Workshop Item - Joe Huss, Finance Director/Asst. City Manager
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Refuse and Recycling Contract Discussion
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Background
At the September 7 Workshop, Council discussed both the proposed 2023 Sanitation Utility Fund budget, and the refuse and recycling contract that is managed and accounted for within this fund. The contract is held by Walters Recycling and Refuse, Inc. of Blaine. Walters has held the contract since 2015. The initial contract was for a 5½-year term with an expiration date of June 30, 2020. In 2019, the City Council approved an extension of the contract through June 2024. Staff indicated at the September 7 Workshop that a request for proposals (RFP) process would begin mid-year 2023. Council voiced potential support to seek alternatives to the RFP process. However, before taking formal action, Council requested that staff research the hauling contracts and fees/rates of other cities with organized refuse hauling before deciding the next step regarding the contract.
Fees
Blaine is one of 13 known cities in the metro area with organized hauling and research indicates that Blaine’s fees for garbage and recycling services are the lowest of these cities. Monthly fees charged by the cities for basic garbage (90 gallon) and recycling collection and disposal range from $21.23 to $46.20. Blaine, at $21.49/month ranks second least expensive on this list. However, Circle Pines (the least expensive city) charges an additional $2.00/bag for additional waste, $7.50/month to participate in organic waster collection, and charges for removal of bulky items. Currently, Blaine has no additional fees for these services.
Refuse and recycling fees are based on the city’s cost to collect and transport waste (typically referred to as “hauling fees”) to a solid waste facility and dispose of these items (typically referred to as “tipping fees”). Hauling fees are paid directly to Walters as part of the city’s contract while tipping fees are a pass-through cost charged by the waste facility based on the weight (tonnage) of waste disposed at the facility. Blaine is able to maintain its cost structure due to favorable terms of its current contract with Walters. Since 2015, fees charged to the city on a per customer basis have been predictable, growing at a steady 3 percent rate year-over-year. Walters initially obtained low tipping fees charged for waste disposal and have secured reasonable and predictable $1.75 per ton annual increases.
Partnership
Since securing the contract in 2015, Walters has been diligent in helping the city contain costs in a very volatile market. Examples include:
• Walters recommended changes to the size of the recycling carts, resulting in an immediate and sustained 30% increase in recycling tons collected.
• Walters alerted the city of instances where individuals were taking advantage of the city’s unlimited service to remove bulky items such as mattresses, carpeting, and construction material. Adjustments were made to reduce the amount of these bulk items, reducing costs to both residents and the city.
• In 2022, with Walters’ assistance, the city launched a pilot program for drop-off of organic waste. Discussions continue around success and next steps in growing the program.
• When Great River Energy closed its Anoka County disposal site, Walters was able to negotiate favorable terms to dispose of solid waste and pass those savings along to Blaine.
These actions have helped to save the city thousands of dollars and maintain low rates for residents.
Service
Prior to 2015, staff fielded numerous complaints regarding poor waste and recycling services. Since Walters has held the contract, staff has reported very few service complaints. Located in Blaine, Walters has proven to be a responsive and responsible corporate citizen and partner.
RFP Process
With the current contract expiring in June 2024, a Request for Proposals process would have to begin mid-2023; soon enough such that adequate time is available to review and evaluate the proposals. There is no legal or policy requirement that the city engage in an RFP process for this service. Considering the information provided above, it is uncertain that the costs and efforts to issue and administer an RFP process would result in improved services or a more favorable contract.
Staff Recommendation
Staff is seeking Council direction regarding next steps in this process. Options include:
1. Begin full RFP process in 2023 and award a new contract to begin July 1, 2024
2. Waive RFP process and negotiate a contract extension in 2023.