HomeMy WebLinkAbout03/30/2009 B A K E R S F I E L D
Staff: John W. Stinson Harold Hanson, Chair
Rick Kirkwood Irma Carson
Ken Weir
BUDGET AND FINANCE COMMITTEE
of the City Council - City of Bakersfield
Monday, March 30, 2009 — 12:00 p.m.
City Hall North
1600 Truxtun Avenue, Bakersfield, CA
First Floor, Conference Room A
A G E N D A
1. ROLL CALL
2. ADOPT FEBRUARY 23, 2009 AGENDA SUMMARY REPORT
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Discussion regarding Participation of Local Contractors and Minority
Businesses in Federal Stimulus Construction Projects and Bid Preference —
Stinson
5. NEW BUSINESS
A. Discussion Regarding Billing Blue Cart Recycling Program on Tax Roll —
Rojas
5. COMMITTEE COMMENTS
6. ADJOURNMENT
B A K E R S F I E L D
John W. Stinson, Assistant City Manager Ken Weir, Chair
Sue Benham
For: Alan Tandy, City Manager
Rick Kirkwood, Management Assistant Irma Carson
AGENDA SUMMARY REPORT
REGULAR MEETING OF THE BUDGET
AND FINANCE COMMITTEE
Monday, February 23, 2009 — 12:00 p.m.
City Hall North
1600 Truxtun Avenue, Bakersfield, CA
First Floor, Conference Room A
The meeting was called to order at 12:15:12 PM
1. ROLL CALL
Committee members present: Councilmember Harold Hanson, Chair
Councilmember Irma Carson
Absent: Councilmember Ken Weir
Staff present:
Harvey L. Hall, Mayor Alan Tandy, City Manager
John W. Stinson, Asst. City Manager Rick Kirkwood, Management Assistant
Steve Teglia, Administrative Analyst Ginny Gennaro, City Attorney
Joshua Rudnick, Deputy City Attorney Nelson Smith, Finance Director
Lyle Martin, Asst. Police Chief Raul Rojas, Public Works Director
Donna Kunz, EDCD Director Brad Underwood, Asst. Public Works Director
Marian Shaw, Civil Engineer Steve Hollingsworth, Gen. Services Supt.
Rhonda Barnhard, Asst. EDCD Director
Sandra Jimenez, Asst. Finance Director
Others present:
James Geluso, Bakersfield Californian Jose Onsurez, Jr., Granite Construction
Andy Pauldan, Brown Armstrong Jerry Fuentz, Kern County Custom Const.
Eric Xin, Brown Armstrong Jonathan Webster, NBAK
Fletcher Waggoner, Citizen Karen Goh, Garden Pathways
Marvin Dean, Kern Minority Contractors
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 23, 2009
Page 2
2. ADOPT AUGUST 25, 2008 AGENDA SUMMARY REPORT
Adopted as submitted.
3. PUBLIC STATEMENTS
None.
4. NEW BUSINESS
A. Audit Reports — Nelson Smith
Finance Director Nelson Smith provided a brief overview of the Brown Armstrong
audit, which included the following reports for fiscal year ended June 30, 2008:
• Comprehensive Annual Financial Report (CAFR)
• Independent Auditors Report — Single Audit Report — Schedule of Federal
Expenditures for the City of Bakersfield
• Independent Auditors Report — Compliance with Contractual Requirements
relative to the Bakersfield Subregional Wastewater Management Plan
• Independent Auditors report on Appropriations Limit Worksheet (GANN Limit) of
the City of Bakersfield
• Independent Auditors Report — Rabobank Arena, Theater, Convention Center,
Bakersfield Ice Sports Center and Brighthouse Networks Amphitheatre
There were no negative reported financial findings. However, there was one minor
finding by the Waste Water Management Technical Advisory Committee noting that
the budget was submitted 26 days late, which was not in accordance with the
agreement.
Andy Pauldan, of Brown Armstrong, congratulated the City for its successful audit.
Committee member Irma Carson made a motion to present the audit reports to the
City Council for approval. The motion was accepted by Committee members
present.
B. Assessment District Update — Smith
Finance Director Nelson Smith reported that in September 2008, the City Council
authorized the initiation of foreclosure proceedings on several hundred parcels of
property that fell within the boundaries of twelve separate Assessment Districts.
Due to this action, many properties tax bills payments became current, while others
are either in pending foreclosure or awaiting court dates. However, three new
districts, District 05-3 (Diamond Ridge), District 07-2 (Sydney Harbour), and District
05-1 (City in the Hills) are currently in delinquency. The City typically does not look
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 23, 2009
Page 3
at delinquency reports until after the June 30th County deadline. These districts
were depended upon for tax collection to make the March and September bond
payments. Diamond Ridge and Sydney Harbour are seriously delinquent with their
installments. These delinquencies will cause the City to draw down on the reserve
fund to make the first payment. Each district has a 10% reserve amount for such
issues. Mr. Smith added that this situation is a first in 20 years and is a reflection of
the current economic times. No draw down on the reserve is necessary to make
the bond payment for The City in the Hills District. The City is still in discussions
with the developer regarding the remaining public improvements and their payment
of delinquent taxes. City Manager Alan Tandy commented that as a result of the
increasing delinquency problem, the City stopped forming these districts. The City
Council subsequently joined the California Communities Public Infrastructure
Finance Program, so that developers that could still function and have a place to go
to get loans on their land. By proceeding with actions indicated by staff, it will avoid
a bigger problem. Mr. Tandy encouraged the Finance Department to continue with
the collection processes in motion.
Committee member Irma Carson asked staff to clarify how these delinquencies
would affect the Cities credit standing with the bond holders. Mr. Tandy responded
that while the City is not responsible for loan repayment, the City's name is on the
bonds when they are issued. If delinquencies become apparent and the City was
not taking the foreclosure actions, it would not look favorable in the eyes of the
bond rating professionals. Mr. Smith added that being proactive and taking actions
early, reflects the City in a more positive light. Committee chair Harold Hanson
asked how many potential dollars are represented in default. Mr. Smith responded
that it varies by district and the City measures the percentage. When the
percentage goes above 5%, it requires action from the City.
C. Airport Fee Schedule Changes - Rojas
Public Works Director Raul Rojas reported on the rate comparison between the
Bakersfield Municipal Airport and several local airports. Staff compared rates on
items such as city-owned hangars, tie-down, and shade ports. Based on the
comparisons, staff recommends the adoption of the new fee increases. Mr. Rojas
advised that even with these increases, the net increase in revenue for the City is
about $8,000 total for the year. Bakersfield citizen Fletcher Wagner advised that
the numbers reported by staff are incorrect and believes this is due to
miscommunication between staff and other local airports providing their rates. He
would like the Committee to consider reestablishing an advisory committee for
airport issues. Mr. Rojas commented that staff will compare the information Mr.
Wagner provided and make the appropriate corrections on Port-a-Port fees if
needed. City Manager Alan Tandy added that if the Committee is willing to move
this issue onto Council, it will be with the understanding that staff will make the field
check and adjust the amounts on this item only, if appropriate. Mr. Rojas
commented that he did not recommend the forming of an advisory Committee. Mr.
Tandy suggested that a tenant meeting be held at least twice a year to discuss the
issues would be a better compromise. Committee member Irma Carson made a
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 23, 2009
Page 4
motion to forward this item to the full Council for consideration. The motion was
approved by Committee members present.
D. Discussion regarding 2009-10 Community Development Action Plan Proposal -
Kunz
Economic Development Direct Donna Kunz, summarized the Annual Entitlements
received by the City through the U.S. Department of Housing and Urban
Development (HUD). These entitlements help to improve the quality of life in low to
moderate income neighborhoods. The HUD Community Development Block Grant
Program (CDBG), HOME Investment Partnership (HOME) and Emergency Shelter
Grant (ESG) entitlements for FY 2009-10 are $4,971,020. Staff is projecting
program income from repayments due to refinancing and payoffs in the amount
$20,000 for CDBG and $150,000 for HOME. The total proposed budget for CDBG,
Home, ESG for FY 2009-10 is $5,141,020.
FY 2009-10 Proposed CDBG
The total resources available for FY 2009-10 are $3,324,357. This amount includes
the CDBG Entitlement of $3,304,357 and the project program income of $20,000.
The total resources are allocated as follows:
• Total Administration — 20% CAP: $660,871.
• Long Term Obligations: $404,035. These on-going, long term obligations
are repayments of Section 108 Loans.
• Public Services — 15% CAP: $515,000. Services include graffiti removal in
HUD eligible areas, the Bakersfield Senior Center, Downtown Area Police
Patrol and Fair Housing.
• Low-Mod Benefit: $196,000 — Bakersfield Senior Center (Kitchen Rehab)
and Bakersfield Community House (Remodel)
FY 2009-10 Proposed Capital Improvement Projects
Net resources available for Capital Improvement Projects (CIP) are $1,548,451.
Staff submitted the following for consideration:
• Amador St, & Bell Terrace Ave. — Curb and Gutter (near Fairgrounds):
$90,000
• California & P St. Area — Curb and Gutter: $800,000
• Alta Vista Area — Curb and Gutter: $500,000
• Lowell Park Playground - Rehab: $158,451
This year staff has received nine proposals for assistance from non-profit and for-
profit organizations totaling $984,335 and 16 intra-city proposals totaling
$7,236,296 for projects to improve the quality of life and infrastructure for low-
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 23, 2009
Page 5
income neighborhoods. Ms. Kunz provided to the Committee a list of for-profit and
non-profit applications that show the proposer's name, description of the project
location, the estimated cost of project and if the project is HUD eligible or qualified.
Unfortunately, the City does not have the financial resources to consider all
projects. In order to meet Councils public service goals, staff's recommendation is
to continue the graffiti removal in HUD eligible areas, continue assistance to the
Bakersfield Senior Center, increase downtown area police patrol to the new
entertainment area and continued support of Fair Housing. Ms. Kunz added that
another $1 billion has been allocated in the stimulus plan for CDBG. It is a one-
time allocation and will be distributed on the allocation formula to the entitlement
cities. Staff estimates the amount to be approximately $800,000 to $1,000,000. If
received, staff will come back to the Committee with a supplemental request for
additional projects. Committee member Irma Carson asked if the stimulus money
could be allocated to Garden Pathways to fund their projects. Ms. Kunz responded
that any eligible CDBG projects will be considered. The only caveat with the new
stimulus money is that the project must be "shovel ready" and a contract must be in
place within 120 days of the award to the City. City Manager Alan Tandy added
that the project designs must be completed and be ready to go to bid.
Home Investment Partnership (HOME)
The total funding available for FY 2009-10 is $1,670,000. This amount includes the
HOME Entitlement of $1,520,000; $150,000 of projected program income. Ms.
