Loading...
HomeMy WebLinkAbout20070205 - VIII-C-3VIII-C-3 MEMORANDUM TO: Honorable Mayor and City Councilmembers FROM: Dave Osberg, City Administrator DATE: February 1, 2007 SUBJECT: Residential Solid Waste Collection License RECOMMENDED CITY COUNCIL ACTION Former Utility Committee members Ed Riveness, Danna Elling Schultz and Turney Hazlet, along with City Attorney Shawn Moynihan and I are recommending the following: a.) The full City Council take action awarding the residential solid waste collection license for a three (3) year period ,retroactive to January I, 2007 to Waste Management. The rate structure shall be as defined in their Option B (attached). b.) It is recommended that the City Council take action directing City Staff to prepare an agreement with Waste Management capturing the elements of the request for proposal document, the actual proposal submitted by Waste Management and their supplemental information dated January 8`h, 2007. c.) Direct City Staff to prepare the necessary Ordinance amendments for City Council consideration at a future meeting, that properly reflect the method for implementing residential solid waste collection rate adjustments, based on a consumer price index and a fuel clause adjustment factor. BACKGROUND On October 30, 2007 five companies submitted proposals regarding the residential solid waste collection license. Those companies included Dicks Sanitation, Allied Waste, Veolia, Waste Management and Highland Sanitation. On November 29`h, 2006 the Utility Committee of the City Council, including City Councilmembers Ed Riveness, Danna Elling Schultz and Turney Hazlet conducting interviews with representatives from Veolia and Waste Management to gain a better understanding of the content of their proposals, and to ask specific questions regarding their proposal. Prior to the meeting on November 29`h, 2006, each company was forwarded a copy of the other's proposal, allowing each to have an opportunity to become familiar with their primary competitor's proposal. Following the meeting on November 29`h, 2006, the Utility Committee forwarded a recommendation to the City Council for consideration and approval at its meeting on December 18`h, 2006. The City Council unanimously approved the following action at the meeting conducted on December 18`h, 2006: a.) Authorize continued discussion with Waste Management and Veolia, and no longer consider the proposals submitted by Highland Sanitation, Allied Waste Service, and Dick's Sanitation. b.) Authorize an extension until February 9, 2007 the current residential solid waste collection license held by Waste Management. c.) Direct City Staff to submit a written request to both Veolia and Waste Management, seeking clarification and further information on various components of their proposals, to assure an accurate and equal comparison. d.) Authorize City Councilmembers Danna Elling Schultz, Turney Hazlet and Ed lZiveness to continue working with the project through completion. Upon approval by the City Council at the December 18`h, 2006 meeting, Staff submitted a written request to both Waste Management and Veolia, requesting additional information to include the following: 1.} Veolia was asked to submit a rate structure to include processing of all waste collected in the City of Hastings through the residential solid waste collection license. Furthermore, Waste Management was asked to submit rate a structure that would include landfill disposal. At the time, the proposal submitted by Veolia did not include a rate structure that included processing, while Waste Management's only included a rate structure for waste processing. Opportunities to consider an equal comparison were sought by the Committee. 2.) Waste Management included in its proposal two options regarding a rate adjustment. One option included an increase from the current rates which would be fixed. A second option included rates which would remain at current levels, with adjustments in the future based on the consumer price index and a fuel clause adjustment. In the Veolia proposal there was no reference to any pending or future rate adjustments. The Committee felt it was imperative to have a better sense of Veolia's future plans for rate adjustments, and under what conditions they would be coming before the City Council for a rate adjustment. 3.) There was some uncertainty on what the proposal submitted by Veolia included for yard waste disposal. The Committee wanted to be certain the cun'ent system would remain in place: a yard waste drop off site, and optional subscription curb side pick up. A better understanding of the rate structure was also needed. 4.) The Committee insisted that the Youth Recycling program continue as currently operating, and sought clarification that each company was willing to do so. 5.) It was the intent of the Committee that the recycling revenue sharing program continue as it has the last six years. Each company was asked to submit information confirming their understanding of that expectation, and affirmation that they are willing to do so. Staff has attached a copy of the supplemental information submitted on January 8"', 2007 by both Veolia and Waste Management. City Councihnembers Danna Elling Schultz, Turney Hazlet and Ed Riveness (via long distance telephone) conducted a meeting on Wednesday January 10"', 2007 to review the information, discuss with representatives from each company, and formulate a recommendation for the full City Council to consider. City Attorney Shawn Moynihan and I were also in attendance. From the start of this process, the Utility Committee has suggested that one of the goals was to assure the system in place would remain, and there would be no changes, unless