CCMIN031814 - Laserfiche WebLink

In November 2013, staff indicated that it would support a franchise extension of five years as an incentive for PGS to make changes to the current franchise. PGS has not provided a comprehensive response but did indicate its preference for an evergreen franchise extension. Staff and the subcommittee were very clear that that was unacceptable and PGS has recently indicated that it is willing to discuss a shorter term. As part of the broader issue, staff feels there needs to be changes in the overall service levels. Staff provided an outline of those and, while specifics have not been discussed, PGS indicated they did not see that as a stumbling block. Two other issues not yet discussed with PGS include an exploration of the overall rate structure and the recycling revenue share. Mr. Bocian stated that staff is recommending the Council adopt the resolution setting for the Refuse and Recycling Collection rates. Staff also feels that continued work with Crowe Horwath, which is estimated to cost approximately $15,000 on a time and materials basis, would be beneficial to ongoing negotiations with PGS. Staff understands the frustration of the subcommittee regarding the lack of progress on the franchise agreements and is requesting authorization to begin work on the RFP process to identify qualified haulers while also continuing to try and resolve these differences with PGS. Councilmember Brown requested a comparison of commercial rates. Mr. Bocian directed her to Page 20 of Exhibit 3. Councilmember Brown asked if staff anticipates negotiating rates again in 2015, given that this only carries through the end of 2014. Mr. Bocian said it was possible, if PGS' projected cost and revenue estimates warranted an increase, but that the immediate focus is on trying to resolve the franchise issue. Councilmember Brown requested clarification on which other communities are serviced by PGS. Mr. Bocian said Dublin and San Leandro, though the latter perhaps not exclusively. Councilmember Brown noted that Pleasanton's rate for a 32-gallon bin service is $30.59, nearly 50% more than Dublin's, and that their rate for a 96-gallon bin is also lower. She acknowledged that she has heard only excellent things about the level of service provided by PGS but asked how they could justify that sort of difference for what she believed to be the same service. Mr. Bocian said it is generally the same service, although every community is different and Pleasanton does have slightly expanded service with the amenity of the transfer station. He also explained that the profit models and incentives used in their franchise agreement are different from Pleasanton's. Notwithstanding that, there is a concern about being more in line with the rates in the overall valley which is one of the reasons the city is looking to make amendments to the franchise. Councilmember Cook-Kallio recalled that during the last rate setting process, PGS requested a 12.18% increase, staff recommended something around 7.4% and they ultimately landed at 5%. She asked if it would be a fair characterization to say that at least some movement has been made in that direction compared to the last conversation at the subcommittee level. Mr. Bocian explained that the rates presented in the report are identical to those discussed with the subcommittee. He clarified that in 2012, Crowe Horwith's analysis concluded that it could support a 7.4% increase but that it was not comfortable with being unable to review all of the financial information it typically would during such a process. City Council Minutes Page 16 of 18 March 18,2014