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HomeMy WebLinkAbout01-02-2001I. CALL TO ORDER: Chair Fred Poe called the meeting to order at 5:00 pm. Members present: Chair Fred Poe, Vice Chair Rich Wagner, Councilmember TriSh Borden. Others present included: Mayor Chuck Booth, B/Chief Dan Bosch, A/Chief Marion Dukes, Plan. Dir. Paul Krauss, Solid Waste SpeC. Sharon Conroy, Parks Dir. Dick Deal, Ass't City Engr., Dennis Selle, Finance Dir. Diane Supler, Secretary Jeanne Herold, Guests~Jerry Hardebeck-RST Disposal, Laura Moser-Waste Mgmt-RST, and Dan Bridges-RST, II. CONSENT: Rate Increase & Curbside Recycling Proposal/Recycling Facility_: Mr. Poe asked Sharon Conroy to introduce the guest speaker from Waste Management/RST Disposal. Ms. Conroy introduced Jerry Hardebeck and Laura Moser. Mr. Hardebeck thanked the Committee for allowing him the opportunity to come and present their proposal. He explained basically that WM/RST Disposal desperately needs an increase in their rates. The last increase in rates was in 1994. The contract anticipated that costs would be going up and actually addresses escalators and should have gone on annually. Mr. Hardebeck brought copies of the appropriate section of the contract that address that for those who had not had the opportunity to see the contract. Waste Management has owned RST Disposal since the beginning of 1999. After purchasing RST, Waste Management did not talk to any of the cities about rate increases but heading into 2001, it was the unpleasant task that Mr. Hardebeck had to bring to the City. Mr. Hardebeck then presented Waste Management's proposal to add Curbside Recycling Services and to exercise the City's Contract Extension options, which included: I Introduction: Curbside Recycling Curbside Used Motor Oil Recycling Regional-MRF(Regional Materials Recycling Facility) Superior Customer Service Community Involvement II, Overview of Current Services: Comprehensive Weekly Solid Waste Collection Yardwaste Collection Service Drop-site Recycling Services for Paper, Tin, Aluminum, Glass and Plastics Fairly Small-scale Recycling Facility ' A Construction, Demolition, and Land Clearing Debris Recycling Facility III. Proposal for New Programs: A)Curbside Recycling - Materials, Including Curbside Collection of all Paper, Municipal Services Committee Meeting 1 January 2, 2001 Tin, Aluminum, Glass and all Plastic Bottles and Jars. B)Used Motor Oil Collection IV. Regional-MRF Proposed Regional Materials Recycling Facility V. (~l~stomer Service VI Community_ Involvement VI. program Fundiw, VII. Summary_ Mr. Hardebeck explained that he realized that the City is heading toward a bidding process and that at this time WM/KST is offering something other then a bidding package. But, if the City decides to go through a bidding package, WM would certainly compete. Mr.Hardebeck passed out copies of the CPI- Urban Wage Earners and Clerical Workers, data dated Jan 2, 2001. He explained that the transportation costs have gone up drastically. Since 1994 this particular index has increased by 19.2%. He explained he would never ask any City for 19.2% increase but thought the Committee might want to see that information. In 1999 there was a 5.9% increase due to the increase in fuel. Mr. Hardebeck further explained that he felt that WM could beat that price increase if given the opportunity. In their industry, costs are lowered in two major components; tracking costs and labor. The other is dispo§al. WM/RST addressed ways of lowering those costs in the package provided. The most economical way to accomplish that was for WM/RST to put in curbside recycling. When a curbside recycling program is implemented, the issue that has to be addressed is the term of the contract. The equipment purchased today, including carts, bins and the tracks will last ten years if maintained well. In looking at the depreciation with this proposal, if the contract were to be extended for two, 5-years terms which is part of the existing contract, WM/RST would have the full 10 years to depreciate their equipment, thereby lowering that costs. The proposal was pretty straightforward. It calls for the addition of curbside recycling which would be an every other week service. WM/RST would provide all the carts and bins for that service. Motor oil recycling was added. Mr. Hardebeck explained that if the City accepts this proposal, the increase that the City will be paying to WM/RST comes to about 2.4% compared to the 5.9% CPI for the last year. Vice Chair Wagner asked if the cost of the annual clean-up event was included in the proposal. Mr. Hardebeck stated that it was included and was just an omission on their part. He also stated that on the IR MRF that WM/RST now has collects and processes about 150,000 tons of recyclable material. Mr. Wagner wanted