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HomeMy WebLinkAbout10.F.1. Award of a Five Year Refuse/Rcylcing Contract to Allied Waste Service,l a division of Republic Services,l Effective June 1, 2014A+kachmenk 6 vwtA General Business 10. F. 1. TO: Mayor and City Council FROM: Mark McNeill, City Administrator DATE: 07/02/2013 SUBJECT: Award of a Five Year Refuse/Recycling Contract to Allied Waste Services, a division of Republic Services, effective June 1, 2014 (D) Action Sought The Council is asked to pass a motion directing city officials to execute a five -year service agreement with Allied Waste Services, a division of Republic Services, to provide organized refuse, recycling, and yard waste collection for the portions of the City of Shakopee which are served under the City's organized waste contract. Background The City's organized garbage /recycling contract has been served by Dick's Sanitation since 2001. Last summer, the City Council directed City staff to seek proposals for a new contract, which would commence June 1, 2014. See the attached memo dated May 21, 2013, for more about the process, and the six proposals which were received. At the May 21 st City Council meeting, the Council directed that Staff negotiate a contract with Allied Waste Services as the preferred respondent to the Request for Proposals. The Council also gave staff direction regarding secondary negotiations, should negotiations with Allied fail. Since then, the City's consultants, City staff, and Allied have met, and have completed the attached contract with a recommendation to the City Council to authorize execution. The major changes from the current Shakopee waste contract are as follows: • Single -sort Recycling -- Rather than the existing "two -sort" system, the new contract provides for a separate, wheeled, covered recycling container for each dwelling unit. All recyclables are "co- mingled" and separated later at a materials recovery facility (MRF). The recycling cart reduces wind -blown debris, and is easier for the customer to use. With single -sort, recycling is picked up every other week, which saves wear and tear on the City streets. The proposed contract has provided for 80% of the net proceeds of the sale of recyclables to go to the City. • Every Other Week Refuse Option - -This allows a lower cost alternative for lower volume users to set out garbage every other week, rather than weekly. • City Ownership of Carts - -This was a decision made on May 7th by the Council. Instead of the hauler owning the carts (and needing to price their service to amortize the costs of the carts over the initial five -year contract), the City will purchase and own the carts. There will be a line item on the bill (cart rental fee), which would be collected by Allied, and which would repay the City the estimated $1.4 to $1.6 million needed for the initial acquisition of approximately 22,000 garbage and refuse carts. The City will amortize this investment over 10 years, providing for lower per customer payments during the first five years. At the end of 10 years, the City should have the carts fully paid off. As the estimated life expectancy of the carts typically runs 15 -20 years, there would be significant savings for customers after the 10 -year amortization is completed. The contract provides for the City to purchase and ship the carts to Shakopee. Allied would then deliver the carts to City residents at its cost. Allied has included in its monthly charges to customers the cost of administering the program, maintaining the carts, providing an inventory of extra carts at its location, and delivering replacements as needed. Allied will also assist the City in ordering new carts as necessary. • The contract also continues the existing language for delinquent accounts, and Allied will provide assistance at special events such as Derby Days and Clean-up Day. • Yard waste services are also part of the contract with Allied and will operate similar to the current yard waste program. • Bulky waste items will also be collected under the new Allied contract using a specific price schedule. which will vary depending on the type of large waste item to be collected. • Organic waste such as food waste and non - recyclable paper may also be collected, starting no sooner than 2015. The details of this additional service have not yet been worked out, but Allied will be developing a proposal within the next year. • Weekly collection operations from City buildings and City park facilities under the new Contract will be similar to the current system. Two improvements in the new Contract include a change to a single - stream recycling system, and the addition of seasonal, single - stream recyclables collections from designated City parks with parking lots. Recommendation Staff s recommendation is to enter into a five -year agreement for refuse, recycling, and yard waste services with Allied Waste Services, a Republic Services Company. Budget Impact The RFP specified that no single criterion would determine the best proposal. However, in the end, Allied did have the least cost as calculated, with a five -year total cost of $5,529,949. That was approximately $381,500 less that the next lowest qualified proposer. The rates for individual customers is shown on Attachment A. This compares pricing for the existing contract, with prices under the proposed Allied contract. As shown, under the current contract, there is a differentiation in pricing between what townhouse customers, and single - family residential customers pay. Prior to the 2001 contract, many townhome associations were served by individual haulers, and many of those used dumpsters instead of individual carts. That led to incidents of illegal dumping, and low rates of recycling. In order to get townhome customers under the then -new City contract, differentiated rates were negotiated. Over the years, this continued practice has effectively caused single - family customers to subsidize the rates paid by townhome customers. Allied proposes to change the pricing structure, so that it is truly a "pay as you throw," volume based cost - -a 60 gallon garbage service would cost the same for everyone covered under the contract, regardless of whether the resident lives in a single - family home or townhome. Likewise, recycling rates are proposed to be the same at $3.24 per month, regardless of volume. Because of this, single - family customers will see a reduction in what they pay, whereas 60 and 90 gallon townhome customers will see an increase. For example, 60 gallon single - family customer monthly rates will be reduced by $2.73. The same volume for a townhome customer will increase by $2.84 per month. Note that both of these figures exclude the 9.75% sales tax which is imposed by the State of Minnesota on garbage services. In an effort to offset the increase for townhome customers, Allied has agreed to work with the City on a recycling education program, which will encourage greater recycling participation by townhome customers - -in the past, many townhome units have not participated in recycling at the same levels of other customers. The intended result of this educational program would be an increase in recycling. That would mean less garbage being thrown, which could result in some townhome customers being able to "downsize" to a smaller container, thus saving money. It should also be noted that for the first 90 days of the contract there will be no charge to exchange garbage and recycling containers for different sizes, as customers adjust their garbage /recycling disposal habits. Relationship To Visioning This meets Goal "D ", "Maintain, improve and create strong partnerships with other public and private sector entities." Requested Action If the Council concurs, it should, by motion, award a refuse /recycling contract to Allied Waste Services, a division of Republic Services, for a Five Year Period from June 1, 2014 through May 31, 2019. Attachments: Attachment 5/21/13 Attachment A Attachment B