TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Amended and Restated Integrated Waste Management Services Franchise Agreement with USA Waste of California, Inc. (dba Waste Management).
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RECOMMENDATION
recommendation
Approve the Amended and Restated Integrated Waste Management Services Franchise Agreement with USA Waste of California, Inc., and authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
There is no direct fiscal impact. Sanitation rates charged to customers are sufficient to cover contract costs.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Public Service Excellence through Internal and External Partnerships
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BACKGROUND
The City of Chino has contracted continuously with Waste Management (WM) for refuse collection, recycling, and disposal services since 1969. Between 1969 and 1997, the franchise agreement was amended multiple times to reflect evolving operational needs, rate adjustments, and service expansions associated with the City’s growth. Many of these early amendments predate the solid waste regulatory framework, including Assembly Bill (AB) 939 (50% diversion mandate), AB 341 (mandatory commercial recycling), AB 1826 (mandatory commercial organics recycling), and Senate Bill (SB) 1383 (statewide organic waste reduction, edible food recovery, and procurement requirements).
In 1997-1998, as the AB 939 sunset date approached, the City conducted two public workshops with the County of San Bernardino and WM to evaluate long-term disposal capacity and regional system options. Only two viable long-term landfill facilities were available at that time, the County’s Mid-Valley Landfill and WM’s El Sobrante Landfill. Following a technical evaluation of disposal costs, long-term capacity, environmental liabilities, and operational reliability, the City Council determined that El Sobrante provided the most stable and cost-effective solution. The City subsequently entered into a new 10-year franchise with a three-year evergreen clause.
Since that time, as each term approached expiration, staff has continued to conduct study sessions, evaluate regional market conditions, and negotiate updates to maintain regulatory alignment and ensure reliable, cost-effective service.
The current franchise agreement, approved by the City Council in May 2017 and effective January 1, 2018, established a 15-year base term with an optional 5-year renewal. The agreement incorporated the then-emerging SB 1383 regulatory framework, expanded programmatic requirements for State-mandated recycling and organics collection, and transitioned all street-sweeping services into the franchise structure.
The City is currently in year eight of the fifteen-year franchise term. The proposed Amended and Restated Agreement does not reopen or renegotiate the franchise term. Instead, it serves as a targeted mid-term update to address specific operational, financial, and regulatory needs that have emerged since 2018.
ISSUES/ANALYSIS
On October 14, 2025, staff conducted an Integrated Waste Management Services Study Session to provide an overview of the City’s Green Chino Program, review the City’s long-standing partnership and operational history with WM, and present the key components of the proposed Amended and Restated WM Franchise Agreement. The purpose of the Study Session was to obtain direction from the City Council and confirm staff’s recommendation to proceed with finalizing the proposed agreement based on the operational, financial, and regulatory considerations discussed.
WM maintains a substantial operational footprint within the City of Chino, including its Redwood Avenue operations yard and the publicly accessible compressed natural gas (CNG) fueling station. This locally based infrastructure directly contributes to rate stability by reducing fuel consumption, limiting vehicle wear, and minimizing routing inefficiencies, thereby supporting long-term operational sustainability and high-quality service delivery.
WM continues to demonstrate strong community partnership and service reliability. The company maintains an active presence in Chino by participating in City events, supporting public education initiatives, and assisting with Green Chino outreach and regulatory compliance programs. These efforts reinforce WM’s alignment with the City’s environmental goals and its commitment to meeting ongoing State mandates.
Operational performance under the existing franchise has remained exemplary. WM consistently maintains an error rate of less than one percent across all service categories, an indicator of effective route management, responsive customer service, and strong adherence to contract performance standards. This level of reliability minimizes service disruptions, supports customer satisfaction, and ensures ongoing compliance with State regulatory requirements.
Under the current franchise, WM provides substantial financial value to the City through a combination of incentive-based and CPI-indexed contributions that help maintain competitive customer rates and support core public services. The table below summarizes the contributions.
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Incentivized Programs |
WM Contributions (CPI increases annually) |
Benefits |
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Public Benefit Payment |
$562,000 / annually |
Contractual obligation of WM; not a rate-payer funded fee |
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Street Sweeping |
$400,000 / annually |
Supports State stormwater and trash regulatory compliance requirements |
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City Services |
$300,000 / annually |
Refuse & recycling services City facilities & events |
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Public Outreach |
$15,000 / annually |
Supports public education, outreach, and compliance assistance |
Over the 15-year base term, these components collectively provide approximately $19.8 million in direct financial benefit to the community.
The Amended and Restated Agreement further addresses the recent court ruling in the Rogers v. City of Redlands (2025) 112 Cal. App. 5th 667 matter. There, the court ruled that local agencies are prohibited from imposing a “tax, permit fee or other charge for the privilege of using its streets or highways, other than a permit fee for extra legal loads.” Importantly, the current version of the WM franchise agreement does not impose any such fees on rate-payers as did Redlands, but instead included a contractual obligation of WM to pay an alley/street rehabilitation contribution. Nevertheless, the proposed agreement removes such WM contribution and, instead, clarifies that the $562,000 annual contribution is a public benefit payment by WM and usable by the City for unrestricted purposes.
