Tonight(June 19th at 6pm) at the Coeur ‘d Alene City Council meeting the city will request a Temporary Rate Increase, Changes to the Acceptable Material List, and Modification of Contract in Regard to Collection Procedures for Coeur d’Alene Garbage Service. The public will be able to express their concerns during the PUBLIC COMMENTS period. Each speaker will be allowed a maximum of 3 minutes to address the City Council on matters that relate to City government business.
DATE: June 19, 2018
FROM: Troy Tymesen, City Administrator
SUBJECT: Request for Temporary Rate Increase, Changes to the
Acceptable Material List, and Modification of Contract in
Regard to Collection Procedures for Northern Stake PAK,
LLC, d/b/a Coeur d’Alene Garbage Service
DECISION POINT: Should the City Council amend the Solid Waste Services Contract
with Northern State PAK, LLC, d/b/a Coeur d’Alene Garbage Services, due to recent and
unforeseen changes in the recycling market?
HISTORY: On April 19, 2016, Council approved the Solid Waste Services Contract
(hereinafter “Contract”) with Northern State PAK, LLC, d/b/a Coeur d’Alene Garbage
Services (hereinafter “CDA Garbage”). The Contract was effective July 1, 2016, and
CDA Garbage has fully performed in accordance with terms and conditions of the
Contract since then. This Contract provided for the collection of solid waste and single
stream recycling materials, and included a glass reuse/recycle program. In May 2018,
CDA Garbage requested an increase in compensation for single stream recycling and a
modification in the type of recycling which must be accepted under the Contract.
FINANCIAL ANALYSIS: The estimated additional cost to the City would be
approximately $17,000 per month. However, due to savings experienced with respect to
the current Contract, the additional cost will not require a rate increase to the customers.
PERFORMANCE ANALYSIS: It is indisputable that significant changes in the
recycling industry have occurred in recent months. In late 2017, China, the world’s
largest consumer of recycled materials, began to limit the quantity of recycled material it
purchased. Beginning on January 1, 2018, China banned twenty-four types of foreign
recyclables, including mixed paper, low grade plastics, certain metals, and waste textiles.
An additional thirty-two items will be banned beginning later this year and in 2019. The
estimated value of the banned materials comes to at least $400 million per year
nationwide. Also in early 2018, China drastically reduced the contamination limit for
recycled materials it would accept from 12-15% to 0.5%. This resulted in higher costs
industrywide for separating recyclables from non-recyclables and the disposal of a higher
percentage of materials collected in the recycling program into landfills as a consequence
of irredeemable contamination. These are all unanticipated costs which are borne by
CDA Garbage under the current Contract.
The cost to CDA Garbage to recycle materials is now over $100 per ton, more than
$17,000 per month for recyclables collected in the City alone, representing a 1,100%
increase over a year ago. Waste Management also recently informed solid waste haulers
that it may charge up to $175 per ton to dispose of contaminated recyclables in landfills.
WM estimates that about 25% of all recycling is contaminated to the extent that the only
option is to send it to the landfills.
Amendments to the Contract are specifically allowed pursuant to paragraph 5.3 of the
Base Contract: “No amendment shall be construed to release either party from any
obligation of the Contract except as specifically provided for in such amendment. All
amendments shall be in writing, signed by both parties thereto.” In addition, paragraph
5.8 of the Base Contract requires both parties “to use their best efforts and diligence in
mutual good faith to promote the best interests of City.”
After considering all the evidence provided by CDA Garbage, as well as research
conducted independently, staff believes that it is in the best interests of the City to
continue a vigorous recycling program despite the negative pressure of economic forces.
In order to accomplish this goal, an amendment to the Contract is both advisable and
necessary. Staff recommends that paragraph 4.3 of the Base Contract be amended to add
a paragraph stating that CDA Garbage will be responsible for the entire cost of hauling
recyclables plus the first $10 per ton charged for disposal by one of the vendors identified
in paragraph 3.6 of Schedule B to the Base Contract. The City will pay the disposal costs
in excess of $10 per ton.
Staff further recommends that paragraph 3.3 of Schedule B to the Base Contract be
modified to implement a more effective tagging program when a customer includes nonrecyclables
in the recycling bin. As part of the new program, customers will be provided
a more comprehensive notice which will direct them to call the City or visit the City’s
website for information on what is recyclable and what is not, and they will be provided
the option to remove the non-recyclables from the bin and either call for a special pickup
(at the customer’s cost) or wait for the next regular pick-up date.
In addition, due to the volatility of the recycling industry, staff recommends that the
following language be added to the definition of “Recyclable Materials” in paragraph 1
of Schedule B to the Base Contract: “The list of recyclable materials is subject to change
with the consent of the City based on market conditions. Customers will be promptly
notified of any changes.”
The cost to the City is expected be approximately $17,000 per month. However, due to
savings experienced with respect to the current Contract, the cost will not result in any
rate increase to the customers.
DECISION POINT/RECOMMENDATION: Council should authorize amendments
to the Solid Waste Services Contract as described.
Some points to consider:
Are you comfortable with the city reducing the recyclable materials for plastics down to only plastics 1 & 2?
Are you comfortable with the city footing the bill for the additional cost of recycling? This cost will be removed from the city’s sanitation fund not directly imposed on CDA Garbage’s customers.
Are you comfortable with your recyclables being sent to Asia to be processed?
Would you like to see a timeline for reviewing the market conditions to consider adding back recyclable materials to the contract?
Are you happy with your service and would like to advocate for the city to work with CDA garbage to adjust their contract accordingly?
Please consider coming to the city council meeting this evening to voice your opinion about the change in the contract. You will have three minutes to present your comments during the public comment period at the beginning of the meeting.
The contract for sanitation is a 10 year contract and CDA garbage is about 2 years into their contract.