TIS 2021-07-12 Item 2D - Letter of Understanding - Renewal of Recyclable Market Surcharge

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TO: FROM: CC: DATE: SUBJECT: City of Tukwila Allan Ekberg, Mayor Public Works Department - Hari Ponnekanti, Director/City Engineer INFORMATIONAL MEMORANDUM Transportation and Infrastructure Services Committee Hari Ponnekanti, Public Works Director/City Engineer Mayor Allan Ekberg July 9, 2021 Renewal of Recyclable Market Surcharge Contract No. 12-027 ISSUE Waste Management (WM) is the solid waste and recycling provider in the city of Tukwila. WM requests that the city renew the 5% Commercial Recycling surcharge for two more years - beginning November 1, 2021 and ending October 31, 2023. BACKGROUND: Recycling Costs Waste Management (WM) presented to the Transportation and Infrastructure Services Committee in May 2019 regarding changes in the global recycling market resulting in increased costs. To offset the additional costs associated with recycling, WM initially requested an increase to the recycling rates. On [insert date] City Council approved two-year 5% Commercial Recyclable Cost surcharge, which went into effect on November 1, 2019. The surcharge was approved to be in place for two years, beginning November 1, 2019, and the parties agreed it could be extended by Council upon written request and clear justification from WM. DISCUSSION: Renewal of the Recycling Surcharge due to continued Recycling Costs WM has submitted the request for extending this 5% recycling surcharge for the rest of their contract, which is set to expire October 2023, due to continued operational costs in the global recycling market. Please see attached information to this extent. FINANCIAL IMPACT The proposed recycling surcharge only applies to commercial users, not residential. Even with the proposed increases, the solid waste and recycling rates remains below Tukwila's neighboring cities. The proposed surcharge would be in place for two more years, beginning November 1, 2021, and ending October 31, 2023. RECOMMEDATION Staff reviewed the material submitted by WM about the operational costs in the global recycling market. Staff agrees that this information is similar to the information submitted in May of 2019, when the Council approved the 5% Commercial Recyclable Cost surcharge to offset WM's costs associated with the weakening recycling market. Council is being asked to consider this item on the Consent Agenda at the July 19, 2021 Regular Council Meeting. Attachments: Letter of Understanding Letter from WM requesting the 5% surcharge for the next 2 years Financial Analysis of 5% Surcharge Extension Current Municipal Contract rates Tukwila City Hall • 6200 Southcenter Boulevard • Tukwila, WA 98188 • 206-433-1800 • Website: TukwilaWA.gav 13