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20 - CR&R Audit Implementation PlanProtecting our community's health and the environment by providing solid waste and sewer collection services. www.cmsdca.gov Costa Mesa Sanitary District ….an Independent Special District Memorandum T o: Board of Directors Via: Scott Carroll, General Manager From: Javier Ochiqui, Management Analyst Date: June 27, 2013 Subject: CR&R Audit Implementation Plan Summary Michael Balliet Consulting, LLC was retained by CMSD to perform a review of CR&R, Environmental Services. On May 23 , 2013, the Board of Directors reviewed the audit results and approved the recommendations from Michael Balliet Consulting , LLC . The Board of Directors directed staff to develop an implementation plan that focused on the “unclear” areas . Staff is providing the Operations Committee with the CR&R A udit I mplement P lan. Staff Recommendation That the Board of Directors approves the CR&R Audit Implementation Plan. Analysis The purpose of the review was to establish CR&R’s compliance with contract terms and performance during fiscal year 2011/2012. The auditor stated that CR&R is in compliance with 25 of 28 review questions (89%). The audit or identified 3 areas that were “unclear .” Below are the 3 areas that the CR&R Audit Implement Plan will focus on : Compliance Area 1. Reasonability of CR&R rates/ Annual rate review 2. Verify green waste diversion percentage 3. Most favorable rate ITEM NO. 20 Board of Directors June 27 , 201 3 Page 2 of 2 CMSD staff will work with District Counsel, CR&R , and Michael Balliet Consulting, LLC to revise the contract in order to clarify the area s of concern. Attached is the CR&R Audit I mplementation P lan providing furt her details, recommendations, and action plan . Strategic Plan Element & Goal This item complies with the objective and strategy of Strategic Element 2.0, Solid Waste, which states: “Objective: Our objective is to manage the collection and recycling of residential trash in the most economical and environmentally friendly way.” “Strategy : We will do this by looking for ways to improve efficiencies, achieve high customer satisfaction, and considering prudent new recycling methods.” Legal Review CMSD sta ff will work with District Counsel to revise the contract in order to clarify the areas of concern. Financial Review CMSD and CR&R have agreed to implement the plan and revise the contract in order to clarify the “unclear” compliance areas. In addition, C R&R is willing to pas s billing and collections savings on to CMSD via a $0.50 rate reduction . Therefore, the Fiscal Year Base Rate per Occupancy per the Agreement will be reduced from $9.1554 to $8.9054 per household and the Recycling/Disposal rate will be reduced from $52.22 to $51.97 per ton. Committee Recommendation On June 18, 2013, the Operations Committee approved recommending to the Board the CR&R Audit Implementation Plan. Public Notice Process Copies of this report are on file and will be in cluded with the complete agenda packet for the June 27, 2013 Board of Directors regular meeting at District Headquarters and posted on the District’s website . Alternative Actions 1. R efer the matter back to staff for additional information. Attachment A: CR&R A udit I mplementation P lan ATTACHMENT A COSTA MESA SANITARY DISTRICT CR&R AUDIT IMPLEMENTATION PLAN FINANCIAL REVIEW Recommendation # Compliance Comments Action Plan Employee Responsible for Implementation Start Date Completion Date Status 15. Reasonability of CR&R r ates. Annual rate review Unclear Rate guarantee language in contract is ambiguous. Rates can be considered reasonable or unreasonable Work with District staff, Counsel , Michael Balliet Consulting, LLC and CR&R to revise the contract in order to clarify Management Analyst June 2013 August/ September 2013 In progress OPERATIONAL REVIEW Recommendation # Compliance Comments Action Plan Employee Responsible for Implementation Start Date Completion Date Status 6. Verify green waste diversion percentage Unclear Exact percentage of green waste diversion requires disposal composition study Enter into an Agreement with Michael Balliet Consulting , LLC to perform a waste characterization study and Amendment review Management Analyst July 2013 August 2013 Pending Agreement COMPLIANCE REVIEW Recommendation # Compliance Comments Action Plan Employee Responsible for Implementation Start Date Completion Date Status 2. Most Favorable Rate Unclear Current agreement terminolog y is too vague for a definitive determination Delete from contract and replace with within 10 percent of net to hauler OC average language Management Analyst June 2013 August/ September 2013 In progress