The City’s solid waste rates remain competitive within the region. As part of this update, staff conducted a comparative analysis of residential rates across neighboring jurisdictions to ensure Chino’s rates align with similarly situated agencies. The continuation of key cost-containment measures within the Amended and Restated Franchise Agreement further supports long-term rate stability and protects customers from cost volatility associated with fuel, disposal, and evolving State regulatory requirements. These provisions reinforce the City’s commitment to maintaining affordable, predictable rates while sustaining high-quality, compliant, and environmentally responsible service levels.
The proposed Amended and Restated Agreement focuses on a limited set of key areas, including enhanced SB 1383 organics compliance, refinements to the street-sweeping service model, and an update to the franchise fee structure. These modifications are intended to maintain regulatory alignment, improve operational efficiency, and ensure the long-term sustainability of the City’s integrated waste management, recycling, and organics diversion programs. For a summary of all changes see Attachment 2.
Street-Sweeping Oversight Responsibilities. Under the proposed agreement, WM will enhance its street-sweeping oversight, supervision, and administration of all street-sweeping services provided to the City. This includes supporting compliance with the City’s Municipal Separate Storm Sewer System (MS4) Permit by ensuring that street-sweeping operations contribute to pollutant reduction, litter control, and improved stormwater quality. WM will designate a primary contract representative to serve as the City’s main point of contact and to ensure consistent adherence to all performance standards.
WM will conduct regular field inspections, monitor route performance, and review operational data, including route completion reports, service logs, and street-sweeping metrics tied to MS4 compliance such as debris accumulation, prohibited discharges, and sweep-related stormwater observations. WM will also track resident complaints, assess service needs, and recommend route or schedule adjustments to improve both operational efficiency and stormwater outcomes.
WM will maintain accessible communication channels for residents, including a dedicated phone line, email, or online portal, and will be responsible for timely complaint intake, investigation, resolution, and follow-up.
To ensure accountability, WM will track key performance indicators such as monthly complaint totals, complaint types and resolution times, inspection results, MS4-related observations, and any operational modifications. WM will compile this information into a monthly performance report summarizing service trends, identifying areas for improvement, and outlining corrective or preventive actions. This reporting framework supports data-driven oversight, enhances MS4 compliance, improves transparency, and ensures street-sweeping operations remain responsive to community needs and aligned with City expectations.
Enhanced Reporting Requirements. The Amended and Restated Agreement strengthens the City’s oversight and compliance framework by requiring comprehensive quarterly and annual reporting from the Contractor. These reports ensure transparency, verify regulatory compliance under AB 939, AB 341, AB 1826, and SB 1383, and support the City’s ability to monitor service performance, diversion outcomes, and customer responsiveness.
Quarterly Reports must be submitted within forty-five (45) days of each quarter’s end and include detailed tonnage information by program type, diversion performance, facility disposition data, commercial recycling and organics compliance metrics, contamination notifications, customer complaint trends, corrective actions, and Construction & Demolition (C&D) diversion results. These reports provide the City with regular, data-driven insight into service levels, operational adjustments, and areas requiring targeted outreach or enforcement.
In addition, an Annual Report is required within forty-five (45) days of each calendar year end. The Annual Report provides a comprehensive summary of system performance, program participation, customer counts, regulatory compliance progress, and recommended changes to maintain alignment with AB 939 and SB 1383 requirements. It also includes organizational disclosures, gross receipt documentation (upon request), and delinquency reporting for commercial accounts. Collectively, these reporting requirements support the City’s ability to effectively oversee the franchise, validate diversion progress, and maintain compliance with State mandates.
Contamination Monitoring and Enforcement. The proposed agreement strengthens SB 1383 compliance through a comprehensive contamination monitoring program. WM will use its WM Smart Truck℠ on-board video and digital systems to conduct annual route reviews and document instances of Prohibited Container Contaminants and Excluded Waste, including time, date, location, and photos tied to the customer account. For residential customers, WM will collect contaminated containers and issue progressive education and warning notices for the first and second violations within a rolling 12-month period, with the option to assess Contamination Fees beginning with the third violation. For commercial and multi-family customers, WM may assess Contamination Fees for each occurrence (with an initial grace period for new accounts), and may increase container size, collection frequency, or require additional containers when warranted. Excluded Waste is not collected; containers are tagged in the field and customers receive written notice explaining the violation and required corrective actions. WM will provide the City with quarterly summaries of repeat contamination and Excluded Waste violations, along with supporting documentation, to support City oversight and, where appropriate, further enforcement action.
SB 1383 Compliance and Monitoring Support. The proposed agreement strengthens the City’s ability to meet ongoing State-mandated organics diversion requirements by formalizing WM’s role in supporting annual SB 1383 compliance reviews. Upon the City’s request, WM will conduct records-based (“desk”) reviews and perform limited field audits of commercial and multi-family generators to verify compliance with State source-separation and service-subscription requirements. These reviews include confirming adequate service levels, identifying potential waivers, and recommending corrective service adjustments where appropriate.