Kunz reported that no competitive HOME applications were received this year.
There are currently projects in the southeast and Old Towne Kern in the regular
redevelopment activities that are multifamily, affordable, tax credit projects that
require a gap in subsidy assistance. The funding staff received from HOME was
placed in a new construction account. A 10% portion in the amount of $152,000
was set aside for administration cost.
Proposed Housing Programs.
Staff estimates the total Program/Project Costs ($1,468,000) and Direct Delivery
($50,000) for FY 2009-10 to be $1,620,000. Program/Project cost includes
$1,240,000 in SEPA, DT & OTK Downpayment Assistance and $228,000 in HUD
mandated Community Housing Development Organization (CHDO) sponsored
projects.
Emergency Shelter Grant (ESG):
Staff proposes $146,663 in ESG to fund the Bakersfield Rescue Mission
($62,000); Bethany Homeless Shelter ($62,000); and Alliance Against
Family Violence ($15,330). Also included is the 5% Administrative Cap of
$7,333.
Committee members unanimously approved staff's recommendations to move
forward to full Council for approval.
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 23, 2009
Page 6
E. Discussion regarding Participation of Local Contractors and Minority Businesses in
Federal Stimulus Construction Projects and Bid Preference — Stinson
Marvin Dean of Kern Minority Construction gave a presentation on a proposal to
provide a preference to local and minority contractors on City construction contracts
and a request for a sole source public outreach contract. Mr. Dean requested to
meet with City Manager Alan Tandy. Mr. Tandy agreed to meet with Mr. Dean. Mr.
Tandy also indicated staff needed some time to review and research the materials
and concerns raised by Mr. Dean and would come back with a report at the March
Budget and Finance Committee meeting.
F. Discussion regarding Adoption of the 2009 Committee Meeting Schedule - Stinson
Committee members adopted the schedule as submitted.
5. COMMITTEE COMMENTS
None.
6. ADJOURNMENT
The meeting adjourned at 1:50:13 P.M.
cc: Honorable Mayor and City Council
S:\Council Committees\2009\Budget and Finance\February\February 23 Agenda Summary.doc
BA E
O 4coavoe��
U O
cam, MEMORANDUM
LIFO CITY ATTORNEY
March 26, 2009
TO: BUDGET & FINANCE COMMITTEE
Harold Hanson
Irma Carson
Ken Wier
FROM: JOSHUA H. RUDNICK, DEPUTY CITY ATTORNEY
SUBJECT: LOCAL BIDDING PREFERENCES - UPDATE
The following is a legal memorandum which responds to the committee's referral
at the February 23, 2009 Budget and Finance Committee meeting and addresses the
DOT letter presented to Mr. Dean at the March 11, 2009 City Council meeting.
Issues:
1) May the City establish bidding procedures for public works projects
under which contractors are entitled to a preference on the ground
that their places of business are located within the City?'
2) May the City establish bidding procedures for public works projects
that establishes a preference for minority and women owned
businesses?
Short Answer:
Short answer No. 1: No. The City may not establish bidding procedures
for those projects subject to the bidding requirements of the California Public Contract
Code under which contractors are entitled to a preference on the grounds that their
places of business are located within the City.
Short answer No. 2: No. The City may not establish bidding procedures for
those projects subject to the bidding requirements of the California Public Contract
Code that include a preference for minority and women owned businesses. However,
federal and state law does allow the City to establish goals for participation by minority
and women business enterprises related to such public works projects.
1 This is to be distinguished from the 1%offset that the City of Bakersfield gives to local vendors providing goods,which is different
from that of a true"public work contract."
March 26, 2009
Budget & Finance Committee
Re: Local Bidding Preferences - Update
Page 2 of 5
Legal Analysis:
a. Local preferences:
Contracts for competitively bid public projects must be awarded to the lowest
responsible bidder. California Public Contract Code Section 20162.
Under Federal law, the United States Supreme Court held that an ordinance
requiring a bidding preference for hiring local residents on public works contracts was
held to violate the privileges and immunities clause of the United States Constitution
and therefore was deemed unconstitutional. United Building & Construction Trades
Council of Camden County& Vicinity v. City of Camden(1984), 465 U.S. 208.
In addition, the California Supreme Court held that a program that required
contractors bidding on city projects either to utilize a specific percentage of minority and
female subcontractors or to document efforts to include minority and female
subcontractors in their bids violated Proposition 209 (Cal. Const. art. 1, Section 31),
which prohibits any form of preferential treatment based upon race, sex or other
prohibited characteristics by the state or its political subdivisions. Hi-Voltage Wire
Works, Inc. v. City of San Jose(2000) 24 Cal. 4th 537.
Accordingly, this office has determined that where a preference is required to be
given by law to the lowest responsible bidder, a preference in favor of local vendors is
plainly invalid.
Although Federal and California law clearly do not allow for the establishment of
a preference for local businesses with regard to public works projects subject to the
lowest responsible bidder requirements, cities do have the option of establishing goals
for minority and women business enterprise participation in these projects. Public
Contract Code section 2000 provides, in part, that "any local agency may require that
a contract be awarded to the lowest responsible bidder who does either of the following:
(1) Meets goals and requirements established by the local agency relating to
participation in the contract by minority business enterprises and women business
enterprises. If the bidder does not meet the goals and requirements established by the
local agency for that participation, the local agency shall evaluate the good faith effort of
the bidder to comply with those goals and requirements as provided in paragraph (2).
(2) Makes a good faith effort, in accordance with the criteria established pursuant
to subdivision (b), prior to the time bids are opened, to comply with the goals and
requirements established by the local agency related to the contract by minority or
women business enterprises."
March 26, 2009
Budget & Finance Committee
Re: Local Bidding Preferences - Update
Page 3of5
The establishment of minority and women business enterprises (MWBE) goals
does not create a preference for minority or women businesses bidding on public works
projects. However, the bid must still be awarded to the lowest responsible bidder who
has either met with the goal established by the City, or has made a good faith effort to
meet the goal, 2
b. Section 3:
In addition, there are also Section 3 (low-income) and MWBE goals that apply to
certain projects funded in whole or in part with federal funds. Section 3 of the HUD Act
of 1968 requires, to the greatest extent feasible, that recipients of HUD funds (and their
contractors and subcontractors) provide jobs and other economic opportunities to low-
income persons, particularly public housing residents, those living nearby a HUD-
assisted project, participants in Youthbuild programs and homeless persons. Section 3
helps create employment for low-income persons and provides contracting opportunities
for businesses that are owned by low-income people or that provide employment to low-
income people. However, the MWBE goals that apply to certain projects funded in
whole or in part with federal funds, such as Section 3 funded projects, do not create or
allow for the creation of a preference for either local or MWBE contractors.
The City of Bakersfield has a Section 3 Plan that it follows in order to comply with
the HUD rules and regulations concerning economic opportunities for low and very low
income persons and the use of HUD funds. (See attached Section 3 Plan.) In order to
ensure compliance under Section 3, HUD requires that the City maintain records and to
submit an annual report to the Assistant Secretary of HUD for the purposes of
determining the effectiveness of Section 3.
Regarding outreach and bid documents, HUD requires that the City send
MBE/WBE documentation/certification out with each federally procured project. The
plans and specifications are widely distributed as with all Public Works projects giving
qualified contractors the opportunity to bid. (See attached memos dated February 17,
2009 and February 20, 2009 that were submitted to the Budget and Finance Committee
at its February 23, 2009 meeting.)
The Section 3 requirements apply to contractors and subcontractors that are
hiring new employees and performing work on a Section 3 covered project for which the
amount of the assistance exceeds $200,000; and each contract or subcontract exceeds
$100,000. If neither the Primary contractor or subcontractor are hiring new
employees, then Section 3 is not aaPlicable
Z Although Mr.Dean did not specifically address small business enterprises("SBE's")in his presentation,Public Contracts
Code Section 2002 was added to the Public Contract Code in 2001,which allows local agencies to establish a five percent
preference for"small businesses".In order to legally include such provisions in our public works bid documents,we would need the
enactment of legislation similar to that contained in section 2002.
March 26, 2009
Budget & Finance Committee
Re: Local Bidding Preferences - Update
Page 4 of 5
Regarding monitoring of the contractors, the following is the procedure that the
City takes to insure that any subcontractor (including Disadvantaged Business
Enterprises ("DBE"), MBE, or WBE) is employed and performing the appropriate work
on a Section 3 project:
Once construction has commenced on a project, each subcontractor doing work
on the project is checked against the subcontractor's list submitted at the time of bid.
Once it has been determined that the subcontractor is listed, the scope of work being
performed by the subcontractor is reviewed to ensure it conforms to the scope attributed
to the listed subcontractor. If the subcontractor is not listed or is performing work
outside of the scope outlined on the subcontractor listing, the General Contractor is
immediately notified to stop that work and to either employ the appropriate
subcontractor or to provide a subcontractor substitution in accordance with the Public
Contract Code. To date the City has not detected any Section 3 violations.
C. California Department of Transportation (Caltrans) Contracts:
On March 4, 2009, the City of Bakersfield was informed by Caltrans that it
received conditional approval from the Federal Highway Administration (FWHA) to
immediately implement its Federal Fiscal Year (FFY) 2009 DBE Goal and Methodology.
(See attached letter dated March 4, 2009 from Caltrans to the City of Bakersfield). The
Goal and Methodology provides for a 6.75 percent race-conscious goal and a 6.75
percent race-neutral goal for an overall 13.5 percent program goal. Implementation of
the race-conscious component of the DBE program applies to local agencies, such as
the City of Bakersfield, as subrecipients, and includes African American, Asian-Pacific
American, Women, and Native American businesses, in the advertised contracts for
federally funded projects. These four groups together will be referred as Underutilized
Disadvantaged Business Enterprises (UDBE's). The race-conscious goal established
for each contract will be based on the subcontracting opportunities it provides and the
availability of the UDBE's.
The California Division of Engineering Services and the Division of Procurement
and Contracts will be including the UDBE race-conscious goal in its federally-funded
advertised contracts by March 30, 2009. The FHWA has indicated that failure to
implement the overall goal and contract goals could result in the imposition of
sanctions authorized by 23 Code of Federal Regulation (CFR) Part 1 Section 1.36.
Those sanctions may include withholding federal funds, withholding approval of
projects, or other action FWHA deems appropriate under the circumstances until
compliance or remedial action has been accomplished by the State.
Finally, although the UDBE goals do not create a preference per se, it is our
understanding that Caltrans will not award a contract to the lowest responsible bidder
that did not meet the goal and did not make an adequate good faith effort to meet the
goal. Due to the grey-area legal issues concerning Caltrans contracts, staff will be sent
to a Caltrans contract procurement training to obtain more information on how Caltrans
expects local agencies, such as the City of Bakersfield, to implement its UDBE goals
and will report back to the committee.
