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HomeMy Public PortalAboutM 2013-10-07 - CC SP LYNWOOD CITY COUNCIL SPECIAL MEETING • October 7, 2013 Item #1. CALL TO ORDER The City Council of the City of Lynwood met in a special meeting in the Council Chambers, 11330 Bullis Road on the above date at 4:46 p.m. Mayor Alatorre presiding. Item #2. CERTIFICATION OF AGENDA POSTING BY CITY CLERK City Clerk Quinonez announced that the Agenda had been duly posted in accordance with the Brown Act. Item #3. ROLL CALL PRESENT: COUNCIL MEMBERS SANTILAN-BEAS, MORTON, RODRIGUEZ AND ALATORRE ABSENT: CASTRO Also present were Interim City Manager Warne, City Attorney Galante and City Clerk Quinonez. Item #4. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was led by Council Member Morton. Item #5. INVOCATION The Invocation was given by City Treasurer Edwin Hernandez. PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) Percy Brown commented on the trash hauling contract. He stated that he was happy with the current contract in place. He stated that he recalled at a previous Council meeting, requesting that council have enough time and consideration before making a decision on the contract. He stated that the contract may not have had enough review time to allow both parties to come to a mutual agreement. City Clerk stated that Council Member Castro had arrived. It was moved by Mayor Pro Tern Rodriguez, seconded by Mayor Alatorre to recess to closed session at 4:29 p.m. The City Council reconvened at 5:39 p.m. Item #6. CLOSED SESSION A. With respect to every item of business to be discussed in closed session pursuant to Section 54956.9: CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Section 54956.9: Number of Cases: One The council held a discussion no reportable action was taken. NEW/OLD BUSINESS Item #7. CONSIDERATION OF AWARD OF A SOLID WASTE FRANCHISE Special Counsel Patrick Munoz provided the staff report regarding the solid waste franchise. A brief summary for the public is that in early September the Council granted a franchise to WRI for the hauling of commercial and residential waste; the agreement was signed by WRI; although afterword, there was correspondence as to the specific terms; the last issue, being billing whether it would be quarterly, as stated in the agreement, or whether it would be bi- monthly, as it is currently. Then the City received notice from WRI that its signature on the agreement was rescinded. Then at last week's Council meeting, the Council adopted a resolution rescinding its award to WRI. So in the absence of a agreement, the Council has questions for WRI from the designated representative(s), the most important of which is can WRI start operations on Nov1? Mayor Alatorre clarified that public responses have already been'responded to, but the Council has several important questions. Councilmember Castro requested the decision maker(s) to come forward. Sam Perdomo introduced himself as representing WRI, also Chairman Cosi Sharvanian, Chairman and Founder of WRI, both will respond. In response to a question from Councilmember Castro: Yes, we can start Nov 1. We have all the containers, consisting of 700 from vendor Brad Guss, and 300 from WRI inventory and they can be in place for Nov 1, with one caveat, the address list for delivery locations of the containers is needed by Thursday (=2 days). Perdomo in response to Councilmember Morton re-iterated that WRI is ready to start Nov. 1. Councilmember Castro said that the City will accept the current bi-monthly billing (instead of quarterly to be done by WRI), but would WRI accept a payment to the City of $25,000 a year (if the City continues to do the billing)? Reference was made to a competitor company offering to reduce the rate by 18 cents for residential customers if the City continues to do the billing. Perdomo responded that they understood that the billing cost by the City was included in the 7 percent administrative fee to be paid to the City, and Perdomo also referred to the 22 percent franchise fee to be paid to the City. Councilmember Castro stated that in the agreement, WRI was going to do quarterly billings, so what does the City get from WRI by the City continuing to do the billings? Sharvanian responded with a request to sit down with the City Manager and City Attorney to deal with these questions. Also, that they do not feel comfortable with the contract, that they will go with whatever CR&R proposed, but that the contract drafted by Munoz is too tight, and that they are not comfortable with discussing this in an open meeting with the competitor present. Councilmember Castro responded that the City needs to move forward with the original contract that WRI signed, that the City Attorney is present and that a decision is needed to be reached tonight. Councilmember Castro stated to WRI we are negotiating for an agreement. If a decision cannot be reached tonight we will have to go with an alternative vendor. Originally, a $50,000 fee paid to the City was considered, but now we are requesting $25,000, or do you have a