ACTION REQUESTED:
Title
Communication from the City Manager and the Director of Public Works with a Request to APPROVE One of the Following: (Refer to Item No. 16-234)
A. Proposal A, the Second Amendment to the WASTE COLLECTION AGREEMENT Between the City of Peoria and PDC SERVICES, INC., which would Extend the Contract for Two and Half Years (2.5) from January 1, 2017, through June 30, 2019; All Current Services Would Remain “as is” in the Agreement; House-Count Reconciliation Mutually Agreed by Both Sides; Additional Week of Yard Waste Service in December; Eliminate 7-year Age Limit on Trucks; Increase Cart Rental Fee to $4.00 per unit; Reduce Performance Bond to 12%; and an Annual 3% Increase Effective January 1, 2017; OR
B. Proposal B, the Second Amendment to the WASTE COLLECTION AGREEMENT Between the City of Peoria and PDC SERVICES, INC., which would Extend the Contract for Three and Half Years (3.5) from January 1, 2017, through June 30, 2020 (Term Aligns with Cart Agreement Expiration); Every-other-week Recycling Pickup; $1.85/unit Increase Effective January 1, 2017; 3.0% Annual Increase Effective January 1, 2018; Additional Week of Yard Waste Service in December; House-count Reconciliation Mutually Agreed by Both Sides; Eliminate 7-year Age Limit on Trucks; Increase Cart Rental Fee to $4.00/unit; Reduce Performance Bond to 12%; and All Other Services Would Remain “as is” in the Current Agreement.
Body
BACKGROUND: On October 28, 2009, the City of Peoria entered into a Waste Collection Agreement for the collection of residential waste throughout the City of Peoria with PDC Services, Inc. This agreement was amended, effective January, 2012, and will expire on December 31, 2016.
On June 28, 2016, staff requested that the agreement be amended to extend the notification period to August 4, 2016, in order to finalize policy options. PDC was amenable to extending the time period for discussion with the City until September 1, 2016. Staff has been discussing the contract extension with PDC and exploring other service options.
The Waste Collection Agreement is the largest contract that the City administers. The following table reflects the cost of the contract broken out between hauling and disposal. Trash disposal prices at the City County Landfill are contractually set to increase 6% annually until the second landfill is at capacity. This is estimated to be 2021. Landfill costs are approximately 33% of the Waste Collection Agreement costs, but have been, and will continue to increase until the current landfill is at capacity. Once that capacity has been reached, the new landfill will begin operations and the City disposal costs will drop from an estimated $75.71 per ton in 2021 to $41.66 per ton in 2022.
Table 1. PDC Contract - Hauling and Disposal Costs
|
Year |
Households |
Unit Cost |
Total Cost |
Hauling Cost |
Cost/Ton |
Disposal Cost |
Cost/Ton |
|
2010 |
39,562 |
$10.53 |
$5,000,000 |
$3,338,308 |
$85.88 |
$1,661,693 |
$42.75 |
|
2011 |
39,559 |
$10.74 |
$5,099,613 |
$3,455,779 |
$93.87 |
$1,643,834 |
$44.65 |
|
2012 |
39,619 |
$10.96 |
$5,209,502 |
$3,543,617 |
$99.02 |
$1,665,885 |
$46.55 |
|
2013 |
39,773 |
$11.29 |
$5,386,643 |
$3,549,467 |
$93.61 |
$1,837,176 |
$48.45 |
|
2014 |
39,799 |
$11.62 |
$5,551,863 |
$3,707,744 |
$101.23 |
$1,844,119 |
$50.35 |
|
2015 |
39,824 |
$11.97 |
$5,721,864 |
$3,730,789 |
$100.00 |
$1,991,075 |
$53.37 |
|
2016 |
39,836 |
$12.33 |
$5,894,135 |
$3,825,887 |
$104.64 |
$2,068,248 |
$56.57 |
Staff has heard concerns about recycling frequency and has discussed increasing recycling with PDC. But as reflected in the prior table, hauling is the largest cost of the contract, and to add an additional 14 weeks of service would require PDC to increase their fleet and add additional staff to run the recycling routes. PDC has estimated that the cost of moving to every other week recycling would increase the cost of the contract. Our current garbage fee is set at $14.00 per month. By comparison, the following rates are in effect in the following central Illinois communities:
Table 2: Central Illinois Community Comparison
|
Community |
Hauler |
Description |
Fee |
Recycling |
Landscape |
|
Peoria |
PDC |
Multiple Carts |
$14.00 |
Y |
Y |
|
Bloomington |
Municipal |
35 Gallon 65 Gallon 95 Gallon |
$16.00 $20.92 $22.00 |
Y |
Y |
|
Normal |
Municipal |
|
$18.00 |
Y |
Y |
|
Urbana |
12 Private |
35 Gallon 65 Gallon 95 Gallon |
$15.00 - $24.50 $18.00 - $28.00 $20.00 - $35.00 |
Y |
N |
|
Champaign |
9 Private |
|
$15.00 - $27.00 |
Y |
Y |
|
Springfield |
4 Private |
1 Can 2 Cans |
$11.75 $13.75 |
Y |
Brush - Y |
On July 13, 2016, two Public Meetings were held simultaneously by City staff at the Peoria North Branch Library and at City Hall to gather input regarding the contract extension with PDC. Over twenty people attended the meetings. The most common observation from the public was to increase the awareness and education on recycling services. Other comments included: more frequent recycling; less frequent landscape waste collection; implement a “pay-as-you-throw” service; increase awareness/encourage composting; drop glass from recycling; review differential charges for can size; monitor and encourage minority hiring; and implement a performance-based contract. Minutes from both meetings are attached. Written comments were also submitted to the City via email. More citizens voiced support for additional recycling, but there were many that also commented saying the current system is sufficient.