March 26, 2009
Budget & Finance Committee
Re: Local Bidding Preferences - Update
Page 5 of 5
d. Project Labor Agreement and Federal Stimulus Funds:
The issue of project labor agreements has also been raised. Generally speaking,
a project labor agreement is a pre-hire collective bargaining agreement with one or
more labor organizations that establishes the terms and conditions of employment for a
specific construction project. These agreements are used primarily on large construction
projects. The purpose of the agreement is to help prevent labor disputes that can delay
or even stop a project, and to assist in coordinating the numerous employees and their
employees that are often involved with larger projects.
On February 6, 2009 President Obama issued an Executive Order encouraging
federal agencies to consider requiring the use of project labor agreements in connection
with large-scale construction projects costing $25 million or more. This order does not
require an executive agency to use a project labor agreement on any construction
project, and does not create any right or benefit by any party regarding the use of
project labor agreements. We are also not aware of any federal orders or legislation
that would allow the City to create a preference for local or MWBE contractors for
projects funded with either state, local or federal funds.
Conclusion:
The City may not establish bidding procedures for those projects subject to the
bidding requirements of the California Public Contract Code under which contractors are
entitled to a preference on the ground that their places of business are located within
the City or that include a preference for minority and women owned businesses.
However, federal and state law does allow the City to establish goals for
participation by minority and women business enterprises related to public works
projects, and allows the City to institute a small business preference. Moreover, certain
federally-funded projects require the recipient to meet low-income, MWBE, and UDBE
goals. In those public works contracts, the bid must still be awarded to the lowest
responsible bidder who has either met the goal established by the funding agency, or
has made a good faith effort to meet the goal.
In the case of local Caltrans projects that are funded by the FWHA, it appears
that Caltrans will be approving local contracts that are awarded to the lowest
responsible bidder that meets the project UDBE race-conscious and race-neutral
goals. However, it is unclear how Caltrans expects the City of Bakersfield to evaluate
those bidders that do not meet the UDBE goals, but simply make a good faith effort to
meet the goals.
cc: Alan Tandy, City Manager
John Stinson, Assistant City Manager
Nelson Smith, Finance Director
JHRNL Raul Rojas, Public Works Director
Enclosures
S:\Finance\M E MOS\08-09\Local BiddingPref-update.doc
CITY OF BAKERSFIELD
ECONOMIC OPPORTUNITIES
FOR
LOW & VERY LOW INCOME PERSONS
City of Bakersfield
Jobs for Residents
Section 3 Plan
SECTION 3 PLAN
C:\DOCUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB
Section 3 Plan
Table of Contents
Subject Page
I. Purpose ............................................................................................... 2
II. Definitions ........................................................................................... 2
III. Goals for Section 3 Residents & Section 3 Business Concerns......... 4
IV. Selection Priority for Section 3 Residents
& Section 3 Business Concerns .......................................................... 5
V. List of Section 3 Compliance Documents to be Submitted with Bid ... 7
VI. Section 3 Equal Opportunity Plan (EOP) ........................................... 8
VII. Section 3 Contract Compliance .......................................................... 9
VIII. Complaint Procedure .......................................................................... 9
IX. City of Bakersfield Preference Procedures for section 3 Business... 10
X. Attachments & Maps ......................................................................... 11
C:\DOGUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated-10-20-06 1313 Table of Contents
NOTICE OF SECTION 3 REQUIREMENTS
Please read the attached Section 3 Plan very carefully. Your cooperation is
appreciated. It is your responsibility, as proposed bidder/responder, to assure
compliance with the following procurement provisions. Non-compliance will result in
the rejection of submitted bids or proposals. Section 3 is in addition to, and separate
from, the Affirmative Action requirements of this proposal. If there are any
questions regarding Section 3 requirements, please contact:
Economic Development Director
City of Bakersfield
Economic and Community Development Department
1600 Truxtun Avenue, Suite 300
Bakersfield, CA 93301
(661) 326-3765
FAX: (661) 328-1548
CADOCUME-1ljrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 88 Page 1 of 11
SECTION 3 PLAN
I. PURPOSE
Section 3 is a means to foster local economic development, neighborhood
economic improvement, and individual self-sufficiency through housing and
community development projects funded whole or in part by the Federal
Department of Housing and Urban Development (HUD). Section 3 of the HUD
Act of 1968 as amended by the Housing and Community Development Act of
1992, states that it is the policy of Congress and the intent of this section to
ensure that employment and other economic opportunities generated by certain
HUD financial assistance shall, to the greatest extent feasible, and consistent
with existing Federal, State and local laws and regulations, be directed to low-
and very low-income persons, particularly those who are recipients of
government assistance for housing, and to business concerns which provide
economic opportunities to low- and very low- income persons.
Section 3 is the legal basis for providing jobs for residents and awarding
contracts to businesses in areas receiving certain types of HUD financial
assistance in excess of $100,000. In the event Section 3 covered project
expenditures generate economic opportunities (i.e., not out of necessity to serve
low- or very low- income persons, but out of necessity to serve the employment
or contracting needs of the recipient or contractor) these economic opportunities
(i.e., new employees/subcontractors) must be directed (i.e., give preference) to
qualified Section 3 residents and Section 3 business concerns. The purpose of
Section 3 preferences is to be results oriented by: 1) encouraging business
concerns that are not major sources of employment for low-income persons to
increase their employment of these persons when economic opportunities arise
from HUD financed construction related projects; and 2) promoting the growth of
"profit-making" enterprises owned by low-income persons that substantially
employ low-income persons with Section 3 contract awards (i.e., projects funded
with Community Development Block Grant funds).
II. DEFINITIONS
Employment Opportunities - With respect to Section 3 covered housing and
community development assistance, this term means all employment
opportunities arising in connection with this Section 3 covered project including
management and administrative jobs. Management and administrative jobs
include architectural, engineering, or related professional services required to
prepare plans, drawings, specifications, or work write-ups; and jobs directly
related to administrative support of these activities, for example, construction
manager, relocation specialist, payroll clerk, etc.
Fulltime - A position that is temporary, seasonal, or permanent that requires at
least 1750 hours of employment on an annual basis.
C:\DOCUME-.1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20.06 BB Page 2 of 11
Metropolitan Area - A metropolitan statistical area (MSA), as established by the
Office of Management and Budget. The entire geographic area encompassed by
the political boundaries of the County of Kern has been defined as the
Bakersfield MSA for this Section 3 Plan.
Neighborhood Area - Has the same meaning as defined in 24 CFR
570.204(c)(1); that is [1] a geographic location within the jurisdiction of a unit of
general local government (but not the entire jurisdiction) designated in
comprehensive plans, ordinances, or other documents as a neighborhood,
village or similar geographic designation; or [2] the entire jurisdiction of a unit of
general local government which is under 25,000 population; or [3] a
neighborhood, village or similar geographical designation in a new community.
New Hires - Means full-time employees for permanent, temporary or seasonal
employment opportunities and/or hiring of contractors/subcontractors.
Lowest Responsive Bid - An acceptable bid with the lowest price that meets the
minimum requirements and specifications.
Responsible Bidder - A bidder, who, at the minimum, is licensed, bonded,
insured, capable and reliable.
Section 3 Resident - [1] a public housing resident; or [2] an individual who
resides in the metropolitan area in which this Section 3 covered assistance is
expanded, and who is: (i) a low-income person, as defined in Attachment B
and/or E to this plan, incorporated herein by this reference as if set forth in full; or
[3] a very, low-income person, also as defined in Attachment B and/or E to this
plan.
Section 3 Business Concern - A business concern: [1] that is 51 percent or
more owned by Section 3 Resident; or [2] whose permanent, full-time employees
include persons, at least 30 percent of whom are currently Section 3 Residents,
or within three years of the date of first employment with the business concern
were Section 3 Residents; or [3] that provides evidence of a commitment to
subcontract in excess of 25 percent of the dollar award of all subcontracts to be
awarded to business concerns that meet the qualifications set forth in paragraphs
(1) or (2) in this definition of "Section 3 Business Concern."*
(* This part means the following: For a business to receive a preference under
item #3 it must provide evidence that it subcontracted at least 25% of all
subcontracts for the previous twelve months of its fiscal year to Section—3
business concerns).
Section 3 Covered Contract - A contract or subcontract (including a
professional service contact, such as for architectural or engineering services)
awarded by the City of Bakersfield or contractor/subcontractor for work
generated by the expenditure of Section 3 covered assistance, or for work arising
in connection with this Section 3 covered project. This definition does not include
contracts for the purchase of supplies and materials. However, whenever a
C:ID000ME-1ljrudnick\LOCALS-11Temp\xPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 1313 Page 3 of 11
contract for materials includes the installation of the materials, that contract
constitutes a Section 3 covered contract.
Service Area - The geographical area in which the persons benefiting from this
Section 3 covered project reside. The service area shall not extend beyond the
unit of general local government in which this Section 3 covered assistance is
expended.
Skilled Position - A position requiring knowledge, experience, or license in a
particular trade or craft.
Unskilled Position - A position that is entry level and does not require any
substantial experience or knowledge beyond the high school level.
HUD Youthbuild Program - Programs that receive assistance under subtitle D
of Title IV of the National Affordable Housing Act, as amended, and provide
disadvantaged youth with opportunities for employment, education, leadership
development, and training in the construction or rehabilitation of housing for
homeless individuals and members of low- and very, low-income families.
III GOALS FOR SECTION 3 RESIDENTS AND SECTION 3 BUSINESS
CONCERNS
Contractors and subcontractors may demonstrate compliance with the "greatest
extent feasible" requirement of Section 3 by meeting the goals set forth herein for
providing training, employment, and contracting opportunities to Section 3
Residents and Section 3 Business Concerns. The goals for hiring and
contracting established below represent minimum targets for a Section 3
covered contract (contractor or subcontractor) that exceeds $100,000 of HUD
financial assistance. The goals are not set-asides and quotas, but constitute a
"safe harbor" for contractors and subcontractors on the matter of compliance with
Section 3. In the absence of evidence to the contrary, a contractor or
subcontractor that meets the minimum goals for all new hires and contracting
opportunities outlined in this Section 3 Plan will be considered to have complied
with Section 3 requirements.
In evaluating compliance under this Section 3 Plan, a contractor or subcontractor
that has not met the goals described below has the burden of demonstrating
why it was not feasible to meet the goals identified in the Section 3 Plan.
Such justification may include statements regarding impediments encountered
despite actions taken. In addition, to further demonstrate efforts taken to meet
the goals, a contractor/subcontractor can indicate other economic opportunities
provided to Section 3 residents or Section 3 business concerns as outlined on
page 4 of Attachment "A".
