#3 Authorize City Manager to enter into waste disposal contract with Town & Country Sanitation (File Res. #2011-778)
DEPARTMENT OF PUBLIC WORKS MEMORANDUM
February 17, 2011
TO: City Council
FROM: John Whitcomb, Operations Director
SUBJECT: ACTION ON A PROPOSED RESOLUTION AUTHORIZING THE
CITY MANAGER TO ENTER INTO A WASTE DISPOSAL
CONTRACT WITH TOWN & COUNTRY SANITATION THROUGH
DECEMBER 31, 2013 (FILE RESOLUTION 2011-778)
Summary
The proposed File Resolution authorizes the City Manager to enter into a waste
disposal contract with Town & Country Sanitation through December 31, 2013,
and establishes disposal pricing and includes specific waste requirements and
restrictions. The prior agreement with Town & Country Sanitation expired on
December 31, 2010.
Staff Recommendation
Following Council discussion, staff recommends the City Council adopt File
Resolution 2011-778.
Recommended Motion
I move to adopt File Resolution No. 2011-778 authorizing the City Manager to
enter into a waste disposal contract with Town & Country Sanitation for a term of
three years and at the rates and other provisions contained in the Resolution.
City Manager Recommendation
The City Manager recommends approval. This contract is structured to maintain
the cash flows and waste flows for the life of the landfill as discussed by the
Council during the study sessions. The contract is structured as a 3-year
contract due to the decrease we have seen in volumes since the original budget
plan was approved.
Request
There was no specific request by Council, although the Council had prior
authorized a one year extension of the prior disposal contract, through 2011, with
Town & Country Sanitation.
Background
As part of development of the 2011 budget, and after two Council study sessions
focusing on Sanitation Fund finances and operations, the Council implemented a
residential trash collection and disposal fee, and authorized one year waste
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disposal contract extensions with three of four waste haulers the City had under
contract. All contracts were set to expire at the end of 2010. The goal in
extending these contracts was to maintain then current waste flows to facilitate
permanent closure of a portion of the landfill in 2011, which would help reduce
offsite odor migration. Council also directed that staff attempt to reduce waste
flows at the landfill beginning in 2012. The goal here is to ensure the operating
landfill and planned first expansion area are able to provide for disposal through
2045. Under the City’s contract with Janesville Sand & Gravel, the City cannot
access its second planned expansion area until this date.
Since development of the budget, there have been significant changes in the
regional marketplace:
Veolia Environmental Services has purchased the Mallard Ridge landfill in
Delevan, WI.
Veolia has reduced its waste deliveries to the City’s landfill by about half
and are now hauling that waste to their own landfill (10,000 ton reduction
from 2010).
Town & Country Sanitation would not agree to a one year contract offer
from the City but has indicated they would agree to a three year contract
to deliver a minimum 30,000 tons through 2013. Town & Country has also
agreed to haul approximately 45,000 tons in 2011, though was unwilling to
commit to that in contract language. In 2011, this is an approximate
15,000 tons reduction from 2010. The company has further agreed to a
40,000 ton cap on tonnage in 2012 and 2013 to facilitate the overall goal
of reducing waste long-term. Town & Country has indicated they also
have a disposal contract with Veolia, though that contract has no minimum
tonnage requirements.
Waste Management would not agree to a one year contract extension with
the City and is reducing its waste deliveries to the City’s landfill, instead
hauling that waste to their own landfill (15,000 ton reduction from 2010).
Assuming the City enters into a contract with Town & Country Sanitation, it is
estimated the landfill will receive approximately 188,000 tons in 2011, down from
the 2010 waste flow of about 228,000 tons, and significantly less than the
242,000 tons assumed in the 2011 adopted budget.
Financial Impacts
Below is a Sanitation Fund income statement which shows: 2010 actual Fund
performance; 2011 projected fund performance as presented to Council at the
August 2010 study session; 2011 as budgeted; 2011 projected fund performance
with Town & Country Sanitation as is being proposed; and 2011 projected fund
performance without Town & Country Sanitation.
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Sanitation Fund Income Statement
2011 With
20102011Town & Country2011 Without
ActualBudgetedas ProposedTown & Country
Expenditures$ 6,628,015$ 7,560,612$ 6,550,612$ 5,964,612
Revenue$ 6,941,447$ 8,515,518$ 7,325,518$ 5,987,518
Gross Income (Loss)$ 313,432$ 954,906$ 774,906$ 22,906
Transfers$ 977,589$ 1,208,270$ 1,208,270$ 1,208,270
Net Income (Loss)$ (664,157)$ (253,364)$ (433,364)$ (1,185,364)
Ending Undesignated Fund Balance$ 1,417,381$ 1,164,017$ 984,017$ 232,017
Landfill Tons 228,758 242,000 188,000 143,000
Gate Rate Per Ton$ 28.90$ 30.00$ 33.00$ 36.00
The table illustrates the significance of the proposed contract with Town &
Country Sanitation. Without the contract, the Sanitation Fund would be projected
to have a net loss of over $1.1 million in 2011. With the contract, there is a
projected Sanitation Fund net loss of approximately $433,000 which is
approximately $180,000 greater than the net loss contained in the 2011 adopted
budget.