they were improvements or service enhancements. For example, the following elements of the system are in place, and among others must remain intact: -Processing of waste -Recycling revenue sharing -Youth Recycling program -Yard waste drop off site; free to City residents -Option for yard waste pick up at curb (subscription service) Relying on those fundamental elements of the current system, the Committee reviewed the supplemental information and reached the following conclusions: A] Focus the discussion on the rate structure from each company that includes processing of waste. By reviewing the rate structure more closely, and including an additiona195 cents to the Veolia proposal due to the yard waste program (more discussion on that item later) it became obvious the Waste Management proposal was the more competitive. B.] The Committee is not recommending the City implement an increase in the rates as proposed by Waste Management in one of its options. Rather, after having reviewed the rate structure submitted by both Waste Management and Veolia, and conducting discussions with each of the companies, it is understood that future rate adjustments will be based on a change in the consumer price index and a fuel clause adjustment. I have included in the packet the option submitted by Waste Management reflecting the CPI and fuel clause factor that would result in an adjustment in the rates. Staff will need to work on provisions to the City's existing ordinance governing the ability to change rates, to more accurately reflect the process and timing for making a change in the residential solid waste collection rates. C.] The Veolia supplemental proposal clarified that an additiona195 cents must be added to their rate structure in order to assure the continued opportunity for the two different methods of yard waste disposal: yard waste drop off site and curb side pick up subscription service. This was clarified further during the discussion the Committee conducted with Veolia on January 10`h, 2007. D.] Both Veolia and Waste Management affirmed their commitment to the Youth recycling program and recycling revenue sharing program, and thus there was no distinguishing feature of either proposal. After thorough review of the original proposal, two different discussions with representatives from both Veolia and Waste Management and the clarification of certain information from the supplemental proposal letters submitted by each company, Councilmembers 12iveness, Shultz and Hazlet were unanimous in their recommendation that the residential solid waste collection license be issued to Waste Management. In general, the years of excellent service provided by Waste Management, combined with the most competitive rate structure, lead to the recommendation brought forward by the Committee. David M. Osberg City Adminis~ RATE COMPARISON PROCESSING OF WASTE Waste Management Veolia 96 Gallon $12.03 $12. ] 5 Recycling $3.30 $2.50 Yard Waste Included $1.40 TOTAL $15.33 $16.05 64 Gallon $10.63 $11.15 Recycling $3.30 $2.50 Yard Waste Included $1.40 TOTAL $13.93 $15.05 32 Gallon $8.93 $9.40 Recycling $3.30 $2.50 Yard Waste Included $1.40 TOTAL $12.23 $13.80 QvEO~iA ENVIRONMENTAL SERVICES Veolia Environmental Services, Inc. Response to :, Q VEO~IA ENVIRONMENTAL SERVICES Date: 1 /8/2007 TO: MR. DAVID M. OSBERG FROM: MAYO RUDE Re: Supplementallnformation Dear Mr. Osberg, It is with great pleasure that we continue to provide options to the City of Hastings during this RFP process. We understand that the RFP process can be taxing at times for City Staff as well as the City Council and the Residents. If there is anything we can do to make the process less difficult please do not hesitate to contact us at any time. We have made the adjustments to our proposal as you requested and feel that once again we have placed our best foot forward in providing the City of Hastings a comprehensive proposal for Solid Waste, Recycling and Yard Waste collection. Our goal is always to provide every customer with the assurance that we will do whatever it takes to provide them with the best possible service at a very competitive price. In addition we feel that our service standards are second to none in the industry and if you're not happy then we're not happy. We also believe the key to our success is the open lines of communication that have been developed and nurtured with the various municipalities that we contract with currently. We look forward to the opportunity to develop that relationship with you as well. Best Regards, G" / Mayo Rude General Manager Veolia Environmental Services r' O VEOI.IA ENVIRONMENTAL SERVICES Rate Structure It has been requested by the City that Veolia submit a rate structure in which all of the waste is delivered to a processing facility. Although we feel strongly that the land filling process provides a great environmental benefit by producing electricity to thousands of homes, our main concern is to always satisfy our customer first. Please see the comparable pricing structure listed below. Category Original Proposal Price with Processin Trash 96 Gallon $10.75 er unit $12.15 er unit Trash 64 Gallon $9.75 er unit $11.15 er unit Trash 32 Gallon $8.50 er unit $9.90 er unit Rec clin $2.25 er unit *$2.50 r unit Yard Waste -Curb and Dro Off Site $1.40 per unit $1.40 per unit Dro Off Site Onl $.45 er unit $.45 er unit Sin le Ba $1.50 er ba $1.50 er ba Drive-b Fee No Char a No Char e Rate Adjustments Veolia Environmental Services would propose two potential areas in which rate adjustments may occur, Fuel Cost and Annual CPI. We understand that the CPI will not be allowed in the first year of the contract. Please see the Fuel Cost table below. Fuel Cost per gallon Diesel According to