C:I DOCUME-lljrudnick\LOCALS-11Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB Page 4 of 11
A. Training and Employment
The goals apply to all new hires generated from the Section 3 covered
assistance for a project. Efforts to employ Section 3 residents should, to the
greatest extent feasible, be made at all job levels (entry level and skilled
positions) for those residents who are qualified (i.e., persons who able to
successfully complete the work required of the position).
1. Goals for HUD Community Development Programs
Contractors and subcontractors may demonstrate compliance with Section
3 requirements by documenting and committing (at the time of their
project bid submission) to employ Section 3 residents as 30 percent of the
number of new employees.
2. Goals for HUD Housing Programs
Regarding housing assistance provided under other HUD programs,
contractors and subcontractors may demonstrate compliance with Section
3 requirements by documenting and committing (at the time of their
project bid submission) to employ Section 3 residents as 10 percent of
the aggregate number of new employees generated from the Section 3
covered assistance for each year of the duration of the Section 3 project.
B. Contracting
Goals also apply to all contracting and subcontracting needs generated from the
Section 3 covered assistance for a project. The goals for each contractor and
subcontractor may demonstrate compliance with the requirements of this part by
documenting and committing to award to Section 3 business concerns:
1. Goal for Contracting
At least 10 percent of the total dollar amount of all Section 3 covered
contracts for building trades work arising in connection with housing
rehabilitation, housing construction and other public construction.
W. SELECTION PRIORITY FOR SECTION 3 RESIDENTS AND SECTION 3
BUSINESS CONCERNS
Section 3 is authorized under 12 U.S.C. 1701 u and 42 U.S.C. 3535(d).
Implementing regulations are 24 CFR Part 135 - Economic Opportunities for Low
and Very Low Income Persons - Interim Rule dated June 30, 1994) that
expressly encourages, to the maximum extent feasible, a geographic preference
in the evaluation of bids or proposals. This preference is triggered by the need
for new hires (whether individual employees or contractors or subcontractors) for
work on a project assisted by HUD financial assistance in an excess of $100,000
covered by Section 3.
C:\DOCUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB Page 5 of 11
A. Selection Priority for Section 3 Residents in Training and
Employment
Contractors and subcontractors shall direct their efforts to provide, to the greatest
extent feasible, training and employment opportunities generated from the
expenditure of Section 3 covered assistance to Section 3 residents in the order of
priority outlined below:
1. Section 3 residents residing in the service area or neighborhood in
which the Section 3 covered project is located (collectively, referred to as
category 1 residents); and
2. Participants in HUD Youthbuild programs (category 2 residents).
3. Where the Section 3 project is assisted under the Stewart B. McKinney
Homeless Assistance Act (42 U.S.C. 11301 et seq.), homeless persons
residing in the service area or neighborhood in which the Section 3
covered project is located shall be given the highest priority;
4. Other Section 3 residents (i.e., homeless persons, and recipients or
participants of government assisted programs such as section 8 and
public housing tenants).
A Section 3 resident seeking the preference in training and employment provided
by this part shall certify, or submit evidences to the contractor or subcontractor,
as needed. Attachment "B" must be filled out by potential Section 3 residents
seeking the preference in training and employment outlined in the City's Section
3 Plan.
Attachment "B" self-certification will be one of the methods used by City,
contractors, and subcontractors to confirm eligibility for Section 3 preference.
Should said certification come into question or not be appropriate due to the type
of Section 3 resident (i.e., public housing tenant), City, and contractors and
subcontractors may request other evidence of eligibility for the preference, such
as evidence of receipt of public assistance or evidence of participation in a public
assistance program. Attachment "B" for each Section 3 resident must be
submitted no later than the date of the pre-construction conference. Should
a contractor submit a bid and be awarded a contract predicated on new hires for
Section 3 residents, and does not provide evidence at the pre-construction
conference that this requirement was met, the contractor may be deemed by the
City of Bakersfield to be in non-compliance of federal requirements and
therefore, in breach of contract and subject to contract rescission.
(Please note that nothing in the Section 3 Plan shall be construed to require the
employment of a Section 3 resident who does not meet the background and
qualifications of the position to be filled.)
C:\DOCUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB
Page 6 of 11
B. Selection Priority for Section 3 Business Concerns in Contracting
Contractors and subcontractors shall direct their efforts to award Section 3
covered contracts, to the greatest extent feasible, to Section 3 business concerns
in the order of priority outlined below:
1. Section 3 business concerns that provide economic opportunities for
Section 3 residents in the service area or neighborhood in which the
Section 3 covered project is located (category 1 businesses); and
2. Applicants selected to carry out HUD Youthbuild programs (category 2
businesses); and
3. Other Section 3 business concerns.
The form provided as Attachment "C" (or a similar form) must be used by
contractors and subcontractors to obtain certification from Section 3 business
concerns seeking the preference in contract or subcontract award provided in
this Section 3 plan. This attachment, if utilized, must be submitted by the bid
deadline. Should said certification come into question, City, and
contractors/subcontractors may request other evidence of eligibility for the
preference.
A business concern seeking to qualify for a Section 3 contracting preference
shall certify that the business concern is a Section 3 business concern. A
Section 3 business concern seeking a contract or a subcontract must
demonstrate to the satisfaction of the party awarding the contract or subcontract
that the business concern is responsible and has the ability to perform
successfully under the terms and conditions of the proposed contract or
subcontract.
V. LIST OF SECTION 3 COMPLIANCE DOCUMENTS TO BE SUBMITTED WITH
BID
Attachment A - Section 3 Economic Opportunity Plan
Attachment C - Section 3 Business Concern Certification
Attachment F - Resident Employment/Business Utilization Bidder's Certification
(Attachments A, C, and F must be satisfactorily completed as part of an
acceptable bid. These Attachments provide important information as to the
bidder's Section 3 strategy.)
VI. SELECTION PRIORITY FOR SECTION 3 RESIDENTS AND SECTION 3
BUSINESS CONCERNS
All bidders must complete the Section 3 EOP (Attachment "A") and return it
with your bid. Part of the Section 3 EOP requires all bidders to complete a
preliminary statement of your workforce needs for the activity, broken out by
C:I DOCUME-lyrudnickl LOCALS-11Temp\xPgrpwise\complete Section 3 Plan Jan 2008,doc
Updated 10-20-06 BB
Page 7 of 11
trade for all skilled, semi-skilled, and unskilled labor and trainee categories,
regardless if new hires will be generated. This statement should include the
anticipated workforce needs of any subcontractor you intend to use where this is
known; where this is known, this information should be obtained from the
subcontractor before any subcontract in excess of $100,000 is awarded.
If your firm is selected for a contract that will generate economic opportunities as
a result of a Section 3 covered project, you will be required to meet appropriate
goals for the hiring of Section 3 area residents/businesses to fill the project
workforce needs. Furthermore, if your firm is awarded a contract but fills its new
positions with non-Section 3 area residents/businesses prior to the signing of a
contract, you must be prepared to demonstrate that this was not done to
circumvent these requirements. If Section 3 requirements are purposely
circumvented as a means acquire an award, the project contract will be deemed
null and void.
In meeting these low-income resident employment requirements, contractors and
subcontractors may wish to consider using the employment/job development
services of the agencies listed below as well as other agencies and centers that
serve the economically disadvantaged within the project area:
Employers Training Resource (ETR) - (661) 325-4473
State Employment Development Department (EDD) - (800) 300-5616
Housing Authority of Kern County - (661) 631-8500
Small Business Development Center - (661) 395-4126
Kern, Inyo and Mono Counties Central Labor Council - (661) 324-6451
Bakersfield Homeless Center (Bethany Services) - (661) 322-9199
ETR and EDD can provide names of potentially qualified Section 3 residents.
The Housing Authority and Bethany Services can provide names of qualified
Section 3 residents who are public housing tenants and homeless, respectively.
The Kern, Inyo and Mono Counties Central Labor Council can potentially provide
names of unemployed Section 3 residents skilled in the building trades. The
Small Business Development Center and the Bakersfield Minority Business
Development Center are able to provide technical assistance to potential Section
3 businesses.
Contractors will also be required, to the greatest extent feasible, to award
subcontracts to business firms located in or owned in substantial part by
residents of the project area (Tier 1 , 2, or 3 - see Attachment A for more
information). As identified on page 6 of this Plan, the Section 3 Business
Contracting goal is 10% of the total dollar amount.
If your company should be awarded a Section 3 covered contract under this
project, you will be required to give notice to all labor organizations with which
you have an agreement that you have made this commitment. This notice
should also be posted at your place of business and at the job site. A sample
notice of this type is provided for your reference in this section.
C:\DOCUME--1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
updated 10-20-06 BB Page 8 of 11
In order for your bid to be acceptable under this provision, you should be certain
that you understand the attached Section 3 clause (Attachment "D") which is to
be inserted in all Section 3 covered contracts and subcontracts. This clause
commits the contractor to provide, to the greatest extent feasible, training and
employment opportunities to lower-income residents living in the project area
(see attached census tract map). A low income resident is defined by their
household annual gross income and household size (Attachment "E"). The
Resident Employment Bidder's Certification Form (Attachment "F") states you
understand this Section 3 requirement. This form must be completed by you,
signed by an authorized representative of your company and returned with your
bid.
VII SECTION 3 CONTRACT COMPLIANCE
Minimum compliance with Section 3 is determined by meeting goals for training
and contracting by contractors and subcontractors for Section 3 covered projects.
In evaluating compliance under Section 3, a contractor or subcontractor that has
not met the appropriate goals has the burden of demonstrating why it was not
feasible to meet the goals described in the Section 3 Plan. This would include
documentation that every feasible attempt was made to notify, encourage and
facilitate job and contracting opportunities to Section 3 residents and business
concerns.
The written records of Section 3 covered project contractors and subcontractors
will be reviewed by the City as a means of establishing compliance or non-
compliance with Section 3 requirements. Contractors and subcontractors who
receive Section 3 contracts found to be in non-compliance will be deemed to be
ineligible for future Section 3 covered projects for a minimum period of 24
months from the date deemed to be in non-compliance. Attachment "G" shall
be used by contractors and subcontractors to provide information and data
regarding actual contracts and subcontracts awarded. Attachment "H"
identifies a form that is required for actual jobs created in connection with
assisted section 3 projects. Satisfactory submission of Attachment "G" and/or
"H" with each request for payment is a prerequisite in order for City to authorize
payment on a Section 3 covered project.
Attachment "I" identifies acceptable methods that, when documented,
demonstrate compliance with Section 3. Attachment "J" identifies a sample
notice for project area resident employment commitment. Attachment "K"
provides a sample description of job categories connected with Section 3
covered projects.
