Zero Waste Case Study: Fresno
Fresno Franchise Agreements
- Contractual Arrangements
- Procurement Best Practices
- Contracting Best Practices
The City of Fresno has adopted an ambitious Zero Waste Action Plan. In 2005, the Fresno City Council passed a mandatory recycling ordinance requiring all multifamily and commercial customers to recycle. The sole service provider for trash collection, the City of Fresno Solid Waste Management Division phased-in recycling services to 2,500 multi-family complexes (approximately 30,000 units) and 4,000 businesses. In 2010 the city decided to privatize these operations as a cost saving measure.
The contractors transport trash to an independently owned transfer station before delivery to the county-owned landfill. This transfer station has a fairly robust diversion program where they sort out a lot of cardboard, wood, beverage containers and other large or valuable recyclables.
Fresno established two exclusive franchise areas, released a Request for Proposals (RFP) and awarded contracts to Allied Waste Services and Mid-Valley Disposal covering different service areas.
- City approves maximum allowable rates based on proposals.
- Contractors perform billing and pay city fees.
- Compensation is adjusted annually using index-based system during most rate years and a cost-based review of contractor’s actual costs every three to five years during contract term.
- Liquidated damages can be assessed by the city for service delivery omissions.
- Customers may also subscribe for collection of compostable materials including food scraps, yard trimmings and food-soiled paper.
Procurement Best Practices
- Separate Collection from Disposal Contracts: The contractors transport trash to an independently owned transfer station where beverage containers, cardboard, wood, and other large or valuable recyclables are sorted out before delivery to the county-owned landfill.
- Provide Draft Contract in the Request for Proposals (RFP): The draft contract was included in the RFP and proposers were asked to submit suggested changes or exceptions to the contract as a part of their proposals. This effort can expedite negotiations and clarify key business points.
- Multiple Evaluation Criteria: Evaluation criteria and weighting of the criteria were included in the RFP to ensure that proposers understood the city’s priorities. Cost was less than half of the total points and the “lowest price” proposal was not selected by the council.
- Mandatory Commercial Recycling: The multifamily and commercial program was a key program in the RFP.
Contracting Best Practices
- Education and Outreach: The RFP required twice annual technical assistance visits to multi-family properties and annual visits to commercial properties.
- Environmentally Preferable Purchasing: Proposers were encouraged to identify environmental enhancements they could incorporate into their operations, including Green Business certification, environmentally preferable purchasing and local purchasing. Each contractor committed to these enhancements in their proposals, which were incorporated into the contracts.
- Align Cost of Service To Rates: Contractors are compensated for all services delivered to the customer, including recycling and organic materials collection. Subsidies for recycling services were eliminated from commercial and multifamily rates.
- Innovations Clause: Proposers were encouraged to submit one or more proposals for service enhancements, innovations, or cost-saving approaches. Provisions allow for changes in scope, at city direction, for implementation of innovative services, changes in collection methods, new requirements for customers, expansion of public education or implementation of pilot programs.
- Maximizes Zero Waste Results: The city used numerous best practices and innovative approaches to maximize zero waste opportunities associated with the private sector agreements.
- Low Cost: The city initially provided commercial recycling services to increase competition and demonstrate cost-effectiveness and then transitioned to commercial franchises to promote zero waste innovation and focus city operations on residential services.
- Potentially Inadequate Incentives: Service fees for trash, recycling and organics collection reflect costs of service, but may not provide enough incentives to customers to maximize recycling and composting. In addition, the trash collection-focused revenue model may not provide enough incentives to the contractors to maximize diversion from landfills and incinerators.