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Item 4IM E M O R A N D U M (August 15, 2018) To: Shana K. Yelverton, City Manager From: Lauren LaNeave, Assistant to the City Manager Subject: Item 4I: Approve contract renewal with Republic Waste Services of Texas, Ltd. for the provision of commercial and residential solid waste and recycling services. Action Requested: City Council approval of Item 4I: Approve contract renewal for a term of five-years for the provision of commercial and residential solid waste and recycling services. Background Information: On May 7, 2013, the City approved a non-exclusive contract and franchise agreement with Republic Waste Services of Texas, Ltd., to engage in the business of collecting and disposing of acceptable waste, recyclables, and construction debris within the corporate limits of the City; which includes solid waste that is generated from commercial properties. The term of the agreement between the City and contractor is for a period of five-years beginning October 1, 2013 and terminating September 30, 2018, with an option to renew, based on contractor performance. The purpose of this item is to seek City Council approval of a contract renewal for a term of five-years for the provision of commercial and residential solid waste and recycling services. The contract states that "near the end of the five year period, the City Council will undertake a review of the performance of the contractor based on the performance and quality measures outlined in Section Eleven of the contract." Recall that staff presented such performance data , as well as several renewal service level options to the City Council during Work Session at the March 20, 2018 City Council meeting. To follow is a summary of that information. Contractor Performance: The performance data is summarized in the table on the following page. Measures include responsiveness to customer complaints, collection of waste following a missed pickup, spillage, and timeliness of collection. The table shows that Republic has not only met, but well exceeded these performance expectations. Performance Category Contract Provision Measure Performance (October 2013 – February 2018) Customer Complaints Failure to contact customers by end of next business day No more than six times per year No instances Customer Complaints Resolution of complaint within 36 hours 90% 100% Waste Collection Failure to collect within 12 business hours after receiving notification No more than 10 times in a twelve month period Residential – 10 total in 5 years Commercial – 6 total in 5 years Spillage Failure to pick up scattered refuse or spillage No more than three times in a twelve month period Zero Timeliness of Collection Collection within 1000 ft. of residences before 7AM or after 7PM No more than two occasions annually Two total The service contract with Republic also includes a performance measure related to resident service satisfaction, stating that an 85% satisfaction level must be reached on the citizen survey. This chart provides a view of Republic's service performance since 2013 and shows ratings of Republic's performance during that time are comparable and exceed the 85% contract requirement. The proposed contract includes these performance measures, as well as additional reporting requirements. Renewal Considerations - Residential: The contract renewal maintains current service levels, as shown in the chart below. Republic has added the addition of bulk cardboard recycling as a service enhancement. This is a frequent request from residents, especially new move-ins or near the holiday season. Current Provisions Renewal Provisions 2x per week garbage hand collection   1x per week automated recycling   Bagged grass collection   Curbside Leaf Recycling   Household Hazardous Waste Collection Event   Scheduled bulk loose brush collection (3 per year, up to 12 cubic yards)   Bundled/bulk brush (2 cubic yards/home/collection)   Bulk cardboard recycling  Monthly rate (prior to tax): $13.72 $14.75 Increase to current: $1.03 Residential collections will increase by $1.03 (7.5%) on October 1, 2018. The trash rate will increase annually by 3% and the recycling rate increase will be based on the Annual Adjustment Calculation. Current Renewal Increase Amt. Annual Increase Residential Trash Rate: $9.80 $10.05 $0.25 3% Residential Recycle Rate: $3.92 $4.70 $0.78 Based on Annual Calculation Adjustment Total Rate: $13.72 $14.75 $1.03 The Annual Adjustment Calculation is shown in Exhibit E of the contract. Under the renewal proposal, the calculation of the residential recycling rate increase is based on two separate components: 1) Collection and 2) Processing. The Collection Portion of the Residential Recycling Rate captures costs associated with the collection and hauling of recycling. This portion of the rate will increase annually by 3%, consistent with other proposed rate increases. The Processing Portion of the residential recycling rate relates to recycling processing and commodity sales, and will be calculated on an annual basis. The calculation of the Processing Portion is based off of the following formula: Net Processing Rate x Prior Year Tonnage Number of Households The Net Processing Rate is the difference between the current Commodity Value and the Current Processing Rate at Republic’s Materials Recovery Facility (MRF) over a twelve month period. If the impact to the total residential recycling rate based on this calculation is greater than 3%, then the rate requires City Council approval before taking effect. The chart below shows two examples of how this calculation could impact rates. In Example A, the collection portion of the rate increases by the annual increase of 3% and the processing portion of the rate increases by 14.2%, for a total rate increase of 5.5%. Because the total rate exceeds 3%, the rate would require City Council approval before going into effect. In Example B, the collection portion of the rat e increases by the annual increase of 3% and the processing portion of the rate decreases by 7.5%, for a total rate increase of 0.6%. Because the total rate does not exceed 3%, the rate will go into effect in accordance with Section V(b) of the contract “Modification of Rates.” Under this renewal, Republic is required to provide the City a report on a monthly basis detailing the commodity value by material type and processing rate of their processing facility for the City’s recyclable materials. The calculation of the twelve month period Net Processing Charge will be based on the data reported to the City. Additionally, the renewal requires Republic to notify the City if a load must be landfilled due to contamination, or if a recyclable material is unable to be moved due to market conditions. Renewal Considerations - Commercial: The contract renewal maintains current service levels for commercial trash and recycling, including the ability for curbside recycling to those businesses that do not have the option to utilize recycling via the currently-offered dumpster recycling services. Commercial collections and roll-off rates will increase by 3% on October 1, 2018, and 3% annually under the contract renewal. Financial Considerations: An adjustment in rates will change the franchise fees received by the City. The City collects ten percent (10%) of the total monthly dollar amount collected for residential and commercial/industrial billing. Strategic Link: The proposed contract amendment links to the City’s Strategy Map: “B2 Collaborate with select partners to implement service solutions.” Citizen Input/ Board Review: N/A Legal Review: The proposed contract renewal and exhibits have been reviewed and approved by the City Attorney. Alternatives: 1. Adopt proposed contract amendment as presented, with an effective date of October 1, 2018 2. Adopt modified contract amendment and pursue negotiations with Republic regarding fee 3. City denies approval of proposed contract amendment and seeks alternatives from solid waste service provider Supporting Documents: 1. Proposed contract renewal for Residential and Commercial Solid Waste Collection 2. Amended Exhibit A showing October 2018 rates 3. Amended Exhibit B showing October 2018 Miscellaneous Rates for Arlington Landfill 4. Exhibit E Residential Recycling, which reflects the calculation of the annual adjustment to the Residential Recycling Rate Staff Recommendation: Staff recommends approval of Item 4I: Approve contract renewal with Republic Waste Services of Texas, Ltd. for the provision of commercial and residential solid waste and recycling services. Staff Contact: Lauren LaNeave, Assistant to the City Manager