Note: Labor Union Relationships and Section 3
Some contracting firms choose to enter into business agreements with labor
unions. These agreements may sometimes appear to be inconsistent with
C:\DOCUME-i\jrudn ick\LOCALS-1\Temp\XPgrpwise\Complete section 3 Plan Jan 2008.doc
Updated 10-20-06 BB
Page 9 of 11
Section 3 requirements. However, it is important to note that labor union
agreements do not take precedence over laws established by the federal
government of the United States. In other words, it would not be correct for
labor unions to suggest that their signatories not comply with federal
regulations when such regulations are incompatible with the terms of the
union-signatory agreement.
C:\D000ME-I\jrudnick\LOCALS-11Temp\xPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB Page 10 of 11
VIII COMPLAINT PROCEDURE
A complaint may be filed alleging a violation of Section 3 requirements. They
may be filed by Section 3 residents and Section 3 business concerns.
Complaints are investigated by HUD and where appropriate, voluntary
resolutions are sought. Those grievances that are not resolved voluntarily can
result in an administrative hearing.
A complaint should be written upon the enclosed complaint register (Attachment
«L„
Complaints should be filed with the City of Bakersfield and, if warranted, may be
appealed to the Area Office of HUD (LA Area), Washington, D.C. HUD.
Addresses:
1 . City of Bakersfield - Economic Development Director
Economic and Community Development Department
1600 Truxtun Avenue, Suite 300, Bakersfield, CA 93301
[661] 326-3765; FAX - [661] 328-1548; TDD - [661] 324-3631
2. HUD LA Area Office, Region IX
Director, Fair Housing and Equal Opportunity
U.S. Dept. of Housing and Urban Development
611 West 6th Street
Los Angeles, CA. 90017 (213) 894-8000 FAX: (213) 894-8096
3. HUD Washington
Assistant Secretary, Fair Housing and Equal Opportunity
Room 5100, Dept. of HUD
451 Seventh St., S.W.
Washington, D.C. 20410-2000 (202) 708-2251
IX CITY OF BAKERSFIELD PREFERENCE PROCEDURES FOR SECTION 3
BUSINESS
Concerns under Procurement by Sealed Bids (invitations for Bids)
This section of the Section 3 Plan provides a framework for awarding Section 3
covered contracts to contractors and subcontractors under Procurement by
Sealed Bids (Invitation for Bids).
Preference in the award of Section 3 covered contracts that are awarded under a
sealed bid process may be provided as follows: [1] Bids shall be solicited from
both Section 3 Business Concerns and Non-Section 3 Business Concerns. An
C.\DOCUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 1313 Page 1 of 11
award shall be made to the qualified Section 3 Business Concern with the
highest priority ranking and with the lowest responsive bid if that bid (A) is
within the maximum total contract price established in the contracting party's
budget for the Section 3 covered project, and (B) is not more that "X" higher than
the total bid price of the lowest responsive bid from any responsible bidder. "X"
is determined as follows:
Preference Matrix
X = lesser of:
When the lowest res onsive bid is:
At least$100,001 but less than $200,000 9% of that bid or$16,000
At least $200,000 but less than $300,000 8% of that bid or$21,000
At least $300,000 but less than $400,000 7% of that bid or$24,000
At least$400,000 but less than $500,000 6% of that bid or$25,000
At least$500,000 but less than $1 million 5% of that bid or$40,000
At least$1 million but less than $2 million 4% of that bid or$60,000
At least$2 million but less than $4 million 3% of that bid or$80,000
At least$4 million but less than $7 million 2% of that bid or$105,000
$7 million or more 11/2% of the lowest responsive
bid, with no dollar limit
X. ATTACHMENTS & MAPS (SEE ATTACHED INFORMATION.)
Attachments:
A - Section 3 EOP (Part of Bid Submission)
B - Section 3 Residency Certification (Must be submitted at Pre-Con)
C - Section 3 Business Concern Certification (Part of Bid Submission)
D - Section 3 Clause
E - Section 3 Resident Family Income Limits
F - Resident Employment/Business Utilization Bidder's Certification Form
(Part of Bid Submission)
G - Actual Subcontracts Awarded in Connection with Section 3 Covered
Projects. (To be Submitted with Each Payment Request)
H - Actual Hires in Connection with Section 3 Covered Projects.
(To be Submitted with Each Payment Request)
I - Examples of Efforts to Offer Training & Employment Opportunities to
Section 3 Residents
J - Sample Notice for Project Area Resident Employment Commitment
K - Sample Description of Job Categories for Section 3 Plan
L - Complaint Register
Maps: City of Bakersfield Urban Census Map(s)
• Required if new hires (new employees/subcontractors, etc.) are required for this
project.
C:\DOCUME-I\jrudnick\LOCALS-1\TemplXPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB
Page 2 of 11
SECTION 3 ECONOMIC OPPORTUNITY PLAN
City of Bakersfield
Economic & Community
Purchasing Department Development Department
1501 Truxtun Avenue 1600 Truxtun Ave., Suite 300
Bakersfield, CA 93301 Bakersfield, CA 93301
(661) 326-3746 (661) 326-3765
Date: Project Name:
Name of Bidder/Organization:
Address of Bidder:
Contact Person: Project Address:
Title:
A. Economic Opportunities for Local Businesses and Lower Income Persons
1. Description of Section 3 project area boundaries for new hires (New hires means the
hiring of new employees or subcontractors):
a. New Employees If your firm is hiring new employees for this project, please
identify from which tier bounda;y they will be selected:
New employees will be needed to complete this project. Yes _ or No _
Tier 1 boundary is the U.S. Census Tract (C.T.) and Block Group (B.G.) in
which the project is located in: (see attached map)
Tier 2 boundary is the following impacted Census Tracts adjacent to the
project site: (See attached map.)
Tier 3 boundary is the County of Kern:
b. Business Concerns to Be Hired If your firm is hiring subcontractors for this
project, please identify from which tier boundary they will be selected:
(i.e., contractors, subcontractors, vendors/suppliers who provide installation)
Subcontractor(s) will be needed to complete this project. Yes _or No
(If "no" go to page 2.)
Tier 1 boundary: (same as above)
Tier 2 boundary: (same as above)
Tier 3 boundary: (same as above)
Submit with Bid
ATTACHMENT "A"
C:\DOCUME-1\jrudnick\LOCALS-1\Temp\XPgrpwise\Complete Section 3 Plan Jan 2008.doc
Updated 10-20-06 BB Page 1 of 6
•
B A K E RS F I E L D
Economic and Community Development Department
M E M O R A N D U M
February 17, 2009
TO: John Stinson, Assistant City Manager
FROM: Donna L. Kunz, Economic Development Director
SUBJECT: Information concerning selection of minority owned development companies,
contractors and Non Profit entities (serving low income minority communities)that
EDCD has contracted for redevelopment and economic development projects.
Background:
The Economic and Community Development Department occasionally receives inquiries from
the community concerning the efforts the department makes to reach out to qualified minority
developers and contractors. Below is a list of 18 key redevelopment projects that have been
undertaken by the department over the past 8 years in which minority developers or non profit
organizations serving low income minority communities were selected.
Redevelopment Projects
Little Saigon Commercial Center— Owner Asian
California Avenue Commercial Strip Center - Owner Hispanic
Baker Street Development- Co-Developers Asian, African American
18th Street Senior Housing — Co- Developers African American
Creekview Villas (South Mill Creek) — Co-Developers African American
Union Avenue Mixed Use — Developer Hispanic
The Courtyards (South Mill Creek) — Co-Developers African American
Maya Cinemas — Co-Developers Hispanic
South Mill Creek — Commercial — Co Developers African American
California Senior Apartments — Developer African American
Kings Square Family Apartments Egyptian
Friese Inn Rehabilitation African American
Youthbuild Program - RCPI African American
Filson Area Front Porch — Program African American
The following projects were developed by non-profit entities with boards that include several
minority low income persons as board members.
Lowell Senior Residential - Non Profit Developer
Parkplace Senior Residential — Non Profit Developer
C:IDOCUME-IWWSTIN-1%LOCALS-11TemplGWViewerlminoriry report.doc
The Village at Park Place — Non-Profit Developer
Food Bank — Non Profit Corporation
Small scale infill housing program — this ongoing program has awarded contracts to 4 out of 7
development contracts to African American small builders in the Southeast.
C:\DOCUME-1\JWSTIN-11LOCALS-1\Temp\GWViewer\minority report.doc
B A K E R S F I E L D
OFFICE OF THE CITY MANAGER
MEMORANDUM
February 20, 2009
To: Alan Tandy, City Manager
From: John W. Stinson,Assistant City Manager
Subject: Request by Mr. Marvin Dean re. Working with the City to get local
contractors ready for federal stimulus projects
Mr. Marvin Dean appeared at the February 11, 2009 City Council meeting and spoke to
the City Council under public statements, regarding his desire to work with the City to
get local contractors ready for federal stimulus projects. This matter was referred to the
Budget and Finance Committee for consideration.
Mr. Dean indicated a need to prepare local workers so they could benefit from the
anticipated federal stimulus construction projects and also requested that a preference
be implemented to award construction contracts to local contractors and minority owned
businesses. The details of the federal stimulus legislation and the associated
regulations are just now becoming available and will likely follow existing federal and
state laws regarding the award of contracts and bidding.
The City of Bakersfield currently follows both state and federal laws regarding the award
of construction contracts. This includes following procurement guidelines regarding
minority businesses. A separate memo from the City attorney details the legal issues
related to such regulations and the concerns regarding the preference for local
contractors desired by Mr. Dean.
Significant efforts have been made to perform outreach to contractors for federal
projects such as the TRIP program. TRIP hosted a Contractor Outreach Event on
August 6, 2008 at the Rabobank Convention Center, 9 a.m. to 12:30 p.m. Prime
contractors, sub-contractors, small businesses, DBEs and DVBEs were invited for a
preview of the Mohawk Street Extension, Westside Parkway and 7th Standard Road
Widening projects. The City, of Bakersfield, County of Kern, and Caltrans sent
representatives who discussed other upcoming construction projects and explained
procurement procedures (see attached agenda). Mr. Dean also participated in the
outreach effort.
S:\JOHN\Marvin Dean - Federal Stimulus Projects.doc
The purpose of the event was to increase the number and competitiveness of bid
packages, and to facilitate working relationships between prime contractors, small
businesses, and DBEs. Invitations to the event were e-mailed to TRIP's contractors' lists
and the Caltrans District 6 Small Business Office. A press release was sent to the
media on 7/21/2008.Approximately 60 signed up to come to the event, but 35 attended.
TRIP has also participated in the Kern Minority Contractors events January 2008 and
January 2009). Representatives from TRIP (and other City departments) participated in
panel discussions. In addition, we participated in the "vendor's marketplace," providing
information on TRIP, upcoming TRIP projects, upcoming City of Bakersfield capital
improvement projects, and how to become a vendor and do business with the city.