counteroffer? Continuing, there has to be acceptance on the deal points . in the agreement or our alternative is to consider the CR&R proposal. City Attorney Galante addressed Sharvanian and noted that the Council has to go with the original contract and then to find out if there are any points to address further and that the Council is very concerned that the start date be Nov. 1. Sharvanian mentioned a $10,000 fee paid to the City, but stated there are other points. Mayor Alatorre advised that Councilmember Castro would continue with the deal points. The Mayor stated to WRI that he also was uncomfortable with having these deal points not fully accepted by WRI. MPT Rodriguez proposed the Council vote on each item separately. Councilmember Morton proposed that negotiation be continued between WRI and the City Manager and the City Attorney. Councilmember Santillan-Beas mentioned this was 'discussed in closed session, and was not acceptable and the City Attorney advised that what was discussed in close session not be pursued now. Councilmember Castro asked if WRI would agree to a $50,000 Liquidated Damages Clause per day? As explained by Councilmember Castro, the purpose is that if WRI does not perform as required starting Nov 1, the penalty clause applies and the City can pay for whatever services are required to meet the required performance. Sharvanian replied that WRI.wants to perform as required by Nov 1, but needs the address lists from the City in order to perform. A performance bond is already in effect he noted (in the proposed contract),and WRI is willing to start, if Republic will work with WRI for a smooth transaction. Councilmember Castro noted that a performance bond is not adequate protection to the City because of the time involved in implementation of the bond. We would need funds immediately. If we are going forward with you, you (WRI) must agree to this ($50,000 damages per day). Sharvanian responded yes. Councilmember Castro then reiterated the points agreed to: yes on a Nov 1 start date staff to provide all information by Thusday, that is, residential and commercial addresses. Then Munoz clarified that the.City will provide whatever they have, but that the City is not on the hook for information it does not have. Question from Councilmember Castro to Munoz, is the City entitled to all the information the hauler has (CR&R)? Munoz replied yes. To repeat, Perdomo stated they need all commercial addresses, it consists of a routing list. Castro then stated to WRI, you need a plan B in the event some addresses are not provided. James Castro from Republic Services, stated there has been no'request from the City but yes we will cooperate and also interjected, for the record, they never offered to sell to WRI any equipment. Sharvanian in response to Munoz, denied that WRI had threatened to sue the City but stated (again) that they are not in agreement with some of the wording. • He repeated (again) that he wants to sit down with City. Councilmember Castro moved to take a 15 minute recess, 2nd by MPT Rodriguez; Council reconvened at 6:43 pm. Special Counsel Munoz summarized WRI agreement points: they can start Nov 1; agree to $50,000 in liquated damages per day, in event they do not start Nov 1, and will pay $10,000 to City for City's continued billing. There are two issues that they are not in agreement: first is the right to renegotiate contract if disposal costs exceed 30% of revenues; and the other issue is the right to change of control or transfer of ownership of the company without City approval. They define change of ownership as 50% of shares, compared to (as per Munoz) the standard in the industry of a change of control defined as 5-10% of ownership shares. Then there is also the unfettered discretion issue. Does the company have the right to bring in anybody, and can the City require that the City shares in the profits of a sale? So, Munoz stated, I believe there is an impasse. Councilmember Castro discussed reasonable concerns that the City has about transfer of ownership issues; also not to be in violation of 218 restrictions, that the residents should not be charged in excess for the cost of the services received. Munoz noted that the reasonable clause in the agreement requires the . company to notify the City of proposed ownership changes and the issue is whether the City has reasonable discretion or unfettered discretion to which explanation, City Attorney Galante concurred. Galante noted, with the word reasonable ownership changes, you look at whether they are experienced and whether they have the financial resources. Mayor summarized his experience as part of the Ad Hoc Committee. All 6 waste haulers knew what we wanted in the RFP; and they all stated their willingness to accept the deal points. As to transfer of ownership we want control with reasonable discretion. The only issue not agreed to before this meeting was the billing issue. So WRI can accept the negotiated billing decision now or we can extend CR&R and go for a new RFP. Councilmember Castro summarized that she is OK with reasonable discretion