DOE Index Amount of Fuel Surcharge per unit monthly $2.25 To $2.749 $.00 $2.75 To $2.999 $.06 $3.00 To $3.249 $.12 $3.25 To $3.499 $.18 $3.50 To $3.749 $.24 $3.75 To $3.999 $.30 O VEOl1A ENVlRONMENTAI SERVICES Our intent is to implement the Fuel Surcharge to all monthly residential rates after review of the DOE index on a quarterly basis. Review of the DOE will occur on the 26th of the month prior to the quarterly billing. CPI Veolia proposes that a provision be put in place between the City of Hastings and the contractor to review pricing on an annual basis during the anniversary of the contract. The review will take into account the Regional CPI Transportation Index. With approval from the City we would implement a price increase based on 75% of the Regional CPI Transportation Index. Review should begin sixty days prior to the contracts anniversary date so any approvals from the City Council can be sought. Veolia would request that a minimum of 2.5% be considered as the base increase in years two and three. Yard waste Veolia's current proposal includes both programs, the curb side collection of yard waste as well as the public drop off site at a cost of $1.40 per household. If we were to remove the curbside portion of the collection process we would reduce the price to $.45 per unit per month for the operation of the yard waste site. In either case Veolia will maintain the operation of the public drop off site. Hours of operation at the site will remain the same as they currently are to minimize any changes for the residents of Hastings. Our operating plan includes personnel to staff the facility on the regular operating days, (currently Wednesdays and Saturdays). In addition we will assure the City that all materials that are collected will be removed the same day unless otherwise agreed upon between the City and Veolia. The location for the site is not yet determined. Since our prior meeting on November 29th 2006, we have been in contact with a commercial real estate broker who has located three to five potential locations that would work well for this use. We would ask that the City of Hastings understand our position in this matter. We are confident that we will be able to attain an appropriate property for the operation of the yard waste site, however, we are unable to secure a location until which time we have a signed agreement. Obviously we cannot make any commitment to a land owner until the contract has been awarded. We would ask the City to recognize this dilemma and be assured that Veolia will acquire a suitable site. 1~ O VEOl1A ENVIRONMENTAL SERVICES .Y.._~...._.°-......._._ _ _ _ _.._. --'----~.~. Youth Recvclinq Proctram It is with great pleasure that Veolia would continue the Youth Recycling Program. Veolia works with several of its municipal contract communities to develop and maintain recycling programs of all types. Recvclinq Rebate Option #1 Veolia would provide the City of Hastings with 100% of the revenue gained by the sale of recyclables if the solid waste is delivered to our land fill as originally proposed. The rate would remain at $2.25 per home per month. Option #2 Veolia will provide a rebate of 100% above the strike price for aluminum and newspaper at a new elevated rate of $2.50 per home if the solid waste is delivered to a processing facility. Summary Once again we would like to thank the City of Hastings for the opportunity to propose our solid waste, recycling and yard waste programs. We at Veolia are very excited about the potential opportunity to become environmental partners with the Staff, City Council and Residents of Hastings. If you have any further questions or concerns please do not hesitate to contact me at any time. Sincerely, Mayo R~~ General Manager 651-248-2599 IT.~~ ,1 January 8, 2007 City of Hastings Utility Commission l Ol 4'h Street East Hastings, MN 55033 Dear Commissioners: WASTE MANAGEMENT 2800 Millard Avenue Hastings, Minnesota 55033 (651)437-9201 (651) 437-9661 (Fax) (800) 247-1012 (Toll Free) Thank you for the opportunity to respond to the questions in your Memorandum dated December 14, 2006. Waste Management is proud to be located in the City of Hastings. As a City leader we are sure you appreciate the value of doing business locally. As a local business in Hastings we cwitribute to the economy. Waste Management purchases from many other businesses in town. For example we purchase over $36,000 each month in fuel locally. Our employees also Live and shop locally. I) Rate Structure for Landfilling City of Hastings Waste. Per your request Waste Management is providing information on pricing for waste disposal with no processing or landfilling. Waste Management's ultimate disposal site for the City of Hastings's waste would be at Waste Management's Timberline Trail. This state-of--the art disposal facility is located in Weyerhaueser, Wisconsin. Waste Management has a landfill gas recovery system on site. We are currently pulling enough methane off of the landfill to generate the electricity to power 2,700 homes in Rust County. I have included an article from the River Falls Journal with information on our facility. Monthly Rate 96 Gallon 64 Gallon 32 Gallon Solid Waste: $12.38 $10.93 $9.18 Recycling: $3.30 $3.30 $3.30 Total: $15.68 $14.23 $12.48 Monthly Rate 96 Gallon* 64 Gallon* 32 Gallon* Solid Waste: $11.86 $10.46 $8.76 Recycling: $3.30 $3.30 $3.30 Total: $15.16 $ 13.76 $12.06 *This option has a fuel surcharge st arting at $3.00 per gallon and a CPI in Year 2 and Year 3 I have included some additional information on waste disposal. As we discussed at the Utility Commission meeting our goal is to be environmental stewards and provide the best possible most effective disposal method to our customers.