SUBJECT: AGREEMENT BETWEEN THE CITY OF SAN JOSE AND
the valley transportation aUTHORITY for the collection and maintenance of civic
litter modules
COUNCIL DISTRICT: City-Wide
Adoption of a resolution authorizing the City Manager to negotiate and execute an agreement between the City of San José and the Valley Transportation Authority (VTA) for the collection and maintenance of civic litter modules beginning July 1, 2003 through June 30, 2004 in the amount not to exceed $189,993.
BACKGROUND
The Civic Litter Module (CLM) program provides approximately 800 large litter receptacles for pedestrian use throughout the city. Service of the CLMs requires weekly or more frequent collection, occasional maintenance and repair, and periodic power washing and painting. CLM service had been included in the residential solid waste collection agreements until June 2002; however, it is not included in the new Recycle Plus contracts. This program has always been in the General Fund with the Fiscal Year 2002-03 budget of $292,000 based on the final year’s payment to GreenTeam of San José.
Separate Request for Qualifications (RFQ) were released for CLM collection and CLM maintenance to allow more firms to compete for the work. It was also hoped that maintenance could be improved if it was performed by a maintenance contractor under direct City oversight rather than a by waste hauling firm or its subcontractor.
Two responses were received for the collection RFQ, with an open purchase order awarded to the lowest responsible respondent, Stevens Creek Disposal and Recycling, beginning July 2002. The City Council approved an additional encumbrance on November 5, 2002, increasing the total maximum compensation to $210,000. The actual cost of this service is based on the number of CLMs collected, and is now estimated to be $190,000 for Fiscal Year 2002-03. The contract ends on June 30, 2003 with an option to extend for one year, subject to a CPI-based rate adjustment and contractor acceptance. The only other collection proposal would have cost more than twice as much.
No responses were received for the maintenance RFQ. Consequently, the City has been without a contracted CLM maintenance provider since July of last year. As part of the closeout of their previous Recycle Plus contracts, GreenTeam has completed CLM installations on Lincoln Avenue and East Santa Clara Street, with all of their outstanding maintenance and installation work expected to be finished by June 30, 2003. Other immediate maintenance needs have been addressed by the Department of Transportation in the Downtown area, by VTA for CLMs at bus stops, and by CLM program staff for some minor repairs. Despite this work, there is a backlog of CLMs in need of repair. Aesthetic maintenance such as painting and power washing has also been deferred.
ANALYSIS
Stevens Creek handled the CLM transition well, despite the much larger transition undertaken at the same time by their sister company, Norcal Waste Systems of San Jose. After they started collection, the number of complaints about missed pickups or overflowing CLMs dropped significantly, complaints are now negligible. Following startup, it also became clear that there were not as many CLMs to collect as had been listed in the RFQ, primarily due to damaged units not having been replaced following their removal. In order to bring revenue closer to projections, Stevens Creek informed the City that they would require a compensation increase of 10%, if the City exercised its option to extend the contract. The contract provides for an adjustment based on the CPI only, but Stevens Creek’s revenue problem has been addressed as additional service has been ordered, including Saturday collection of about 100 CLMs in busy shopping areas.
Because of concern that Stevens Creek would not accept an extension of the contract and the increasing likelihood of General Fund budget cuts and layoffs, Environmental Services Department (ESD) investigated bringing the work of collection and maintenance of CLMs in-house. Staff met with the Department of Transportation and General Services to discuss this option.
Unfortunately, the projected costs for either department, including specialized vehicles for collection and module handling and increased labor to maintain the CLMs at an acceptable standard, would require a substantial budget increase, so this option was dropped.
Next, staff reviewed the possibility of contracting with another public agency for the service. It was clear that VTA had the capability to perform module maintenance and collection since they service their own containers. While the City of San José owns the majority of the litter modules on City sidewalks, over 280 modules are owned and serviced by VTA. The City’s CLM collection contractor collects trash from modules that are on the same street as VTA modules. By contracting with the VTA, redundancy in the collection routes could be eliminated.
VTA determined they would be able to provide collection, maintenance, power washing, and painting at a cost of $189,993. The work will be performed by two full time bus stop maintenance workers. Their work will be performed with existing vehicles and equipment provided at cost. A nominal overhead amount is included for supervision and administrative costs and for cleaning supplies. VTA will provide storage for CLMs at its Zanker Road facility.
Under the current contract with Stevens Creek, cost for collection in FY 2003-04 would be about $200,000 assuming very limited growth in the number of CLM’s and a 3% compensation adjustment. Based on discussions with potential maintenance contractors and other City departments, annual maintenance costs range from $50,000 to $100,000 or more for a combined total of at least $250,000, not including replacement CLMs and parts. VTA’s proposal reduces the City’s costs by at least $60,000 and provides a higher level of maintenance. The City will provide replacement CLMs and parts. Because of VTA’s lower operational costs, funds will remain for purchase of some additional CLMs and limited expansion of the program.
Service will be improved in several ways. The VTA maintenance workers will clean and repair CLMs in response to complaints much more quickly than our residential collectors were able to while preventing complaints through frequent inspection and proactive maintenance. The City and VTA already coordinate on the placement of CLMs at transit stops, a process that will be simplified with VTA as the only service provider. Similarly, it will be easier for the public to report CLM problems or to request new CLMs, although budget constraints will still limit the number that can be provided.
Significant expansion would require additional funds. The Redevelopment Agency has agreed that any CLMs specified for streetscape improvements will be funded as part of the project. ESD will investigate other funding sources, such as Business Improvement Districts.
During the first six months of the contract, the City and VTA will test the assumptions on which the compensation is based and determine whether to propose extending this agreement or making significant changes. In the event that VTA or the City determines that the agreement is not beneficial, either may terminate with a 90 days notice.
VTA will consider this agreement at the Transit Planning and Operations Committee (TP&O) meeting on May 15, 2003, at 4:30 p.m. in Room 106 of San Jose City Hall. The TP&O report will be heard by the VTA Board of Directors on June 5, 2003.
Not applicable.
This memorandum has been coordinated with the City Attorney’s Office, the City Manager’s Budget Office, Public Works–Equality Assurance, General Services/Purchasing and the Redevelopment Agency.
COST IMPLICATIONS
Total cost to contract with the VTA for collection and maintenance of CLMs is $189,993. This contract would allow the continuation of the CLM program, including limited growth, with no increase from the current budget. The contract would be executed only if the funds are appropriated for FY 2003-04.
This recommendation meets the general principles of the Mayor’s FY 2003-04 budget strategy by protecting a core service and reducing costs.
BUDGET
REFERENCE
Fund: General Fund – (001)
Appn: 0762 – Non Personal/Equipment
Amount: $292,200
Budget Document: 2003-2004 Proposed Operating Budget*
* Funding is included in the 2003-2004 Proposed Operating Budget and has been included for these purposes in an ongoing basis since December 13, 1994, when the Integrated Waste Management Special Fund was created.
CEQA
Not a Project.
CARL W. MOSHER
Director, Environmental Services Department