5. Administration and Finance: A. Approval of the 2015/16 Mid-Year Budget - Continued Item (Approval item)

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1 1. Roll Call 2. Public Comment Persons wishing to address the Board on matters NOT on the posted agenda may do so. Each speaker is limited to two minutes. If there are more than five individuals wishing to speak during public comment, the Chairman will draw five speaker cards from those submitted to speak during this time. The balance of the Public Comment speakers will be called upon at the end of the Board Meeting. If the item you are speaking on is not listed on the agenda, please be advised that the Board may briefly respond to statements made or questions posed as allowed under The Brown Act (Government Code Section ). The Board's general policy is to refer items to staff for attention, or have a matter placed on a future Board agenda for a more comprehensive action or report and formal public discussion and input at that time. 3. Interim Executive Director s Report 4. Approval of Consent Calendar: Consent Calendar item(s) are considered to be routine and will be enacted by one motion. There will be no separate discussion on these items unless members of the Board, staff or public request specific items be removed for separate action. Items removed from the Consent Calendar will be moved to the end of the agenda for separate discussion. A. Adopt the January 28, 2016 BOD Meeting Minutes B. Resolution Approving Agreement with R3 Consulting Group, Inc. for Financial Systems Audit of Collection Services and Facility Operations Contractors for Calendar Year 2015 C. Resolution Approving Agreement with R3 Consulting Group, Inc. to Conduct a Review of Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems for Calendar Year 2015 D. Approval of the Quarterly Investment Report as of 12/31/15 5. Administration and Finance: A. Approval of the 2015/16 Mid-Year Budget - Continued Item (Approval item) 6. Collection and Recycling Program Support and Compliance: No items 7. Shoreway Operations and Contract Management: A. Approval of Contract for the Repair of the MRF and Transfer Station Tipping Floor (Approval item) 8. Informational Items Only (no action required) A. California State Legislative Update for 2015/16 (Nick Lapis, CAW) B Finance and Rate Setting Calendar C. Check Register for January 2016 D. Potential Future Board Agenda Items 9. Board Member Comments 10. Adjourn BOARD OF DIRECTORS THURSDAY, February 25, 2016 at 2:00 p.m. San Carlos Library, Conference Room A/B 610 Elm Street, San Carlos, CA Member Bronitsky representing Foster City will be calling in to the meeting from: 104 Kaanapali Shores Place Maui, Hawaii MEMBER AGENCIES ATHERTON * BELMONT * BURLINGAME * EAST PALO ALTO * FOSTER CITY * HILLSBOROUGH * MENLO PARK * REDWOOD CITY * SAN CARLOS * SAN MATEO * COUNTY OF SAN MATEO * WEST BAY SANITARY DISTRICT FULL PACKET PAGE 1 of 71

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5 To: From: Date: Subject: STAFF REPORT SBWMA Board Members Hilary Gans, Interim Executive Director & Facility Operations Contract Manager February 25, 2016 Board of Directors Meeting Interim Executive Director Report Board Agenda/Packet Items Mid-Year Budget The FY15/16 mid-year was presented by Farouk Fakira at the January Board meeting. The Board continued this item to February and requested that staff revise the mid-year budget to 1) capture the most recent actuals (tonnage and financial information) through December, and 2) to update the commodity revenue forecasting so that the most recent commodity pricing information is included into the budget forecast. The revised mid-year budget shows a variance in Net Income of $921,628 (from an original budget amount of $1,520,886 to the midyear forecast of $599,258). Staff is analyzing the effect of this change in budgeted net of income on cash reserves and will be presenting this update at the March Board meeting. Budget Process for FY 2016/17. Staff has begun the process of budgeting for next fiscal year. Milestones in this process include the following Board meeting items: March discussion of potential Capital projects April presentation of preliminary 2016/17 Operating Budget May presentation of preliminary 2016/17 Operating Budget June request to approve 2016/17 Operating Budget Collection Services Updates Contract Negation Process With the approval of the Plan and Recommended Process to Negotiate an Extension to the Franchise Agreements with Recology at the January Board meeting, staff is now seeking commitments from the Member Agencies for their participation in the process by April/May. The following are the key items set forth in the Plan for the next three months: March TAC meeting (Discuss Recology Self-Review due on March 3 rd ; Discuss Member Agency Notice regarding Commitment to Participate; Discuss formation of Ad Hoc Committee) April TAC meeting (Discuss Member Agency Notice regarding Commitment to Participate; Discuss formation of Ad Hoc Committee) April BOD meeting (Discuss Status of Member Agency Notice regarding Commitment to Participate and to consider formation of an Ad Hoc Committee; Receive SBWMA Review of Recology Meeting the Franchise Agreement Standards and Goals of the Contractor Selection Process) May BOD meeting (Discuss Status of Member Agency Notice regarding Commitment to Participate and to consider formation of Ad Hoc Committee) Every Other Week (EOW) Garbage Collection Pilot Program Update On February 16, the EOW Garbage collection pilot was brought before the San Mateo City Council. Staff made a presentation on the pilot and the Council provided valuable feedback. The item was tabled pending revised messaging and a formal letter of support for the pilot from the County Department of Health, who staff has worked AGENDA ITEM:3 - p1 FULL PACKET PAGE 5 of 71

6 closely with and already received their endorsement of the pilot. To date, Recology has received over 1,800 phone calls from the 5,200 households included in the pilot with approximately 840 opting out of participating in the pilot and 460 ordering an upsized Garbage cart for use during the pilot. (Customers can request at no additional cost a larger garbage cart for use during the pilot). Participation in the pilot is voluntary and residents who are aware of the pilot are encouraged to participate, despite a temporary suspension of the data collection efforts. Staff will return to the City Council in the near future and it is anticipated that the Council will endorse reestablishing the pilot with updated messaging to participating households. AB1826 Mandatory Commercial Organics Recycling Update California Assembly Bill (AB) 1826, mandatory commercial organics (compost) recycling, requires businesses and multi-family complexes that generate specified amounts of organic waste to arrange for organics collection service. Starting this April, businesses that generate eight or more cubic yards of organic materials per week will be required to arrange for collection service. To assist our Member Agencies with compliance, RethinkWaste has taken the lead with outreach efforts on AB1826. All commercial and multi-family property owners will receive a bill insert with information on the new law and a direct mail notification sent to businesses impacted by the April deadline. RethinkWaste is working with Recology to identify compliant and non-compliant businesses as is required by the law and to provide ongoing outreach and education. A detailed staff update will be provided at the March Board meeting. Program and Operational Updates SBR 2015 Annual Report SBR issued its 2015 Annual Report this month which highlights the following significant operational information: - Acquisition of the SBR majority ownership partner Community Recycling & Resource Recovery, Inc. by Recology Inc. occurred in March of Completion of the MRF Canopy construction project that enlarged the tipping area to accommodate more inbound materials. - Third-party MRF volumes increased18% over prior year which resulted in a total of $462,616 in host fee revenues. - The VRS program continues to be a success though challenges in getting a sufficient number sorters supplied by the program remain. - Commodity pricing has continued to decline for the fifth straight year and SBR forecasts that pricing will bottom-out in 2016 and increase slightly in the second half of the year. Impacts of Declining Commodity Markets As illustrated in the two graphs on the following page there has been a trend of declining commodity prices since the market s high in In the past six months this downward trend has intensified, particularly for containers. Conversations and data received from other Bay Area recyclers as well as from trade journal news articles confirm that recycled commodities are declining as a result of 1) economic slowdown and declining demand from China and 2) depressed petroleum prices that make containers from virgin materials (plastics in particular) cheaper. As disused in the Mid-Year Budget staff report, this declining commodity value has impacted the SBWMA s revenues. Commodity sales compose approximately 10% of the SBWMA total revenues and the market decline of roughly 9% has required that the Agency reduce reserve balances to cover cash flow needs. The impact on Agency reserves is currently being analyzed by staff and will be discussed in the March Board meeting. AGENDA ITEM:3 - p2 FULL PACKET PAGE 6 of 71

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11 Call To Order: 2:00PM 1. Roll Call DRAFT MINUTES SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY MEETING OF THE BOARD OF DIRECTORS January 28, :00 p.m. San Carlos Library Conference Room A/B Agency Present Absent Agency Present Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary District X 2. Adjourn to Closed Session Pursuant to Government Code Section : Public Employee Appointment Interim Executive Director. 2b. Regular Session CTO: 2:35PM Roll Call Agency Present Absent Agency Present Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary District X 2c. Report from Closed Session No Report 2d. Public Comment Persons wishing to address the Board on matters NOT on the posted agenda may do so. Each speaker is limited to two minutes. If there are more than five individuals wishing to speak during public comment, the Chairman will draw five speaker cards from those submitted to speak during this time. The balance of the Public Comment speakers will be called upon at the end of the Board Meeting. AGENDA ITEM: 4A - p1 FULL PACKET PAGE 11 of 71

12 If the item you are speaking on is not listed on the agenda, please be advised that the Board may briefly respond to statements made or questions posed as allowed under The Brown Act (Government Code Section ). The Board's general policy is to refer items to staff for attention, or have a matter placed on a future Board agenda for a more comprehensive action or report and formal public discussion and input at that time. Joe LaMariana from the County of San Mateo announced that the County of San Mateo has gone through a realignment, and his staff that used to report to the Public Works department, now reports to the Office of Sustainability. He also introduced the new Deputy Director of Natural Resources, Daniel Lee. 3. Approval of Consent Calendar Consent Calendar item(s) are considered to be routine and will be enacted by one motion. There will be no separate discussion on these items unless members of the Board, staff or public request specific items be removed for separate action. Items removed from the Consent Calendar will be moved to the end of the agenda for separate discussion. A. Adopt the November 19, 2015 BOD Meeting Minutes B. Adopt the January 18, 2016 BOD Special Meeting Minutes C. Resolution Accepting the FY1415 Annual Financial Statements D. Resolution Approving Revised SBWMA Investment Policy for 2016 E. Approval of Quarterly Investment Report as of 9/30/15 Member Aguirre made a motion to approve the consent calendar Charles Stone seconded the motion Voice Vote: All in Favor Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary Dist. X 4. Administration and Finance A. Appointment of Hilary Gans as Interim Executive Director During Recruitment Process for an Executive Director for SBWMA (Approval Item) Chair Widmer introduced the item and asked for discussion. Member Brownrigg noted that the Board is appreciative of Hilary Gans stepping into the role, and asked if there was agreement on the terms of the position. Chair Widmer answered that the Board would need to approve this item, as well as the compensation that goes along with this item. Member Brownrigg asked if the discussion that was held in closed session will be agreeable to the candidate. Chair Widmer commented yes, but with an amendment to the compensation as discussed in closed session. He suggested that Resolution be amended to leave the temporary compensation AGENDA ITEM: 4A - p2 FULL PACKET PAGE 12 of 71

