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Home My WebLink About4.F.5. Garbage and Recycling Cart Procurement Process Consent Business 4. F. 5. St AKOPEE TO: Mayor and City Council FROM: Mark McNeill, City Administrator DATE: 11/06/2013 SUBJECT: Garbage and Recycling Cart Procurement Process (A) Action Sought The Council is asked to approve a purchasing process for City-owned trash and recycling carts. Background As part of the garbage/recycling contract change, the City Council chose to go to City ownership of trash and recycling carts. One reason for that is with hauler-owned carts, the entire cost of the cart must be recouped during the initial five-year contract, which results in a higher cost to the customer. The garbage company then owns the carts as an asset, and garbage rates may or may not be reduced in any subsequent extensions of the contract, even though the carts are fully paid. Typically, carts have a 15 to 20 year life expectancy. With City cart ownership, should the City change trash haulers before the carts are worn out, customers will keep their City-owned carts. With City ownership of the carts, amortization may take place over a longer period of time, such as 10 years (the term of time recommended by staff). The City fronts the acquisition cost and a "City's cart rental fee" will be listed on the Contractor's trash/recycling bill. These cart rental fees collected by the hauler will then be reimbursed to the City. At the end the amortization period, the City Council can choose to either the reduce rates for cart rental, even eliminate them entirely, or continue the rental fees at a rate to be determined to help build a cart replacement fund. City ownership of the carts also makes it possible to more easily change garbage haulers, in that all that would be bid out is the labor, rather than labor and carts. Transitions to a new company will be easier without the need for cart switch outs. Numbers of Carts--Approximately 22,000 carts will need to be purchased, with each household receiving one each for garbage and recycling. Trash cart sizes will vary between(nominal) 30, 60, and 90 gallons.. Because of the new single-sort recycling system, recycling pick-ups will be made every other week, rather than the current weekly schedule. Garbage will continue to be collected weekly. Because of that, and that additional types of materials are to be collected for recycling, the recycling carts to be delivered will be larger--60 or 90 gallon, versus the current two-sort, 18 gallon recycling bins. Process--A competitive acquisition process is required under Minnesota law It could be either: 1. Formal Bid Process--the City would draw-up specifications, advertise, and seek bids on its own; or i 2. Purchase from a cooperative buying service. The advantage of a cooperative buying service is the ease of purchase, speed of acquisition, and generally more competitive cart prices. The City has access to two cooperative purchasing programs--the National Intergovernmental Purchasing Alliance (National IPA) and the Houston-Galveston Area Council (HGACBuy). Several legal reviews have been conducted regarding the authority of local governments in Minnesota to use cooperative purchasing agencies. In general, if the master or base contract was procured competitively, the use of cooperative purchasing arrangements by other public agencies is allowed. Specifically, this is outlined in MSA 471.59--Joint Exercise of Powers. In a review of the two above mentioned purchasing cooperatives, Staff s recommendation is to utilize HGACBuy and/or National IPA. By utilizing one or both of these cooperatives, the City will have access to up to eight cart manufacturers (representing almost all of the possible major vendors). Through HGACBuy and/or National IPA, the City would release a request for price quotes, including a "price worksheet". This will help the cart vendors by using a standard form to which to respond. The worksheet could include the required post-consumer plastic resin content, and would also include: •Unit price per cart, by cart size/model. •Extended purchase cost to the City for each size/model of carts. •Price per cart for the "hot stamped" City logo (a permanent identification on the side of the cart). •Price per cart for the "in mold label" (instructions on top of the cart for such things as recycling, etc.). •Price per cart for the radio frequency ID (RFID) tags to be installed at the time of cart manufacturing. (RFID tags act like automated serial numbers to uniquely identify each cart and greatly improve cart tracking efficiency and accuracy.) •Shipping costs to transport carts to Shakopee from the cart manufacturing plant •Cart transportation scheduling needs (required amount of manufacturing time, delivery notices, etc.) .Cost for any extended warranties beyond the standard 10-year minimum. •Taxes. •Other fees or costs. Cart specifics continue to be identified--for example, 90 gallon recycling carts may be specified for single-family residential units; 60 gallon recycling carts might be preferable in townhomes with smaller garages. The intent would be to have a standard size for each type, and have the customer try the issued size for several weeks before changes would be considered. While several colors are possible, Staff s recommendation is to go with black as the preferred color, owning to the fact that black is typically is the least expensive, and also has the highest percentage of post-consumer resin. However, alternatives for other colors will be accepted. So as to differentiate between trash and recycling carts, different colored lids will be installed on the recycling carts--for example, either red or yellow. The City has also received inquiries as to option for specific colors for specialized fund raising efforts. For example, pink carts are used by selected cart vendors to support breast cancer research fundraising efforts. Staff is still investigating this option. If a unique cart color is not available or otherwise not feasible from the selected cart vendor, an alternative might be pink stickers to be placed on the sides of standard carts for an extra fee to be donated to the selected charity Delivery--It is anticipated that delivery will be over the space of five business days the week of the cart change-out, May 27 - 31, 2014. Delivery will be made by an estimated total of 18 semi trucks to the Public Works yard in Shakopee. The new contractor, Allied, has agreed to assemble the carts (attach wheels and lids) and will deliver the City's new carts. The Allied delivery of new carts will closely follow the removal of Dick's carts. Recommendation I recommend that Council approve the cart acquisition plan, and direct that staff and Foth Infrastructure &Environment, the City's environmental consultant, be directed to contact HGACBuy and National IPA with a pricing sheet to solicit competitive quotes for the City's trash and recycling cart needs. Budget Impact The estimated cost for the City purchase of the carts when this was first discussed with Council was $1.5 million. Preliminary pricing has indicated that the actual cost may be lower than this original estimate. The intent is for the City to purchase these carts through an inter-fund loan, to be repaid with a "cart rental fee" which will be shown on each trash/recycling bill from the Contractor as per the new City-Allied Contract. That will be collected by Allied, and then will be remitted to the City to repay the inter-fund loan. Staffs recommendation is that a modest interest rate be imposed to off-set the investment earnings that would otherwise be earned from those funds being invested elsewhere. Relationship To Visioning This supports Goal A--"Keep Shakopee a safe and healthy community where residents can pursue active and quality lifestyles." Requested Action If the Council concurs, it should, by motion, direct Staff and the City's consultant solicit competitive quotes through a cooperative buying consortium for the acquisition of garbage and recycling carts, for use in the new contract beginning June 1, 2014. Attachments: