CC Resolution No. 20-142 Approving a New 10-Year Franchise Agreement with Recology CupertinoRESOLUTION NO. 20‐142
A RESOLUTION OF THE CUPERTINO CITY COUNCIL
APPROVING A NEW 10-YEAR FRANCHISE AGREEMENT WITH
RECOLOGY CUPERTINO RELATED TO RECYCLING, ORGANICS, AND
SOLID WASTE COLLECTION, PROCESSING, AND DISPOSAL; ADOPTING A
MAXIMUM RATE SCHEDULE FOR RATE YEAR 1 AND PERCENTAGE
INCREASES FOR RATE YEARS 2 AND 3; ESTABLISHING A MINIMUM
ENTERPRISE FUNDS RESERVE; AUTHORIZING THE USE OF ENTERPRISE
FUNDS TO SMOOTH AND MITIGATE RATE ADJUSMENTS; AND
APPROVING BUDGET MODIFICATION NO. 2021-109, INCREASING
APPROPRIATIONS IN THE ENTERPRISE FUND IN THE AMOUNT OF
$285,864
WHEREAS, pursuant to state constitutional and statutory authority, the
City of Cupertino has the authority to regulate the handling of solid waste within
its jurisdiction; and
WHEREAS, the City enacted and maintains Municipal Code Chapters 6.24
and 9.16, in part, to satisfy solid waste collection and diversion obligations, and
other requirements of the California Integrated Waste Management Act AB 939,
Assembly Bill 1826, the Short‐Lived Climate Pollutants Bill of 2016 SB 1383, and
related laws and regulations; and
WHEREAS, pursuant to Municipal Code Section 6.24.120 and applicable
statutory authority, where the public health, safety, and well‐being require it, the
City may award an exclusive franchise to any person or entity the City Council
believes is qualified to perform solid waste collection service; and
WHEREAS, the City has determined that collection of solid waste, which
includes garbage, recyclables, and organic waste, is a health, sanitary, and safety
measure necessary for the promotion, protection, and preservation of the health,
safety, and general welfare of the people of the City, and the City and its
residents benefit from granting an exclusive franchise for same; and
WHEREAS, in 2010 the City entered an exclusive franchise agreement
with Recology South Bay d/b/a Recology Cupertino (“Recology”) for collection
and processing of recyclable and compostable materials, and the collection of
disposal of garbage (the “Existing Franchise Agreement”), the base term of
which is scheduled to expire on January 31, 2021; and
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WHEREAS, pursuant to Section 2.2 of the Existing Franchise Agreement,
the City has the option to negotiate a new 10‐year franchise agreement, if certain
criteria are satisfied; and
WHEREAS, on April 21, 2020, the City Council determined that the
criteria under the Existing Franchise Agreement were satisfied, and authorized
City staff to pursue negotiation of a new franchise agreement with Recology; and
WHEREAS, the City has determined, based on demonstrated experience,
reputation and capacity, that Recology is qualified to provide for certain
collection, processing, and transport of solid waste generated within the
corporate limits of the City; and
WHEREAS, after conducting thorough due diligence with the assistance
and support of expert advisors, and significant public outreach, over the last
nearly eight months, the City has determined that the final proposal submitted by
Recology to the City meets the service‐related goals of the City and assures the
community continued high levels of service at competitive rates; and
WHEREAS, the City does not provide solid waste collection services;
rather, it regulates the private solid waste collection industry to protect public
health, safety and welfare and ensure compliance with applicable laws; and
WHEREAS, as part of its regulatory role, pursuant to Municipal Code
Section 6.24.150, the City reserves the right to establish a maximum schedule of
rates and charges for all level of solid waste collection services to be rendered by
the solid waste collector in order to avoid an abuse of the franchise rights
granted; and
WHEREAS, the solid waste collector is solely responsible for setting and
collecting such rates and charges at a level at or below the established maximum
schedule; and
WHEREAS, the Resource Recovery Enterprise Fund 520‐330 (“Resource
Recovery Fund”) is an enterprise fund held by the City whose purpose is to pay
for operating costs related to the collection, disposal, and recycling of solid waste
performed under franchise; and
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WHEREAS, the City finds that it would be prudent to establish a target
reserve for the Resource Recovery Fund of Five Hundred Thousand Dollars
($500,000), which is approximately two percent of the City’s current annual solid
waste program operating costs, and that such reserve may be drawn below the
targeted reserve amount based on the reasonable discretion of the Director of