13 as stated but allow for a one time additional 80 hours of vacation pay to be used subsequent to the completion of the assignment, but within a 12 month period of time. Member Benton moved to approve Resolution as amended. Member Bronitsky seconded the motion. Voice Vote: All in Favor Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary Dist. X B. Election of Board Officers for 2016 (Approval item) Member Slocum requested that 4D be discussed before 4B, as the County s Director of Human Resources was here to answer any questions about the recruitment of the Executive Director but that she had to leave by 3PM. Chair Widmer introduced the item, and noted that he was happy to continue to serve in whatever capacity the Board wanted him to serve. Member Stone commented that he had great respect for Chair Widmer s work and dedication over the last two years. He nominated Member Grassilli for Chair of the Board. Chair Widmer nominated Member Bronitsky, and called for any other nominations, and closed nominations. Member Benton asked to hear from each of the Board Members nominated. Member Bronitsky stated that the Agency has a lot of big negotiations coming up, and as a lawyer for 30 years he s done a lot of negotiating. He also added that now that he has served on the Board for two years, he understands how the agency works, and he knows everyone on the Board. He added that he thought he would lead good meetings, and deal with all of the issues the agency has to deal with in a professional manner. Member Grassilli commented that he has been involved in this agency since 2006, and choosing the new service provider. He also noted that he has been the Chair of C/CAG for two years, so he has experience in leading groups of colleagues. He added that he has an interest in this that goes back a long way, and he has the time and expertise to be an effective chair. Member Brownrigg thanked Chair Widmer for his service and noted that rotation is useful in Chair roles and suggested a two year rotation going forward to allow a buildup of knowledge. He also asked Member Grassilli if he saw any conflict of interest because the SBWMA does so much work with San Carlos. AGENDA ITEM: 4A - p3 FULL PACKET PAGE 13 of 71

14 Member Grassilli answered not any more than being on the Board. He commented that the Chairman s job is almost a silent one to facilitate the will of the Board, and he wouldn t have any more power than his one vote. Member Aguirre asked how the Vice Chair is selected. Chair Widmer explained, closed discussion and called for a roll call vote for the two candidates. Agency Member Member Member Member Abstain Absent Agency Grassilli Bronitsky Grassilli Bronitsky Abstain Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary Dist. X Member Grassilli received 8 votes and became Chair. Member Brownrigg called for a round of applause for Member Widmer s work as Chair. Chair Grassilli thanked the Board for their support. Member Aguirre nominated Member Bronitsky for Vice Chair Member Benton moved to close nominations. Voice Vote for Member Bronitsky as Vice Chair: All in Favor Chair Grassilli also thanked Vice Chair Dehn for her service. C. Resolution Accepting Mid-Year Review of FY1516 Annual Operating Budget (Approval item) Staff Fakira gave an overview of the staff report, and gave details of the variances on the mid-year budget. He noted that the mid-year budget includes additional compensation to SBR for higher glass hauling costs, and an additional amount for the Split Body pilot which was originally in the Recology compensation, but was moved to the SBWMA budget. Member Widmer noted that the year to date spending was done on December 10 th, and asked about commodities, noting that the year to date commodity revenue was only $2.5M, but the projection of $9.5M didn t change. He added that he noticed this throughout the budget, and he wondered what type of analysis was done to trend the numbers forward, and asked for an update on the commodity situation. Member Abrica was absent at 3:28 PM Member Aguirre was absent at 3:29 PM Absent AGENDA ITEM: 4A - p4 FULL PACKET PAGE 14 of 71

15 Staff Fakira noted that the commodity numbers were based on the first four months of actual numbers, and the softening of commodity prices occurred recently. He noted that projections are made based on the average of the actuals. Member Widmer asked for clarification because the year to date number is only four months and not half a year. Staff Fakira answered that it is the same process that has worked effectively in years past for projecting commodity revenue. Member Widmer reiterated that the same trending was used for disposal costs and throughout the budget, and the actual numbers don t match the trending numbers, and it looks like it will be significantly lower than expected. Staff Fakira responded that disposal fees are based on actuals for a longer period of time than commodities. He also noted that projections are also made based on the same quarter as in the previous time period. Chair Widmer submitted that if it is a four month number it should be noted, because it s stated as actual spending for half the year, and the projected numbers don t match the actual numbers. Member Benton asked for clarification on tip fee revenues versus disposal, noting that franchised tons are slightly down, but third party tons are slightly up, and disposal is up, and he questioned if more tons received means more money lost. Chair Grassilli commented that he had the same question. Staff Fakira answered that s not the case. He explained that the net revenue is not all the revenue, but noted that the disposal side was under budgeted, and the revenue was over stated, in the original budget. The revenue for the third party tons was budgeted, but the volume was not reflected on the disposal side. Chair Grassilli noted that he came in early today to discuss the mid-year budget because he wanted to understand how this works, but noted that it is still unclear to him. He asked if this item needed to be approved today. Counsel Savaree said that it did not need to be approved today. Chair Grassilli asked for further detail on the revenue and disposal variances in simplified terms at the next Board meeting. Member Widmer stated that he agreed and noted that in the Executive Director s goals the Board specifically asked that Board presentations be at a higher level and in presentation form to discuss the major variances. He asked when it comes back that it be presented as a Powerpoint summarizing the major items. AGENDA ITEM: 4A - p5 FULL PACKET PAGE 15 of 71

16 Chair Grassilli submitted that this item be brought back to the Board at the next meeting, and the Board would then go through the numbers and the larger discrepancies. Member Benton commented that he agreed, and noted that one of the Board s objectives was to seek more third party tons to offset the costs, and he wanted to make sure that those tons were actually brining in money while not costing money. Member Widmer commented that every third party ton is supposed to be a gain of $14 per ton. Member Benton moved to table this item to the next Board meeting. Interim Executive Director Gans noted that Staff Fakira mentioned that the commodity prices have dropped, which is a change that has happened between the booking of revenues in December, and January commodity pricing, so it was too late to capture in this staff report. He noted that he is glad to have the opportunity to reflect the commodity price drop impact when this is discussed next time, because at this point it s about a $600,000 drop in net revenue, which is significant. Member Widmer suggested getting input from other agencies to see what they are seeing and what their impacts are. Interim Executive Director Gans noted that Dan Domonoske of SBR was in the audience and could speak about commodity prices, but that trying to predict trends in commodity prices was like trying to predict oil prices - these commodities swing dramatically. Chair Grassilli asked that Dan speak next time when the budget comes back. Interim Executive Director Gans noted that Dan wouldn t be available then. Chair Grassilli asked that he give an explanation in writing on the commodity pricing. D. Consideration And Approval Of Resolution Authorizing Contract For The Recruitment Of Executive Director Or, In The Alternative, Provide Board Direction On How To Proceed With This Recruitment (Approval item) Member Slocum requested that 4D be discussed before 4B, as the County s Director of Human Resources was here to answer any questions about the recruitment of the Executive Director but that she had to leave by 3PM. The Board agreed and Chair Widmer introduced the item and gave a brief background. Donna Vailancourt, Director of Human Recourses and Lisa Yapching, Director of Recruiting, spoke about what the County s approach would be and if it would be any different from some of the Executive search firms proposals. Lisa Yapching went over the process and what the County would do as the search firm. AGENDA ITEM: 4A - p6 FULL PACKET PAGE 16 of 71

17 Donna Vailancourt added that the County would just charge their hourly cost for the services as well as any pass through costs for expenses. She also noted that they do have experience recruiting for JPAs, and noted that they recruited for the C/CAG Director and the Library Director positions. Chair Widmer asked for clarification on how the 20 resumes that met the top criteria would be narrowed down to those interviewed. He noted that the big difference he s identified between the County doing the search or a firm doing the search is that there will need to be more Board involvement in candidate selection. Donna Vailancourt answered that typically the process is a sit down process and the Board subcommittee would spend 2-3 hours going through the resumes. Chair Widmer noted that the estimated cost for the County providing recruitment services would be $2,500 exclusive of pass through costs. Donna Vailancourt answered yes with the understanding that the goal is to have the candidate in place in April. Member Benton asked if the County had any recruitment experience recruiting outside of government services. Donna Vailancourt that they don t just post the job listing and hope that the right candidate will apply. They source resumes through LinkedIn. Member Brownrigg asked the County why they want to do this work for the JPA. Donna Vailancourt answered because Member Slocum asked them. Member Grassilli commented that he was the Chair of C/CAG when the County did the recruitment for their Executive Director search. He said they did a wonderful job and the candidates they brought forward were excellent candidates. Member Aguirre asked what recruitment the County has done outside of government. Donna Vailancourt answered that it is typically government or non-profit. Member Brownrigg asked if the County had the bandwidth to do this recruitment. Donna Vailancourt answered yes, and that was one of the first questions Member Slocum asked her agency. Member Benton asked if any of the Board Members have experience with either of the other two search firms that they can share with the Board. Chair Widmer noted that he has worked with both, and added that they prepare a brochure that they send out, they post in papers and in the Western Cities magazine, collect resumes and do the screenings. AGENDA ITEM: 4A - p7 FULL PACKET PAGE 17 of 71

18 Member Grassilli noted that he worked with Bob Murray and Associates for their City Manager recruiting, and the County with the C/CAG Executive Director search and both did a good job, and brought in high quality candidates. Chair Widmer added that the City of Atherton used Bob Murray after they had tried to do the recruitment themselves to start with, and Bob Murray came in and did an expanded search. Member Stone responded that he spoke with Belmont City staff and that their response was that either of the firms will give about the same services, and an acceptable outcome. He also noted he liked what he heard from the County and that there is a strong argument to be made from a cost savings point of view. Member Abrica noted that he also supports using the County, and thinks the additional involvement required on the part of the Board might be a good thing. Member Aguirre noted that she supports using the County as well. Member Benton commented that he is concerned that it won t be an easy position to fill, to get a good strong Executive Director, but wants to make sure that whoever is doing the recruiting understands that they may have to dig deeper to find quality candidates. Member Brownrigg commented that he agreed that it is a very important position, and a very important phase of the Agency so it s a critical hire. But, he noted that even the private search firms are focused on hiring for government, so they aren t going to have a much wider net than the County. Member Benton commented that he s worried it s a pretty small niche, and he thought whomever does the recruitment is going to have to go find the right candidate rather than expect the candidate to come to them. Chair Widmer commented that his main concern that the Board Members on the search committee have the time to do additional work if the County is chosen, as opposed to a firm that would get paid to do that work. Member Bronitsky noted that Member Grassilli has had experience with both the County and a search firm, and he noted that there wasn t that big of a difference in how much work on the part of the selection committee needed to be done, so with that he was in favor of the County. Member Slocum commented that he thought the County would work well, and that he would be willing to put the time in to make sure this works well. He also asked if there would be national recruitment or California only. Chair Widmer answered that the salary is not in line with someone moving here, but suggested the recruitment be regional. AGENDA ITEM: 4A - p8 FULL PACKET PAGE 18 of 71

19 Member Aguirre noted that while she understands bringing someone in from another part of the country it may be impossible to house them, but also doesn t want to limit where the job is posted to cast the net where the highest caliber of candidates are. Member Benton asked if it would remain a non-pers position. Chair Widmer stated yes, we are a non-pers agency. Member Stone acknowledged Member Aguiree s point, but noted that the candidate will need to have knowledge of California regulatory framework as well. So yes, cast the net, but I would be wary of hiring someone without California experience. Member Abrica asked if the Board would see the job description. Chair Widmer noted that there was a pro forma at the Special Meeting last week that was passed on to the attorney. Counsel Savaree commented that at the Special Meeting she suggested that once you pick a recruiter, the search committee will meet with the recruiter and be very clear about the brochure that will go out and the job description. Member Abrica asked if those pieces would come back to the Board, so that it can be approved. Chair Widmer noted that this tasked to the committee, and with Member Slocum as the Chair the committee will need to do that. Member Benton asked for a reminder as to who was on the search committee. Chair Widmer answered, Warren Slocum is the Chair, with Charlie Bronitsky, Charles Stone, Micheal Brownrigg and Fran Dehn. Member Abrica asked that the job description come back to the Board so that even the public can see it. Member Brownrigg made a motion to work with County of San Mateo for a not to exceed an amount of $10,000 including expenses. Member Stone seconded the motion. Voice Vote: All in Favor Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary Dist. X AGENDA ITEM: 4A - p9 FULL PACKET PAGE 19 of 71

