May 7, 2012 - ZWED to provide commercial organic waste processing services. ... Republic to enter all customer informati
T&E AGENDA: 05-07-12 ITEM: d(4)
CITY OF ~
SAN JOSE CAPITAL OF SILICON VALLEY
TO’- TRANSPORTATION AND ENVIRONMENT COMMITTEE
FROM: Kerrie Romanow
SUBJECT: COMMERCIAL SOLID WASTE TRANSITION SUMMARY REPORT Approved ~.~~
Date ~//Z.. COUNCIL DISTRICT: City-Wide
RECOMMENDATION Accept this summary report on Republic Services and Zero Waste Energy Development Company preparations for the July 1, 2012 transition to the new commercial solid waste system. OUTCOME Update the Committee on the efforts of Republic Services and Zero Waste Energy Development Company (ZWED) to transition commercial businesses from a competitive non-exclusive franchise system to a new exclusive system. Staff will provided updates on the initiatives described below during the oral presentation to the Committee. BACKGROUND On June 21,2011, Council granted Allied Waste Services (now known as Republic Services, their parent company) two franchises for both north and south San Jos~ to provide exclusive solid waste collection, recyclables processing, and disposal services for most standard waste collected Citywide and authorized the City Manager to negotiate and execute an agreement with ZWED to provide commercial organic waste processing services. These exclusive franchises represent a significant change in the way commercial waste services are provided in San Josd and result in the most comprehensive and innovative commercial solid waste and recycling systems in the United States. Effective July 1, 2012, City businesses will transition from a non exclusive franchise system, where more than 20 different haulers collected waste, to an exclusive system with one hauler serving the entire City for most commercial solid waste collection needs. In addition, ZWED will convert the organic material collected to energy in a dry fermentation anaerobic digestion facility scheduled to come online in 2013. This new system includes a significant infrastructure investment in San Jos~, including new state-of-the-art solid waste processing facilities and the creation of new recyclables processing jobs. Furthermore, these services will increase the commercial recycling rate from approximately 25% to 80%, a significant step towards meeting Green Vision Goal #5 - Divert 100% Waste From Our Landfill and Convert Waste to Energy.
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The infrastructure being developed to support the new system includes ZWED’s construction of the first commercial scale dry fermentation anaerobic digestion facility in the United States, Republic’s renovation of their Newby Island Resource Recovery Park ~IRRP) to become one of the most advanced materials recovery facilities in the world, and Republics’s conversion of their fleet to compressed natural gas fueled collection trucks. The transition will result in approximately 10,000 businesses participating in a new wet/dry collection system in which businesses separate waste materials into two categories: 1) wet or organic material such as food waste or plant trimmings, and 2) dry material such as paper or plastic. All materials collected will be delivered to Republic or ZWED facilities for processing with only residual waste sent to the landfill for disposal. ANALYSIS Customer Preparations In February, Republic completed the acquisition of three of the largest commercial haulers in San Jos~, giving them more than 90% of the existing customer base. These acquisitions allowed Republic to enter all customer information into their database, bill customers, and familiarize drivers with collecting at these locations. Acquiring these customer accounts facilitates Republic’s ability to complete waste audits, where trained Republic representatives assess every accessible waste container to determine the types and quantities of waste material generated by each business. Republic used information from the waste audits and customer accounts to develop their customer engagement strategy. In March, Republic mailed San Jos~ businesses their first formal notification of the upcoming collection changes. Republic has developed a series of general print and electronic materials about the system change and has designed more specific how-to materials for business managers and their employees. These materials are delivered by a combination of direct mail, paid advertisements, business association presentations, and in-person distribution. In early April, Republic launched their targeted customer engagement strategy to inform individual businesses of the upcoming changes. This phase of the outreach campaign is tailored to each business based upon information gathered from the waste audits. Depending on their anticipated service needs, businesses receive on-site scheduled meetings, drop-in appointments, or a telephone consultation. To complete outreach efforts, Republic is using their newly hired and trained local San Jos6 team with support from Republic’s other Bay Area offices as needed. Once services begin in July, Republic’s staff will contact customers to ensure they understand the program and make any necessary service modifications. During the first few months of service, customers may need to exchange containers for different types and sizes as they adjust to the new system. Once customers have appropriately sized containers in place, Republic will implement a "Paint in Place" program to repaint containers (with appropriate colors and signage) at their collection location. This program avoids the inconvenience to businesses of removing containers for painting and signage and has been successfully implemented in other jurisdictions. Republic will order additional containers as needed throughout the term of the agreement.
