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09.e1 Memo - Recycling Contract Renewal ConcernsPage 1 of 2 City of Scandia 14727 209th St. N., Scandia, Minnesota 55073 Phone (651) 433-2274 | Fax (651) 433-5112 | www.cityofscandia.com DATE: Tuesday, November 15, 2022 FROM: Ken Cammilleri, City Administrator TO: Staff RE: Household Recycling Collection Contract Concerns Background The City has long maintained a contract with SRC. Inc. to provide community-wide household recycling collection services. The City pays $27,846 for this service as part of a flat rate fee. The City budget provides $14,658 towards the service costs. The remaining $13,188 is covered by the Washington County Municipal Recycling Grant. This rate has seen relatively little change, as SHR leveraged this service expense by mostly securing most of the City’s refuse hauling services. The City’s recycling program has a history that goes back to 1994. Since that time, Washington County has maintained their recycling grant program to help reduce the County’s reliance on solid waste disposal facilities and to implement environmentally responsible waste management practices. More importantly the program assured that all households in the City received recycling and, indirectly, refuse collection services. The Issue SHR, Inc. was recently purchased by Waste Management, Inc. Since the sale of the business closed, the new owners have set out to implement significant changes to hauling service rates. Currently, they have provided customers with notice of their rate changes and have indicated that they will continue to honor the existing recycling collection service agreement with the City through the remainder of the contractual term of December 31st. Their new rate proposal is nothing short of a dramatic price shift. The newly proposed rates are not one flat service rate, the agreement is for 5 years rather than one, and, are unprecedented, based on our experience with SRC. Here is Waste Management’s proposed new rate structure per household per year: 2023 2024 2025 2026 2027 $177.06 $185.90 $195.26 $204.88 $215.28 4.76% Change over PY 4.89% Change over PY 4.7% Change over PY 4.83% Change over PY To put this expense into total perspective, we can apply Met Council’s estimated 2021 household count 1582: 2023 2024 2025 2026 2027 $280,108.92 $294,093.80 $308,901.32 $324,120.16 $340,572.96 Page 2 of 2 City of Scandia 14727 209th St. N., Scandia, Minnesota 55073 Phone (651) 433-2274 | Fax (651) 433-5112 | www.cityofscandia.com Next Steps Staff has already begun to solicit proposals from other waste haulers, given we only received Waste Management’s proposal on November 9th, it may take more time to get a rate proposal. Conditions are currently uncertain as to whether or not other haulers may be looking to expand their services into our area. Limitations as to which haulers may service area will likely be tied to the fact that recycling collection is processed in a facility in Newport that is jointly owned by Ramsey and Washington Counties, the Recycling and Energy Center. Staff is in the process of alerting Washington County of this change, as it has assumed responsibility for organizing the collection of recyclable materials in the County. So, more information is to come, but the ultimate plan is to have residential recycling collection resolved by the end of the year. In the meantime, the City Council may want to consider changes to its Garbage Ordinance, Chapter 52, and the opportunity to amend it. An amendment could include recycling requirements and the capacity for the City to negotiate all hauling rates and tie them to changes in economic conditions. The City already currently mandates haulers obtain licenses, but does not implement regulation of recycling or capacity to oversee rate changes. Please find a copy of the rate proposal included in your packets for reference.