Title
Authorize the City Manager to execute a contract for a five year extension with Progressive Waste Solutions (formerly IESI TX Corporation) to the exclusive franchise agreement for the collection, hauling, recycling and disposal of municipal solid waste and recyclable materials for the City of Pflugerville.
Summary
The City Council authorized the City staff to negotiate a two year extension to the current exclusive franchise agreement with Progressive Solid Waste. During the negotiations, it became apparent that a proposed five year extension with a three year fixed rate would provide the largest cost savings and longest term of cost certainty. The term of the contract is proposed to be February 1, 2013 through January 31, 2018. The proposed three year fixed rate of $14.98 per month is $.18 lower than the current rate of $15.16. The extension provides a formula for an annual fuel cost adjustment that ties any adjustment to the annual average price determined by the Department of Energy for the Gulf Coast region. Progressive Waste Solutions can request an operating cost adjustment after February 1, 2016.
Staff has negotiated a change to the promotion method. The funds previously required to be used for quarterly newspaper advertisements will now be used as recommended by the City's Public Information Officer to disseminate information to our solid waste/recycling customers.
Although Progressive Waste Solutions has been responsive when asked to replace or repair solid waste or recycling roll outs, it depended upon the customer notifying the City staff of the need for the replacement or repair. In order to maintain the appearance of the carts that are put out on the city streets in our neighborhoods each week, Progressive Waste Solutions has agreed to perform an audit of the condition of every solid waste and recycling roll out in the City. This audit will begin on February 1, 2013 and will result in the proactive repair and replacement of any roll out that needs it. In addition, going forward the drivers will report any roll out that needs repair or replacement while on the route. Any service requests from citizens for roll out repair or replacement will continue to be completed within three (3) business days as specified in the contract.
Exhibit C has been added to the contract to confirm the locations, sizes, and frequency of collection for the dumpsters for the City facilities.
The City Attorney has reviewed the document and requested additional protection for the City in the event of the termination of the contract due to nonperformance by either party. Section 12 of the amendment describes the termination procedures. Section 14 of the amendment requires a $3 million performance bond that would be payable to the City in the event that the City terminates the agreement due to a default by the Service Provider.
In addition to the substantive changes listed above, other negotiated changes to the franchise agreement through the amendment added definitions for Contract Year and Dumpster, provided notice information, and clarified language.
Deadline for City Council Action
The current contract ends on January 31, 2013.
Fiscal Impact
The difference between the rate charged by Progressive Solid Waste and the rate charged to the citizens is paid to the General Fund as compensation for personnel used in the Finance office, city costs related to clean up day, and street wear and tear. This amount will be $.62 per account for this extension, compared to $.44 currently and equals an estimated additional annual amount of $40,000 to the General Fund. The number may vary with fuel cost or operating cost adjustments during the term of the agreement.
Staff recommends no change to the monthly amount of $16.89, including $1.29 in sales tax, which is charged to our residents for solid waste and recycling. The rate was established in 2010. During the term of the extension of the agreement, staff is confident that the rate charged to our citizens will not have to be increased as the City will be able to absorb any fuel or operating cost adjustment as has been the practice with previous adjustments made during the terms of contracts.
Staff Recommendation
Staff recommends that the City Council authorize the City Manager to execute the extension to the franchise agreement with Progressive Waste Solutions as presented.
Drafter
Lauri Gillam
Assistant City Manager