City Staff continued the discussion with PDC, with the goal of providing Council with two options to consider:
Proposal A:
Current Services Extension Proposal
o January 1, 2017 - June 30, 2019 (2.5 - years)
o All current services remain “as is” in agreement
o House-count reconciliation mutually agreed by both sides
o Additional week of yard waste service in December
o Eliminate 7-year age limit on trucks
o Increase cart rental fee to $4.00/unit
o Reduce Performance Bond to 12%
o Annual 3% increase effective January 1, 2017
Proposal A is generally an extension of the current services, with the addition of 1 week of landscape waste in the December. The contract would be extended for 30 months, allowing the City time to develop a comprehensive RFP that takes into consideration the input from the public, and ends the contract in June 30, 2019, which would allow for an easier transition if waste haulers were to change. The proposal would lift the 7-year age limit on trucks, increase the additional cart rental charge from PDC to $4.00 per month, reduce the performance bond to 12%, and includes a 3% cost escalator (to cover the cost of increased disposal charges). Importantly, the agreement also calls for the City and PDC to accurately set the house count, which is the basis for the annual cost of the contract.
Proposal B:
Every-Other-Week (EOW) Recycling Extension Proposal
o January 1, 2017 through June 30, 2020 (3.5 - years)
*Term aligns with cart agreement expiration
o Every-Other-Week recycling pickup
o $1.85/unit increase effective January 1, 2017
o 3.0% annual increase effective January 1, 2018
o Additional week of yard waste service in December
o House-count reconciliation mutually agreed by both sides
o Eliminate 7-year age limit on trucks
o Increase cart rental fee to $4.00/unit
o Reduce Performance Bond to 12%
o All other services remain “as is” in agreement
Proposal B includes every other week recycling and the addition of 1 week of landscape waste in the December. The contract would be extended for 42 months, aligning with our current lease purchase agreement for garbage carts, and ends the contract in June 30, 2020, which would allow for an easier transition if waste haulers were to change. The proposal would lift the 7-year age limit on trucks, increase the additional cart rental charge from PDC to $4.00 per month, and reduce the performance bond to 12%. Increasing the frequency of recycling would raise the monthly unit charge $1.85, effective January 1, 2017 and then a 3% cost escalator (to cover the cost of increased disposal charges) beginning in 2018. As with Proposal A, the agreement also calls for the City and PDC to accurately set the house count, which is the basis for the annual cost of the contract. PDC supports this option.
Staff met with our current landfill consultant Foth Infrastructure to discuss issuing a new Request for Proposals (RFP). In their professional opinion, it would take at least 18 months to develop, solicit and evaluate new proposals for the City. The current services extension (Proposal A) would provide the City with the time to work with Foth and the public on an RFP that would take into consideration the desire of the public and provide an adequate timeline for the examination of all waste collection and disposal options. Proposal B would increase recycling frequency, which would come at an additional cost. While those who have been interested in recycling have voiced their opinion, the cost has not been widely discussed. It is likely that the increased monthly charge would lead to increased comments from the public opposed to paying more waste collection.
Staff recommends that the current services extension (Proposal A) be approved and that the City staff immediately begin working with Foth Infrastructure on a new RFP for waste collection services.
FINANCIAL IMPACT: Acceptance of the contract would commit the City to PDC for an additional 30 months of waste collection services. The contract would increase 3% on January 1st for the next 3 years, or approximately $100,000 annually. However, with the commitment to determine the house count, the cost basis would be accurately reflected in the billing.
NEIGHBORHOOD CONCERNS: As previously stated, the most common observation from the public was to increase the awareness and education on recycling services. Other comments included: more frequent recycling; less frequent landscape waste collection; implement a “pay-as-you-throw” service; increase awareness/encourage composting; drop glass from recycling; review differential charges for can size; monitor and encourage minority hiring; and implement a performance-based contract. Minutes from both meetings are attached. Written comments were also submitted to the City via email. More citizens voiced support for additional recycling, but there were many that also commented saying the current system is sufficient.
IMPACT IF APPROVED: If Proposal A is approved, the contract with PDC for waste collection would be extended for two and half years (2.5).
IMPACT IF DENIED: If neither Proposal A or B are approved, then staff would need to renegotiate the terms of the contract with PDC.
ALTERNATIVES: The City would have to begin the process of soliciting competitive bids and negotiate a shorter extension period with PDC.
EEO CERTIFICATION NUMBER: 00984-161231
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City Government, Effective City Organization
2. Attractive Neighborhoods with Character: Safe and Livable
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Keep taxes and fees competitive.
2. Reinvest in neighborhoods.
3. Support sustainability.
DEPARTMENT: Public Works