2.1.
CC Work Session
- Meeting Date:
- 11/10/2020
Information
Title:
Discuss Resolution #20-225 for New Curbside Recycling Contract with ACE Solid Waste, Inc.
Purpose/Background:
The purpose of this case is to continue the conversation from the October 13, 2020 City Council meeting related to the curbside recycling contract with ACE Solid Waste, Inc. During the City Council meeting on October 13, 2020, City Council was concerned about the automatic step increases built into the contract starting on the first of each year. Since the previous City Council meeting, Staff has reached out to neighboring and comparable communities to see if their contracts include an automatic annual increase. Staff also reached out to Anoka, who recently finished an RFP process, to see if all proposals include an automatic annual increase. Staff has also reached out to ACE Solid Waste, Inc. for additional information.
Automatic Annual Increase/Escalators
Attached is a document outlining a comparison of rates for comparable and/or adjacent communities. Staff would like to note that Ramsey is a unique City that does not see some of the efficiencies of other Cities of our size as we are a large (acreage) City with a significant number of single family homes. Many comparable communities see cost savings related to the number of apartment buildings that allow for centralized pickup (one large dumpster for 300 units, compared to 300 individual homes in Ramsey). Ramsey's unique rural character, sheer acreage of City size, and large City lots provides a unique challenge related to garbage hauling.
The City of Anoka shared that their previous contract (a 5 year contract that was extended 2 years) included an escalation scale, and all proposals in their recent RFP (that ended October 16, 2020) included an escalation scale as their RFP directed. They directed proposals to not include an annual increase of more than 3%. They hope to sign a new contract in November 2020.
ACE Solid Waste, Inc. also provided Staff two recent RFPs from Monticello and Circle Pines, which also included annual escalators. Staff found that annual escalators are common in this type of contract. These types of escalation scales or annual increases are typically seen due to extra processing fees the haulers are being charged.
Updated Proposal from Ace Solid Waste, Inc.
ACE Solid Waste, Inc. has provided staff an updated proposal for a 5 year fixed price contract at $3.98 per month if the City Council would prefer to see a fixed rate as opposed to the prices with an automatic escalator on the 1st of each year.
From ACE: I think these two additional cities [Monticello and Circle Pines], along with the data you gathered, support the question of whether having annual escalators is typical – and the answer is yes. But, because ACE calls Ramsey home and we are invested with the city and community, we are willing to forego escalators to help move this to a new 5 year agreement.
The new flat rate pricing is $3.98 for all 5 years, and for a quick comparison, is about 1.5K less over 5 years than the pricing provided to Council with annual price increases.
Below is an excerpt from the original October 13 City Council Case. Please refer to the October 13 City Council Case for a more detailed background on the needs and options for recycling within Ramsey.
Automatic Annual Increase/Escalators
Attached is a document outlining a comparison of rates for comparable and/or adjacent communities. Staff would like to note that Ramsey is a unique City that does not see some of the efficiencies of other Cities of our size as we are a large (acreage) City with a significant number of single family homes. Many comparable communities see cost savings related to the number of apartment buildings that allow for centralized pickup (one large dumpster for 300 units, compared to 300 individual homes in Ramsey). Ramsey's unique rural character, sheer acreage of City size, and large City lots provides a unique challenge related to garbage hauling.
The City of Anoka shared that their previous contract (a 5 year contract that was extended 2 years) included an escalation scale, and all proposals in their recent RFP (that ended October 16, 2020) included an escalation scale as their RFP directed. They directed proposals to not include an annual increase of more than 3%. They hope to sign a new contract in November 2020.
ACE Solid Waste, Inc. also provided Staff two recent RFPs from Monticello and Circle Pines, which also included annual escalators. Staff found that annual escalators are common in this type of contract. These types of escalation scales or annual increases are typically seen due to extra processing fees the haulers are being charged.
Updated Proposal from Ace Solid Waste, Inc.
ACE Solid Waste, Inc. has provided staff an updated proposal for a 5 year fixed price contract at $3.98 per month if the City Council would prefer to see a fixed rate as opposed to the prices with an automatic escalator on the 1st of each year.
From ACE: I think these two additional cities [Monticello and Circle Pines], along with the data you gathered, support the question of whether having annual escalators is typical – and the answer is yes. But, because ACE calls Ramsey home and we are invested with the city and community, we are willing to forego escalators to help move this to a new 5 year agreement.
The new flat rate pricing is $3.98 for all 5 years, and for a quick comparison, is about 1.5K less over 5 years than the pricing provided to Council with annual price increases.
