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signature on the agreement was rescinded.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