20 5. Collection and Recycling Program Support and Compliance A. Consideration of Approval of Final Plan and Recommended Process for Supporting Member Agencies with Future Franchise Agreement Decisions (Approval item) Staff Feldman gave an overview of the staff report. He noted that the plan is needed to facilitate developing a future contract extension with Recology but does not preclude any of the authorizations and approvals that will be needed to proceed with a contract extension, nor does it preclude any Member Agency from negotiating any unique aspects of their franchise agreement either on their own outside of this plan and process or concurrently in collaboration with the JPA. He added that per discussion at the last Board meeting there has been one change in the time frame, which gives a timeline for Member Agencies to come back to the JPA board by April/May with a commitment to the process. He reiterated that this plan and process is not to make a decision on whether to extend or not, this is to negotiate a contract that hopefully all the Member Agencies can live with. Member Widmer stated that he thought the process and timeline was not conducive to giving the Member Agencies enough time to have discussions about what they want in a future Franchise Agreement. He noted that he felt like the Member Agencies were being rushed, and suggested a June/July timeframe for Member Agencies to come back to the JPA with the detailed information needed. Member Benton asked for further details on the JPA s option to extend the contract, and when the last date that can be exercised. Staff Feldman answered that the Franchise Agreements are between the Member Agencies and Recology, the JPA is not a party to the contracts, so the JPA does not have an extension option. He added that the date in the contract that the decision needs to be made is by the end of December He added that the time frame in this staff report allows for the contract amendments to be negotiated by early in 2017, and that the contract extension and amedments will then be vetted by all the Member Agencies governing bodies over the course of Member Benton clarified that each Member Agency has until December 31 st, 2017 to exercise a one year option to extend with Recology. Staff Feldman answered that the term of the extension is not in the current franchise agreement, but it s likely to be a 10 year term, not a one year term because of components in the Long Range Plan such as cost savings associated with a new CNG fleet. Member Benton noted that he thought he saw that there were several one year extension options. Staff Feldman answered that those provisions are in the Operations Agreement with SBR which is a contract between the JPA and the operator which does have individual one year extensions. He added that this staff report is only for the collection services Franchise Agreement with Recology. Staff Feldman added that what the current Franchise Agreements do have is a time frame for Agencies to make a decision in 2017, because all of the Member Agencies have one company that AGENDA ITEM: 4A - p10 FULL PACKET PAGE 20 of 71

21 provides the services, and to unwind that in any way and go in potentially different directions will require two to three years to conduct an RFP process in order to get a new contract in place with another vendor. He added that the document you are voting on today provides for a one year period from now to come back with a negotiated contract with Recology that an ad hoc committee has signed off on, which will be vetted by this Board, and then go before each of the Member Agencies governing bodies. He added that contract extension decisions could be made after that point, but substantially it would be one collaborative contract similar to the existing uniform Franchise Agreements. He also added that he understands Member Widmer s concern that the timeframe is too aggressive, but feels strongly that the timeframe is doable and to extend it might be problematic. Member Bronitsky commented that he has negotiated many leases over the years, and the faster things are negotiated the more cost savings there are. He thought the Board should be as aggressive as possible with the schedule to negotiate savings with the extension and did not want to see the schedule slip. Member Brownrigg commented that it s important to remember throughout the negotiation that the Member Agencies are not bound to use this vendor. And while he agreed that cost savings are important in the negotiations, part of the reason for the speed is so that there is time to do an RFP. Member Benton asked if the deadlines for the spring of this year regarding the survey of Recology s operations were on track. Staff Feldman answered that there are two deliverables this spring, and pending the Board s approval staff will be working diligently with Recology to accomplish the request to ask Recology to perform a self-review by March. And, then the JPA will do a similar review on how Recology has met the original goals of the contractor selection process that led to Recology being chosen as the service provider in the current Franchise Agreement. He added that both of those will happen in the March/April time frame. Chair Widmer noted that last year consultant dollars were allocated to look at the overall costs and compare that with other agencies, and he still wanted to get that analysis, but now it sounds like Recology is going to do a self-review and staff would then vet that self-review. Staff Feldman answered that in last year s budget there was money allocated for consultant work to look at Recology s overall costs, however, Recology gave that information voluntarily and an expansive audit was not needed. So that consultant work Member Widmer is referring to did not happen. He added that in the current budget there is money allocated to execute an operational audit that will go into building a collection services pro forma that can be used to vet Recology s actual costs. He added that that work will be on board in the near future pending approval of this schedule, so that the results used will be timely. Chair Widmer pointed out that his understanding was that the consultant was also going to be looking at similar jurisdictions, and what it should cost to provide these services, and now it sounds like that is not happening. Staff Feldman responded that looking at similar jurisdictions is tricky because the Franchise Agreement structure this JPA has is very unique. AGENDA ITEM: 4A - p11 FULL PACKET PAGE 21 of 71

22 Member Widmer reiterated that he thought the schedule should be altered to allow the Member Agencies to reflect on their must have, and nice to have list in a future agreement. Chair Grassilli asked for a motion to that affect. Member Widmer made a motion to move the date that the Member Agencies agree to move forward to June 30, Member Brownrigg asked for the current date, which is April/May. Staff Feldman clarified that the April/May date is the date staff is requesting the individual Member Agencies to come back to the JPA Board and state whether or not they are committed to the process. Member Brownrigg clarified that each Member Agency has to tell you that they are in, not what they want. Staff Feldman stated yes, and added that regarding any unique contract amendments to the existing Franchise Agreements that comes later. He noted than an ad hoc committee will be formed in April/May and the contract work will be driven by that committee, including any and all amendments there are to provide one uniform Franchise Agreement. Member Widmer noted that he thought the cart was before the horse, because yes he was interested in getting a number from Recology, but without them knowing what my list of must haves is, the number won t mean much. Chair Grassilli clarified that if by saying a Member Agency is in, means in the JPA, and asked Member Widmer if they were saying they were considering not being part of the JPA. Member Benton stated that he thought the Board was agreeing that the JPA would take the lead in negotiations. Staff Feldman yes, this plan sets in process that the JPA will take the lead in negotiating an extension with Recology, and he noted that it is not binding. Every contract decision every step of the way will go back to the governing bodies, and the Board s input will be used to develop one uniform Franchise Agreement that Recology will provide a proposal for. Chair Grassilli asked if there was flexibility to opt out down the line in the process. Staff Feldman answered yes. Member Benton stated that he d like to see the process move along and doesn t want to see the timeline moved. Member Stone made a motion to approve Resolution as stated in the staff report. Member Brownrigg seconded the motion. AGENDA ITEM: 4A - p12 FULL PACKET PAGE 22 of 71

23 Voice Vote: Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton X Menlo Park X Belmont X Redwood City X Burlingame X San Carlos X East Palo Alto X San Mateo X Foster City X County of San Mateo X Hillsborough X West Bay Sanitary Dist. X B. Staff Update on Implementation of Commercial Recycling Hauler Reporting System Ordinance (Informational item) Staff Feldman gave an update on the Commercial Recycling hauler reporting system ordinance, and noted that there has been an increase in participation by 45%, but there is still about 125 businesses that need to be registered. He also noted that at this point staff will be reaching out to the Member Agencies to continue to encourage businesses that have not registered to register. He added that staff will continue to work diligently to get the numbers of participation up, and the recycling volumes up to improve the projections that were in the Long Range Plan. Vice Chair Bronitsky asked that when the list of those not registered goes out that the Board gets a copy of the list in case of political sensitivity. Member Brownrigg commented that the diversion numbers are pretty profound, noting that Recology collects 59,000 tons and outside haulers so far have reported 40,000 tons and there is only a third reporting. Staff Feldman commented that the projection is 60,000 once all the fourth quarter reports are in, so yes, there is a tremendous amount of recycling going on that is just now getting captured. Member Brownrigg noted that it is a really big number and he is interested in drilling down to this further at a future meeting. Staff Feldman commented that staff is not recommended imposing fines for non-compliance with the ordinance anytime soon, but will be asking for Member Agency help with getting to the right person at a business so that they comply. Member Benton asked at this point what percent are compliant. Staff Feldman answered 35-40% by volume of potential business that should be registered are registered. Member Widmer reminded the Board that before any fines are assessed the Board has to approve that, and he requested that the list of those businesses that are not compliant be available when any fines are discussed. 6. Shoreway Operations and Contract Management A. Update on Organics Recovery Project Work with Silicon Valley Clean Water (Informational item) AGENDA ITEM: 4A - p13 FULL PACKET PAGE 23 of 71

24 Interim Executive Director Gans gave an update on the Mixed Waste Processing system, noting that it is in the design phase with the goal of getting the design far enough along to get complete cost estimates for the equipment and the required transfer station expansion, as well as the amount of material the system could recover. He noted that the most important document for tracking progress is attachment A. He introduced Teresa Herrera, Assistance Manager at Silicon Valley Clean Water, as the lead person on this SBWMA project and partnership. Teresa Herrera presented where Silicon Valley Clean Water is on their side of the project, and noted that they are excited about the potential energy that could be derived from this project. She added that with the estimated quantities that the SBWMA is looking at it might be possible to get to a net positive energy, but the goal is to get to net zero energy because energy is the third biggest cost at Silicon Valley Clean Water and net zero energy would work to stabilize rates. She noted that they have done a technical feasibility study, and they have excess digester capacity, and that they will be doing a small scale pilot with Recology in San Francisco. She added that assuming everything looks good, they would be ready to scale up. 7. Informational Items Only (no action required) A Finance and Rate Setting Calendar B. Check Register for November and December 2015 C. Technical Consulting Contracts for 4 th Quarter 2015 D. Potential Future Board Agenda Items Member Widmer requested that the budget item that was continued, as well as a separate presentation on the commodity revenues. Chair Grassilli requested a discussion on HHW costs. 8. Board Member Comments 9. Adjourn 4:13PM AGENDA ITEM: 4A - p14 FULL PACKET PAGE 24 of 71

