12-21-2016 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Joel Hanson, City Administrator DATE: December 16, 2016 RE: Organized Collection Contract Renewal We believe our organized collection contract haulers and city staff are very close on a final agreement for a five-year extension to our agreement for waste services. Some of the key highlights we are addressing in this renewal include the following: • Ensuring that the amount we are paying for tipping fees is accurate. The goal of our agreement with the haulers is this is a revenue neutral item. As you know, they are required to dispose of the waste collected in Little Canada at the Recycling and Energy Center in Newport. Ramsey County sets the tipping fees for waste brought to this facility. That rate is currently $58 per ton and it is subsidized by our county environmental tax on waste services. We expect this rate to rise in the future so we want to ensure what we are being charged correlates to the volume of waste generated by our organized collection program. Industry standards seem to indicate that an average household generates about one ton of trash per year. In the City of Minneapolis, the amount of waste generated per household has averaged about 1,745 pounds over the last six years. With either of these numbers, we would be able to reduce the disposal component of our rate structure by $15,000 or $28,000 respectively. (The amounts we are currently paying reflect an average waste generation per household of over 2,300 pounds.) The concept I’m anticipating we will have in this agreement is to base our disposal costs on the 2,000 pounds per household figure for 2017 and then conduct a weight study over the course of 2017 to make sure this is a fair number to all parties. If not, adjustments will be made in 2018 to more accurately reflect the results of the weight study. While the final details are still being worked out, we believe the weight study will be based on the haulers taking only Little Canada organized collection refuse to the Newport facility, weighing it, and then dividing the weight by the number of households collected. This will occur once per quarter in 2017 to average out seasonal differences. There is some risk in this concept if we are not “average”. If our waste generation per household is higher than the 2,300 pounds we have been charged for, our rates will go up accordingly. However, if we are better than average, we could see a nice drop in our 2017 rates and also provide some protection from future tipping fee increases. • We are proposing some additional penalty/liquidated damages provisions to help us address service issues.