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HomeMy WebLinkAbout13.F.1. Dick's Sanitation Contract Renewal /3. -F J , CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Dick's Sanitation Contract Renewal DATE: March 9,2010 Comment: Introduction: The Council is asked to approve a three year extension of the term of the contract with Dick's Sanitation, Inc., for garbage and recycling service. Background: Dick's has been the City's designated hauler since 2001; a second 5-year contract was negotiated for a renewal in 2006. On January 19th, the City Council discussed a request from Dick's to have the Council exercise in a provision of the existing contract to extend the term of the contract by three years. Without it, the contract would expire March 19, 2011. In exchange for the extension, Dick's Sanitation proposes to reduce the rates charged for garbage and recycling pick up. The Council discussed and reviewed the rationale both for and against extending the contract. It was felt that the pluses of extending the contract were: . A continued high level of service from Dick's as a known commodity; . An assured reduction in price. The negatives of not seeking quotes include: . Foregoing knowing for certain that there is not a greater opportunity for savmgs; . Problems relating to switching out containers for nearly 11,000 residential garbage, yard waste, and recycling containers. . The need for most of those customers to switch their automatic billing between the vendors. It should be noted that at least one of the provisions dictated by the City in the current contract assures that the prices of the current contract will be higher than if alternatives were allowed. For example, it would be less expensive to allow landfilling. However, the contractual requirement to have the garbage incinerated (which leads to refuse-derived energy production) significantly reduces the City of Shakopee's liability from future landfill cleanup costs. The State's Data Practices Law provides that the new rates being proposed by Dick's are private data, because Dick's would be at a significant disadvantage if their proposed rates are made public before a final decision is made by the City Council on whether to accept the proposal. Staff has separately provided the specifics ofthe proposed rates to the City Council. In general, prices would go down in the first extension year from the prices set forth in the current contract. Prices would go up in the second extension year, but the resulting rates would still be less than what is provided for in the current contract. Prices for the third year would be the same as the second year. Therefore, the rates that would be in effect at the end of the three year extension would be less than the rates that are currently in place. Contract Date Extension Change: Assuming that the City Council is in agreement with the concept of an extension, staff recommends that the termination date of the three year extension actually be extended by an additional ten weeks from March 20,2014, to May 31, 2014. The reason for the additional time is to avoid the problem similar to what happened when the contract was last shifted between vendors in 2001. Thousands of the two-wheeled carts of various sizes needed to be delivered and stored by Dick's Sanitation until the previous vendor's contract expired. The only room available for that was outdoors at a local parking lot. During February and March, the carts became covered by snow, and in many cases the carts became frozen to the parking lot and were difficult to move. . Extending the actual changeover date to the end of May would eliminate these issues. All other provisions of the contract would stay the same. Recycling Information: At the January meeting, there was also discussion as to the merits of "single-sort", versus the City's existing two-sort recycling system. The single sort system is very popular with residents, as there is not the need to bag papers to place those on top of plastics and glass in the eighteen gallon bins that are provided by Dick's. However, more of the recycle materials become contaminated, and therefore must be incinerated or landfilled at a higher disposal cost, and cost to the environment. Recycling does impact the cost of providing services, and the economy has a big impact on the market for recyclables. When the economy was strong, Dick's would be able to sell Shakopee recyclables for $30 per ton. The City received a portion of that back, which went towards Clean-up Day and other recycling events. Recently, however, because of the bad economy, Dick's has actually had to pay to have recyclable materials taken. However, it still makes economic sense to recycle-the cost of incineration amounts to $45 per ton. Dick's would be open to discussion of a single -sort system, but indicates a need to amortize the cost of the additional containers. They would seek an additional five-year extension to justify that. Recommendation: I recommend that the City exercise the provision in Section 2.2 B of the existing contract with Dick's Sanitation, and authorize the extension from March 20, 2011, to make May 31 st, 2014. This is shown on Attachment #2. Relationship to Visioning: This supports goal D- Vibrant, Resilient, and Stable. Action Required: If the Council concurs, it should, by motion, authorize an extension of the contract with Dick's Sanitation Services, Inc., dba Lakeville Sanitary Services, Inc., to May 31, 2014, for the provision of garbage and recycling services to the City's designated contract servIce area. , l/V\~ ~ Mark McNeill City Administrator MM:cn A+to.Lh m,tn +- 4f;.