5.4. SR 02-05-2007
City of Elk River
REQUEST FOR COUNCIL ACTION
Agenda Section Meeting Date
Administration February 5, 2007
Item Number
5.4.
Item Description
Ci Garba e Hauler Contract Extension and Rate Increase
Prepared by
Rebecca Haug, Environmental
Administrator
Tim Simon, Finance Director
Reviewed by
Lori ohnson Ci Administrator
1ft
Introduction
The City of Elk River contracts with Allied Waste (formerly BFI) and Randy's Sanitation for residential
garbage hauling and recycling. On each even numbered year, the haulers and staff discuss the terms of
the agreement and payment schedule to determine if any adjustments are needed. The premise behind
having organized collection is to offer the residents a better rate, safer roads, and continuity in services
provided.
Discussion
During our discussion of the terms of the agreement and the payment schedule, the haulers expressed
concerns in experiencing significant cost increases with fuel and that they have not had an increase in
their payment in approximately 10 years. Because of this, they are requesting a modest price increase to
offset some of the costs. They are willing to wait until 2008 for the increase. They are currently in the 3rd
year of their current contract which would expire in 2009. They are requesting that in 2008 the S-year
term restart putting this contract out to 2012. The haulers have agreed to stay with the proposed increase
throughout the contract period. Staff is comfortable with the extension of the contract with those terms.
The Consumer Price Index has seen a combined two-year increase of 6.8% but the haulers are willing to
accept a 2.9% increase. Staff recommends this increase due to the fact that the haulers have shown that
they appreciate the relationship they have with the city and are willing to share the costs. This would
increase the rates the city pays the haulers to the following:
Container Size
32 gallon hi-weekly
32 gallon
60 gallon
90 gallon
Two 90 gallons
Current Monthly Rate
$ 9.10
$ 9.20
$ 9.30
$ 9.40
$10.50
Requested Monthly Rate
$ 9.36
$ 9.46
$ 9.57
$ 9.67
$10.80
With this increase, the rates to residents will need to be adjusted. At this time an estimated $0.30 increase
would allow the city to have a relatively small operating income but still maintain a cash flow for
unexpected expenditures, change in new housing developments, change in tipping fees, etc. With that,
the following would be the estimated 2008 rates for the residents:
C: \Documents and Settings \tallard\Local Settings \ Temporary Internet Files \ OLKF\REQUEST COUNCIL ACTION-garbage contract (2).doc
Container Size
Current Monthly Rate
(not including sales taxes)
$ 9.66
$ 11.62
$ 12.98
$ 15.03
$ 24.83
Estimated New Monthly Rate
32 gallon bi-weekly
32 gallon
60 gallon
90 gallon
Two 90 gallons
$9.96
$11.92
$ 13.28
$ 15.33
$ 25.13
An inflationary increase to the residents would also be expected in 2010 to continue allowing the city to
have a relatively small operating income but still maintain a cash flow for unexpected expenditures. Staff
will come back to the Council this fall with a final rate increase to be included in the 2008 fee schedule.
Financial Impact
Based on the population projection by Jeremy Barnhart, Planning Manager, an increase of 100 residents
will potentially occur in 2008, 300 in 2009, 200 in 2010 and 2011. The fInancial impact is an estimated
$0.30 increase or $3.60 per year to the residents.
Attachments
Memo from the Garbage Haulers
Action Requested
Staff is recommending approval of the increase to the haulers and also an extension of the contract with
the haulers.
Council Action
Motion by _
Second by _
Vote
Follow Up
C\Documents and Settings \tallard\Local Settings \ Temporary Internet Files \ OLKF\REQUEST COUNCIL ACTION-garbage contract.doc
January 16, 2007
City of Elk River
C/o Rebecca Haug
13065 Orono Parkway
Elk River, MN 55330
Dear Ms. Haug,
Thank you so much for all of your time and help over the last few months with the various issues we've been working
on. This letter is to confirm and to officially request, on behalf of the Elk River Trash and Recycling haulers, an
extension of the current contract for services and a slight price increase for 2008.
On page 10, number 5 of the current Waste and Recycling Services contract it states that the City and Contractor will
meet in November of each even numbered year to discuss "the terms of the Agreement, including the payment
schedule outlined in Attachment 8, to determine if any adjustments are needed."
When we met with you and the City Staff in November, we requested a modest price increase in an effort to help
share in some of the significant cost increases we have experienced over the last 5-10 years (and in particular, the
last 2 years). During the term of the current and previous contracts we have not requested or been granted any price
increases. We have finally come to the point where one is necessary.
In meetings and follow-up discussions with yourself, other Elk River City Staff, the City Attorney, and the Elk River
Waste Haulers during November and December 2006, we agreed that the Elk River trash and recycling companies
would voluntarily give-up any price increase request for the 2007 calendar year in exchange for a price increase for
2008 and an extension of the current contract. Given that verbal agreement, we would respectfully request a 2.9%
price increase to the trash and recycling services rates for 2008 and an extension to the contract that would return
the contract to the original 5-year term. We are currently in the 3rd year of that contract so it would effectively be a 2-
year extension request.
Since the current contract was signed in November 2004, the Consumer Price Index has seen a combined two-year
increase of 6.8%. We view our relationship with the City of Elk River as a partnership, and therefore seek to share
the costs of these significant increases.. . rather than ask that the City and citizens bear the entire cost. We are
requesting a 2.9% increase, less than half of the 6.8%. With a 2.9% increase, the following rates would apply:
Container Size
32 gallon bi-weekly
32 gallon
60 gallon
90 gallon
Two 90 gallons
Current Monthly Rate
$ 9.10
$ 9.20
$ 9.30
$ 9.40
$10.50
Requested Monthly Rate
$ 9.36
$ 9.46
$ 9.57
$ 9.67
$10.80
Please contact us with any questions you may have. We look forward to continuing our strong working relationship
and are thankful for the partnership we have with the City of Elk River.
Sincerely,
TOVVl GVlOV(/jl!'v
Tom Chovan
Allied Waste Services
763-259-5569
JLVVl woLLsc'VlL(/jgev
Jim Wollschlager
Randy's Sanitation
763-972-4121