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CR 90-185 Curbside Recycling Extension• August 28, 1989 kr521222.94_,AgliciA Overview. MAgrtina iatasaaiian Staff recommends adoption of the following motion: "Approve a contract s c�uC n 993 �c c3�deeo�rcl� r �' eke t `a arras, Waste $anagg:na nt fcar 1 1 peL MatitheR0r ce tifigd cAwe °n n't Following the Council action to add plastics to the weekly recycling collection program, negotiations with Waste Management resulted in a proposed increase of $.30 per household per month to collect plastic under the current contract. During these negotiations Waste Management proposed a $.35 per household per month increase for plastic with a contract extension through June 30, 1993 and a modification to the 90-day cancellation clause 411 Prifts'_ to O�aaa idaae o What are the proposed changes? c Should the contract be extended? o How will the additional costs be funded? o Detailed Background c Analysis of Issues c Alternatives o Proposed Amendment o Existing Agreement with Waste Management ea Waste Management Proposal T i el, Public Worksseoor CURBSIDE RECYCLING CONTRACT EXTENSION Council Report: 90 -185 Council Report: 90-°185 Page 2 Waste Management has been our recycling contractor since January 1, 1990. Our original program collected newspaper, metal can and glass. On May 6, 1990 Waste Management added corrugated cardboard at no extra cost and on August 13, 1990, HDPE and PET plastic's were added for collection. The addition of plastics :increased the cent of collection $.30 to $2.45 per household per month or $10,008,00 per year for the 2780 households now receiving curbside collection. The $.30 per household per month increase for plastics is comparable with plastics collection costs quoted to other cities in the Hennepin County area. Our current contract with Waste Management is $2.15 per household per month and expires on June 30, 1991. During discussion for the addition of plastics, Waste Management proposed increasing our collection cost to $2.30 per household per month to add plastics if we would approve an extension of our contract through June 30, 1993 and modify the 90 -day cancellation clause. This rate reflects an increase of $.15 per household per month for the collection of plastics or $5,004.00 per year for the 2780 households currently receiving curbside collection. Waste Management's performance has been very acceptable. They have been responsive to problems and to changes we requested and have also been timely with report information. To re -bid and possibly change recycling contractors would displace a system that is working very well at an already competitive cost. If Waste Management's performance were to deteriorate, Section 6 of the Recycling Agreement still allows the City to terminate upon the contractor's failure to perform its responsibilities under the Agreement and Section 12 imposes penalties which can be deducted from payments due. _1$i__ angijaple_RL o What are the proposed changes? - Modification of the 90 -day cancellation clause - Section 6. Terminaticn, shall be amended to read: This Agreement may be terminated by the City upon the Contractor's failure to perform its responsibilities under the Agreement. Otherwise, the City may terminate the Agreement upon 90 days advance written notice to the Contractor if Hennepin County significantly reduces or alters its Funding Policy for reimbursing City recycling program costs. "Significantly reduces or alters' means a reduction or alteration resulting in the reimbursement of less than 5O% of the CityPs recycling program costs, or additional requirements set forth by Hennepin County in which the City and Waste Management are unable to mutually negotiate a rate of payment adjustment. 1 .. Extension of contract through June 30, 1993, Current contract expires on June 30, 1991. - Change rate from $2.15 to $2.30 per household per month for the addition of plastics to materials collected. • • Council Report: 90 -185 Page 3 o Should the contract be extended? If we continue with the current contract and include plastics, which is required for Hennepin County funding assistance beginning January 1, 1991, we will be paying $2.45 per household per month beginning August 13, 1990. If we extend our contract to June 30, 19 93 , we can reduce that cost $.15 per household per month, to $2.30 per household per month. For the remaining 11 months of the current contract that would mean a total savings of $4,587,00 for the 2780 households collected from now, This amount will increase as more households are added to our collection routes. Our current contract will end on June 30, 1991 and negotiations for a new contract would begin in March of 1991. Waste Management's performance has been very acceptable to date. With a contract extension, Waste Management will be assuming the market risk for the next two years during a time when markets are very unstable. This coupled with the cost savings overall and minor adjustments to the release clause make the contract extension a reasonable choice at this time. how will the additional costs be funded? Provided we meet our abatement goal, 80% of the increase would be funded by Hennepin County's funding reimbursement program. Currently $.75 a month is charged for recycling on the quarterly utility bill, this amount will be adequate to cover the anticipated city portion (20 %) of the additional costs. The 1990 Funding Grant Application included the additional amount to add plastics in anticipation of the County requirement. Al,tA} n39ti to 1. Revise the contract to included plastic, modify the 90 - day cancellation clause and extend the contract through June 30, 1993 at a cost of $2.30 per household per month. Staff Staff recommends extending the contract. Our ur r 1 t 9 h •y� m 4« .1. �.: «q. V44+.i'.. Lf3F�4d1i.W NitLA. Waste Management has been good and costs seem to be in line with the costs of other recycling programs in the area By extending Waste Management's contract and agreeing to modify the 90-day release clause the City is able to negotiate a lcwer cost per household. 2. Revise the contract to include plastics but do not extend it at a cost of $2.45 per household per month. This alternative it not recommended primarily due to the higher cost per household. 3. Discontinue the recycling program and turn responsibility back to Hennepin County. Thia alternative is not recommended. mended» Hopkins has a quality recycling program functioning at this time. As long as the County continues to Band 804 of the program costs, a major change in our program could have a negative effect on our residents recycling efforts.