Agenda Item Wording:
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Authorization to allow the City Manager to award contract for processing of City collected recyclables (RFP 20-21-46) to Pena’s Disposal in the amount not to exceed $540,000 annually for up to three years for a total not to exceed cost of $1,620,000.
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Deadline for Action: N/A
Submitting Department: Public Works
Contact Name and Phone Number:
Jason Serpa, Public Works Manager, jason.serpa@visalia.city <mailto:jason.serpa@visalia.city>, 713-4533
Nick Mascia, Public Works Director, nick.mascia@visalia.city <mailto:nick.mascia@visalia.city>, 713-4323
Department Recommendation:
Staff recommends authorizing the City Manager to award a contract for processing City collected recyclables (RFP 20-21-46) to Pena’s Disposal in the amount not to exceed of $540,000 annually and a not to exceed $1.62 million if all three potential years of the contract are utilized. Although the City is expected to receive a recycling rebate based on the current recycling market, the contract amount is based on most current historical payments to Pena’s Disposal. The proposed contract is 3 years, with 2 one (1) year renewals.
Background Discussion:
The City’s current contract with Pena’s Disposal expires September 30, 2021. A Request For Proposal (RFP 20-21-46) was issued to receive proposals for a new contract.
On August 4 two proposals were received from:
• Pena’s Disposal, Inc.
• Mid Valley Disposal
Pricing Model:
The RFP requested one pricing model that focused on a simple per ton pricing for processing the City’s recyclables. Because the RFP also required the contractor to pay for the City’s recyclables based on the market rate (recyclingmarkets.net), this made the comparative selection a lot easier without the dilution of recycling pricing that may exist in the secondary market. The amount paid to the city for all recyclables will be identified on every invoice and verifiable by the standard pricing published regionally. This is different from the City’s current contract that does not separate the recyclables. Currently, the City’s recyclables are assigned to Pena’s and a hybrid pricing model is used to lower the processing price to the City. Since recycling is state law for residential and commercial service, the new way of identifying the recyclables and getting paid for them separately on the invoice will be a much more transparent way for the City to conduct business. In addition, Cal Recycle requires jurisdictions to report annually on specific recycling tonnages and it has become very important to have this type of aggregate information. Even though Cal Recycle has required these reports in the past, these same reports are now much more detailed and ask for very specific requirements to be met.
Since 2016, China’s recycling market has not accepted many materials and recyclers have had a difficult time finding markets to continue business as usual. Because of this, prices had been depressed until very recently when new markets emerged in India and Southeast Asia. In addition, the pandemic’s effect on the economy has had a very recent positive turn on the recycling market as the supply is now trying to catch up to demand. Many other countries outside the United States depend on our cardboard because it is so clean, and they pay a premium for it. Many of the prices for many types of recyclables have seen large increases as much as 50% over the last calendar year.
Proposal Experience:
In general, both proposers are experienced and able contractors. Equipment and facilities are capable of providing the needed service to the City.
Although the RFP requested proposals that included both residential and commercial recyclables to be received by the contractor, Mid Valley Disposal submitted their pricing based solely for commercial recycling only. This is a major disadvantage since the City was requiring the award of the contract to one proposer for operational efficiency by providing both residential and commercial. In addition, even though Mid Valley Disposal’s site is very conveniently located next to the City’s Corporation Yard, the matter of assigning only the cleaner and more lucrative commercial side of the business to another proposer was deemed contrary to the proposal requirements.
One advantage to Staff’s recommendation is have the Pena transfer station at the same location (Tulare County Landfill) as the City waste disposal site because the recycling contractor (Pena) will be able to realize efficiencies of separating the residual from the recycling stream without extra haul costs. This may result in lower prices for the City. If the transfer station was at another site, it would increase transportation costs to the City and operations could be impacted.
In comparing the price per ton processing fee, Pena’s Disposal was a favorable rate:
|
Proposer |
Pricing Model |
Price per ton |
Collection site for recyclables |
|
Pena's Disposal |
Per ton price |
$81.97 |
Road 80 Tulare County Landfill |
|
Mid Valley Disposal |
Per ton price |
$86.00 |
Facility: 1707 E Goshen Ave, Visalia |
Recommendation:
Staff recommendation is to award a 3-year contract with two one-year renewals to Pena’s Disposal based on the following factors:
1) Lowest dollar per ton pricing
2) Advantage of transfer station at the same location for taking City’s waste
3) Able to receive both residential and commercial recyclables
Fiscal Impact:
If current recycling market trends hold, the annual savings to the Solid Waste Enterprise Fund (441) could be $480,000 to $540,000 per year compared to the current contract. With current projections, the City may benefit from a rebate of an estimated $1.86 per ton. Even though this may mean that the City will no longer have a net payment to the recycling contractor, it is important to have a contract in place for the possibility of the market change in the future. The $540,000 contract amount is based on the most recent history of payments to Pena’s Disposal estimated at $45,000 per month, but could result in lower payment amounts, depending on the on-going market for recycled materials.
Prior Council Action:
None
Other:
None
Alternatives:
Do not award contract to Pena’s and void all proposals and solicit new proposals for the RFP.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the City Manager to award the contract for processing of City recyclables (RFP 20-21-46) to Pena’s Disposal, Inc. in a not to exceed amount of $540,000 per year.
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Environmental Assessment Status:
N/A
CEQA Review:
N/A
Attachments:
Proposal Price Comparisons
Ownership Disclosure Statement