( City of Shakopee -Contract Collection, Processing and Disposal of Residential Refuse, Recyclables and Yard Waste II. GENERAL CONDITIONS 2.1 CONTRACTOR'S OBLIGATIONS: A. In strict accordance with the terms of this Contract (including the General and Special Conditions and Specifications below) and at its sole cost and expense, the Contractor shall provide all of the labor, materials, necessary tools, expendable equipment, supplies, vehicles, transportation services, and recyclable processing and yard waste disposal arrangements required to perform and complete the collection and disposal of Refuse and Yard Waste and the collection and processing of Recyclables from Residential Units within the limits of the City and any territory hereinafter annexed. Contractor must provide for adequate disposal facilities or methods for refuse, recycling and yard waste as part of the contract proposaL B. Any contracts between the Contractor and businesses, commercial operations, multi-family rental buildings in excess of four (4) units, institutions, schools, or industries and units of government or agencies thereof, shall include a provision that such contract shall not interfere with the terms and conditions set forth under this Contract. C. The Contractor is strictly prohibited from mixing any waste from any other City residential route or with any commercially generated waste other than City Facilities as specified in this agreement. D. For informational purposes the City shall provide the Contractor the initial computerized listing of all those Residential Units within the City of Shakopee, which are eligible for City, contracted services. Those structures, which are not eligible for City services, shall not be collected. Said computerized list shall be maintained and updated by the City and the Contractor in electronic format. The computerized listing shall be updated each calendar quarter shall be made available at no cost to the City. .....-.+ 2.2 TERM OF CONTRACT: A. This contract shall become effective on the 18th day of March 2006, and shall remain in full force and effect through the 19th day of March 2011. B. At the expiration of the initial contract term, the City, at its sole discretion, may extend the contract for up to three (3) years at the proposal price for the option years by delivering written notice of its intent to extend delivery to Contractor at least six (6) months prior to the expiration date of this contract. The proposal price for the option years shall be the proposal price for 2011 adjusted by the 8 City of Shakopee -Contract Collection, Processing and Disposal of Residential Refuse, RecycJables and Yard Waste percentage increase in the consumer price index for all urban areas (CPI-D) from December 2011 to December 2014 and shall be in effect for those three (3) years. C. Contractor shall have the opportunity to request an additional extension with terms and conditions to be determined and agreed upon by both parties up to twelve (12) prior to the last full year term of the agreement or any extension thereof. 2.3 PAYMENT: A. The Contractor will bill the single family dwellings or town home association, which receive individual curbside pickup within the designated City service area for the services included in this contract in accordance with the charges set forth on Attachment 1 to this agreement. B. The Contractor will bill each unit quarterly-at least every three months and no frequently than every month. The Contractor will be responsible for collecting all charges from each unit and may not hold the City responsible for any uncollectible charges. The City will assist the hauler through legal methods in the collection of unpaid accounts. C. The Contractor may not stop providing refuse, yard waste and recycling services to any unit that has past-due charges. Collection of such charges will be done .pursuant to the City Code. 2.4 CONTRACTOR'S ACCIDENT PREVENTION: A. The Contractor shall comply with the safety provisions of all applicable laws, regulations and building codes, including, without limitation, the installation and maintenance of safeguards on machinery and equipment, the elimination of hazards, and worker safety training. B. ....- The Contractor shall exercise precaution at all times to protect the safety of persons and property. C. The Contractor shall immediately notify the City of any accident of any kind, which involves the general public or private or public property which occurs during the performance of this Agreement. D. Upon City's request, the Contractor shall provide the City with a written report within forty-eight (48) hours including the details of any such accident. 9 A+tadtmU\ + * (;( AMENDMENT TO REFUSE AND RECYCLING CONTRACT This contract amendment is entered into as of March 16, 2010 by and between the City of Shakopee ("City") and Dick's Sanitation Services, Inc., a Minnesota corporation, doing business as Lakeville Sanitary Services, Inc., a Minnesota corporation ("Dick's"). RECITALS A. The City and Dick's entered into a Refuse and Recycling Contract as of May 17, 2005 ("Contract"). The current termination date of the Contract is March 19, 2011. B. Section 2.2 B of the Contract allows the City to extend the term of the contract for up to three (3) years at the proposal price for the option years by delivering written notice of its intent to extend the Contract to Dick's at least six (6) months prior to the expiration date. C. Dick's has proposed a three-year extension of the Contract at rates that are more favorable to the City than the rates currently provided for in Section 2.2 B of the Contract. D. The City Council has determined that it is in the City's best interest to extend the Contract until May 31, 2014 at the more favorable rates. NOW, THEREFORE, the City and Dick's agree as follows: 1. The Contract is extended from March 20, 2011 until May 31, 2014. 2. The Contract prices during the extension term are set forth in Attachment #2 to this Contract Amendment. 3. Except as otherwise set forth in this Contract Amendment, all terms of the Contract remain in effect. DICK'S SANITATION SERVICES, INe., A CITY OF SHAKOPEE, A MINNESOTA MINNESOTA CORPORATION, D/B/A CORPORATION LAKEVILLE SANIT AR Y SERVICES, INC. By: By: Richard Clemmer John J. Schmitt, Its President Its Mayor By: Mark McNeill, Its City Administrator By: Judy Cox, Its City Clerk