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City of Pleasanton

Sole-Source Negotiations (2017-18)

Project Background

The City's exclusive refuse collection and recycling franchise agreement (Franchise) with Pleasanton Garbage Service (PGS) to provide all residential and commercial solid waste services, (including the collection of refuse, recyclable material, green waste, food scraps, and construction and demolition material from residences and commercial accounts), was set to expire in 2019. PGS had been operating in the City for over 40 years. Based on PGS' history of service, the City Council determined it appropriate to engage in negotiations with PGS prior to conducting a public bidding process. The intent of this process was to determine if PGS could meet the City's current and future needs in a manner that was consistent with industry standards, with services and rates comparable to neighboring cities, with an increase in the franchise fee, and with PGS ( rather than the ratepayers) assuming reasonable risks related to the cost of its operations. The City Council engaged HF&H to assist with this determination and process.

Project Results

Staff entered the process with the following goals:

  • Obtain a state of the art service agreement consistent with best industry practices;
  • Obtain collection rate relief;
  • Transfer risk regarding routine changes in operating costs from the ratepayers to PGS;
  • Increase services to the community consistent with industry standards and adjacent communities;
  • Increase the City franchise fee to be more consistent with those in other communities that would help offset the impact of refuse services conducted in the community;
  • Create a service rate adjustment system based on clearly identifiable regional cost indexes, thus replacing negotiated service rate settlements;
  • Eliminate all practices related to cost carryovers from year to year that placed the City customers at risk of absorbing unexpected costs;
  • Increase the transparency of related party financial interactions ;
  • Agree on a reasonable term length for a new agreement.

HF&H assisted staff in negotiating an agreement with PGS that achieved all of these goals, while also achieving a 13.3% rate reduction.