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AGENDA BILL Agenda Item No. 5(C) Date: October 21, 2014 To: El Cerrito City Council From: Garth Schultz, Operations + Environmental Services Division Manager ` Yvetteh Ortiz, Public Works Director/City Engineer Subject: Amend Franchise Agreement with East Bay Sanitary Company to Eliminate Unnecessary Provisions Pertaining to Fleet Maintenance ACTION REQUESTED Adopt a resolution approving the proposed Seventh Amendment to the Franchise Agreement between the City of El Cerrito and East Bay Sanitary Company, Inc. eliminating provisions pertaining to fleet maintenance that were changed or added to the Franchise Agreement by the Sixth Amendment and are now unnecessary. DISCUSSION On October 15, 2013, the City Council approved a Sixth Amendment to the City’s Franchise Agreement with East Bay Sanitary Company, Inc. (EBS) that expanded EBS’s fleet management and maintenance operations for the City (Resolution No. 2013-57). In the Sixth Amendment, it was established that EBS would form a separate corporation that would function as the City’s independent fleet manager and maintenance operator for recycling collection and maintenance vehicles. The Sixth Amendment stipulated that, upon formation of the separate corporation, the City would enter into a separate maintenance agreement with the newly formed company, the terms of which would make unnecessary the fleet management and maintenance services provided via the Sixth Amendment. On August 19, 2014, the City Council approved an agreement with the newly formed Liberty Fleet Care, Inc. for fleet management and maintenance services previously provided by EBS per the terms of the Sixth Amendment (Resolution No. 2014-41). The action requested of the Council is to eliminate the unnecessary fleet management and maintenance provisions in the EBS Franchise Agreement, as these services are now being provided via the City’s agreement with Liberty Fleet Care. STRATEGIC PLAN CONSIDERATIONS Approval of the proposed Amendment will have no bearing on implementation of the City’s Strategic Plan. The prior actions taken by the Council on this matter have supported the “Develop and strengthen relationships with public and private partners” strategy listed in Goal A – Deliver exemplary government services. ---PAGE BREAK--- Agenda Item No. 5(C) ENVIRONMENTAL CONSIDERATIONS Approval of the proposed Amendment will have no bearing on the City's environmental footprint. Prior actions taken by the Council on this matter have resulted in decreased vehicle miles travelled for maintenance needs, more efficient operations, and .longer useful vehicle lifetimes. FINANCIAL CONSIDERATIONS Approval of the proposed Amendment will have no bearing on the City's finances. Prior actions taken by the Council on this matter have considered the financial impacts of the fleet management and maintenance services previously provided by the Company, and now provided by Liberty Fleet Care. LEGAL CONSIDERATIONS The City Attorney has reviewed the proposed Seventh Amendment and found that legal considerations have been addressed. Scott Hanin, City Manager Attachments: 1. Resolution 2. Proposed Seventh Amendment to Franchise Agreement Page 2 ---PAGE BREAK--- Agenda Item No. 5(C) Attachment 1 RESOLUTION 2014–XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO TO APPROVE THE SEVENTH AMENDMENT TO FRANCHISE AGREEMENT BETWEEN THE CITY OF EL CERRITO AND EAST BAY SANITARY COMPANY, INC. WHEREAS, the City of El Cerrito (City) and East Bay Sanitary Company, Inc. (Company) have entered into that certain Franchise Agreement originally dated September 2, 1997 and most recently amended on October 16, 2013 (Franchise Agreement); and WHEREAS, the Company previously provided fleet management and maintenance services to the City’s recycling collection and maintenance vehicles per the terms of the Franchise Agreement; and WHEREAS, the Company has formed a separate corporation named “Liberty Fleet Care, Inc” to provide fleet management and maintenance services to City vehicles; and WHEREAS, the City and Liberty Fleet Care, Inc. have entered into a separate maintenance agreement under which Liberty Fleet Care is responsible for providing fleet management and maintenance and repair services for City recycling and other vehicles; and WHEREAS, the execution of that agreement makes unnecessary the provisions that were changed or added to the Franchise Agreement by the Sixth Amendment; and WHEREAS, the parties now wish to amend the Franchise Agreement to eliminate those unnecessary provisions. NOW THEREFORE BE IT RESOLVED, by the City Council of the City of El Cerrito, that it hereby approves the Seventh Amendment to the Franchise Agreement between the City of El Cerrito and East Bay Sanitary Company, Inc., hereto attached as Exhibit A, eliminating provisions that were changed or added to the Franchise Agreement pertaining to Fleet Maintenance by the Sixth Amendment and are now unnecessary. BE IT FURTHER RESOLVED, that this Resolution shall become effective immediately upon passage and adoption. I CERTIFY that at a regular meeting on