Council Agenda # ______Meeting of April 13, 2010

Staff Report

RESOLUTION CONSENTING TO THE ASSIGNMENT OF THE FRANCHISE COLLECTION AGREEMENT BY ALLIED INDUSTRIES, INC. TO , INC.

Honorable Mayor and Council Members:

Summary Approval of the attached resolution provides consent of the assignment of the Franchise Collection Agreement with Allied Waste Industries, Inc. (Allied) to Republic Services, Inc. (Republic) pursuant to their merger.

Background On November 20, 2008, the South Bayside Authority (SBWMA) was provided a memo regarding the pending merge of Allied with Republic. This memo indicated that a “Consent to Assignment” of both the Operating Agreement and Disposal Agreement with Allied would require the approval of SBWMA as well as the SBWMA Member Agency Franchise Collection Agreements, which includes the City of Belmont.

The merger of the two companies went through on or about December 5, 2008 with Republic becoming the surviving corporation and Allied became a wholly owned subsidiary of Republic. The merger was subject to a lawsuit outside of California and review by the Federal Department of Justice. Both of these issues have been resolved and the merger is final.

Discussion SBWMA believes it is appropriate for the SBMWA Member Agencies to act under the relevant Assignment provisions of their respective Franchise Collection Agreements to provide consent to the Allied/Republic merger. As stated in the Franchise Agreement, “merger” is within the definitions provided for assignment as a “change of ownership” or “change in control.”

The requirements for Performance Bonds and Guarantees in the Franchise Collection Agreements have been updated and modified by SBWMA to provide for Republic being the principal party. Otherwise there will be no changes to the documents.

General Plan/Vision Statement No impact.

Fiscal Impact Council – Consent of Assignment from Allied to Republic April 13, 2010 Page 2 of 2 There is no fiscal impact associated with this report.

Public Contact Positing of City Council agenda.

Recommendation

Alternatives A. With direction, refer back to staff. B. Take no action.

Attachments A. Resolution Consenting to the Assignment of the Franchise Collection Agreement by Allied Waste Industries, Inc. to Republic Services, Inc. B. SBWMA Staff Report Recommending the Assignment

Respectfully submitted,

______Brooke Lazzari Thomas Fil Deputy Finance Director Acting City Manager

Staff Contact: Thomas Fil, Acting City Manager 650-595-7435 [email protected] RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT CONSENTING TO THE ASSIGNMENT OF THE FRANCHISE COLLECTION AGREEMENT BY ALLIED WASTE INDUSTRIES, INC. TO REPUBLIC SERVICES, INC.

WHEREAS, in 2000 the City of Belmont entered into a Franchise Collection Agreement, as subsequently amended, with BFI Waste Systems of North America, Inc. (BFI), now a wholly owned subsidiary of Allied Waste Industries, Inc., a Delaware corporation (Allied), (hereinafter the Franchise Collection Agreement); and

WHEREAS, by an agreement of June 22, 2008, Allied, pursuant to an Agreement and Plan of Merger, with Republic Services, Inc., a Delaware corporation (Republic), and effective December 5, 2008 Republic became the surviving corporation and Allied became a wholly owned subsidiary of Republic; and

WHEREAS, the SBWMA has reviewed the financial records and performance of Republic as part of the RFP processes for both the new Shoreway Operations Agreement with the SBWMA and Collection Agreements with Member Agencies and is satisfied that the merger of Allied and Republic, with Republic as the Contractor, will not be detrimental to the SBWMA or its member entities, and that a Consent to Assignment can be issued.

NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Belmont, hereby consents to the assignment of the Franchise Collection Agreement to Republic by Allied conditioned on Republic executing a revised Guaranty Agreement, and providing a new Performance Bond pursuant to the requirements of said Franchise Collection Agreement.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of Belmont at a regular meeting thereof held on April 13, 2010 by the following vote:

AYES, COUNCILMEMBERS:

NOES, COUNCILMEMBERS:

ABSTAIN, COUNCILMEMBERS:

ABSENT, COUNCILMEMBERS:

CLERK of the City of Belmont APPROVED:

MAYOR of the City of Belmont

STAFF REPORT To: SBWMA Board Members From: Robert J. Lanzone, General Counsel Date: November 19, 2009 Board Meeting Subject: SBWMA Member Agencies Consent to Assignment: Franchise Collection Agreements. Allied Waste Industries, Inc. (Allied) Merger with Republic Services, Inc. (Republic) Recommendation Board approve Resolution No. 2009-35 attached hereto as Attachment A recommending Member Agencies consent to assignment of their respective Franchise Collection Agreements with Allied Waste to Republic Services pursuant to their merger.