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For the duration of the fifteen-year term of the contract, Republic is required to provide customer outreach and technical assistance to businesses, including presentations, facility tours, quarterly newsletters, program how-to materials, sustainability awards, and on-line chat with recycling experts. Equipment and Facilities To implement the new commercial system, new equipment and facilities must be in place for a successful transition. Both Republic and ZWED are working to bring their facilities on-line as described below. Newby Island Resource Recovery Park Republic currently owns and operates NIRRP located in north San Jos~. The NIRRP is one of the few "one stop" solid waste facilities in the Bay Area and includes a large-scale materials rec’overy facility (MRF), composting operation, landfill, and hauling company. Republic staff is working closely with the City to transform the MRF into the most advanced facility in the nation and possibly the world. Republic ceased recycling processing at the NIRRP in January 2012 to allow for a complete retrofit of the facility. Republic removed, salvaged, and transported processing equipment off site for potential reuse at other Republic MRFs. To date, approximately 45% of the new equipment has been installed, and the remainder will be installed and thoroughly tested prior to receiving commercial material on July 2, 2012. All associated construction activities are currently on schedule. This facility is unique in that there are four different incoming waste sorting lines. These lines allow materials to be kept separate, so that one type of waste does not contaminate ’the other thus increasing the value of the recovered material. Because of its scale and innovative processes, the MRF is generating interest from other service providers and government agencies across the United States. Further, Republic, the nation’s second largest publicly traded waste management company, is looking to San Jos~ as a model for shaping their facilities and operations nationwide. Collection Equipment and Fueling Station Per contract requirements, Republic will power all collection vehicles with compressed natural gas (CNG) and fuel them at a newly constructed fueling station located at the NIRRP. To date, 32 of the 46 vehicles in the fleet have arrived, and two are already operating in San Jos6. CNGfueled trucks are notably quieter and cleaner than diesel trucks, and combined with the routing efficiencies gained by having just one service provider, greenhouse gas emissions from the trucks will significantly decrease. Republic is working closely with Pacific Gas and Electric Company (PG&E) to ensure gas transmission by July 1; however, in the event that PG&E has unforeseen delays that impact their ability to make the fueling station operational by then, contingency plans are in place to allow for temporary off-site fueling at other locations. ZWED Waste to Energy Facility ZWED will convert the organic portion of the commercial waste collected by Republic to energy at the first commercial-scale dry fermentation anaerobic digestion (AD) facility in the United States. ZWED will construct the facility on plant land leased from the City. Dry AD uses less
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water, less energy, and emits fewer greenhouse gases than wet AD processes often used at wastewater treatment plants and dairy farms. ZWED and City staff are targeting July 2013 for completion of this anaerobic digestion facility. ZWED will use their existing Z-Best Composting Facility in southern Santa Clara County to process commercial organics until the new facility is complete. ZWED is working with Republic to analyze the commercial waste stream and train ZWED staff to manage the organic feedstock prior to the July 1, 2012 transition. City Transition Related Efforts Rates The Republic franchise agreements include formulas for establishing maximum customer service rates that are subsequently approved by Council. In late 2011, Republic submitted calculations for adjusting rates for inflationary increases from 2010 to 2012 dollars. Staff verified that the proposed of 3.846% total rate adjustment for the two years was consistent with the formula specified in the franchise agreement. This adjustment was based on increases in the Consumers Price Index and an adjustment factor for CNG fuel. Similarly, ZWED submitted their adjusted compensation rates (paid to them by Republic), and staff verified the proposed adjustments. The ZWED processing costs are a component of the maximum commercial collection rates. Staff is currently working with Republic to conduct a comprehensive comparison of current customer rates to the rates for new services starting in July. Staff and Republic can complete this evaluation now since Republic has the billing information from the customers they acquired in 2012. Preliminary analysis shows that about half of the customers will see a rate increase and about half the customers will see a rate decrease, an outcome driven largely by the company providing the hauling services prior to Republic. Up to date information on this evaluation will be provided in the staff presentation to the Committee on May 7. Approval of maximum commercial customer service rates is currently scheduled for Council consideration on May 15, 2012. Code Changes and Non-Exclusive Franchise Agreements To facilitate the change .from a non-exclusive to an exclusive collection system for most commercial solid waste, staff will be recommending revisions to the San Joss Municipal Code. At the same time, since certain materials such as construction and demolition debris will continue to be collected by non-exclusive franchises, the non-exclusive system will be modified to only cover these services. Municipal Code revisions and new non-exclusive franchise agreements are currently scheduled for Council consideration on May 15, 2012. Franchise Enforcement Compliance with relevant sections of the Municipal Code and the provisions of the exclusive and non-exclusive franchise agreements will require two environmental inspectors dedicated to field enforcement of solid waste Code requirements, including the provision that haulers must have a franchise with the City to provide commercial solid waste and recyclable material collection. ’ This enforcement function will help ensure that the cost of the new system is distributed appropriately among all customers covered by the franchise, mitigating risk of rate increases and ensuring that all franchisees are collecting waste per the terms of their franchise agreement, which includes requirements for the quality of services to the customer. The addition of the
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environmental inspectors is expected to be brought forward for Council consideration as part of the 2012-2013 Proposed Operating Budget. EVALUATION AND FOLLOW-UP Staff will continue to work with Republic to ensure businesses are receiving regular communication on the commercial transition and provide pertinent updates to Council through information memos and the City Manager’s weekly updates. PUBLIC OUTREACH Criteria 1: Requires Council action on the use of public funds equal to $1 million or greater. (Required: Website Posting) Criteria 2: Adoption of a new or revised policy that may have implications for public health, safety, quality of life, or financial/economic vitality of the City. (Required: E-mail and Website Posting) Criteria 3: Consideration of proposed changes to service delivery, programs, staffing that may have impacts to community services and have been identified by staff, Council or a Community.group that requires special outreach. (Required: E-mail, Website Posting, Community Meetings, Notice in appropriate newspapers) This recommendation does not meet any of the public outreach requirements above; however, it will be posted as part of the May 7, 2012, Transportation and Environment Committee agenda. COORDINATION This memorandum has been coordinated with the City Attorney’s Office and the Office of Economic Development.
Not a Project, File No.PP10-069(a), Staff Reports that involve no approvals of any City Actions. /s/ KERRIE ROMANOW Acting Director, Environmental Services
For questions please contact Jo Zientek, Deputy Director, Environmental Services Department, at (408) 535-8557.