Recommendation
Given the changes in the marketplace, it will be extremely difficult for the City to
both maintain 2010 waste flows through 2011 (which was to facilitate permanent
closure of landfill Cell 1) while also beginning to reduce waste flows beginning in
2012, as previously suggested. Permanent closure of landfill Cell 1 will now not
occur until 2012, although there are a number of closure-related activities that will
be completed this year which should help reduce offsite odor migration. These
market changes do, however, present an opportunity for the City to reduce waste
flows beginning this year rather than in 2012.
The goal of reducing waste flows does not eliminate the need for disposal
contracts, particularly in light of Veolia’s purchase of the Mallard Ridge landfill.
Town & Country Sanitation has agreed to pricing at 95% of the base gate rate
established by City ordinance, with pricing caps in each year of the contract as
noted in the Resolution.
Staff recommends Council adopt File Resolution 2011-778, authorizing the City
Manager to enter into a waste disposal contract with Town & Country Sanitation
for a term if three years with the provisions noted.
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RESOLUTION NO. 2011- 778
A Resolution authorizing the City Manager to enter into a contract, on behalf of the City
of Janesville, with Town & Country Sanitation, establishing a three year term of contract
and providing pricing for the disposal of solid waste at the City of Janesville sanitary
landfill.
WHEREAS, Town & Country Sanitation and the City have negotiated the terms of a
waste disposal contract which establishes a three year term and disposal fees; and
WHEREAS, said contract is reiterated and incorporated herein by reference as if fully st
forth verbatim; and
WHEREAS, entering into a contract with Town & Country Sanitation is beneficial to the
City in the form of revenue and in maintaining marketable disposal fees for all
customers; and,
WHEREAS, Janesville General Ordinance Section 8.64.150 (K) permits such disposal
contracts; and,
WHEREAS, the Common Council finds this contract to be of benefit to the City and in
the best interest of the City’s landfills and the City overall.
NOW, THEREFORE BE IT RESOLVED by the Common Council of the City of
Janesville that the City Manager and City Administration, on behalf of the City of
Janesville, are hereby jointly and severally authorized to amend an existing contract
with Town & Country Sanitation in the manner and for the purposes set forth in the
above recitals, and to negotiate, draft, enter into, amend such contracts and/or other
agreements and modifications, and to take such other actions as the City Manager
and/or his designee may determine, from time to time, to be in the best interest of the
City to effectuate the purpose of this resolution, and/or the administration of said
contract(s), and to establish the time frames and other terms and conditions of each
contract not expressly addressed by this resolution, as well as to include the terms and
conditions set forth herein.
BE IT FURTHER RESOLVED by the Common Council that the City of Janesville hereby
establishe the following provisions in the contract with Town & Country Sanitation:
A. Town & Country’s fee payment for the disposal of municipal solid waste at the
CITY’S sanitary landfill shall be 95% of the sanitary landfill base fee. Base fee, as
used herein, shall be the full and total gate rate established by City Ordinance
8.64.150 (A) less any and all state and federal fees, taxes and surcharges.
B. Town & Country’s base fee payment shall not exceed $19.00 per ton in 2011; $19.95
per ton in 2012; and $20.90 per ton in 2013.
C. In 2011 only, Town & Country shall receive a $1.00 discount on the disposal price for
every ton over 30,000 delivered to the City’s landfill. The discount applies to the
disposal price as determined by Paragraphs A and B of this resolution.
D. Town & Country agrees to deliver to the City of Janesville a minimum of 30,000 tons
of waste annually for the term of contract and is obligated to annually pay the City an
amount equal to this minimum tonnage multiplied by the fee payment established
herein. This provision applies even if Town & Country delivers to the City less than
30,000 tons in any year of the contract.
E. Unless authorized otherwise, in writing from the City Manager, Town & Country shall
not deliver more than 40,000 tons of waste in 2012 and 2013.
F. The term of this Contract shall begin upon the date of execution by the City Manager
and shall extend through December 31, 2013. The terms and conditions of this
Contract may be extended if mutually agreed by the CITY and CONTRACTOR.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
McDonald
Eric J. Levitt, City Manager
Perrotto
Rashkin
ATTEST:
Steeber
Truman
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
City Attorney Wald Klimczyk
Proposed by: Operations Division
Prepared by: Operations Division