Analysis We believe it is appropriate to now have the SBWMA Member Agencies act under the relevant Assignment provisions of their respective Franchise Collection Agreements to provide consent to the Allied/Republic merger. As stated in their Franchise Agreements, “merger” is within the definitions provided for assignment as are “change in ownership” or “change in control.”

There are requirements for Performance Bonds and Guarantees in the Franchise Collection Agreements as Exhibits F and G thereto that will have to be updated and modified to provide for Republic being the principal party. Otherwise there will be no changes to the documents.

In a related matter, there may be a future need for Member Agencies to consider a consent to assignment of the Franchise Collection Agreement from Republic Services to Recology. The parties are currently discussing Recology taking over Allied’s existing collection operations as early as next summer so as to facilitate, in part, an early transition and rollout of new collection services. Recology and the other companies submitting responses to the Collection Services RFP on March 11, 2008, submitted plans for an early phased program rollout schedule starting July 1, 2010. An early rollout is predicated on all Member Agencies approving both the Allied to Republic assignment and a Republic to Recology assignment. Representatives from Recology and Allied will be available at the November 19 th Board meeting to provide an update on their discussions.

Background A year ago, November 20, 2008, a memo was provided to the Board discussing the pending merger of Allied with Republic. It was indicated that the “Consent to Assignment” provisions of both the Operating Agreement and the Disposal Agreement with Allied would require SBWMA consent to the merger, as would the SBWMA Member Agency Franchise Collection Agreements.

We did review documentation provided by Allied last year. The merger of the two companies went through on or about December 5, 2008. The merger was subject to a lawsuit outside of California and review by the Federal Department of Justice. All of those are now final and the merger is final.

As stated in the November 2008 memorandum, Republic was the company retaining the majority of directors, its CEO remained as Chair of the Board and CEO, and Allied survived only as a wholly owned subsidiary of Republic.

Fiscal Impact There is no fiscal impact associated with this Board action.

Attachment Resolution No. 2009-35

SBWMA BOD PACKET 11/19/09 AGENDA ITEM: 4B – p1

RESOLUTION NO. 2009-35 RECOMMENDING ASSIGNMENT OF THE SBWMA MEMBER AGENCY FRANCHISE COLLECTION AGREEMENTS BY ALLIED WASTE INDUSTRIES, INC., TO REPUBLIC SERVICES, INC.

WHEREAS , in 2000 the South Bayside Waste Management Authority (SBWMA) Member Agencies entered into respective Franchise Collection Agreements, as subsequently amended, with BFI Waste Systems of North America, Inc. (BFI), now a wholly owned subsidiary of Allied Waste Industries, Inc., a Delaware corporation (Allied),(hereinafter the Franchise Collection Agreement); and

WHEREAS , by an agreement of June 22, 2008, Allied, pursuant to an Agreement and Plan of Merger, merged with Republic Services, Inc., a Delaware corporation (Republic), and effective December 5, 2008 Republic became the surviving corporation and Allied became a wholly owned subsidiary of Republic; and

WHEREAS , the SBWMA has reviewed the financial records and performance of Republic as part of the RFP processes for both the new Shoreway Operations Agreement with the SBWMA and Collection Agreements with Member Agencies and is satisfied that the merger of Allied and Republic, with Republic as the Contractor, will not be detrimental to the SBWMA or its member entities, and that a Consent to Assignment can be issued.

NOW, THEREFORE, BE IT RESOLVED that the SBWMA Board recommends that its Member Agencies consent to the assignment of their respective Franchise Collection Agreements to Republic by Allied conditioned on Republic executing a revised Guaranty Agreement, and providing a new Performance Bond pursuant to the requirements of said Franchise Collection Agreements.

PASSED AND ADOPTED by the Board of Directors of the South Bayside Waste Management Authority, County of San Mateo, State of California on the this 19 th day of November, 2009 , by the following vote:

Agency Yes No Abstain Absent Agency Yes No Abstain Absent Atherton Menlo Park Belmont Redwood City Burlingame San Carlos East Palo Alto San Mateo Foster City County of San Mateo Hillsborough West Bay Sanitary Dist

I HEREBY CERTIFY that the foregoing Resolution No. 2009-35 was duly and regularly adopted at a regular meeting of the South Bayside Waste Management Authority on November 19 th 2009 .

______ATTEST: Martha DeBry, Chairperson of SBWMA

______Kevin McCarthy, Executive Director

SBWMA BOD PACKET 11/19/09 AGENDA ITEM: 4B – p2