25 To: From: Date: Subject: STAFF REPORT SBWMA Board Members Farouk Fakira, Finance Manager February 25, 2015 Board of Directors Meeting Resolution Approving Agreement with R3 Consulting Group, Inc. for Financial Systems Audit of Collection Services and Facility Operations Contractors for Calendar Year 2015 Recommendation It is recommended that the SBWMA Board of Directors approve Resolution No attached hereto authorizing the following action: Authorize the Executive Director to execute a contract with R3 Consulting Group, Inc. for a Financial Systems Audit of Collection Services and Facility Operations Contractors with a not-to-exceed budget of $39,890. Summary The purpose of this annual audit is to verify for completeness and accuracy various financial reports and information for calendar year 2015 provided by our two main contractors, Recology San Mateo County (Recology) and South Bay Recycling (SBR). This audit focuses on reviewing critical financial aspects of the $100 million per year solid waste, recycling and compost collection services system and materials handling/processing and to verify the accuracy of remitting commodity revenue and transfer station gate revenue of approximately $17 million per year by SBR to the SBWMA. Thus, the audit work will verify that both Recology and SBR are accurately obtaining, compiling and reporting financial data to the Member Agencies and the SBWMA per the requirements prescribed in the Franchise Agreement(s) and the Shoreway Facility Operations Agreement, respectively. Analysis The SBWMA is seeking to contract with R3 to perform a financial systems audit of our two contractors, Recology and SBR. In 2014, the SBWMA issued a Request for Proposals (RFP) for a Financial Systems Audit of Collection Services and Facility Operations to five potential proposers. In March 2015, the Board approved staff s recommendation to contract with R3 for this work. R3 has agreed to provide a 15% discount on the Financial Systems audit which will result in savings of $6,038 if the SBWMA contracts with them for both the Annual Report Review and the Financial Systems Audit (see agenda item 4C). In addition, R3 has reduced the cost of the Financial Systems Audit by $2,388. The cost will not exceed $35,743. The combined savings in year-over-year cost reductions and the discount for both the Financial Systems Audit and the Annual Report Review is $16,150. To summarize the scope of work, this project will entail a thorough review and verification of Recology s 2015 Annual Revenue Reconciliation which includes verifying the surplus/shortfall balance owed to/from Recology by Member Agency. It also reviews the billed revenue, Member Agency fees, and disposal and processing expense by Member Agency. The work will also review Attachment Q (i.e., Unscheduled Services) revenue and costs. The SBR review and verification will include public revenue and commodity revenue reported and paid to the SBWMA for R3 will also review the scale house procedures which is the originating source of all tonnage and public revenue reporting. The full scope of work is provided in the R3 proposal (see Exhibit A). AGENDA ITEM: 4B - p1 FULL PACKET PAGE 25 of 71

26 Background The Member Agencies Collection Services Franchise Agreements with Recology prescribe numerous reporting requirement that ultimately have a direct effect on Member Agency garbage collection rates charged to their customers. It is very important that the total Collection system cost of approximately $100 million is correctly verified for accuracy. In particular, Recology will submit on March 31, 2016, a Revenue Reconciliation for 2015 that will show the surplus or shortfall balance in compensation retained by Recology in comparison to what they are owed by Member Agency. The Member Agency s balance is based on billed revenue, less the approved Recology compensation for collection services, fees paid by Recology to the Member Agencies and payments to the SBWMA for disposal and processing at Shoreway. As the financial administrator of the Franchise Agreements, the SBWMA conducts this audit on behalf of our Member Agencies. Based on the terms of the Facility Operations Agreement, SBR paid to the SBWMA in 2015 all public gate revenue of approximately $7,132,244 and all commodity revenue of approximately $9,506,840 net of their share. This audit will review in detail the backup to the company s calculations and payments to ensure that the proper amounts were reported and paid to the SBWMA. Fiscal Impact The SBWMA FY2016 budget includes $55,000 for Contract Management Support. The contract with R3 Consulting, LLC for a not-to-exceed amount of $35,743 will be paid with these funds. Attachments: Resolution Exhibit A Proposal from R3 Consulting Group (available online only at (A sample professional services agreement is also available at AGENDA ITEM: 4B - p2 FULL PACKET PAGE 26 of 71

27 RESOLUTION NO RESOLUTION OF THE SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY BOARD OF DIRECTORS AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A CONTRACT WITH R3 CONSULTING GROUP FOR A FINANCIAL SYSTEMS AUDIT OF COLLECTION SERVICES AND FACILITY OPERATIONS CONTRACTORS FOR CALENDAR YEAR 2015 WHEREAS, the South Bayside Waste Management Authority (SBWMA) Board of Directors has considered entering into a contract with R3 Consulting Group for the purpose of providing a financial systems audit of collection services and facility operations contractors 2015 financial reporting and payments; and WHEREAS, the R3 Consulting Group has the appropriate experience in the industry and with our unique contracts; and WHEREAS, attached as Exhibit A hereto is the R3 proposal with the scope of work. NOW, THEREFORE BE IT RESOLVED that the South Bayside Waste Management Authority hereby authorizes Executive Director to execute an Agreement with R3 Consulting Group with a not-to-exceed budget of $35,743. PASSED AND ADOPTED by the Board of Directors of the South Bayside Waste Management Authority, County of San Mateo, State of California on the 25 th day of February, 2016, by the following vote: Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton Menlo Park Belmont Redwood City Burlingame San Carlos East Palo Alto San Mateo Foster City County of San Mateo Hillsborough West Bay Sanitary Dist. I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular meeting of the South Bayside Waste Management Authority on February 25, ATTEST: Bob Grassilli, Chairperson of SBWMA Cyndi Urman, Board Secretary AGENDA ITEM: 4B - p3 FULL PACKET PAGE 27 of 71

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29 To: From: Date: Subject: STAFF REPORT SBWMA Board Members Cliff Feldman, Recycling Programs Manager February 25, 2016 Board of Directors Meeting Resolution Approving Agreement with R3 Consulting Group, Inc. to Conduct a Review of Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems for Calendar Year 2015 Recommendation It is recommended that the SBWMA Board of Directors approve Resolution No attached hereto authorizing the following action: Authorize the Interim Executive Director to execute a contract with R3 Consulting Group, Inc. for a Review of Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems for calendar year 2015 with a not-to-exceed budget of $34,816. Summary The purpose of this annual audit is to verify for completeness and accuracy the self-reported data and information for calendar year 2015 provided by our two main contractors, Recology San Mateo County (Recology) and South Bay Recycling (SBR). This self-reported information affects the compensation paid to the contractors and the disincentive payments and liquidated damages paid by the contractor s to the Member Agencies. This audit focuses on the data included in the 2015 Annual Reports issued by the contractors and their various functions related to compiling, maintaining and reporting this data. Thus, the audit work will verify that both Recology and SBR are accurately obtaining, compiling and reporting the information included in their Annual Report(s) to the Member Agencies and the SBWMA per the requirements prescribed in the Franchise Agreement(s) and the Shoreway Facility Operations Agreement, respectively. Analysis The SBWMA is seeking to contract with R3 to perform an audit of data and information related to the 2015 Annual Report(s) of our two contractors, Recology and SBR. In 2014, the SBWMA issued a Request for Proposal (RFP) for a Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems Auditing Project to five potential proposers which were likely qualified to perform the requested audit work. Based on the results of that RFP process, staff recommended contracting with R3 to perform this work for calendar year 2014 and is seeking to execute another contract with R3 for this work for R3 has agreed to provide a 15% discount on the Annual Report Review which will result in savings of $6,144 if the SBWMA contracts with them for both the Annual Report Review and the Financial Systems audit (see agenda item 4B). In addition, R3 has reduced the cost of the Annual Reports Review work by $1,580. The combined savings in year-over-year cost reductions and the discount for both the Annual Report Review and the Financial Systems audit is $16,150. To summarize the scope of work, the Annual Report Review will entail a thorough assessment and verification of Recology and SBR s 2015 Annual Report(s) which includes verifying tonnage allocation, liquidated damages, AGENDA ITEM: 4C - p1 FULL PACKET PAGE 29 of 71

30 performance incentives and disincentives, customer service call center data and billing. The full scope of work is provided in the R3 proposal (Exhibit A). Background The Member Agencies Collection Services Franchise Agreements with Recology prescribe numerous reporting requirements that ultimately have a direct effect on Member Agency garbage collection rates charged to their customers. It is very important that the self-reported data and information included in the contractor s annual reports is correctly verified by Member Agency. Numerous components of these reports are included in the company s respective applications for an adjustment to contractor s compensation due in June/July each year. Fiscal Impact The SBWMA FY15/16 budget includes $80,000 for Collection Services Franchise Agreement administration. The contract with R3 Consulting for a not-to-exceed amount of $34,816 will be paid with these funds. Attachments: Resolution Exhibit A Proposal from R3 Consulting Group (available online only at (A sample professional services agreement is also available at AGENDA ITEM: 4C - p2 FULL PACKET PAGE 30 of 71

31 RESOLUTION NO RESOLUTION OF THE SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY BOARD OF DIRECTORS AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR TO EXECUTE A CONTRACT WITH R3 CONSULTING GROUP FOR A COLLECTION SERVICES AND FACILITY OPERATIONS REPORTS, TONNAGE DATA AND CUSTOMER SERVICE SYSTEMS AUDIT FOR CALENDAR YEAR 2015 WHEREAS, the South Bayside Waste Management Authority (SBWMA) Board of Directors has considered entering into a contract with R3 Consulting Group for the purpose of providing a Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems Auditing Project for 2015; and WHEREAS, the R3 Consulting Group has the appropriate qualifications and experience in the industry and with the unique scope of work required to conduct the 2015 auditing work; and WHEREAS, attached as Exhibit A hereto is the R3 proposal with the scope of work. NOW, THEREFORE BE IT RESOLVED that the South Bayside Waste Management Authority hereby authorizes Executive Director to execute an Agreement with R3 Consulting Group with a not-to-exceed budget of $34,816. PASSED AND ADOPTED by the Board of Directors of the South Bayside Waste Management Authority, County of San Mateo, State of California on the 25 th day of February, 2016, by the following vote: Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton Menlo Park Belmont Redwood City Burlingame San Carlos East Palo Alto San Mateo Foster City County of San Mateo Hillsborough West Bay Sanitary Dist. I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular meeting of the South Bayside Waste Management Authority on February 25, ATTEST: Bob Grassilli, Chairperson of SBWMA Cyndi Urman, Board Secretary AGENDA ITEM: 4C - p3 FULL PACKET PAGE 31 of 71

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33 STAFF REPORT To: SBWMA Board Members From: Farouk Fakira, Finance Manager Date: February 25, 2016 Board of Directors Meeting Subject: Approval of Quarterly Investment Report for the Quarter Ended December 31, 2015 Recommendation It is recommended that the SBWMA Board review and approve the Quarterly Investment Report as of 12/31/15. Analysis The primary objective of the Investment Policy for the SBWMA is safety of principal while meeting the cash flow needs of the Authority through prudent investment of unexpended cash. As of December 31, 2015, the investment portfolio was in compliance with the Investment Policy. The portfolio contains sufficient liquidity to meet the next six months of expected expenditures by the Authority as well as by other third parties. Fiscal Impact The attached Investment Portfolio Summary indicates that as of December 31, 2015, funds in the amount of $19,786,798 were invested producing a weighted average yield of 0.40%. Below is a summary of the changes from the last quarter. Qtr Ended 12/31/15 Qtr Ended 9/30/15 Increase (Decrease) Total Portfolio $ 19,786,798 $ 21,238,203 $ (1,451,405) Weighted Avgerage Yield 0.40% 0.38% 0.02% Interest Earnings $ 19,735 $ 19,865 $ (130) The overall portfolio balance decreased by $1,451,405. The decrease reflects the timing of disbursements for disposal processing and transfer station services between this quarter and the last quarter. Normally, payments for these services are made around the 20 th of each month. But, the September payments were made at the beginning of October, creating a timing difference between the two quarters. A table comparison of the portfolio components is provided below: 12/31/2015 Balance % of Total 9/30/2015 Balance % of Total Change over Prior Quarter SM County Pool $ 5,739,190 29% $ 5,728,746 27% $ 10,444 LAIF 8,385,354 42% 10,878,169 51% (2,492,815) Bond Account 5,662,252 28% 4,631,288 22% 1,030,964 Total Portfolio $ 19,786, % $ 21,238, % $ (1,451,407) Note: There may be minor differences in totals as individual amounts are rounded to the nearest dollar AGENDA ITEM: 4D p1 FULL PACKET PAGE 33 of 71