While WM will assist in reviewing customer data and performing on-site field audits, all physical inspections of premises for enforcement purposes, as well as any corrective or enforcement actions required under 14 CCR Sections 18995.1, 18995.3, and 18995.4, remain the sole responsibility of the City. This framework ensures that the City retains full regulatory authority while leveraging WM’s operational expertise to support monitoring, documentation, and compliance alignment with SB 1383.
Franchise Fee & Administrative Fees. The updated Agreement maintains the City’s long-standing franchise fee structure but no longer specifies a fixed percentage (e.g., 10% or 12.5%). Instead, the Agreement clarifies that the applicable Franchise Fee shall be the amount lawfully established and approved by the City through a Proposition 218-compliant process. This structure ensures flexibility for future adjustments while maintaining full compliance with State constitutional requirements. For Commercial and Contractor-billed accounts, WM will remit the Franchise Fee (currently 10%) to the City monthly based on Gross Receipts. For Residential and City-billed accounts, the City will retain the applicable Franchise Fee (currently 12.5%) at the time customer payments are received.
In addition to the Franchise Fee, the Agreement includes modernized Administrative Fees to reimburse the City for the actual and reasonable costs of providing solid waste program oversight. These include the Billing Service Fee to recover City billing and account administration costs, and the Recycling Administration Fee to support AB 939 and SB 1383 compliance activities. Each fee includes defined verification and adjustment procedures to ensure cost transparency, protect ratepayers, and maintain consistency with applicable laws. All such fees may be adjusted through Proposition 218 process.
Procurement of Recovered Organic Waste Products. Pursuant to 14 CCR §18993.1, all jurisdictions are required to procure a State-assigned annual quantity of Recovered Organic Waste Products, including compost, mulch, renewable gas, electricity generated from biomass conversion, or other products derived from recovered organic materials. These procurement obligations are a core component of the SB 1383 Short-Lived Climate Pollutant Reduction Regulations, designed to create statewide end-use markets that divert organic waste from landfills.
At this time, the regional infrastructure necessary to support these procurement pathways does not exist. The regulations require highly prescriptive specifications, delivery standards, end-use documentation, verification, and application protocols that are operationally unrealistic for the City to implement. There are currently no local markets, no feasible distribution or application mechanisms, and no cost-viable procurement opportunities that would enable the City to meet the State-mandated volumes through direct procurement.
To maintain compliance during this period in which the State’s infrastructure and markets are still emerging, the City is utilizing State-authorized procurement credits. These credits serve as a temporary compliance mechanism under SB 1383 and allow the City to remain in good standing until viable procurement pathways are established.
The underlying legislation also imposes mandatory program costs, including organics collection, contamination monitoring, public education and outreach, recordkeeping, reporting, and procurement. These activities must be funded through Proposition 218-compliant solid waste service rates. At present, the City is offsetting its organic processing and outreach costs; however, staff will reevaluate the City’s solid waste rate structure once the necessary procurement infrastructure exists and the City is able to operationalize the procurement provision of SB 1383.
The Amended and Restated Agreement is intentionally structured to preserve the City’s flexibility in meeting SB 1383 procurement requirements, particularly given the absence of viable regional infrastructure and end-use markets for recovered organic waste products. In recognition of these constraints, the City and WM are evaluating the feasibility of developing a separate, cost-neutral Procurement Agreement.
This standalone agreement would only be pursued if mutually acceptable terms can be negotiated and if practical procurement pathways, such as certified compost, mulch, or renewable gas products, become available within the region. Until such time, and in order to maintain regulatory compliance, the City continues to utilize State-authorized procurement credits as an interim compliance mechanism.
CONCLUSION
The proposed Amended and Restated Integrated Waste Management Services Agreement reflects a focused, practical update to the City’s long-standing solid waste partnership. The revisions strengthen day-to-day operational accountability, improve enforceability, and align the agreement with the State’s increasingly complex regulatory environment, including SB 1383, MS4 requirements, and enhanced contamination-monitoring obligations.
While the core structure of the franchise remains intact, the updated provisions modernize the agreement in the areas where service needs, compliance standards, and community expectations have evolved. These refinements support clearer oversight, more consistent performance reporting, and a stronger framework for maintaining reliable service and long-term rate stability in accordance with Proposition 218.
Overall, the agreement provides a technically sound and fiscally responsible foundation that positions the City of Chino to sustainably meet current and future solid waste program requirements, uphold regional rate competitiveness, and continue delivering high-quality service to the community.
Therefore, staff recommends that the City Council approve the Amended and Restated Integrated Waste Management Services Agreement with USA Waste of California, Inc.
Attachments:
Attachment 1 - Restated & Amended Integrated Waste Management Franchise Agreement
Attachment 2 - Summary Table: Proposed Amended & Restated Agreement vs. Current Agreement