The City Council does have a policy that provides a bid preference for vendors that are
located within the City limits based on the 1 percent sales tax returned to the City for the
purchase of supplies, materials and equipment. A copy of the Council resolution is
attached.
Staff has also provided a memorandum from Economic Development Director, Donna
Kunz regarding the selection of minority owned development companies, contractors
and non-profit entities that the City has contracted with for redevelopment and economic
development projects.
S:\JOHN\Marvin Dean - Federal Stimulus Projects.doc
Thomas Roads Improvement Program ThomosRove tPro9rom
900 Truxtun Avenue, Suite 200, Bakersfield, California 93301 3
Telephone: (661)326-3700 • Fax: (661) 852-2195
Project Preview and Contractor Outreach
August 6, 2008
9 a.m. to 12:30 p.m.
AGENDA
9:00 a.m. Welcome
9:05 a.m. Overview of the Thomas Roads Improvement Program (TRIP)
Chris Clark, Parsons
9:15 a.m. Upcoming construction projects
• TRIP
• Luis Topete, City of Bakersfield
• Todd Wood, Kern County Roads
• City of Bakersfield Public Works, Arnold Ramming
• Kern County Roads Department, Clark Farr
• Caltrans District 6 Construction, Amrit Brar and Mike Garrett
• Q & A
10:30 a.m. Break
10:45 a.m. Procurement Processes
• City of Bakersfield, Kim Berrigan
• Kern County General Services, Carol Cox
11:15 a.m. Small Business, DBE and DVBE programs and certification
• Program Overview, Benefits and Certification Process
Morris Caudle, Caltrans District 6 Small Business Office
• Local Resources
Marvin Dean, Kern Minority Contractor's Association
• Q & A
12:00 Networking Opportunity
12:30 Adjourn
Managed by the City of Bakersfield in cooperation with
County of Kern•California Department of Transportation
www.8akersfieldfreeways.us
CITY OF BAKERSFIELD
COUNCIL POLICY STATEMENT
CP No. 4.3
SUBJECT: BIDDING PREFERENCE
SECTION: FISCAL
POLICY: GRANTS A ONE PERCENT BID PREFERENCE TO VENDORS
WITHIN CITY LIMITS
STATEMENT: Authorizes the granting of a one percent bid preference to
vendors within the city limits
ADOPTION:
Agenda Item No./Date 10.a.1.; Oct. 12, 1994
Approved by City Council Res. No. 167-94
Amended by City Council
1/14/00
s:form.cps
RESOLUTION NO. 1 67 - 94
A RESOLUTION GRANTING A ONE PERCENT
BID PREFERENCE TO VENDORS WITHIN
CITY LIMITS.
WHEREAS, the City of Bakersfield purchases supplies ,
materials and equipment from merchants located within the City
limits; and
WHEREAS, the State of California refunds to City one
percent of the sales tax paid on City purchases within the City;
and
WHEREAS, the lowest responsible bidder on City purchases
is the seller whose sale results in the lowest possible net cost to
the City.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City
of Bakersfield as follows :
1. City shall, whenever appropriate, grant a one
~ ' percent bid preference to vendors located within City limits
submitting bids for proposed City purchases of supplies , materials,
and Vquipment; and
2. The lowest possible net cost for purchases of
supplies , materials, and equipment shall be calculated by
subtracting from the bids of. vendors located within City limits an
amount equal to the amount of the anticipated sales tax refund the
City will receive from the purchase of the proposed items; and
3 . The term "vendors located within City limits" means
any person (including sole proprietorships, corporations, and
partnerships) possessing a City of Bakersfield business license and
and a California State Board of Equalization sales tax permit
number area coded so as to remit sales tax revenue to the City of
Bakersfield.
4 . The City Manager is directed to implement procedures
fairly executing this po;icy.
------000---------- - �.
I HEREBY CERTIFY that the foregoing Resolution was passed
and adopted by the Council of the City of Bakersfield at a regular
meeting thereof held on OCT 1 Z 1994 , by the following vote :
AYES: COUNCILMEmSERS ucDEFtmoTf.E WARDS.DoU ND,SM".BMW,WALES.SALVAGG10
NOES: COIINCILMEWcE
ABSTAIN: COUNCILAIEMBEAS
ABSENT: MUNCILMEWBERS
CITY CLERK and EX OFFICIO of the
Council of the City of Bakersfield
APPROVED OCT 12 94
bm
BOB PRICE
_ MAYOR of the City of Bakersfield
APPROVED AS TO FORM:
JUDY X. SKOUSEE
City Attorney
By:
ALLEN M. SHAW
Assistant City Attorney
City of Bakersfield
AMS/meg
R-2A0-ARM-?kEF.R.ES
6/30/94
2 —
STATE OF CAUFORNIA—BUSINESS,TRANSPORTATION AND HOUSING AGENCY ARNOLD SCHWARaNEGGER Govemor
DEPARTMENT OF TRANSPORTATION
DIRECTOR'S OFFICE
1120 N STREET
P.O.BOX 942873
SACRAMENTO,CA 94273-0001
PHONE (916)654-5266 Flex your power!
FAX (916)654-6608 Be energy efficient!
TTY 711
March 4, 2009
Dear Transportation Construction Community:
The California Department of Transportation (Caltrans)has just received conditional
approval from the Federal Highway Administration (FHWA)to immediately implement its
Federal Fiscal Year(FFY) 2009 Disadvantaged Business Enterprise(DBE)Goal and
Methodology. The 2009 Goal and Methodology provides for a 6.75 percent race-conscious
goal and a 6.75 percent race-neutral goal for an overall 13.5 percent program goal.
With the recent enactment of the American Recovery and Reinvestment Act(ARRA)of 2009
and the increase in transportation contracting opportunities it will bring, the urgency for
Caltrans to implement contract goals has heightened. The conditional approval requires
Caltrans to submit to FHWA the additional requested information to support its decision to
make no upward adjustment to the FFY 2009 goal. The conditional approval also requires
Caltrans to submit monthly status reports on its use of contract goals beginning
March 31, 2009.
FHWA has indicated that failure to implement the overall goal and contract goals could result
in the imposition of sanctions authorized by 23 Code of Federal Regulation (CFR) section
1.36. Those sanctions may include withholding federal funds, withholding approval of
projects, or other action FHWA deems appropriate under the circumstances.
By March 30, 2009, the Division of Engineering Services and the Division of Procurement
and Contracts will begin including an appropriate DBE race-conscious goal to include
African American, Asian-Pacific American, Women, and Native American businesses, in the
advertised contracts for federally funded projects. These four groups together will be referred
to as Underutilized Disadvantaged Business Enterprises (UDBEs). The race-conscious goal
established for each contract will be based on the subcontracting opportunities it provides and
the availability of UDBEs. At this time, Hispanic American and Subcontinent Asian
American businesses are not included in the race-conscious portion of the program.
However, use of these businesses does count toward meeting the race-neutral portion of the
goal and the overall goal. I encourage continued use of these groups at current levels in order
to avoid the necessity of adjusting the goals as time goes on.
Implementation of the race-conscious component of the DBE program applies to Local
Agencies as subrecipients. Caltrans will advise regional and local partners to begin
implementing DBE race-conscious goals on federally funded projects within 90 days.
"Caltrans improves mobility across California"
Transportation Construction Community
March 4, 2009
Page 2
Caltrans will continue its commitment to the application of race-neutral measures as before.
They include, but are not limited to,providing technical assistance, one-on-one counseling,
training, and direct referral of DBEs to prime contractors through the California Construction
Contracting Program and the memorandum of understanding with the California Community
Colleges Chancellor's Office. More information can be found on the Web site at
http://www.buildcalifomia.org.
Caltrans will also implement its Communication Plan to advise the DBE firms, community
organizations, industry/trade associations, and California Legislators that Caltrans has
conditional approval to implement the race-conscious component of the overall DBE goal.
To broaden business communication and outreach, the Caltrans' Office of Business and
Economic Opportunity will have information and the schedule of public forums on its Web
site at http://www.dot.ca.gov/hq/bep. In addition, Caltrans staff will work with business
groups such as the City-County-State-Federal Cooperative Committee, Caltrans Statewide
Small Business Council, Associated General Contractors of California,Engineering and
Utility Contractors Associations, Southern California Contractors Association, and American
Council of Engineering Companies on the implementation of their program revision.
I thank you for your patience and understanding during the last year while Caltrans operated
under race-neutral measures. If you have any questions regarding this announced change in
the DBE program,please contact Robert Padilla, Disparity Study Project Manager, at
(916) 324-0552, or by e-mail at robert_padilla @dot.ca.gov.
Sincerely,
-.,)M K�4
WILL KEMPTON
Director
c: Walter Waidelich, Division Administrator, Federal Highway Administration
Rick Land, Chief Engineer, California Department of Transportation
Robert Padilla, Disparity Study Project Manager, California Department
of Transportation
"Caltrans improves mobility across California"
B A K E R S F I E L D
OFFICE OF THE CITY MANAGER
MEMORANDUM
March 27, 2009
To: Alan Tandy, City MMa.nnaager
From: John W. Stinson;As's'istant City Manager
Subject: Meeting with Marvin Dean
This is to summarize our meeting today with Mr. Marvin Dean and Jerry Fuentez
regarding the issues he presented to the Budget and Finance Committee.
Mr. Dean indicated he no longer was pursuing his job training request through the City
as he is working with Employer's Training Resource to address that issue. He also
provided a legal opinion from County Counsel regarding local preferences on federal
and state construction contracts that indicated such preferences were not allowed by
Public Contract Code absent specific legislation. Therefore, he indicated he is no
longer pursuing that issue as well. He did ask that the City contact the County to
determine what they are doing to possibly address this for non-state or non-federal
projects and that the City consider looking at implementing any program they may
develop. Staff indicated they would contact the County and find out what they are
considering in this regard.
Mr. Dean also asked that the City consider including in redevelopment development
agreements, requirements that encourage hiring from the neighborhoods and areas
surrounding the proposed project. City staff will look into this as well to determine if it is
feasible.
Finally, Mr. Dean provided new information regarding a request to fund Outreach and
referral services through the Kern Minority Contractors Association. Mr. Dean provided
a brief outline of the proposed costs which he estimated to cost approximately $50,000
annually. There was no line item detail provided regarding the cost elements. He
indicated he thought the City could fund the program through various federal funding
sources including CDBG, NSP, Federal Economic Stimulus funds including highway
funds, or redevelopment funds. Staff indicated they would need more time and
information to explore the information provided by Mr. Dean and his proposal regarding
the Outreach Program. Based on this new information, staff is recommending the
Budget and Finance committee defer any action on Mr. Dean's item and allow staff to
conduct it's research and obtain additional details from Mr. Dean regarding his Outreach
proposal.