34 Due to arbitrage restrictions, bond investments are not included in our LAIF rate or investment pool comparison. As of December 31, 2015, the bond reserve and payment accounts of approximately $5.7 million were invested with the trustee in short-term investments. As of December 31, 2015, investments in the County Investment Pool totaled 41% of SBWMA s funds available for investment pools (see Attachment 1). The percentage is within the range specified by the SBWMA Board. The average yield of the portfolio in the quarter excluding the bond proceeds was 0.54%. LAIF is used as a benchmark and the average LAIF yield for the quarter ending December 31, 2015, was 0.37%. The San Mateo County Pool average yield for the quarter was 0.78%. The Investment Advisory Committee, consisting of Jeff Maltbie, City Manager of San Carlos; Michael Galvin, City Treasurer for San Carlos; and Rebecca Mendenhall, Administrative Services Director of San Carlos, have reviewed this report before presentation to the Board. Attachments A Summary of All Investments for Quarter Ending December 31, 2015 B Investment Portfolio 12/31/ Chart C Historical Summary of Investment Portfolio AGENDA ITEM: 4D p2 FULL PACKET PAGE 34 of 71

35 Attachment 1 SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY SUMMARY OF ALL INVESTMENTS For Quarter Ending December 31, 2015 Category Weighted Average Interest Rate Historical Book Value % of Portolio GASB 31 ADJ Market Value* Interest Earned Liquid Investments: San Mateo County Investment Pool (COPOOL) 0.78% $ 5,739,190 41% 5,739,190 11,208 Local Agency Investment Fund (LAIF) 0.37% 8,385,354 59% 8,390,340 8,279 Total - Investments 0.54% 14,124, % 14,129,530 19,487 Bond Accounts - Cash with Fiscal Agents BNY Western Trust - Certificates of Deposit 0.43% 744, , A Reserve Fund Account BNY Western Trust - Dreyfus Cash Mgmt 670 Inv 0.00% 3,383,849 3,383, A Reserve Fund Account BNY Western Trust - Dreyfus Cash Mgmt 670 Inv 0.00% 1,534,405 1,534, A Payment Fund Account Total - Bond Accounts 0.06% 5,662,254 5,662, GRAND TOTAL OF PORTFOLIO 0.40% 19,786,798 19,791,784 19,735 Total Interest Earned This Quarter 19,735 Total Interest Earned Fiscal Year-to-Date 39,600 Note: SBWMA Board approved the following investment mix at its January 22, 2015 meeting: LAIF - 50% to 70% COPOOL - 30% to 50% *Difference in value between Historical Value and Market Value may be due to timing of purchase. Investments in the investment pools may have been purchased when interest rates were lower or higher than the end date of this report. As interest rates increase or decrease, the value of the investment pools will decrease or increase accordingly. However, interest rate fluctuations does not have any impact to SBWMA's balance in the investment pools. The market values are presented as a reference only. AGENDA ITEM: 4D ATTACHMENT A - p1 FULL PACKET PAGE 35 of 71

36 Attachment 2 South Bayside Waste Management Authority Investment Portfolio 12/31/2015 San Mateo County Pool 29% Bond Accounts 29% LAIF 42% San Mateo County Pool LAIF Bond Accounts AGENDA ITEM: 4D ATTACHMENT B - p1 FULL PACKET PAGE 36 of 71

37 Attachment 3 100% 90% 80% 70% 60% South Bayside Waste Management Authority Historical Summary of Investment Portfolio 50% 40% 30% 20% 10% 0% Dec-13 Dec-13 Mar-14 Mar-14 Jun-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Dec-15 #REF! Bond Accounts LAIF SM County Pool South Bayside Waste Management Authority Portfolio Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 SM County Pool 2,269,668 2,286,013 2,289,604 2,293,037 2,596,754 5,700,859 5,719,002 5,728,746 5,739,190 LAIF 11,628,111 11,584,976 12,591,585 13,448,147 12,456,035 10,864,026 7,971,342 10,878,169 8,385,354 Bond Accounts 5,653,984 5,226,893 6,257,859 4,628,312 5,659,274 5,264,849 6,296,018 4,631,288 5,662,254 Grand Total $ 19,551,763 $ 19,097,882 $ 21,139,048 $ 20,369,496 $ 20,712,063 $ 21,829,734 $ 19,986,362 $ 21,238,203 $ 19,786,798 AGENDA ITEM: 4D ATTACHMENT C - p1 FULL PACKET PAGE 37 of 71

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39 ADMINISTRATION AND FINANCE Agenda Item 5 FULL PACKET PAGE 39 of 71

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41 To: From: Date: Subject: STAFF REPORT SBWMA Board Members Farouk Fakira, Finance Manager February 25, 2016 Board of Directors Meeting Resolution Accepting Mid-Year Review of FY15/16 Annual Operating Budget Board Action It is recommended that the SBWMA Board of Directors approve Resolution No attached hereto authorizing the following action: Approval of the Mid-Year Budget Adjustments for FY15/16. Board approval includes additional compensation to South Bay Recycling (SBR) to pay for higher glass handling costs (i.e., $76,200 in transportation cost to send glass to Fairfield; $37,600 additional lease expense for two tractors and two trailers to haul the glass, and $35,000 hauling charge for disposal of batteries). Board approval also includes the addition to the Mid-Year budget of $55,422 for the split-body pilot collection program that was included in the adopted 2015 Long Range Plan; the expense for this pilot program was previously included in the Board approved Recology compensation for Analysis Staff has conducted a thorough analysis of year-to-date revenues and expenditures. Attachment A has been prepared to provide the Board with key budget and related information as follows: Attachment A contains budget worksheets providing line item detail for all projected revenues, expenditures, cash reserve balances and capital spending. Net Income is projected at $599,258 which is $921,628 less than projected in the Approved FY15/16 Budget (see Table 1). Table 1 Revenues FY15/16 SUMMARY NET INCOME Adopted Budget Mid-Year Projections Variance Variance % Total Revenues $42,523,900 $42,324,267 ($199,633) -0.5% Total Expenditures $41,003,014 $41,725,008 $721, % Net Income $1,520,886 $599,258 ($921,628) -60.6% As shown in Table 2, there was a Total Revenue variance of $199,633 (due to a decrease of $727,288 by a high drop in commodities, lower host fees of $43,500; which were partially offset by higher than budgeted Non- Franchised and Franchised revenues of $452,430 and $116,417 respectively). Higher than budgeted Expenditures of $721,994 are primarily due to $510,662 in higher disposal costs. AGENDA ITEM: 5A - p1 FULL PACKET PAGE 41 of 71

42 Table 2 FY 15/16 SUMMARY - MAJOR BUDGET VARIANCES Expenditures Commodity Revenue Prices Fall ($727,288) Host fees ($43,500 Split Body Pilot Program ($55,422) Glass Hauling & other to Fairfield ($149,061) Disposal ($510,662) Total ($1,442,433) Revenue Offsets Tipping Fees - Non Franchised $ 452,430 Tipping Fees - Franchised $ 116,417 Gains $ 568,847 Mid-Year Variances ($873,586) Revenues Total operating revenues for FY15/16 are projected to be 0.5% lower than originally budgeted primarily due to declining commodity prices which have caused a revenue shortfall of $727,288. As illustrated in Graph 1 below, there is a negative variance of $17.59 per ton from the adopted budget (Mid-Year Budget at $ vs Adopted Budget at $142.70). Graph 1. Commodity Price Mid-Year vs Budgeted Table Prices 120 Avg Commodity Price Mid Budget Avg Commodity Price Budget 100 Quarters This revenue gap was partially offset by an increase in tip fee revenues resulting from higher than budgeted tonnage into Shoreway (see Table 3). AGENDA ITEM: 5A - p2 FULL PACKET PAGE 42 of 71

43 Table 3 FY15/16 REVENUE SUMMARY Mid-Year Revenues Adopted Budget Projections Variance Variance % Tip Fee Revenues $33,602,300 $34,171,147 $568, % Non Franchised $6,982,300 $7,434,730 $452, % Franchised $26,620,000 $26,736,417 $116, % Net Commodity Sales Revenues* $7,668,100 $6,940,812 ($727,288) -9.5% MRF - Host Fees $443,500 $400,000 ($43,500) -9.8% Interest Income $48,200 $54,508 $6, % HHW and Other Revenue $761,800 $757,800 ($4,000) -0.5% Total Revenues $42,523,900 $42,324,267 ($199,633) -0.5% *Gross commodity sales 28% revenue share with SBR and buyback payments. Expenditures Table 4 below shows that the higher than budgeted Shoreway Operations expense of $713,537 is primarily the result of $149,061 in SBR compensation due to unforeseen glass handling and transportation expenses and $510,662 in disposal expense payments to offsite disposal and processing facilities ($297,760 from higher disposable volume of 3,712 tons, $102,117 in higher pass-through disposal, and $96,794 for composting of 2,000 unbudgeted tons). Other expense variances include: sewer taxes that were higher by $21,947 due to higher sewage volume and higher San Carlos franchise fee payments of $32,630 due to more tons than budgeted. Table 4 FY15/16 EXPENDITURE DETAIL FOR SHOREWAY OPERATIONS Expenditures Adopted Budget Mid-Year Projections Variance Variance % SBR Compensation* $17,739,700 $17,888,761 $149, % Disposal and Processing* $14,472,300 $14,982,962 $510, % Insurance Shoreway $211,400 $210,637 ($763) -0.4% Education Center $60,000 $60,000 $0 0.0% Debt Service Bond Interest $2,833,100 $2,833,100 $0 0.0% Other Operating Expenses $241,000 $241,000 $0 0.0% Taxes (Sewer) $35,800 $57,747 $21, % Franchise Fee (San Carlos)** $1,594,600 $1,627,230 $32, % Total Shoreway Operations: $37,187,900 $37,901,437 $713, % * Expense projection based on estimated facility tonnage ** Expense projection based on estimated gate revenue (tipping fees x estimated tons) As shown in Table 5 below, the SBWMA budget has a Mid-Year Budget variance that include a $16,965 savings in Administrative Expenses due the vacancy in the Recycling Outreach and Sustainability Manager and Executive Director positions. Recycling & AB 939 Compliance expense is $55,422 higher than originally budgeted due to the addition of the split-body collection pilot program expense. AGENDA ITEM: 5A - p3 FULL PACKET PAGE 43 of 71