October 21, 2014 the City Council of the City of El Cerrito passed this Resolution by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ---PAGE BREAK--- Page 2 IN WITNESS of this action, I sign this document and affix the corporate seal of the City of El Cerrito on October X, 2014. Cheryl Morse, City Clerk APPROVED: Janet Abelson, Mayor ---PAGE BREAK--- Page 1 of 3 SEVENTH AMENDMENT TO FRANCHISE AGREEMENT BETWEEN CITY OF EL CERRITO AND EAST BAY SANITARY COMPANY, INC. This Seventh Amendment to the Franchise Agreement is entered into as of the day of 2014 by and between the CITY OF EL CERRITO, a municipal corporation (City) and EAST BAY SANITARY COMPANY, INC. a California corporation (Company). Preamble WHEREAS, City and Company have entered into that certain Franchise Agreement originally dated September 2, 1997 and most recently amended on October 16, 2013 by the Sixth Amendment (the “Franchise Agreement”); and WHEREAS, the Company previously provided fleet management and maintenance services to the City’s recycling collection and maintenance vehicles per the terms of the Franchise Agreement; and WHEREAS, the Company has formed a separate corporation named “Liberty Fleet Care, Inc.” to provide fleet management and maintenance services to City vehicles; and WHEREAS, the City and Liberty Fleet Care, Inc. have entered into a separate maintenance agreement under which Liberty Fleet Care is responsible for providing fleet management and maintenance and repair services for City recycling and other vehicles; and WHEREAS, the execution of that agreement makes unnecessary the provisions that were changed or added to the Franchise Agreement by the Sixth Amendment; and WHEREAS, the parties now wish to amend the Franchise Agreement to eliminate those unnecessary provisions; THEREFORE, IN CONSIDERATION OF THE COVENANTS AND CONDITIONS CONTAINED HEREIN, THE CITY AND COMPANY DO HEREBY AGREE AS FOLLOWS: 1. The foregoing recitals are hereby incorporated into this Agreement. 2. Section 11 (Company Provided Services) Subsection I (Maintenance of the City’s Recycling Collection Fleet) is hereby replaced in its entirety with the below: I. Fleet Maintenance and Management Services for the City’s Recycling Collection Fleet and other City Vehicles Agenda Item No. 5(C) Attachment 2 ---PAGE BREAK--- Page 2 of 3 Fleet management and maintenance for City vehicles is governed by a separate maintenance agreement between Liberty Fleet Care, Inc., or its successor, and the City. 3. Section 11 (Company Provided Services) Subsection Y (Liquidated Damages) is hereby amended to delete sections 11, 12 and 13 as follows: 11. $250 for each failure to conduct and accurately document services required in Section 11.I of this Agreement. 12. Actual cost of any citation, fine or other monetary penalty to the City up to $10,000 per incident for failure to maintain the City’s vehicles and/or any associated reporting requirements in accordance with the terms and conditions of this Amendment. Company will not be liable for any preexisting violation that existed prior to the execution of this Amendment to the Franchise Agreement. 13. The actual cost incurred for required parts for any instances of failure to maintain the City’s vehicles in accordance with the requirements necessary to provide the full benefits of the manufacturers’ warranties. 4. Section 21 (Indemnification) of the Franchise Agreement is amended to delete paragraph as follows: D. The City agrees to defend and indemnify the Company and East Bay Truck Maintenance, Inc., (and their respective officers, directors, shareholders consultants, predecessors, successors, assigns, agents, representatives, employees, parent and subsidiary companies, affiliates, and each of them) from and against any and all claims, demands, causes of action, liabilities, judgments, settlements, losses, costs, damages, and/or expenses in law or equity, contract or tort, of every kind and nature whatsoever to the extent they arise out of or relate to operator error, as defined below, or to the extent they arise out of or relate to the negligence or willful misconduct by any operator of any City vehicle that is the subject of the 6th Amendment to Franchise Agreement when the operator of the City vehicle is not an employee of the Company or East Bay Truck Maintenance, Inc. Operator error includes driving errors, failure to follow written recommendations by the Company or East Bay Truck Maintenance, Inc., and failure to report vehicle deficiencies to the Company or East Bay Truck Maintenance, Inc., when required by state law. 5. Franchise Agreement. Except as expressly set forth herein, the Franchise Agreement remains in full force and effect. 6. Entire Agreement. ---PAGE BREAK--- Page 3 of 3 This Seventh Amendment is executed in three duplicate originals, each of which is deemed to be an original. This Seventh Amendment includes three pages of text. IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the day first above written: City Company Signature Signature Printed Name Printed Name Title Title Date Date APPROVED AS TO FORM: ATTEST: City Attorney City Clerk 2315672.1