S:IJ0IIN1Memo Template.doc
B A K E R S F I E L D
OFFICE OF THE CITY MANAGER
MEMORANDUM
March 27, 2009
To: Alan Tandy, City Manager
From: John W. Stinso�istant City Manager
Subject: Requests from Marvin Dean re. Local and Minority Preference on
contracts and Request for Sole Source Public Outreach Contract
At the February 23, 2009 Budget and Finance Committee Mr. Marvin Dean presented
information regarding his request for the City Council to consider a preference for local
and/or minority contractors for City projects and a request for the Kern Minority
Contractors Association to receive a sole source public outreach contract.
Regarding the request for a preference on contracts the City Attorney has prepared a
memo which details the issues related to his request. The memo states that the City
may not establish bidding procedures for projects subject to the Public Contract Code
under which contractors are entitled to a preference just because they are located within
the City. Similarly, the City may not establish a preference for minority and women
owned businesses. There are however, federal and state laws which establish goals for
participation by minority and women owned business enterprises related to such public
works projects.
The City of Bakersfield currently follows both state and federal laws regarding the award
of construction contracts. This includes following procurement guidelines regarding
disadvantaged, minority, and women owned businesses. The City takes these
requirements seriously and has deemed contractors to be non-responsive who fail to
demonstrate adequate good faith efforts. The City utilizes a computerized notification
system to notify vendors of bid opportunities in addition to newspaper notices and other
methods. There are currently, 189 disadvantaged businesses, 703 minority businesses,
and 618 women owned businesses identified in the City's purchasing data base who
would receive bid notices from the City based on the types of work they request to be
notified of. These businesses receive e-mail notifications when bids are available and
may access the bid information and documents on-line.
Significant efforts have been made to perform outreach to contractors for federal
projects such as the TRIP program. TRIP hosted a Contractor Outreach Event on
August 6, 2008 at the Rabobank Convention Center, 9 a.m. to 12:30 p.m. Prime
S:AJOHN\Marvin Dean - Budget and Finance.doc
contractors, sub-contractors, small businesses, Disadvantaged Business Enterprises
(DBEs) were invited for a preview of the Mohawk Street Extension, Westside Parkway
and 7th Standard Road Widening projects. The City, of Bakersfield, County of Kern, and
Caltrans sent representatives who discussed other upcoming construction projects and
explained procurement procedures (see attached agenda). Mr. Dean also participated
in the outreach effort.
The purpose of the event was to increase the number and competitiveness of bid
packages, and to facilitate working relationships between prime contractors, small
businesses, and DBEs. Invitations to the event were e-mailed to TRIP's contractors' lists
and the Caltrans District 6 Small Business Office. A press release was sent to the
media on 7/21/2008.Approximately 60 signed up to come to the event, but 35 attended.
TRIP has also participated in the Kern Minority Contractors events January 2008 and
January 2009). Representatives from TRIP (and other City departments) participated in
panel discussions. In addition, we participated in the "vendor's marketplace," providing
information on TRIP, upcoming TRIP projects, upcoming City of Bakersfield capital
improvement projects, and how to become a vendor and do business with the city.
Caltrans has recently received approval from the Federal Highway Administration
(FHWA) to implement new goals and methodology which provide for a 6.75% race
conscious goal and a 6.75 race neutral goal for an overall 13.5% program goal. The
race conscious component applies to local agencies, such as the City of Bakersfield as
subrecipients, and includes African American, Asian-Pacific American, Women and
Native American businesses. These four groups are considered Underutilized
Disadvantaged Business Enterprises (UDBE's). The race-concious goal established for
each contract will be based on the subcontracting opportunities it provides and the
availability of UDBE's. Although the UDBE goals do not create a preference, it is our
understanding that Caltrans will not award a contract to the lowest responsible bidder
that did not meet the goal and did not make an adequate good faith effort to meet the
goal. City staff is attending a Caltrans workshop to obtain more information how
CAltrans will be implementing these new UDBE goals in order for the City to maintain
compliance with these requirements. Requirements for showing a good faith effort was
made towards meeting the goal include: advertising in newspapers and trade
publications; making telephone solicitations of UDBE subcontractors; assisting UDBE
subcontractors in obtaining bonding; assist with obtaining necessary equipment, and
other forms of technical assistance. These efforts must be documented by bidders.
Mr. Dean also mentions a concern about minority subcontractors being included on a
bid and then being removed once the bid is awarded. Public works reviewed their
records and determined that during the past five years there were 8 requests to
substitute subcontractors. Such requests must follow a specific process which includes
the contractor providing reasonable cause for the substitution, agreement of the
subcontractor, and approval by the City. If the subcontractor does not approve of the
substitution, they may request a hearing with City staff to appeal the substitution. Public
Works staff is not aware of any requests for subcontractor change that was appealed by
the subcontractor, and in most cases a letter is received from the subcontractor
agreeing to the change.
S,\JOHN\Marvin Dean - Budget and Finance.doc
Regarding Mr. Dean's request for a sole source public outreach contract, the City is not
currently pursuing any contract for these services. In the event the City was to solicit
such services, we would be required to follow City procurement procedures. It is likely
that there would be several qualified firms who would be interested in providing such
services. If such a service was needed, staff would recommend an RFP process be
used to select a provider.
S:\JOHN\Marvin Dean - Budget and Finance.doc
S A K E R S F I E L D
CITY OF BAKERSFIELD
PUBLIC WORKS DEPARTMENT
MEMORANDUM
TO: Alan Tandy, City Manager
FROM: Raul Rojas, Public Works Director
DATE: March 10, 2009
SUBJECT: Budget and Finance Committee Agenda Item - Recycling
At the December 17, 2008 City Council meeting, staff presented the attached
report on recycling program issues. The report consisted of two sections: a
feasibility study for a recycling facility, and ways to expand the City's blue cart
recycling program. In addressing the first section, the City Council decided not to
proceed with the cost of a feasibility study, due to economic issues. Due to time
constraints, the rest of the report was then referred to the Budget and Finance
Committee for further consideration of other more detailed issues. This agenda
item is intended to allow the Committee to review the attached report in greater
detail with staff, and to recommend action on one item in the report, which is to
streamline the billing system for blue recycling cart customers.
The billing system for the blue cart program is a burden for the customers, and
needs to be streamlined. To save printing and mailing costs, the current system
was set up to bill quarterly instead of monthly. However, these small $12
quarterly bills are often overlooked or confusing to people who are accustomed
to monthly bills.
A customer survey indicated that most participants would rather pay the recycling
fee on their property tax bill, to avoid writing a quarterly check for only $12. Staff
recommends a change in the billing system to collect the voluntary blue cart fees
via the property tax roll. This would not make blue cart recycling mandatory;
rather, it would simply establish that the optional service would be billed on the
property tax bill if the service is requested by the property owner.
Billing for blue carts would then be consistent with the way new residential refuse
accounts are handled. To start service, they pay up front from the start date to
the next July 1St, and then are billed on the tax roll afterward. In the case of
optional blue cart service, it would remain on the tax roll unless the owner
requests termination of the service. This way, new owners would not be forced
to continue if they buy a home that has a blue cart.
GAGROUPDAT\Solid Waste0009\Bud9et&Finance Memo 3-10-09.doc
March 10,2009
MEMORANDUM
ALAN TANDY, CITY MANAGER
March 10, 2009
Page 2
Using the tax roll to collect the optional recycling fee would require a public
hearing in accordance with Proposition 218. Staff has prepared a legal notice of
public hearing to be mailed to all residential property owners. This mailing will
not cost extra, as the recycling hearing notice will be included in a routine mailing
for other City fees. Staff recommends the full City Council consider this at the
April 1, 2009 meeting to allow time for the mailing of notices in advance of the
public hearing.
GAGROUPDAT\Solid Waste\2009\Budget&Finance Memo 3-10-09.doc
3/10/2009
BAK��s
ADMINISTRATIVE REPORT
`�L1FOR��
MEETING DATE: December 17, 2008 AGENDA SECTION: Deferred Business
ITEM: /S. a
TO: Honorable Mayor and City Council
APPROVED
FROM: Raul M. Rojas, Public Works Director
DEPARTMENT HEAD
DATE: December 9, 2008
CITY ATTORNEY
CITY MANAGER
SUBJECT: Report on Recycling Program Issues:
1. The Cost of a Feasibility Study for Recycling Facilities (All Wards)
2. Possible Ways to Expand the City's Blue Cart Recycling Program (All Wards)
RECOMMENDATION: Staff recommends that the City Council receive and file this report, with no further
action because:
A. The City is currently on track to comply with the State recycling mandate.
B. Revenues from the sale of recyclables are weak to nonexistent with the global market decline,
leaving program and facility costs to be covered solely by service fees.
C. The current economic climate would make it difficult for ratepayers to afford extra fees for new
facilities or services.
BACKGROUND: This report is to follow up on two different recycling issues previously addressed by the
City Council, as described below.
1. Recycling Facility Feasibility Study
At the May 21, 2008 City Council Meeting, staff was directed to develop a scope of work and budget for a
joint City/County consultant study of the cost and advisability of a material recovery facility (MRF) for
recycling. Staff issued a request for proposals to ten consulting firms. Proposals were received from
three qualified firms. City and County staff have reviewed the proposals. The most qualified and least
costly proposal was submitted by Shaw Environmental, Inc., at a cost of $119,050. The County would
fund half of the study's cost based under the current City/County Solid Waste Memorandum of
Understanding. The study would require seven months to complete. It would compare two differing
approaches to expansion of the City's recycling program, which are:
A. Collection of recyclables separately from refuse, and processing them at a "clean" MRF.
B. Sorting of recyclables from raw refuse at a "dirty" MRF, without separate collection.
During the course of obtaining proposals for the study, staff has found that most recycling programs use
separate collection and the "clean" MRF approach, because clean recyclables have greater economic
value. Programs using the "dirty" MRF approach actually sort only part of the commercial refuse, and
SolidWaste(kb)
G:IGROU PDAT WDMINRPT120 0811 2-1 71Recycling Report 12-17-08.doc
December 9,2008,2:38 PM
seldom recycle any of the raw residential refuse. Therefore, the study of a "dirty" MRF is not likely to
address the issue of residential recycling.
Since the May direction of City Council to develop the study, there have been some new events and
changes, as follows. The national, state, and local economics have gone into crisis. Revenues at all
levels are dropping. The unbudgeted study is $119,050, but a full MRF would be tens of millions of
dollars. In the present economy, a reasonable argument could be made to save the $119,050 since the
capital and operating expenses of the full project are likely unaffordable anyway.