44 Table 5 FY15/16 EXPENDITURE SUMMARY Mid-Year Expenditures Adopted Budget Projections Variance Variance % Administrative Expenses $1,766,814 $1,749,849 ($16,965) -1.0% Contract Compliance & Support $291,000 $261,000 ($30,000) -10.3% Recycling & AB 939 Compliance $1,091,000 $1,146,422 $55, % Collection Operations $666,300 $666,300 $0 0.0% Total SBWMA Expenses $3,815,114 $3,823,571 $8, % Shoreway Operations $37,187,900 $37,901,437 $713, % Total Expenses $41,003,014 $41,725,008 $721, % Capital Spending No change in projected capital spending. Please see Attachment A for a worksheet on our capital projects. Reserve Balances Table 6 below captures the Mid-Year reserve balance projections for FY15/16 compared to the Approved Budget reserve balance. The projected Total Unrestricted General Reserve variance of $454,492 primarily due to not implementing tipping fee increase at Shoreway for year Table 6 RESERVE BALANCE ACTUAL FY14/15 ADOPTED BUDGET MID-YEAR BUDGET FY15/16 FY15/16 Variance Variance % Unrestricted Rate Sstabilization (10% of expense) $ 3,887,542 $ 4,033,671 $ 4,105,871 $ 72, % Emergency Reserve (10% of total expense) $ 3,887,542 $ 4,033,671 $ 4,105,871 $ 72, % Equipment Replacement (Annual) $ 1,429,675 $ 1,499,514 $ 1,499,514 $ - 0.0% Facilities Improvements (discontinued) Undesignated $ 5,023,699 $ 3,175,018 $ 2,576,127 $ (598,891) -18.9% Total Unrestricted General Reserves $ 14,228,458 $ 12,741,874 $ 12,287,382 $ (454,492) -3.6% Committed: Bond Principal Payment Fund $ 1,058,333 $ 1,091,667 $ 1,091,667 $ - 0.0% TOTAL GENERAL RESERVES $ 15,286,791 $ 13,833,541 $ 13,379,049 $ (454,492) -3.3% Background On June 25, 2015, the SBWMA Board of Directors adopted the FY15/16 Annual Operating Budget. Mid-year budget was reviewed at the last Board on January 28, 2016 and staff has updated the Mid-Year Budget to include more current financial and tonnage information. Fiscal Impact The Mid-Year Budget for FY15/16 shows Net Income of $599,258 which is $921,628 less than the Adopted FY15/16 Budget. AGENDA ITEM: 5A - p4 FULL PACKET PAGE 44 of 71

45 Attachments: Resolution Attachment A FY15/16 Budget Worksheets AGENDA ITEM: 5A - p5 FULL PACKET PAGE 45 of 71

46 RESOLUTION NO RESOLUTION OF THE SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY BOARD OF DIRECTORS ACCEPTING MID-YEAR REVIEW OF FY1516 ANNUAL OPERATING BUDGET WHEREAS, the South Bayside Waste Management Authority proposed budget adjustments as presented is balanced and provided sufficient funds for normal operations. NOW THEREFORE, BE IT RESOLVED, the South Bayside Waste Management Authority hereby approves the adjustments to the fiscal year 2015/2016 operating budget. PASSED AND ADOPTED by the Board of Directors of the South Bayside Waste Management Authority, County of San Mateo, State of California on the 25 th day of February, 2016, by the following vote: Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton Menlo Park Belmont Redwood City Burlingame San Carlos East Palo Alto San Mateo Foster City County of San Mateo Hillsborough West Bay Sanitary Dist. I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular meeting of the South Bayside Waste Management Authority on February 25, ATTEST: Bob Grassilli, Chairperson of SBWMA Cyndi Urman, Board Secretary AGENDA ITEM: 5A - p6 FULL PACKET PAGE 46 of 71

47 SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY RESERVE SUMMARY RESERVE BALANCE FY1516 MID YEAR BUDGET ACTUAL FY14/15 ADOPTED BUDGET MID-YEAR BUDGET FY15/16 FY15/16 Variance Variance % Unrestricted Rate Sstabilization (10% of expense) $ 3,887,542 $ 4,033,671 $ 4,106,197 $ 72, % Emergency Reserve (10% of total expense) $ 3,887,542 $ 4,033,671 $ 4,106,197 $ 72, % Equipment Replacement (Annual) $ 1,429,675 $ 1,499,514 $ 1,499,514 $ - 0.0% Facilities Improvements (discontinued) Undesignated $ 5,023,699 $ 3,175,018 $ 2,572,212 $ (602,806) -19.0% Total Unrestricted General Reserves $ 14,228,458 $ 12,741,874 $ 12,284,119 $ (457,755) -3.6% Committed: Bond Principal Payment Fund $ 1,058,333 $ 1,091,667 $ 1,091,667 $ - 0.0% TOTAL GENERAL RESERVES $ 15,286,791 $ 13,833,541 $ 13,375,786 $ (457,755) -3.3% Reserves Cash Flow Md Yr AGENDA ITEM: 5A ATTACHMENT A - p1 FULL PACKET PAGE 47 of 71

48 SBWMA - FY2014 BUDGET Revenue Summary REVENUES BY MAJOR CATEGORY AND SOURCE REVENUE SUMMARY ACTUAL FY14/15 ADOPTED BUDGET YTD 12/10/15 MID-YEAR Variance to PROJECTION V Adopted Variance to Appvd Notes ADMINISTRATIVE REVENUES INVESTMENT INCOME $ 70,405 $ 48,200 $ 39,654 $ 54,508 $ 6, % INVESTMENT (GASB 31) MARKET VALUE ADJ INTEREST INCOME TOTAL ADMINISTRATIVE $ 70,405 $ 48,200 $ 39,654 $ 54,508 $ 6, % OPERATIONS TIPPING FEES - Non Franchised $ 6,528,891 6,982,300 3,712,849 7,434, ,430 Manily due to favorable volume increase of 7.4K tons mainly from third party customers and unfavorable decrease from public in Cubic yards 6.5% of SW (5.5K), GW (.149K) and fav C&D 1.4K. Due to increase in volume of SW.7K tons, GW TIPPING FEES - Franchised 26,140,918 26,620,000 13,192,466 26,736, , % (.4K), C&D 1K, and.13k wood COMMODITY SALES 10,722,198 9,630,400 3,980,805 8,899,603 (730,797) Mainly due to a dip of $.98 per ton resulting in ($66.4K) drop in revenue. The rest is a drop of -7.6% 56 tons in volume COMMODITY REVENUE SHARING - NEW (1,846,342) (1,064,400) 839,319 (1,070,551) (6,151) Budget didn't reflect the $59K in quality 0.6% incentive Buyback Payment (879,726) (897,900) 418,574 (888,242) 9, % OX MOUNTAIN - 0.0% E Recycling 66,085 50,000 10,450 50, % MRF Host Fee 456, , , ,000 (43,500) Third pary volume is lower (3.5K) tons than what -9.8% was forecasted HHW ON-CALL COLLECTION SERVICE - NEW 546, , , , % COMMERCIAL RECYCLING REPORTING ORDINANCE 4,500 25,000 1,125 15,000 (10,000) -40.0% Fee revenue from commercial recyclers per Ordinance MISCELLANEOUS REVENUE 29,240 24,000 27,383 30,000 6, % CA Paint Care program payments. TOTAL OPERATIONS $ 41,768,302 $ 42,475,700 $ 22,711,903 $ 42,269,758 $ (205,942) -0.5% TOTAL OPERATING REVENUES 41,838,707 42,523,900 22,751,558 42,324,267 (199,633) -0.5% NON-OPERATING RECEIPTS MISC - EQUIPMENT AUCTION NON-OPERATING RECEIPTS TOTAL REVENUE $ 41,838,707 $ 42,523,900 $ 22,751,558 $ 42,324,267 $ (199,633) -0.5% CONTRIBUTION TO CASH RESERVES $ 2,438,047 $ 1,520,886 $ 3,127,690 $ 595,995 $ (924,891) -60.8% REVENUE AGENDA ITEM: 5A ATTACHMENT A - p2 FULL PACKET PAGE 48 of 71

49 EXPENDITURE SUMMARY ACTUAL FY14/15 BUDGET YTD 12/31/2015 Mid-Yr BUD Variance Notes ADMINISTRATIVE EXPENSES ADMINISTRATIVE STAFF & & AB 939 PROGRAM STAFF EMPLOYEE RECRUITMENT / HR SUPPORT PEO COST (RGS/LGS ADMIN FEES) BOARD COUNSEL BOARD MEETINGS ACCOUNTING SERVICES INFORMATION SYSTEMS WEBSITE ANNUAL AUDIT D&O INSURANCE BANK FEES RENT PRINTING AND POSTAGE UTILITIES OFFICE/TENANT IMPROVEMENTS OFFICE SUPPLIES OFFICE EQUIPMENT COSTS PUBLICATIONS & PUBLIC NOTICES PROFESSIONAL DUES & MEMBERSHIPS VEHICLE MILEAGE & TOLLS CELL PHONES CONFERENCE & MEETINGS TRAINING SPONSORSHIPS & DONATIONS COMPUTER PURCHASE TOTAL ADMINISTRATIVE $ 564,358 $ 565,798 $ 309,526 $ 572,764 $ 6,966 Adjustment for Salary variance vs. Kevin's offset by $43K in unaccrued sick pay PTO. 664, , , ,342 Mainly saving of four months salary for Monica offset by $19.5K in unaccrued sick pay (16,319) PTO. 37,801 5, ,500 2,500 Anticpated recruiting for ED replacement. 9,000 19,900 3,393 19,900 - Fees paid to contract HR and payroll service provider. 34,616 55,000 7,718 45,000 (10,000) Contracted legal counsel services. 2,710 3,000 2,050 3, , ,530 68, ,530 - Estimated fees paid to current vendor (City of San Carlos). 25,096 28,000 13,030 27,000 (1,000) Fees paid to IT service provider. 12,578 11,500 8,555 12, Fees paid to website management service provider. 9,000 9,300 4,950 9,300 - Fees paid to auditors to complete FY & calendar year financial statements. 34,570 39,000 42,898 42,888 3,888 Annual insurance premium for Director's and Officer's insurance. 7,312 8,000 4,062 8,000 - Bank fees inclusive of fees paid to BNY as the Bond Trustee. 52,419 54,300 26,732 53,500 (800) Assumes one-year extension on lease with one option year at current terms ,299 17,500 7,093 17,500 - Utilities and janitorial services by the City. 1,034 1, ,000-16,904 15,500 5,447 15,000 (500) 19,544 24,300 9,121 24, , ,000 - Assumes notice for 2 bids. 1,311 2, ,000 (300) ,131 4,500 1,524 4,000 (500) Reimbursement for employee work related cell phone costs. 6,300 10,500 4,913 9,500 (1,000) Staff attendance at trade conferences and travel related to budgeted projects. 1,724 5,500 1,299 5,000 Up to $1250/employee per year for qualified educational, job related development (500) activities, and personal development as approved by Executive Director. 8,500 9,500 1,000 9,500 - Sponsorships for Acterra, SSMC, CAW and CPSC. 8,610 6,000 3,098 6,000 - Two new laptops. Minor other hardware. $ 1,671,334 $ 1,766,814 $ 889,511 $ 1,749,849 $ (16,965) CONTRACT COMPLIANCE AND SUPPORT RATE REVIEW TOTAL RATE REVIEW CONSULTANT SUPPORT FACILITY IMPROVEMENT OVERSIGHT HCM01 CONTRACT MANAGEMENT SUPPORT HCS02 COLLECTION SERVICES FRANCHISE ADMIN HFM01 FINANCE MANAGER SUPPORT - NEW HCM H QUARTERLY LOAD CONTAMINATION MONITORING TOTAL CONSULTANT TOTAL CONTRACT COMPLIANCE & SUPPORT $ 13,501 $ 25,000 $ 7,610 $ 15,000 (10,000) 3rd party consulting support if needed. $ 13,501 $ 25,000 $ 7,610 $ 15,000 $ (10,000) $ 23,641 $ 50,000 $ 1,355 $ 50,000 $ - 52,627 55,000-55,000 - Operations disaster mgt. plan, utility analysis for CNG and mixed waste processing. Annual financial audit of RSMC and SBR at $40k. $15k for reviewing annual route assessment. $15k call center monitoring. $40k annual reporting system audit. $25k operational assessment. 54,653 80,000 2,027 80,000-35,000-15,000 (20,000) On-call consultant support as needed. 43,895 46,000 10,000 46,000 - Bi-annual Recology contamination sampling. $ 174,816 $ 266,000 $ 13,381 $ 246,000 $ (20,000) $ 188,317 $ 291,000 $ 20,991 $ 261,000 (30,000) EXPENSES AGENDA ITEM: 5A ATTACHMENT A - p3 FULL PACKET PAGE 49 of 71