to know what the capacity of WlVl/RST's proposed plant was. Mr. Hardebeck stated that he couldn't provide the actual tonnage. Mr. Wagner also asked Mr. Hardebeck if he were to secure additional city contracts, if he would be willing to increase that beyond the 150,000 tons. Mr. Hardebeck stated .that he would like to get back with 2 January 2, 2001 Municipal Services Committee Meeting Mr. Wagner with the exact numbers. Discussion ensued regarding recycling scheduling, the construction of the MRF and odor associated with recyclables. Councilmember Borden asked if this proposal was contingent upon the City executing a new two, 5- year extensions to the contract. Mr. Hardebeck stated that at the price WM/RST was proposing, "yes". Mr. Hardebeck stated that the City has asked WM/RST to extend the existing contract without a price increase and he stated that they just can't keep going with what they're doing without some kind of price increase. Councilmember Borden asked what their increase would be if the contract were to be extended six months. Mr. Hardebeck stated that they have looked at what the contract calls for, and unless WM/RST negotiates something with the City, the contract states to use the consumer price index, which is 5.9%. Ms. Borden wondered what would transpire if the Committee felt this was a good proposal but couldn't make a decision for six months. Mr. Hardebeck stated that if the Committee decided to do that, he would take it back to his company for direction. He does however, need to tie down the property for the MRF. As far as logistics, Auburn is at the top of the list. Chair Poe wanted to clarify the record, that the proposal is that nothing would change other than WM/RST would receive 90% of the billable accounts. He stated also, that he didn't believe Mr. Hardebeck had covered the 35-gallon cart Service, and wondered if that was an option. Mr. Hardebeck stated that when WM/RST looked at Auburn's array of residential garbage services there was a big gap. There are 96-gallon carts and 64-gallon carts and nothing below that. WM/RST's proposal was to add a 35-gallon cart as a brand new service. The next down are mini cans. This has the price ora cart and a little bit more disposal built into it because it's 35 gallons versus 32. Mr. Poe stated that he went through the rate structure and really didn't understand it and didn't seem logical Mr. Bridges, stated that he felt that the rates are structured to get people to want to go to drop sites. Discussion ensued. Rich Wagner mentioned that at a previous meeting, the Committee passed the Consultant Contract with the proviso that thei-e be a review after Task 3. After Task 3, there was a Task to do a cost of service analysis in conjunction with the current supplier so the Committee wasn't necessarily going to OK that until seeing what came out of the first three tasks. Mr. Poe asked Sharon Conroy to elaborate on a rate study. Sharon Conroy explained that if the City were to decide to negotiate, the consultant recommends that the City look at the cost of service to figure what is being paid for and what will be paid for divided by the cost. The other part of it is to do a rate model, so that the City can balance out the residential and the commercial rate, if there is any imbalance there. So, there's two different ways to approach the rate. Mr. Poe stated that he felt the Committee needs input from Sharon Conroy and needs the Finance Department to go through and analyze Waste Management's proposal and Committee would have to get back with them. Mr. Poe stated that he's looking forward to a time when the City has a new contract. Municipal Services Committee Meeting 3 January 2, 2001 Finance Director Diane Supler commented that a lot of Finance's call volume is commercial accounts and the calls have to be referred to RST. She wondered if there was a mechanism that the City could use so that calls are forwarded to RST and vice versa. Mr. Hardebeck stated that he felt that could be done. Sharon Conroy wanted everyone to know that she spoke with Mr. Hardebhck last week about extending the contract for six months and he said that WM/RST is not willing to do that. 