- Direction needed: Should Staff continue direct negotiations with Ace Solid Waste, Inc. or if Staff should start the formal Request for Proposals (RFP) process?
- Based on the revised pricing from ACE Solid Waste, Inc., Staff would recommend continuing direct negotiations with ACE, and approving a 5 year contract with flat rate pricing. Based on the research completed, Staff feels that ACE is offering a fair and competitive rate. In addition to ACE being a local business, Staff feels that escalators would be likely in the RFP responses.
Below is an excerpt from the original October 13 City Council Case. Please refer to the October 13 City Council Case for a more detailed background on the needs and options for recycling within Ramsey.
The City is in the final year of a three (3) year contract with ACE Solid Waste for curbside collection of recyclable materials. The current contract will expire on December 31, 2020. In March of this year, the Environmental Policy Board (EPB) reviewed the options available to the City regarding recycling service (negotiate an extension or new contract with ACE, prepare a Request for Proposal [RFP], or migrate to an open hauling system) and recommended that the City attempt to negotiate an extension or new contract with ACE Solid Waste. Subsequently, the City Council reviewed this topic in May and directed Staff to proceed with negotiations with ACE Solid Waste on a new curbside recycling contract. The purpose of this case is to consider approving a new curbside recycling contract with ACE Solid Waste, Inc.
The City of Ramsey and ACE Solid Waste have been working together since 1990 to provide curbside recycling service for residential properties. Over this span of time, there have been some major changes in recycling such as expansion of acceptable materials (and now, some reduction of acceptable materials), collection systems (went from dual sort to single sort), and pricing. In 1990, the monthly rate per household was $1.15 per month. In 2008, the contractually agreed upon price was $2.95 per household per month. The monthly per unit fee has remained constant at $2.95 since that time (span of 12 years).
ACE has proposed a 7-year contract (2021 through 2027). The proposed curbside recycling contract does include a per unit monthly fee increase beginning in 2021. The proposed rate in 2021 and 2022 is $3.75, with the subsequent years having an automatic increase on the 1st of each year. The proposed rates for a 7-year contract are outlined below:
ACE Solid Waste would prefer a 7-year contract. However, If the City Council is more comfortable with a shorter duration contract, ACE has agreed to the following pricing structure for a 5-year contract:
5-year contract
Despite some significant changes in the recycling world over the past 5-10 years, Ramsey's per unit monthly fee has remained constant for over a decade. Over the course of the past decade, there have been some fluctuations to the cost of collecting and processing recyclables. In the early to mid 2010s, there was a significant jump in the price of fuel, which prompted many haulers to approach communities they were contractually servicing to request a per unit fee adjustment. ACE never raised that question with the City of Ramsey and honored the per unit fee in the contract.
More recently, there has been significant disruption to the recycling commodities markets resulting from a policy shift by China. Much of the United States' recyclable materials, especially plastics and mixed paper, had historically been shipped overseas to China. However, beginning in 2018, China implemented their National Sword policy that included a ban on importing certain scrap materials and for other materials, an extremely stringent contamination rate (not to exceed 0.5%, which is the equivalent of about 10 pounds of contamination per 1 ton of material). Essentially, this move created significant disruption to the recycling commodities markets, resulting in significant processing fees being applied to haulers at Material Recovery Facilities (MRFs). Again, ACE did not approach the City to discuss any sort of per unit fee adjustment.
ACE Solid Waste has been providing dependable recycling service for the community for about 30 years. ACE moved their operation to Ramsey in the early 2000s and continues to invest in the community with improvements to their site. Most recently (2019/2020), this included an expansion of their transfer station facility, creating a more efficient operation (now that the Great River Energy Processing Plant is shut down). As part of this expansion, ACE also included a 'convenience center' for residents to drop off additional recyclable materials (e.g. cardboard, newspaper, etc., that doesn't fit in a residents recycling cart). This benefits residents by not having to 'store' excess recyclables nor drive to another community's recycling center.
As a reminder, by offering recycling through a contracted service provider, each household is billed for recycling on a quarterly basis through the City. The hauler invoices the City monthly, they do not bill each residence directly for basic recycling service (they may potentially for walk up/drive up service, cleaning of carts, etc.). Each household is billed by the City regardless of whether they choose to participate in the recycling program or not. It is treated as another utility, similar to priority street lights and stormwater management.
