified four non-profit organizations that meet these criteria.

 

Goodwill of Santa Clara County

 

Established in 1916, Goodwill of Santa Clara County provides career services and vocational training to people with disabilities and the disadvantaged and is largely supported by proceeds from its retail thrift stores and contract manufacturing.  In the past decade Goodwill has trained over 3,500 individuals.

 

Goodwill diverts material from local landfills by selling donated goods at its 13 retail stores in Santa Clara County.  In addition to the retail stores, Goodwill runs re-upholstered furniture operations.  These operations provide necessary vocational training to County residents as well as diverting significant volumes of waste from the landfill.

 

The Salvation Army

 

The mission of The Salvation Army is to restore people to productive living by recognizing the importance of balance in spiritual, mental, and physical aspects of a person’s life.  To help individuals achieve this balance, the Salvation Army operates the Adult Rehabilitation Center (ARC).  The ARC is a modern facility located near downtown San Jose with accommodations for 97 men.  The ARC provides recovery program participants with transitional housing and an opportunity to integrate back into society as contributing members.

 

The ARC successfully uses work as therapy to rebuild a person’s self-esteem and confidence.  In addition, work therapy serves as the basis for one of the nation’s largest recycling programs.  The income from the recycled materials provides the major sources of funding for this program.

 

St. Vincent de Paul Society

 

Established in Santa Clara County in 1941, St. Vincent de Paul (SVdP) provides emergency assistance to persons in need.  SVdP operates a free distribution program, emergency services, day worker centers, and other special programs.  In addition to operating three thrift stores in Santa Clara County, SVdP distributes used clothing and other household goods as part of their emergency services to individuals in need.  These operations result in the reuse of materials and the diversion of the materials from the landfills.

HOPE Services

 

Hope Services is the third largest non-profit in Santa Clara County and has been providing work training, job placement, professional counseling, and daily activities program for children, adults, and seniors with developmental disabilities for over 50 years.  Each year, Hope Services assists over 2,500 individuals living with mental retardation, autism, epilepsy, cerebral palsy, and other neurological impairments.  Hope Services work training programs teach vocational skills and help participants find employment in the community.  In FY 02-03, Hope’s reuse/retail operations operated at less than 50% of the designed capacity as Hope opened two additional retail outlets at the end of the year.  For FY 03-04, Hope plans to continue to expand its retail operations and increase the amount of materials that are reused.

 

 

ANALYSIS

 

Under the Reuse and Recycling Agreements, the Non-profit Recyclers provide reuse and recycling information to the City.  The City provides financial assistance to offset the Non-profit Recyclers’ disposal costs attributable to commercial solid-waste franchise fees and the disposal facility tax (DFT).  The solid waste haulers servicing the non-profits remit franchise fees to the City for each cubic yard of commercial solid waste each non-profit generates.  Landfill operators remit DFT revenue to the City for each ton of solid waste the non-profits dispose of in local landfills.  The fees and taxes are passed through to the non-profits in costs charged by the haulers.

 

The annual appropriation for the non-profit agreements has increased from $115,000 in FY 92-93 to a peak of $685,000 in FY 00-01.  In an effort to align the City’s appropriation with the actual disposal costs incurred by the Non-profit Recyclers, the Administration has made a reduction in the total dollar amount of these agreements.  The FY 03-04 Adopted Operating Budget allocation for the non-profit reimbursements is $586,000.  Based on an estimate of disposal activity and based on FY 02-03 actual disposal activity, staff is recommending the following annual reimbursement amounts for the non-profit recyclers in FY 03-04.

 

Non-Profit

Recycling

Organizations

FY02-03      “Not to Exceed” Amount

 

FY02-03

Actual Expense

Proposed FY03-04

“Not to Exceed”

Amount

Goodwill

$400,000

$374,249.07

$400,000

Salvation Army

$150,000

$111,592.93

$140,000

St. Vincent de Paul

$25,000

$19,833.19

$26,000

Hope Services

$50,000

$9,769.63

$20,000

Totals

$625,000

$515,444.82

$586,000

 

The increases over last year’s actual expense amounts are justified due to expected increases in disposal volumes and changes in the Solid Waste Franchise Fee.  All of the non-profits have experienced increases in the volume of material they have been handling.  As citywide disposal costs have increased, residents have increased their use of the non-profit recyclers as a means of discarding their unwanted household items.  For the non-profits, this has resulted in a greater amount of material to be processed and a greater amount of residue to be disposed.

 

In addition, in FY 03-04, the combined AB 939 Fee and Solid Waste Franchise Fee was modified so that the fee load was shifted away from the AB 939 Fee and towards the Franchise Fee.  While the total amount of the combined fees remains unchanged, the result of this shift was to increase the reimbursable portion, the Franchise Fee, from $2.98 per cubic yard to $3.24 per cubic yard.  Even if the volume of waste remains the same, this increase in Franchise Fees will increase disposal costs for the non-profits by 9%. 

 

In the future, an effort to expedite reimbursements to the non-profits and provide better customer service, staff also recommends that these agreements be executed with two-year terms contingent upon budget appropriations in the second year.

 

At the April 1, 2003 Council Meeting, the staff recommendation was approved with the addition that letters be sent to the non-profit organizations asking them to sign the City’s standard non-discrimination provision which apply to other City contracts.  Staff was also directed to bring forward a mechanism for including the non-discrimination requirements on a go-forward basis.  Each of the non-profit recyclers signed a letter committing itself to the City’s non-discrimination language and staff has forwarded these to the City Clerk’s Office to be placed in their respective contract file.  The City’s standard non-discrimination language has been included in the proposed agreements.  Staff believes that enforcement of the Non-profit recycling contract’s non-discrimination clause will be the most effective means of ensuring adherence to the City’s non-discrimination policy.

 

 

PUBLIC OUTREACH

 

No public outreach was conducted prior to the development of these agreements.  The Non-profit Recycler reimbursement agreements provide for the refund of solid waste fees as a means of encouraging the participating non-profit organizations to continue their salvage and resale operations, in support of their service to the San Jose community.

 

 

COORDINATION

 

This memorandum has been coordinated with the City Attorney’s Office and the City Manager’s Budget Office.

 

 

 

COST IMPLICATIONS

 

These Reuse and Recycling Agreements are consistent with the Mayor’s Budget Strategy of January 31, 2003.  These agreements focus on protecting vital core city services by funding cost-effective solid waste diversion programs to meet state-mandated recycling targets.  Additionally, by using Non-profit Recyclers to achieve state-mandated diversion targets, the City is delivering services through appropriate public-private partnerships.

 

 

BUDGET REFERENCE

 

 

 

Fund #

 

Appn. #

 

Appn. Name

 

RC #

 

Total Appn.

 

Amt. for Contracts

 

2003-2004 Proposed Operating Budget Page

 

Last Budget  Action (Date, Ord. No.)

001

0762

Non-Personal Equipment

500521

$1,446,311

$586,000

191

 

 

 

CEQA

 

Not a Project.

 

 

CARL W. MOSHER

Director, Environmental Services Department