Finally, part of the reason for contemplating a MRF was anticipation of State law changes that might
increase recycling mandates. While an increased mandate has not come out of the legislature, Senate Bill
1016 has just been enacted to emphasize more program-oriented recycling rather than simple changes in
percentages. Jumping into an expensive MRF before seeing how the State will enforce SB 1016 could be
a costly mistake.
2. Possible Expansion of the Blue Cart Recycling Program
At the March 31, 2008 Budget and Finance Committee meeting, Council Member Benham requested staff
to look into possible expansion of the City's blue cart recycling program to include multi-unit dwellings and
commercial locations. These and other efforts to expand the program are discussed below:
A. Multi-Unit Dwelling Recycling - Staff prepared a cost estimate for blue cart service at multi-unit
dwellings. The program would cost about $5.64 per month per dwelling unit in small complexes,
and $3.04 per month per dwelling unit in large complexes. The program would result in a
"recycling percentage" score of about 0.5% toward the 50% State mandate.
B. Commercial Recycling — The City provides various commercial recycling options, as described
below. Participation is limited, due to challenges many businesses face in educating their staff and
spending time separating recyclables. For example, the City has to sometimes cancel cardboard
bin service due to trash being placed repeatedly in recycling bins. Staff is continuing to show
businesses how to recycle and reduce their refuse bills.
1. Cardboard Bins —A dedicated route picks up cardboard from fast food and retail locations.
Customers are charged less than refuse service, but participation is limited due to space
needed for extra bins and turnover/training issues at the businesses.
2. Industrial Compactors —About one third of the large industrial compactor loads from major
retail centers contain a mix of recyclables with very little trash, and are handled by the
construction and demolition material sorting facility on Mt. Vernon Avenue.
3. Commercial Blue Carts — Blue recycling carts are available to businesses at the same $4
per month fee as the residential program, and several dozen businesses participate.
However, many businesses choose not to participate due to the in-house labor needed to
handle separate sets of waste baskets and recycling bins in their buildings.
C. Residential Blue Cart Program Expansion—A variety of tactics have been used or considered to
increase participation in the residential blue cart program:
1. Program flyers were clipped directly to 45,000 trash carts to get the attention of residents,
with a refrigerator magnet clip as a gift. Unfortunately, only about 250 new signups resulted
from this effort.
SolidWaste(kb)
G:\GROUPDATIADMINRPT�2008\12-17\Recycling Report 12-17-08.doc
December 9,2008,2:38 pM
2. The basic service level for all new residential customers could be changed from one tan
and green cart to include a tan, green, and blue cart. This could easily be done for all
newly constructed homes. However, it would be difficult to administer this for ownership
changes for existing homes, as the City does not normally receive notice of home
ownership changes from the County Assessor's Office. This topic may be further
considered by the Budget and Finance Committee.
3. Fee incentives for using blue carts in place of extra tan refuse carts have worked to some
extent. After the City Council increased the extra tan cart fee and lowered the blue cart fee
in 2007, several hundred homes switched to blue carts. However, several hundred homes
still use extra refuse carts. The Budget and Finance Committee may wish to consider
further increasing the extra refuse cart fee.
4. The billing system for the blue cart program is a burden for the customers and needs to be
streamlined. To save printing and mailing costs, the current system bills quarterly instead
of monthly. However, these small $12 quarterly bills are often overlooked or confusing to
people who are accustomed to monthly bills. A customer survey indicated that most
participants would like to include the recycling fee on their property tax bill to avoid writing a
quarterly check for only $12. The Budget and Finance Committee may wish to consider a
change in the billing system.
5. Local processing of recyclables is being developed. Currently, mixed recyclables from the
blue cart program are sorted by a company in Fresno. Bids were recently received for the
City's sorting equipment to be paid for by a $1,500,000 State grant. The equipment bid
award will be placed on a January 2009 agenda. Staff will soon issue a request for
proposals (RFP) for a sorting contractor to use the equipment to sort and sell recyclables.
However, the RFP process may be delayed because market prices are at zero valu
the global demand for raw materials has ceased in the current recession. e since
Staff recommends that the Council receive and file this report for future reference. The City is currently on
track to comply with the State recycling mandate, and the current economic climate would make it difficult
for residents, landlords, and businesses to pay for additional facilities and programs.
SolidWaste(kb)
G:\GROUPDAT'ADMINRPT12008\12-17\Recycling Report 12-17-08 doc
December 9,2008,2.38 PM
http.//www.lati�s.com business la i-noV.
/ _ex�orts 9 2008decQ%Q j54501, story
From the Los An e%s T/mes
TRADE
Wastepaper market in the dumps
With Chinese demand --and prices -- plunging, reclaimed cardboard that is normally exported by the ton
stacks up in Southland warehouses.
By David Pierson
December 9, 2008
Bales of shredded cardboard, paper and packaging are arranged into towers several stories high inside
Steve Young's 130,000-square-foot warehouse in Commerce.
Trucks have been unloading 600 tons of the wastepaper each day for more than a week, leaving the
cavernous building filled nearly to capacity.
Ordinarily, much of the scrap would have been shipped to China, where it would be mashed into pulp and
recycled into new cardboard boxes to package many of the goods destined for American store shelves.
But American consumers aren't buying so many nicely packaged televisions, computers and toys these
days. And China's economy is slowing too.
So the stacks of paper in Young's warehouse are going nowhere. Prices for the material have plunged as
much as 75% in the last six weeks and will probably struggle to rebound as demand continues to melt
away.
But this is more than a story about unwanted paper.These piles of American trash are a window on the
troubled worldwide economy, in which consumers aren't buying and the Chinese manufacturers who
normally serve them are seeing a slowdown in their own breakneck growth.
"Growth in China is so tied to what's going on in the U.S.," said Peter Wang, chief executive of America
file://C:\Documents and Settings\pmccarth\Local Settings\Temp\XPgrpwise\493E... 12/9/2008
Page 3 of 3
Yang and many other suppliers say the swings have prompted Chinese buyers to engage in brinkmanship
by demanding cheaper rates after the wastepaper has already left the U.S., and in some cases, after it has
arrived in Chinese ports. Some buyers are requesting up to 70% reductions in prices.
"It's obviously not ethical to break a contract or renegotiate while the boat is out on the water, but what
are you going to do?" Yang said. "It's not worth fighting. You're just kind of stuck."
The California Integrated Waste Management Board is so concerned about the crisis that it has called a
special meeting for Dec. 10 with officials and suppliers to discuss ways of easing the hardship and
preventing businesses from closing.
One of the options being considered is waiving restrictions on how long suppliers can store waste material,
so they can wait for competitive prices to return.
"A lot of our stakeholders are affected by this dramatic price drop-off," said Jon Myers, director of
communications for the board. "It just happened so fast. Recycling has always been an up-and-down kind
of market. We saw some big price increases the last couple of years, but we've never seen a big drop like
this."
Young, the supplier whose scrap is piling up in warehouses, said his rates for used corrugated cardboard
fell in mid-October to $40 a ton from $170 a ton -- not good when you consider$90 a ton is about where
he breaks even.
"It was like D-Day for us," said Young, who founded Allan Co. in Baldwin Park in 1963 and has similar-sized
foreign and domestic customer bases.
Rather than sell his material at a loss, Young has chosen to increase his warehouse space by 400,000 feet
and hold on to the scrap until prices bounce back.
Hoping to allay the fears of his employees, Young recently fired off a companywide memo that began 'The
prices of our recovered materials have fallen off a cliff. . . . Our buying customers act as if they just went
through an 8.0 earthquake."
He continued, "We have gone through the recessions of 2001, 1996, 1990, 1985, 1980 and 1975. We
survived each and actually made a small profit."
Pierson is a Times staff writer.
david.pierson@latimes.com
file://C:\Documents and Settings\pmccarth\Local Settings\Temp\XPgrpwise\493E... 12/9/2008
Page 2 of 3
Chung Nam Inc. of the city of Industry, the largest wastepaper supplier in the United States. "It's a domin
effect."
0
Chinese manufacturers' dependence on scrap paper from the U.S. grew enormously over the last several
years as environmental degradation and logging restrictions limited their ability to find raw material to make
new paper. Companies increasingly coveted recycled American paper, which was considered to be the
world's finest for its strong fibers.
Last year, 11 million tons of scrap paper worth $1.5 billion was exported to China. By contrast, only 1.1
million tons, worth $57 million, was exported to China in 1998, according to the U.S. International Trade
Commission.
Last year, about a fifth of U.S. scrap paper was sent to China.
Until the bottom fell out last month, this year was on track to equal 2007, industry experts said.
The drop in demand for wastepaper is mirrored in diminished markets for other commodities previously
devoured by the booming Chinese economy, including raw materials for construction and factory
production.
"The developed market's weakness is hurting China and all the other emerging markets," said Donald
Straszheim, a China expert at Roth Capital Partners in Newport Beach. "China has been an enormous
demander of paper, copper and all iron and steel, and now that demand is way down."
The World Bank said last month that China's annual economic growth rate -- 9.4% so far this year -- may
slow to 7.5% in 2009, which would be the lowest rate in 19 years. And Chinese President Hu Jintao hinted
at the depth of China's concern by warning a meeting of Communist Party leaders recently that the country
risked losing its competitive edge as international demand for exports tapered, the party's official People's
Daily newspaper said.
China's slower growth combined with continued sluggish consumption in the U.S. has meant a reversal of
fortune for suppliers who had flourished along with China's boom.
Wang's company, America Chung Nam, led the nation last year in shipping-container exports and was one
of nine wastepaper companies among the 20 largest U.S. exporters, according to the Journal of Commerce.
Now the company is facing 30% declines in sales compared with the summer, Wang said.
Almost all of the wastepaper Wang's company sells goes to China, and half of that goes to its sister
company there, Nine Dragons Paper, which operates its own mill.
Both companies are owned by Zhang Yin, the 15th-richest person in China, according to the Shanghai-
based Hurun Report, which tracks China's business elite.
Last year, Zhang was ranked No. 2. But Nine Dragons'shares have lost about 80% of their value on the
Hong Kong Stock Exchange since the beginning of the year after reports of slower earnings.
The decline of paper values has occurred too recently to be reflected in industrywide statistics, most of
which go as far as September. But industry leaders say the drop-off has been painful and unprecedented.
Prices have dropped so much that we don't know where they should be," said Jim Yang, president of
Newport CH International in Brea. "A lot of material is going to the landfill and a lot is stacking up in
warehouses in case prices go up again. It's just so volatile."
For Yang, rates for corrugated cardboard went from $250 a ton in August to $75 in October to $100 today.
Y
file://C:\Documents and Settings\pmccarthlocal Settings\Temp\XPgrpwise\493E...
12/9/2008