The City of Ramsey and ACE Solid Waste have been working together since 1990 to provide curbside recycling service for residential properties. Over this span of time, there have been some major changes in recycling such as expansion of acceptable materials (and now, some reduction of acceptable materials), collection systems (went from dual sort to single sort), and pricing. In 1990, the monthly rate per household was $1.15 per month. In 2008, the contractually agreed upon price was $2.95 per household per month. The monthly per unit fee has remained constant at $2.95 since that time (span of 12 years).
ACE has proposed a 7-year contract (2021 through 2027). The proposed curbside recycling contract does include a per unit monthly fee increase beginning in 2021. The proposed rate in 2021 and 2022 is $3.75, with the subsequent years having an automatic increase on the 1st of each year. The proposed rates for a 7-year contract are outlined below:
| Year | Rate | % Change |
| 2021 | $3.75 | 27.12% |
| 2022 | $3.75 | 0.00% |
| 2023 | $3.98 | 6.13% |
| 2024 | $4.10 | 3.02% |
| 2025 | $4.22 | 2.93% |
| 2026 | $4.34 | 2.84% |
| 2027 | $4.45 | 2.53% |
ACE Solid Waste would prefer a 7-year contract. However, If the City Council is more comfortable with a shorter duration contract, ACE has agreed to the following pricing structure for a 5-year contract:
5-year contract
| Year | Rate | % Change |
| 2021 | $3.75 | 27.12% |
| 2022 | $3.86 | 2.93% |
| 2023 | $3.98 | 3.11% |
| 2024 | $4.10 | 3.02% |
| 2025 | $4.22 | 2.93% |
Despite some significant changes in the recycling world over the past 5-10 years, Ramsey's per unit monthly fee has remained constant for over a decade. Over the course of the past decade, there have been some fluctuations to the cost of collecting and processing recyclables. In the early to mid 2010s, there was a significant jump in the price of fuel, which prompted many haulers to approach communities they were contractually servicing to request a per unit fee adjustment. ACE never raised that question with the City of Ramsey and honored the per unit fee in the contract.
More recently, there has been significant disruption to the recycling commodities markets resulting from a policy shift by China. Much of the United States' recyclable materials, especially plastics and mixed paper, had historically been shipped overseas to China. However, beginning in 2018, China implemented their National Sword policy that included a ban on importing certain scrap materials and for other materials, an extremely stringent contamination rate (not to exceed 0.5%, which is the equivalent of about 10 pounds of contamination per 1 ton of material). Essentially, this move created significant disruption to the recycling commodities markets, resulting in significant processing fees being applied to haulers at Material Recovery Facilities (MRFs). Again, ACE did not approach the City to discuss any sort of per unit fee adjustment.
ACE Solid Waste has been providing dependable recycling service for the community for about 30 years. ACE moved their operation to Ramsey in the early 2000s and continues to invest in the community with improvements to their site. Most recently (2019/2020), this included an expansion of their transfer station facility, creating a more efficient operation (now that the Great River Energy Processing Plant is shut down). As part of this expansion, ACE also included a 'convenience center' for residents to drop off additional recyclable materials (e.g. cardboard, newspaper, etc., that doesn't fit in a residents recycling cart). This benefits residents by not having to 'store' excess recyclables nor drive to another community's recycling center.
As a reminder, by offering recycling through a contracted service provider, each household is billed for recycling on a quarterly basis through the City. The hauler invoices the City monthly, they do not bill each residence directly for basic recycling service (they may potentially for walk up/drive up service, cleaning of carts, etc.). Each household is billed by the City regardless of whether they choose to participate in the recycling program or not. It is treated as another utility, similar to priority street lights and stormwater management.
Timeframe:
20 Minutes
Funding Source:
Staff is handling this case as part of regular duties. The City receives funding from Anoka County for some costs associated with recycling, and the City charges a quarterly recycling utility fee to Residents for this service.
Responsible Party(ies):
Chloe McGuire, Senior Planner
Tim Gladhill, Deputy City Administrator
Tim Gladhill, Deputy City Administrator
Outcome:
Direct staff to either:
- Continue direct negotiations with ACE Solid Waste, Inc. or
- Start formal Request for Proposals (RFP) for new recycling contract
Attachments
- DRAFT Resolution #20-225
- Contracts Review
- Circle Pines Example
- Monticello Example
- DRAFT City Council Minutes dated October 3, 2020
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Brian Hagen | Tim Gladhill | 11/05/2020 06:56 AM |
| Kurt Ulrich | Kurt Ulrich | 11/05/2020 02:29 PM |
- Form Started By:
- Chloe McGuire Brigl
- Started On:
- 11/02/2020 11:25 AM
- Final Approval Date:
- 11/05/2020