on the part of the City for ownership changes by the company and she noted that other companies were OK with this. But on the 30% cost issue she is not willing to renegotiate because in the RFP, not one of the vendors requested an exception. If any of the companies had requested this, there might be cause to reconsider this. Interim City Manager Warne commented that what the Council is witnessing is the response of WRI throughout RFP process, which is why we recommended CR&R, he noted. You never have a deal. They have agreed to deals and then they change; they have already agreed to transfer and control restrictions in the agreement. MPT Rodriguez interjected, with due respect, this is a decision for the Council. • Councilmember Morton noted that looking at the breakdown of the numbers we should'be able to come to an agreement now. Special Counsel Munoz summarized the situation before the Council: in the absence of a staff report, based on my discussions, 1). on Nov 1, CDS indicated privately they are willing to continue providing the service, but probably they would want more than a 6 month extension, which may dictate another. RFP; 2) CR&R is here ready to take over, with the City continuing the billing and with a 18 cent reduction in the residential billing rate; 3) WRI is here but express being uncomfortable about certain requirements in the agreement and expressing that the contract is too tight. Councilmember Castro to Sharvanian, if we say we are OK with unreasonable compared to unfettered discretion, but not OK with the 30% issue, what will you say? Sharvanian stated (again) he was not comfortable with providing a response. In response to questions, the City Attorney explained circumstances when the company could ask for an increase in payments to the company, noting that there has to be an opener in the contract language. Also both the City Attorney and the Special Counsel noted that the company can request an increase in payments but the City cannot agree to a change in the agreement without receiving something in return; if it is a monetary issue. Sharvanian again stated a request for 24 hours. Councilmember Castro to WRI, you have agreed to all deal points, including the 30% disposal costs issue, and the Council has agreed to the unreasonable discretion versus unfettered discretion for ownership changes. Sharvanian stated the deal points were withdrawn and Councilmember Castro clarified that the Council did not reject/ withdraw the deal points. The Council did agree to the reasonable discretion issue. Councilmember Morton proposed that WRI accept the original contract for a two year period. Councilmember Santillan-Beas explained that some council members thought this was a rushed process, and what we are seeing, are consequences of a rushed process, noting that she was one of two council members who abstained on the agreement. However, whether I was in favor of or against the deal points, Council agreed to the deal points. Addressing Sharvanian, she noted that WRI had agreed to three-deal points, and now you are not accepting the deal points. know that the Mayor is uncomfortable about WRI. I have never been in a Council meeting where there is back and forth on major points, and this is with the trash contract, one of the largest contracts in the City. This council has to make a decision tonight. I am sorry that you do not have your attorney present. Sharvanian again repeated the request for 24 hours. Mayor stated three options on the table: 1) Grant an extension to CDS 6-12 months; 2) negotiate with CR&R, which will include a reduction in rates of 18 cents and with City continuing bi-monthly billing; 3) continue to negotiate with WRI. Councilmember Santillan-Beas made a motion to negotiate with CDS a maximum of 9 months; and to start the RFP process again. There was no second. Mayor Alatorre made a motion to negotiate with CR&R: There was no second. Motion by Mayor Pro Tem Rodriguez (with changes from Councilmember Castro): Grant solid waste agreement to WRI, with caveat that if within 24 hrs WRI does not accept, then negotiate extension with CDS for 9 months. It was noted by Councilmember Castro and clarified by City Attorney that the agreement with WRI would include reasonable discretion as to company transfers compared to unfettered discretion, but would exclude 30% cost provision. AYES: COUNCIL MEMBERS CASTRO, SANTILLAN-BEAS, MORTON, RODRIGUEZ NOES: ALATORRE ABSTAIN: NONE ABSENT: NONE In response to question from Perdomo, WRI answer within 24 hours is due to both City Attorney Galante and to Special Counsel Munoz. In response to a question about the terms for the CDS extension, Special Counsel Munoz stated that it will be necessary to return to Council for a decision on the terms of the contract extension with CDS. CITY COUNCIL ORAL AND WRITTEN COMMUNICATION NONE ADJOURNMENT Having no further discussion, it was moved by Council Member Castro, seconded by Council Member Morton, and carried to adjourn the special Lynwood City Council meeting at 7:18 p.m. Salvador Alatorre, Mayor aria Quinonez, i y Clerk