Public Works consistent with the City’s budget and other financial policies and
procedures; and
WHEREAS, the City has determined that it would be appropriate to make
strategic use of amounts in the Resource Recovery Fund in excess of the
recommended reserve to smooth and mitigate rate adjustments for the benefit of
ratepayers; and
WHEREAS, such strategic use of the Resource Recovery Fund requires a
corresponding Budget Modification; and
WHEREAS, in order to ensure transparency and fairness in the process of
awarding a new franchise agreement and to create an impartial climate during
negotiations of such agreement, the City Council adopted that certain Franchise
Negotiations Communication Protocol, which Recology has affirmed it has
adhered to; and
WHEREAS, the City has determined that the action contemplated herein
is not a project under the requirements of the California Environmental Quality
Act, together with related State CEQA Guidelines (collectively, “CEQA”) because
it has no potential for resulting in physical change in the environment. In the
event that the action is found to be a project under CEQA, it is subject to the
CEQA exemption contained in CEQA Guidelines Section 15601(b)(3) because it
can be seen with certainty to have no possibility of a significant effect on the
environment; Section 15301 because it relates to the use of existing facilities with
negligible or no expansion of use; and Section 15273 because it relates to
establishment of maximum rates for Recology’s provision of existing solid waste‐
related services; and
WHEREAS, the City Council, using its independent judgment, before
taking action on this Resolution, has determined that the action is exempt from
CEQA as stated above.
NOW, THEREFORE, BE IT RESOLVED that the City Council does hereby:
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1. Acknowledge the foregoing recitals are true and correct and
incorporated into this Resolution by this reference.
2. Approve a new 10‐year franchise agreement with Recology related
to recycling, organics, and solid waste collection, processing, and disposal (the
“Franchise Agreement”), in substantially the form on file with the City Clerk, and
authorize the Mayor to execute the Franchise Agreement.
3. Adopt the maximum rate schedule for Rate Period 1 (beginning
February 1, 2021), and the percentage adjustments to the maximum rate schedule
in Rate Period 2 (beginning February 1, 2022) and Rate Period 3 (beginning
February 1, 2023), as more particularly described in the Franchise Agreement at
Section 8.2.B and Exhibit G3.
4. Establish a minimum target reserve for the Resource Recovery Fund
of Five Hundred Thousand Dollars ($500,000), which reserve may be drawn below
the targeted reserve amount based on the reasonable discretion of the Director of
Public Works consistent with the City’s budget and other financial policies and
procedures.
5. Authorize the use of the Resource Recovery Fund to smooth and
mitigate rate adjustments in Rate Period 1, Rate Period 2, and Rate Period 3, in
amounts and in the manner as more particularly described in the Franchise
Agreement at Section 8.2.B.
6. Approve Budget Modification No. 2021‐109, increasing
appropriations in the Resource Recovery Fund in the amount of $285,864.
BE IT FURTHER RESOLVED that this Resolution is not a project under the
requirements of the California Environmental Quality Act of 1970, together with
related State CEQA Guidelines (collectively, “CEQA”) because it has no potential
for resulting in physical change in the environment. In the event that the action
authorized by this Resolution is found to be a project under CEQA, it is subject to
the CEQA exemption contained in CEQA Guidelines Section 15061(b)(3) because
it can be seen with certainty to have no possibility that the action approved may
have a significant effect on the environment; Section 15301 because it relates to the
use of existing facilities with negligible or no expansion of use; and Section 15273
because it relates to establishment of maximum rates for Recology’s provision of
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existing solid waste‐related services. The foregoing determination is made by the
City Council in its independent judgment.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 15th day of December, 2020, by the following vote:
Vote Members of the City Council
AYES: Paul, Chao, Moore, Wei, Willey
NOES: None
ABSENT: None
ABSTAIN: None
SIGNED:
___________________ ________
Darcy Paul, Mayor
City of Cupertino
_________________________
Date
ATTEST:
_________________________________
Kirsten Squarcia, City Clerk
_________________________
Date
December 18, 2020
December 18, 2020