'She wanted to make sure that is referred to at the Council meeting. Also, Ms. Conroy talked to the City's potential consultant and he said it looked like Auburn would have to compress their schedule and they'd like the opportunity to consider policy changes, both at staff and council level. And the decision as to whether or not to negotiate or to go to bid has to be made within the next week or two. Ms. Conroy proposed that at the January 16th, meeting she bring to the Committee, the pros and cons of bid versus negotiation. Committee can then discuss this and make a decision. Mr. Hardebeck reiterated that WM/RST said they couldn't extend the contract, but that was an extension of the contract without a rate increase. Fred Poe stated that he understood WM/RST's position. Mr. Poe wanted Ms. Conroy to ask the consultant what the time frame was for completion of Tasks 1, 2 & 3. Resolution No. 3288: Paul Krauss asked for approval of Resolution No. 3288. A Resolution of the City Council of the City of Auburn, Washington, authorizing the Mayor and City Clerk to execute an Engineering Service Contract for north hangar buildings with W&H Pacific, Inc., for the Auburn Municipal Airport. Mr. Krauss explained that one of things that he was asked to look into was the potential for 5- year leases in the expectation that it would help to minimize the City's risk to have longer term leases in case of an economic downturn. At a meeting with the FAA, the proposal was discussed and the FAA said the City could not do it. Their reason for saying that the City couldn't do it was, because it's a facility that receives federal funds, the City is obligated to treat all parties equally. Since every other hangar rented on the Airport is on a month-to-month rolling lease, the idea of obligating someone for 5 years seemed to get them upset. Mr. Krauss also explained that he and Finance Director Diane Supler have been were working together to get some numbers together to do some cash flows. Diane Supler stated that she ran two scenarios. She ran a 15-Year Bond Issue and a 20-Year Bond Issue. On the 15 year Bond Issue, if a 15 year pay back was done and continuing to put 20% of the hangar rent aside for other emergencies there is a shortfall of $75,000. The project would in fact cash flow but there wouldn't be any excess revenue flow set aside for emergencies. Over a 15-year period, the City would only be setting aside a little less than $300,000 for emergencies. On a 20-Year Bond Issue, once again only using 80% of the new hangar rent. In 2001 and 2002 the rate has already been set by an ordinance for those future rate increases. The 20-year only assumes a 1% per year increase over the life of the bond issue. Not knowing where rates are going to be going the project will still be on the conservative side with a net at the end of the term of the bond of $100,000. That does not include the 20% set aside. So, this project pencils some place between $650,000 and $100,000. Paul Krauss explained that what he did regarding the cost basis for these hangars was, he took the bid price from last tin~e, elevated it a little bit and then built in a contingency of $65,000. Mr. Krauss stated that the bid time is a whole lot better now then it was a year and a half ago and Municipal Services Committee Meeting 4 January 2, 2001 is hopeful that the Airport will get a better bid but won't know hoW the project pencils until pre- leases are done and the City gets a bid. Discussion ensued regarding rent increases. Mr. Wagner stated that he was in agreement with Councilmember Borden and would rather see a 15-year bond issue rather than a 20-year. It doesn't look very promising in the 80% column for 15 years. Ms. Supler pointed out that something that should be considered is that the City is actually depreciating them over 45 years. Consequently, the City is getting a return on their money faster then depreciating the asset and in future years will be getting 100% of the revenue. Mr. Poe stated that he would prefer a 15-year bond issue also. Further discussion ensued. Councilmember Borden stated that with the information presented, she feels people will pay higher rents and would like to see a larger increase. Mr. Wagner stated that he is not comfortable with Mr. Krauss' proposal. Going back to the original item on the agenda, Chair Poe asked if the Committee had a motion to approve Resolution No. 3288. Councilmember Wagner stated that he still wanted some protection for the City for the 1.6 million. Mr. Krauss stated that he has and will make it clearly understood that this contract is contingent upon the bids coming in reasonably, it's contingent upon pre-leasing and upon the Council being comfortable with the funding package and selling the bond. If any one of those doesn't happen, the project doesn't go. Vice Chair Wagner stated that he still wasn't comfortable with it and wouldn't vote for it at this time and wouldn't make a motion to the Committee. It was the consensus of the Committee that they needed more time. m INFORMATION/DISCUSSION: Vice Chair Wagner requested copies of the Fireworks information that was prepared by Fire Marshal Smith be sent to all the Council members. If it is decided to go with a ban everyone needs to have all the information. There being no further business, the meeting was adjourned at 6:35 PM. Submitted by: Jeanne Herold, Secretary Municipal Services Committee Meeting 5 January 2, 2001