City of Culver City, California
Agenda Item Report
Meeting Date: 12/06/2010 Item Number: A-1
CITY COUNCIL AGENDA ITEM: Approval of an Agreement with Athens Services to
Transport Refuse and Recyclable Material from the City’s Transfer Station.
Contact Person/Dept.: Damian Skinner Phone Number: (310) 253-6421
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (e-mail) Agenda and Meetings – City Council (12/02/2010); Athens
Services, CR&R, Magdaleno Trucking, and Ecology Recycling and Transportation
Services (E-mailed on November 12, 2010);
Department Approval:
Charles D. Herbertson (11/22/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (12/01/10)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (12/01/10)
City Manager Approval:
John M. Nachbar (12/02/10)
RECOMMENDATION:
Staff recommends the City Council approve an agreement with Athens Services for
the transportation of refuse from the City’s Transfer Station.
BACKGROUND:
The City of Culver City operates an exclusive residential and commercial refuse
collection and disposal service as a municipal enterprise. The Refuse and Recycling
Divisions (Sanitation) of the Public Works Department operate solely on revenues
generated from the provision of solid waste transfer and collection services to
businesses and residents, grants, and the sale of recyclable material. These
revenues cover the costs for refuse collection, disposal, recycling programs, and
public outreach. Sanitation operations are 100% supported by enterprise fund
revenues, and are not dependent upon other funds or tax contributions.
During the preparation of the City Manager’s Proposed Budget for Fiscal Year
2010/2011, staff analyzed the refuse operations in an effort to identify and minimize
overhead costs. Staff looked at all non-revenue generating activities that could be
reduced or out-sourced without affecting the quality of service provided to residents
and businesses. The analysis showed that the transportation of refuse to various
disposal/recycling facilities is a good candidate for outsourcing for two reasons: 1)
Private companies that provide this service as part of their core business may be
able to more cost effectively transport refuse through greater economies of scale;
and 2) It would eliminate the need to purchase, amortize, and maintain equipment
that do not provide refuse collection services.
City of Culver City, California
Agenda Item Report
Staff tested the analysis by requesting an informal bid from one of the largest
transportation companies in the region. As expected, the per-ton cost to transport
refuse was cheaper than the City’s cost to provide the same service.
Staff submitted the proposal to out-source refuse transportation services to the City
Council during the Public Works Budget presentation. The City Council agreed with
the analysis and approved the proposed course of action.
DISCUSSION:
Culver City Municipal Code Section 3.07.085.A provides that the City may award a
contract for professional or personal services without conducting a competitive bid
process. However, due to the nature of the services being retained, it has been
staff’s experience that the issuance of a Request for Proposals (RFP) is a more
effective way of obtaining the best proposal. Therefore, in July 2010, Staff released
RFP #1461 requesting proposals from qualified companies to transport refuse and
recyclable material from the City’s Transfer Station.
On August 19, 2010, the following proposals were received (Attachments 2, 3, and
4):
Proposer Total Contract
1. Athens Services $276,660.00
2. CR&R $471,758.00
3. Ecology Recycling and Transportation Services $555,278.08
4. Magdaleno Trucking $652,500.00
The proposals received provide the per ton cost to transport the City’s refuse to
various disposal/recycling facilities. Since the transportation cost per ton differs from
one destination to the next, to simplify the comparison between proposals, the table
above shows the annual cost to transport 250 tons per day to the Puente Hills
Landfill. This total is based upon estimated tonnage in the first year of service and
may vary in future years. However, the price per ton shall be adjusted annually as
provided in Athens’ Bid Sheet (Attachment 1). The actual aggregate total amount of
the contract will vary based upon tonnage hauled and the per ton rate in effect at the
time.
All four firms are qualified to provide transportation services; however, Athens’ cost
proposal is significantly lower than the ones received from other companies. Staff
received cost proposals that ranged between $8-$10/ton depending on the disposal
facility location which is closer to the City’s cost to provide the same service. Since
Athens’ cost proposal is at $4.24/ton, staff verified with Athens that they could
perform the service at its proposal price without operating at a loss. Additionally,
Staff conducted a thorough reference and credit check and found that Athens is in
good standing. City of Culver City, California
Agenda Item Report
Outsourcing the transportation of refuse will relinquish the City’s ownership control in
providing this service. As a safeguard, the City will retain its long haul fleet for six to
twelve months after contract execution.
Athens Services is a family owned business founded over 50 years ago.
References for Athens Services were contacted by staff and all indicated Athens to
be competent and responsive. If the agreement is approved, Athens would take
over the refuse transportation services from the City in December 2010. City
employees displaced from this action have either retired or would fill vacancies
within the Division and other departments.
FISCAL ANALYSIS:
The table below shows the annual cost to transport refuse to various
disposal/recycling facilities under Athens’ bid, based on an average tonnage
disposal using 2007 and 2008 actual figures.
Athens Cost Proposal
Destination 2007 2008 Average
Transportation
Cost/Ton Total
Puente Hills 50,660 46,075 48,368 $4.24 $205,078
CALMAT 513 154 334 $7.46 $2,488
Chiquita
Canyon 0 4,410 2,205 $7.44 $16,405
SERF 5,997 2,581 4,289 $4.58 $19,644
Shamrock 675 174 425 $4.24 $1,800
Garage
Overhead 13,500
Total Cost/Year: $258,915
The decision threshold to outsource transportation services was $10 per ton. It is
clear from the table above that Athens’ proposal is well below $10 per ton and would
remain so for the duration of the contract (See Attachment #1).
The following table shows the estimated annual savings the Refuse and Recycling
Division would realize by outsourcing transportation services:
City of Culver City, California
Agenda Item Report
Heavy Truck Driver (4) $346,670
Heavy Truck Driver (RPT) $82,450
Uniforms $5,000
Over Time $46,000
OPEB (5 employees) $32,500
Garage Charge Savings $580,000
Amortization of Equip. $108,830
Total City costs to provide services: $1,201,450
Less Athens’ proposal to provide services: $258,915
Net Savings: $942,535
It is important to note here the estimated net annual savings is approximately one
million dollars. The money saved could be used to upgrade the Transfer Station
facility, build a fund balance, and reduce the upward pressure on refuse rates in a
climate of escalating disposal cost due to the inevitable closure of the Puente Hills
Landfill.
In addition to the net savings, the sale of the City’s refuse transportation fleet at
auction, and amortization cost savings could yield $1.1 million in one-time revenue
which could be used to pay off a $635,830 loan from the General Fund and a
$341,249 loan from the Equipment Replacement Fund.
ATTACHMENTS:
1) Bid sheet submitted by Athens Services
MOTIONS:
That the City Council:
1) Approve an Agreement with Athens Services to Transport Refuse and
Recyclable Material from the City’s Transfer Station for a five-year period
between December 13, 2010 through December 13, 2015, with the option to
exercise two, two-year extensions (with the approval of the Director of Public
Works/City Engineer), for the per-ton rates provided in Attachment One (Bid
Sheet) of Athens RFP response; and,
2) Authorize the City Attorney to review/prepare the necessary documents; and
3) Authorize the City Manager to execute such documents on behalf of the City.
MEETING DATE: 12/06/10
AGENDA ITEM:
Award a Transportation Services Contract to Athens
Services to Transport Refuse and Recyclable Material
from the City’s Transfer Station.
ATTACHMENTS
Pages
1 Bid Sheet submitted By Athens Services 1
1