HomeMy WebLinkAboutReg 2021-07-19 Item 4C - Contract - Letter of Understanding to Renew Recyclable Market Surcharge with Waste ManagementCOUNCIL AGENDA SYNOPSIS
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Council review
07/19/21
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ITEM INFORMATION
ITEM NO.
4.C.
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STAFF SPONSOR: HARI PONNEKANTI
ORIGINAL AGENDA DATE: 07/19/21
AGENDA ITEM TITLE Renewal of Recyclable Market Surcharge
CATEGORY ❑ Discussion
Mtg Date
Motion
Date 07/19/21
❑ Resolution
Mtg Date
❑ Ordinance
M Date
❑ Bid Award
Mtg Date
❑ Public Hearing
Mtg Date
❑ Other
Mtg Date
Mtg
SPONSOR ❑Council Mayor HR DCD ❑Finance Fire TS P&R ❑Police 11 PW ❑Court
SPONSOR'S Waste Management (WM) has submitted a request to extend the 5% recycling surcharge to
SUMMARY October 31, 2023. On July 15, 2019, City Council approved a two-year 5% Commercial
Recyclable Cost surcharge, which went into effect on November 1, 2019. Parties agreed it
could be extended by Council upon written request and clear justification from WM. The
proposed recycling surcharge only applies to commercial users, not residential. Council is
being asked to consider this item on the Consent Agenda.
REVIEWED BY
Trans&Infrastructure
❑ CommunitySvs/Safety ❑ Finance Comm. ❑ Planning/Economic Dev.
❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm.
COMMITTEE CHAIR: VERNA SEAL
❑ LTAC
DATE: 07/12/21
RECOMMENDATIONS:
SPONSOR/ADMIN.
COMMITTEE
Public Works Department
Unanimous Approval; Forward to Regular Consent Agenda
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$0.00 $0.00 $0.00
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
07/19/21
MTG. DATE
ATTACHMENTS
07/19/21
Informational Memorandum dated 07/09/21, revised after 07/12/21 T&I
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
Minutes from Transportation and Infrastructure Committee Meeting of 07/12/2021
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2
TO:
FROM:
CC:
DATE:
SUBJECT:
City of Tukwila
Allan Ekberg, Mayor
Public Works Department - Hurl Ponnekrznti, Director/City Engineer
INFORMATIONAL MEMORANDUM
Transportation and Infrastructure Services Committee
Hari Ponnekanti, Public Works Director/City Engineer
Mayor Allan Ekberg
July 9, 2021 (Revised after July 12, 2021 T&I)
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 July 15, 2019, 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. WM updated municipal rate
comparisons between Tukwila and neighboring cities on June 24, 2021, which highlights the dates each city contract
was signed and differentiation of costs by service type. 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 (Updated 6/24/21)
Tukwila City Hall • szoaSnuthceraterBoulevard . Tukwila, WA 98.188 • 206-433-M00 • Website: TukwiliWAgav
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July 12, 2021
Laura Moser
Public Sector Manager
Waste Management of Washington, Inc.
720 4th Avenue, Suite 400
Kirkland, WA 98033
RE: Letter of Understanding: Extension of Recyclable Market Surcharge -
Comprehensive Garbage, Recyclables and Compostables Collection
Agreement dated March 13, 2012, as amended
Dear Ms. Moser,
The purpose of this Letter of Understanding ("LOU") is to extend the recyclable
market surcharge between the City of Tukwila ("City") and Waste Management of
Washington, Inc. ("WM").
The City and WM executed Agreement No. 12-027, Comprehensive Garbage,
Recyclables and Compostable Collection Agreement dated February 21, 2012
("Agreement").
Pursuant to Letter of Understanding between the Parties dated June 4, 2019 and
signed July 23, 2019, City and WM agreed to increase commercial rates by five
percent (5%), effective November 1, 2019, to reflect increased costs in recyclables
processing and marketing. This surcharge was only approved for a period of two
years; however, WM was permitted to seek an extension of the surcharge for an
additional two years by providing justification of the need to the City. WM has
submitted a written request for an extension of the surcharge, and justification of
the need to continue the surcharge.
The purpose of this LOU is to confirm the City's approval of WM's request for
extension of the surcharge for an additional two years, starting on November 1,
2021, ending on October 31, 2023.
Page 1 of 2
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By signing below, the City and Waste Management acknowledge their approval and acceptance
of the terms of this LOU and acknowledges that this LOU: (a) creates a legally binding obligation
upon the parties, (b) shall be governed and constructed in accordance with the laws of the
State of Washington regardless of any conflict of law provisions, (c) sets forth the entire
agreement between the City and WM with respect to the subject matter hereof and supersedes
all prior negotiations, representations, understandings and agreements with respect to the
subject matter hereof, and (d) may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and the same
instrument. Signatures transmitted electronically shall be deemed valid execution of this LOU
and binding on the parties.
Acknowledged and agreed upon by:
CITY OF TUKWILA:
By:
Printed Name:
Title:
WASTE MANAGEMENT OF
WASHINGTON, INC:
By:
Printed Name:
-N
Title:
Date Signed:
Date Signed:
Page 2 of 2
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June 11, 2021
Mr. Hari Ponnekanti
Public Works Director
City of Tukwila
6300 Southcenter Blvd
Tukwila, WA 98188
Sent via email only to: Hari.Ponnekanti@tukwilawa.gov
RE: Recyclable Market Surcharge expiring October 31, 2021
Dear Mr. Ponnekanti,
WASTE MANAGEMENT
720 41h Ave, Suite 400
Kirkland, WA 98033
The purpose of this letter is to request another 2 -year term for the Recyclable Market
Surcharge set to expire 10/31/21. We understand the request must be made no later than
90 days prior to the expiration date and be accompanied by documentation justifying the
request.
Since November 1, 2019 when the increase became effective, we have continued to see
fluctuating commodity markets and increased processing costs. Over the past 18 months
(October 2019 through April 2021) our processing costs have increased to $136.46 per ton
and commodity values have gone up and down with an average $26.60 per ton. Based on
the commercial and multifamily tons WM collects, processes, markets for City of Tukwila
customers our costs have increased 6.9% over this time frame. Attached is documentation
showing the data for the basis of our request and justification.
Therefore, we are asking that the current 5% recycle surcharge remain in place for another
two-year period (11/1/2021 through 10/31/2023). Even though realistically, this does not
cover our costs and is applied to the collection portion only and not the total rate for
commercial and multifamily.
WM appreciates your consideration of our request and looks forward to your response. As
always, I am available to answer any questions you may have.
Sincerely,
Laura Moser
Public Sector Manager
(206) 391-9112
Lmoser@wm.com
Attachments: 1). Financial Analysis for extension of 5 percent surcharge_061121_City Copy
2). Current Municipal Contract Rates_City Copy
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Transportation & Infrastructure Services Committee Minutes July 12, 2021
D. 2021 Overlay Program - 53rd Avenue South Roadway Widening
Staff provided an update on the 53rd Avenue South traffic revision and sidewalk plan, including
wideningthe road to accommodate two-way travel.
Committee Recommendation
Discussion only.
E. Recyclable Market Surcharge Renewal
Staff is seeking Council approval to renew Waste Management's 5% Commercial Recycling
*surcharge through October 31, 2023 due to continued operational costs in the global recycling
market.
Item(s) for follow-up:
Verify tonnage and revenue chart numbers.
Committee Recommendation
Unanimous approval. Forward to July 19, 2021 Regular Consent Agenda.
11. Miscellaneous
The meeting adjourned at 6:34 p.m.
,
Committee Chair Approval
Minutes by LH
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