50 EXPENDITURE SUMMARY RECYCLING - AB939 COMPLIANCE RECYCLING ADMINISTRATION CIWMB C CIWMB ANNUAL REPORTS SBWMA ANNUAL REPORT HDV H DIVERSION PROGRAM SUPPORT RECYCLING REPORTING ORDINANCE EXPENSES EVENT GIVEAWAYS TOTAL RECYCLING ADMINISTRATION LONG RANGE PLAN/DIVERSION PROGRAMS ACTUAL FY14/15 BUDGET YTD 12/31/2015 Mid-Yr BUD Variance Notes $ $ 25,000 $ - CalRecycle Electronic Annual Report for 10 Member Agencies. $ 25,000 $ 25,000 19,734 8,010 5, ,000-4,643 45,000-45,000 - Public Spaces pilot and related Member Agency Assistance , ,000-1,500 1,500 - $ 37,852 $ 91,500 $ 20,168 $ 91, LRPU LRLONG RANGE PLAN ALTERNATIVES TOTAL LONG RANGE PLAN/DIVERSION PROGRAMS COMMERCIAL PROGRAMS LARGE EVENT/VENUE CONSULTING CLIMATE CHANGE POLICY OPTIONS COE C COMMERCIAL RECYCLING TECHNICAL ASSIST COE C PURCHASE COMM/MFD CONTAINERS FOR RECOLOGY CDRCY C C&D RECYCLING PROGRAM MF MMULTI-FAMILY OUTREACH TOTAL COMMERCIAL PROGRAMS RESIDENTIAL PROGRAMS QNL QQUARTERLY NEWLESTTER DESIGN/SETUP QNLPM QQUARTERLY NEWLESTTER PRINTING/MAILING RES R RESIDENTIAL OUTREACH PROGRAMS COMPS C COMMUNITY EVENTS HHWUW H HHW DOOR TO DOOR COLLECTION OUTREACH CURBSIDE HOUSEHOLD BATTERY OUTREACH ECE E ELECTRONIC COLLECTIONS EVENTS TOTAL RESIDENTIAL PROGRAMS TOTAL RECYCLING - AB939 COMPLIANCE SUBTOTAL SBWMA PROGRAM BUDGET COLLECTION OPERATIONS HHW/U-WASTE ON-CALL COLLECTION SERVICES -- NEW SHRED EVENT SERVICE TOTAL COLLECTION OPERATIONS TOTAL SBWMA PROGRAM BUDGET $ 146,600 $ 460,000 $ 55, ,422 $ $ 55,422 $ 146,600 $ 460,000 $ 55,285 $ 515,422 $ 55,422 $ - $ 7,500 $ - $ 7,500 $ - 15,636 27,000 9,135 27,000-35,885 75,000 3,745 75,000 - EOW Pilot - $120k; $55.4K Split-Body Pilot Outreach - $17k; Commercial Outreach - $60k; Education stakeholder engagement process - $25k. $183k mixed waste processing system project development to 30% design level and estimate. $25k to further refine admin. building options. Zero landfill analysis/taskforce at $30k. MD Note - Carry over project from FY1415. If done before end of FY, not needed then. Repurpose 2nd trailer as mobile education trailer, will explore grant funding opportunities. Incorporating all of Shoreway requires much more reporting requirements and review by outside auditors. $15k-AB1826 and AB341 Compliance Outreach; $20K commercial toolkit; $10kbusiness awards program; $30k-commercial accounts research. Includes $10K AB1826 and AB 341 compliance, $20K MFD toolkit updates/additions; $10K battery/cell outreach; $10K-MFD awards program. 21,440 60,000 18,717 60, Includes $10K AB1826 and AB 341 compliance, $20K MFD toolkit updates/additions; 14,729 50,000 50,000 - $10K battery/cell outreach; $10K-MFD awards program. $ 87,690 $ 219,500 $ 31,597 $ 219,500 - $ 11,176 $ 20,000 $ 2,593 $ 20,000 $ - Design/produce 3 newsletters. 80,016 90,000 44,964 90,000 - Assumes 2 direct mail newsletters and one sent via bill insert. Includes $70K on-going outreach/support for existing programs; $12K annual residential service notice development; $15K website/social media maintenance and updates; 74, ,000 31, ,000 - $23,000 mobile phone app annual fee ,000-5,000 - Covers compost giveaway, e-scrap/shred and coats drive promotion. 121,438 80,000 14,006 80,000 - Ongoing promotion for in program, includes direct mail, print and outdoor advertisements. 3,200 5,000 1,450 5, Included under "Community Events" line item. 291, ,000 94, ,000 - $ 563,624 $ 1,091,000 $ 201,514 $ 1,146,422 $ 55,422 $ 2,423,275 $ 3,148,814 $ 1,112,017 $ 3,157,271 $ 8,457 $ 545,327 $ 662,800 $ 320,433 $ 662,800 $ - 2,278 3,500 4,459 3,500 $ - 547, , , ,300 - $ 2,970,880 $ 3,815,114 $ 1,436,909 $ 3,823,571 $ 8,457 EXPENSES AGENDA ITEM: 5A ATTACHMENT A - p4 FULL PACKET PAGE 50 of 71

51 EXPENDITURE SUMMARY SHOREWAY OPERATIONS ACTUAL FY14/15 BUDGET YTD 12/31/2015 Mid-Yr BUD Variance Notes OPERATING CONTRACT - SBR DISPOSAL INSURANCE SHOREWAY SHOREWAY FACILITY COST SHOREWAY MAINTENANCE - New EDUCATION CENTER OPERATIONS MAINTENANCE - OX MTN TIPPER SHOREWAY MRF EQUIP. MAINTENANCE > $10k TAXES (SEWER) PROPERTY TAX TOTAL SHOREWAY OPERATIONS TOTAL OPERATING EXPENSES $ 17,445,438 $ 17,739,700 $ 9,071,713 $ 17,888,761 Mainly $76.2K transport to fairfield, $37.8K two tractors and two trailers, and $35K $ 149,061 disposing of batteries. 14,059,470 14,472,300 7,722,623 14,986,225 Lower volume of SW (2.8K), GW 2.96K, and C&D 2.3K for $27.4K, higher disposal due to GW product mix ($262K). higher other disposals of $102.1K, lower residue disposal 513,925 paid by SBR for MRF and third party for $14K.. 211, , , ,637 (763) 154, ,000 66, ,000 - Facility repair and maintenance projects not treated as "capital" projects. 13, ,315 60,000 19,639 60,000 - Budget for three special public events, school busing ($19k), tour supplies, etc. Monthly maintenance charge for truck tipper that JPA owns and Republic operates at 30,021 36,000 5,706 36,000 - Ox. Mtn. 18,501 30,000-30,000 - Unplanned MRF equipment repairs greater than $10k are responsibility of JPA. 33,630 35,800 28,874 57,747 21,947 Sewage water has doubled up causing higher charge. $ 32,009,054 $ 32,760,200 $ 17,050,242 $ 33,444,370 $ 684,170 $ 34,979,934 $ 36,575,314 $ 18,487,150 $ 37,267,941 $ 692,627 NON-OPERATING EXPENSES BONDR B DEBT SERVICE BOND INTEREST FRANCHISE FEE NON-OPERATING EXPENSES TOTAL SHOREWAY OPERATING EXPENSES TOTAL OPERATING EXPENSES (SBWMA Program + Shoreway Operations) $ 2,865,404 $ 2,833,100 $ 475,894 $ 2,833,100 - Solid Waste Enterprise Revenue Bond interest payments. 1,555,322 1,594, ,824 1,627,230 32,630 5% franchise fee payments by JPA to City of San Carlos. Higher in line with revenue $ 4,427,700 $ 1,136,718 $ 4,460,330 $ 32,630 $ 36,429,780 $ 37,187,900 $ 18,186,959 $ 37,904,700 $ 716,800 $ 39,400,660 $ 41,003,014 $ 19,623,868 $ 41,728,271 $ 725,257 EXPENSES AGENDA ITEM: 5A ATTACHMENT A - p5 FULL PACKET PAGE 51 of 71

52 FY1516 BUDGET ADOPTED BUDGET PROPOSED BUDGET MID YEAR PROJECTIONS FORECAST FORECAST FORECAST FORECAST PROJECT DESCRIPTION FY14/15 FY15/16 FY15/16 FY16/17 FY17/18 FY18/19 FY19/ SF044 Transfer Station (TS)Tipping floor resurfacing 200, , , , , , , SF045 Site paving repairs and restriping 3 600,000 1,400, SF047 Site signage 40, SF049 Truck shop building maintenance 20,000 20,000 20,000 20,000 20,000 20,000 20, SF050 TS building maintenance 20,000 20,000 20,000 20,000 20,000 20,000 20, SF051 MRF building maintenance 25, , , , , , , SF052 Admin building maintenance 40,000 20,000 20, ,000 40,000 40,000 40, SF053 Site maintenance 25,000 65,000 65,000 30,000 30,000 30,000 30, SF055 Fire suppression 15,000 15,000 15, SF056 Repairs to landfill tipper 70,000 15,000 15,000 15,000 15,000 15,000 15, SF060 Education center exhibits 15, , SF061 MRF tip area canopy 450, , , SF062 Electric charging station 20, , SF063 Replace diesel fuel storage and dist. System ,000 SF066 CNG fueling station 1, 3-1,312, SF064 Energy storage system SF065 Baler reline , new Mixed waste processing equipment ,984,400 new Transfer Station building improvements 3-2,532,200 new LED Lighting retrofit 3 274, ,000 new MRF equipment replacement 2 113, , , , , , SF013 PROGRAM CONTINGENCY SUBTOTAL CAPITAL PROJECTS: 925,000 1,317,750 1,317,750 3,164,700 12,506, ,167 3,810,417 1 $1,209,283 available in Shoreway Remediation fund to help cover capx. 2 Equipment Replacement cash reserve funds will cover these expenses Long Range Plan recommended projects. CAPITAL PROJECTS CAPITAL AGENDA ITEM: 5A ATTACHMENT A - p6 FULL PACKET PAGE 52 of 71

