ACTION REQUESTED:
Title
Communication from the City Manager with a Request to APPROVE the Selection of PEORIA DISPOSAL SERVICES, INC. to Provide SOLID WASTE COLLECTION SERVICES (RFP 29-17), for a Seven-Year Term with Three Year Option to Renew, and to Direct the City Manager and Corporation Counsel to Execute the Necessary CONTRACT.
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BACKGROUND: The City of Peoria held initial public meetings in July of 2016 seeking feedback on current solid waste services and input for the future of solid waste services provided in the City. In late 2016, Foth Infrastructure & Environment, LLC (Foth), was engaged to assist the City through evaluating current services, seeking public input and preparing for a potential request for proposals.
Extensive public outreach was conducted with Simantel Group Inc., who utilized online survey, social media platforms, field distribution of hard copies, promotion at public events and a public meeting. The survey response had the one of the highest participant total of a public outreach campaign. All City of Peoria zip codes were represented and a broad spectrum of age groups and households. Results of the public input were presented to City Council on May 9, 2017, following recent City Council elections. Select slides are included in the presentation and will be discussed further, if needed, during the policy session. Following the presentation to Council, City staff were requested to investigate expanded recycling per public feedback, cost effective and industry best management practices, and public versus private operations.
The City of Peoria released a request for proposals (RFP) on August 11, 2017 and subsequently issued six (6) RFP Addenda. The RFP designation issued by the City was RFP #29-17. Four Respondents submitted proposals by the amended deadline of Thursday, November 9, 2017:
• Advanced Disposal Services (“Advanced”)
• City of Peoria, Public Works Department (“PWD”)
• PDC Services, Inc. (“PDC”)
• Waste Management (“WM”)
The RFP specified a “Base” level of solid waste collection services including, but not limited to:
1. Residential Waste Collection
2. Residential Recyclable Materials Collection
3. Residential Landscape Waste Collection
4. Stacked Condominiums
5. City Buildings
6. Peoria Public Schools (PPS)
7. Various Peoria County Facilities
Submitting a Base proposal was a required element of the RFP process to allow for similar price comparisons between Respondents. However, Respondents were encouraged to submit Alternate Proposals outside of the base specifications. Three (3) of the four (4) Respondents submitted Alternate Proposals as part of their original packets. Later, through the interview process, the Respondents provided additional information and clarification.
Because Respondents developed Alternate Proposals without RFP guided specifications, the Alternate Proposals cannot be directly compared between Respondents. However, Alternate Proposals can be compared to the same Respondent’s Base Proposal. This system of Base and Alternate Proposals was intended to encourage both competitive and creative submittals. Again, a qualitative summary of service elements proposed by each Respondent can be found as in the attached memo.
To evaluate the proposals, the RFP provided a brief evaluation criteria guide, which included the qualitative scoring criteria. Additionally, the proposals were reviewed by a separate Selection Committee composed of various individuals to review the proposals in as submitted. Following submittal, the Committee interviewed all Respondents and asked each various questions based on those interviews. As previously provided to City Council, the Selection Committee was composed of Patrick Urich, Patrick Nichting, Jim Scroggins, Dave Meyers (Peoria Public Schools), and Scott Sorrel (Peoria County). The Selection Committee reviewed all proposals for services proposed in Base and Alternate options.
Through the review of alternate proposals and interviews with all the firms, the Committee began to negotiate in earnest with the City of Peoria Public Works Department and Peoria Disposal Company. Waste Management and Advanced Disposal Services proposals were too costly for the City to consider. PDC’s alternative deviated from universal recycling but provides free recycling toters upon request. The cost of this service was proposed at $11.23 per household per month, excluding waste disposal costs. The City’s final alternative proposal provides universal recycling and would cost households $8.90 per month, excluding waste disposal costs. The Committee discussed a potential hybrid approach between the City and PDC where yard waste and recycling would be provided by the City and trash disposal would be handled by PDC. This service would cost a household $11.09 per month, excluding waste disposal costs. PDC provided certain incentives to complete this process by March 27, 2018: an early payment of $450,000 due upon the opening of landfill #3; foregoing the existing contract escalator ($96,000); and eliminating the last 2 years of toter payments ($580,000) if they are selected to provide trash disposal services to the City.
At the March 20 policy session, staff walked through the cost proposals and received additional questions from Council. The answers to these Council questions are attached. Council asked if PDC would extend their incentives for executing a contract for additional time. In discussions with PDC, they agreed to extend their incentives until April 25, 2018, and they agreed to revisit their proposal. PDC’s Contract Execution Memorandum is attached with reduced prices and additional services identified in red. The Staff also met with Peoria Public Works to discuss their proposal and how their costs were developed, as well as the recycling penetration rate. That memo is attached.
FINANCIAL IMPACT: In an effort to secure the entire contract, PDC agreed to adjust their residential waste fee from $6.35 to $6.21. They also agreed to collect waste from the approximate 130 neighborhood cans throughout the City. PDC agreed to offer a Community Beautification Payment of $60,000 to offset some of the costs to the General Fund for collection of waste downtown and the contract with EPIC. PDC also agreed to increase the Education payment and the Community Beautification Payment by 2.75% annually for the term of the contract. Their proposal includes a July 1, 2018 contract start with every other week recycling services beginning January 1, 2019. As previously stated, the financial incentive offered by PDC above were still included. This lowered the overall cost of the PDC contract to $10.88. Coupled with the disposal costs assumed by the City in the new contract, the total cost would be $16.72 per household per month in 2018. The estimated rate reduction savings the City has gained from the negotiations is estimated to be approximately $2,950,000 when compared to the first alternate proposal over a ten year period. By contrast, the City proposal with disposal costs amounted to $16.62 per household per month, and the hybrid every other week would be $18.29 per household per month.
City and Foth staff examined account information for City households and stacked condominiums to refine the collection rate used in the cost projection models. Further detail is provided in the attached memorandum, but based on the information the annual collection rate is 95%. This does not take into account tax lien sales, and other delayed payment options. The cost projection model collection rate was adjusted from 91% to 92% to remain conservative and develop a required collection rate to remain with a positive cash on hand in 2028. Any additional funds will be used to pay back the general fund sooner.
Based upon the cost savings proposed by PDC, and the previous experience in managing the contract, staff recommends that the City Council agree to PDC as the vendor for all services. While universal recycling would not be implemented until Landfill 3 opens, the administration and familiarity with the existing service would continue. The costs are in line with the current fees established by Council.
NEIGHBORHOOD CONCERNS: Residents have repeatedly stated that they are satisfied with their current trash services but are interested in more frequent recycling and extended yard waste season. City and Foth staff had originally recommend that a hybrid approach be implemented with the new contract. Garbage collection services would be provided by PDC, and yard waste and recycling services would be provided by the City of Peoria. PDC has stated they will ramp up recycling when Landfill 3 (to be operated by a PDC affiliated company) begins operation estimated to be sometime in 2022. PDC has agreed to add 2 weeks at the beginning and 2 weeks at the end of the yard waste season starting with this contract.
IMPACT IF APPROVED: If approved, the City Manager and Corporation Counsel would need to work with PDC to establish a contract based upon this RFP and the negotiations. The residents would see no change in the service provider, but the routes and days of service would change per the RFP submission by PDC.
IMPACT IF DENIED: A hybrid model where PDC would continue to provide trash collection services while the City collected recycling and yard waste would provide some advantages to the City. During cold weather months, staff assigned to yard waste collections could provide snow removal services. The City could provide a legitimate check on PDC to determine if their pricing is competitive. The disadvantage of the hybrid approach is service coordination. PDC and the City would have to coordinate on routes to ensure that trash, recycling and yard waste were all picked up in a coordinated manner. Overall, the cost of a hybrid approach would be higher, but the control provided to the City would outweigh the higher cost.
ALTERNATIVES: The other alternative would be for the City of Peoria Public Works to provide all services under this proposal. This would be the lowest cost, but would also provide the most risk, since the City has not previously been in the waste collection business. Part of the Public Works proposal was adding on to the garage at Dries Lane to accommodate garbage vehicles and fire apparatus. This cost is $1,250,000 that would otherwise need to come from the City’s capital fund if there was ever to be a consolidation of services to bring the fire garage to Dries Lane and have all of the City fleet managed under one department.
EEO CERTIFICATION NUMBER: 00120-181231
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City
2. Beautiful Peoria
3. Grow Peoria
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Support sustainability.
2. Keep taxes and fees competitive.
3. Have an efficient government.
DEPARTMENT: City Manager's Office