53 SHOREWAY OPERATIONS AND CONTRACT MANAGEMENT Agenda Item 7 FULL PACKET PAGE 53 of 71

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55 To: From: Date: Subject: STAFF REPORT SBWMA Board Members Hilary Gans, Interim Executive Director & Facility Operations Contract Manager February 25, 2016 Board of Directors Meeting Resolution Approving Contract for the Repair of the MRF and Transfer Station Tipping Floor Recommendation It is recommended that the SBWMA Board of Directors approve Resolution No attached hereto authorizing the following action: Authorize the Interim Executive Director to accept a bid from the low-bidder American Restore and enter into contract for the described transfer station and MRF tipping floor repair work for an amount not to exceed $289, Analysis The abrasive nature of solid waste has required periodic repairs to the concrete floor of the transfer station and MRF. In heavy wear areas, the floor s topping layer has worn through and the structural steel is being abraded. The Local Enforcement Agent (LEA) has noted the floor wear on his past inspection reports as an item that needs to be remedied. This tipping floor repair will re-cover the exposed rebar and will protect the structural elements of the MRF and transfer station floor. A public bid was conducted and there were two responding bidders: Structural Group, Inc. ($406,314.00), and American Restore ($275,964.00). American Restore was the qualified low bid and the company has performed similar work in previous years for the SBWMA with good results. A 5% contingency has been added to the American Restore bid amount to cover unforeseen issues for a total amount of $289, Background Since purchasing the facilities in 2000 the SBWMA has taken responsibility for repairs at the transfer station. The tipping floor repairs are typically annual repairs with the cost ranging from $100,000 to $200,000 however floor repairs were not conducted in 2015 so, repairs to both the MRF and Transfer station tipping floor are being completed. Specifications and bid documents for this repair are essentially identical to previous bid sets, except that the drawings identifying the areas needing floor to be repair have been updated (the documents are available for review at the SBWMA offices). Fiscal Impact This routine repair was anticipated and $300,000 was budgeted in the FY 2015/16 for tipping floor repair costs which is adequate to cover the estimated project cost of $289, ($275, plus an estimated contingency amount of $13,798.20) Attachments: Resolution AGENDA ITEM: 7A p1 FULL PACKET PAGE 55 of 71

56 RESOLUTION NO RESOLUTION OF THE SOUTH BAYSIDE WASTE MANAGEMENT AUTHORITY BOARD OF DIRECTORS APPROVING A CONTRACT FOR THE REPAIR OF THE MRF AND TRANSFER STATION TIPPING FLOOR WHEREAS, the SBWMA is responsible for maintaining the Facilities in good working order and in compliance with regulations. WHEREAS, the MRF and transfer station tipping floor are in need of repair. NOW, THEREFORE BE IT RESOLVED that the South Bayside Waste Management Authority hereby approves a contract with American Restore for repairs to the transfer station and MRF tipping floors and authorizes the Interim Executive Director to accept the low-bid from American Restore plus a 5% contingency for a total project not to exceed amount of $288, PASSED AND ADOPTED by the Board of Directors of the South Bayside Waste Management Authority, County of San Mateo, State of California on the this 25th day of February, 2016, by the following vote: Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton Menlo Park Belmont Redwood City Burlingame San Carlos East Palo Alto San Mateo Foster City County of San Mateo Hillsborough West Bay Sanitary Dist I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular meeting of the South Bayside Waste Management Authority on February 25, ATTEST: Bob Grassilli, Chairperson of SBWMA Cyndi Urman, Board Secretary AGENDA ITEM: 7A p2 FULL PACKET PAGE 56 of 71

57 INFORMATIONAL ITEMS ONLY Agenda Item 8 FULL PACKET PAGE 57 of 71

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59 Informational Item: California State Legislative Update for 2015/16 Agenda Item 8A Presentation by Nick Lapis, Californian s Against Waste AGENDA ITEM: 8A - p1 FULL PACKET PAGE 59 of 71

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61 To: From: Date: Subject: STAFF UPDATE SBWMA Board Members Farouk Fakira, Finance Manager February 25, 2016 Board of Directors Meeting 2016 Finance and Rate Setting Calendar Recommendation This is an informational report and no action is necessary. Summary The purpose of this staff report is to keep the Board and Member Agency staff informed on the schedule of important financial and rate setting events in This staff report is updated as necessary and included in the Board packet each month. Schedule of Finance, Contractor Compensation and Rate Adjustment Activities in 2016: January 2016 Approval of FY14/15 audited Financial Statement. Completed. February 2016 Mid-Year review of FY15/16 Operating Budget. March 2016 Recology submittal of the 2015 Revenue Reconciliation Report (March 31). April 2016 Discussion on preliminary FY16/17 SBWMA Operating Budget at April 28, 2016 Board meeting. Approval of unaudited calendar year financial statement for bond reporting requirements. May 2016 Additional Review of FY16/17 detailed SBWMA Operating Budget at May 26, 2016 Board meeting. June 2016 Approval of final FY16/17 SBWMA Operating Budget at June 23, 2016 Board meeting. Recology s 2017 Compensation Application due to the SBWMA and Member Agencies (June 15). SBWMA and Member Agency comments are due to Recology on its 2016 Compensation Application (June 29). SBWMA issued a letter requesting feedback from all Member Agencies on estimated 2017 Member Agency fees (e.g., franchise fees) to be included in there 2017 solid waste rates. Approval of Financial Systems audit report on Recology and SBR. AGENDA ITEM: 8B p - 1 FULL PACKET PAGE 61 of 71

62 July 2016 SBR's 2017 Compensation Application due to the SBWMA (July 1). SBWMA issues the following reports to the Board and Member Agency staff for review and comment: 1) Estimated 2016 and 2017 residential and commercial base revenue, 2) Estimated collected tonnage for 2016 and 2017, 3) Residential rates vs cost analysis, 4) Estimated residential revenue changes due to cart migration (i.e., lost revenue) by Member Agency since July 2015, and 5) Summary of 2017 Member Agency fees to be used in the 2017 cost projections based on Member Agency feedback. Recology revised 2017 Compensation Application due to the SBWMA and Member Agencies (July 22). August 2016 SBWMA issues the Draft Report Reviewing Recology s 2017 Compensation Application, recommended total Revenue Requirement and rate adjustment(s) (August 12). SBWMA issues the Draft Report Reviewing SBR s 2017 Compensation Application (August 15) Comments due back from Member Agencies on draft Reports Reviewing Recology s 2017 Compensation Application and SBR s 2017 Compensation Application (August 26). September 2016 SBWMA issues Final Report Reviewing Recology s 2017 Compensation Application including the recommended total collection rate adjustment for (September 15 BOD Packet). SBWMA issues Final Report Reviewing SBR s 2017 Compensation Application. (September 15 BOD Packet). Approval of the SBR 2017 Compensation Application. (September 22 BOD Meeting). Approval of the Recology 2017 Compensation Application and total recommended Revenue Requirement. (September 22 BOD Meeting). September December 2016 Member Agencies issue Prop. 218 notice and approve final 2017 solid waste rates. November 2016 SBWMA issues report to Board on recommended January 1, 2017 Shoreway tip fee adjustments including calendar year 2017 SBWMA financial projection with assumed tip fee and cash reserve balances. AGENDA ITEM: 8B p - 2 FULL PACKET PAGE 62 of 71

63 STAFF REPORT To: SBWMA Board Members From: Farouk Fakira, Finance Manger Date: February 25, 2016 Board of Directors Meeting Subject: Check Register for January 2016 Recommendation This is an informational item only and no action is required. This report was requested by the Board members. Summary The purpose of this report is to provide transparency to the Board and the public on the actual spending by the SBWMA. All payments made by check issued in January 2016 are listed on the attached report for review. Analysis The SBWMA has a contract with the City of San Carlos for accounting services including the issuing of all payments and deposit of all receipts. In accordance with the City of San Carlos policies, checks are normally issued every two weeks. All SBWMA invoices are approved for payment by the program manager and then by the Executive Director or Finance Manager. Total A/P spending for January 2016 was $237, as detailed in Attachment A. December 2015 disposal invoices got paid in February, Certain ACH transactions such as payroll and some benefit payments are drawn directly from the bank and are therefore not included in these A/P reports. If you have any questions on this, please contact Cyndi Urman or Farouk Fakira. The format of the check registers is limited to what is available from the city s MUNIS accounting system. Attachments: Attachment A January 2016 Check Registers FULL PACKET PAGE 63 of 71 AGENDA ITEM: 8C - p1

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71 STAFF UPDATE March - July 2016 Potential Future Board Agenda Items March 24, 2016 (San Carlos Library Conference Room) Status Update on Long Range Plan Projects (Staff presentation) Discussion on Potential Capital Projects for FY16/17 (Discussion item) AB1826 Mandatory Commercial Organics Recycling Update (Staff update) Resolution Approving a Contract with Sloan/Vazquez to Conduct and Operations and Cost Assessment of Recology s Collection Services (Consent item) Resolution Approving a Contract with Ascent Environmental to Complete the 2015 CalRecycle Electronic Annual Reports in Compliance with AB939 (Consent item) Report on status of Agency s Financial Reserves (Staff update) April 28, 2016 (San Carlos Library Conference Room) Resolution Approving Calendar Year 2015 Financial Statements (Consent item) Update from Executive Director Search Committee (Discussion item) Discussion on FY16/17 Preliminary Operating Budget (Staff presentation and discussion item) Status Report on Zero Landfill Working Group (Discussion item) Technical Consulting Contracts for 1 st Quarter 2016 (Staff update) Resolution Appointing an Ad hoc Committee to Review Franchise Agreement Amendments (Approval item) Staff Report on the SBWMA s Review of Recology Meeting the Franchise Agreement Standards and Goals of the Contractor Selection Process (Staff update) 2015 Member Agency Snapshot Reports (Staff update) Staff Update on Implementation of Commercial Recycling Hauler Reporting System Ordinance (Staff update) May 26, 2016 (San Carlos Library Conference Room) Status Report on Expiring Door-to Door HHW Contract and Options (Staff update) Discussion on FY1617 Preliminary Operating Budget (Staff presentation and discussion item) Status Update on Long Range Plan Projects (Staff presentation) Resolution Appointing an Ad hoc Committee to Review Franchise Agreement Amendments (Approval item) Approval of Quarterly Investment Report as of 3/31/16 (Consent item) Annual Solid Waste Rate Survey (Staff update) June 23, 2016 (San Carlos Library Conference Room) Resolution Adopting FY16/17 Operating Budget (Approval item) Resolution Approving Findings from Review of Collection Services and Facility Operations Reports, Tonnage Data and Customer Service Systems Audits for 2015 (Approval item) Resolution Approving 2015 Financial and Accounting Systems Audit of Recology and SBR (Approval item) Resolution Approving Annual Contract for Legal Counsel Services for FY16/17 (Consent item) Resolution Approving Annual Contract for Information Technology and Website Services for FY1617 (Consent item) Resolution Approving Property Insurance Policy Renewal (Consent item) Resolution Approving Contract(s) with Public Education and Outreach Vendor(s) (Consent item) Staff Report on Results from Every Other Week Garbage Collection Pilot (Staff presentation) July 28, 2016 (San Carlos Library Conference Room) Status Report on Expiring C&D Processing Contract and Options (Staff update) FULL PACKET PAGE 71 of 71 AGENDA ITEM: 8D - p1