The City Council discussed enacting an extension with Republic Services at regular City Council meetings on September 18, 2019 and October 16, 2019. At the September meeting, Council provided guidance to staff to begin negotiations with Republic Services for an extension, and at the October meeting staff reported that negotiations were progressing in accordance with Council's directive.

Negotiations ended up taking somewhat longer than expected due to unforeseen circumstances which included the closing of the Great River Energy Waste to energy facility (GRE) in Elk River. In summary, GRE stopped accepting waste as of January 15, 2019. There are only two remaining waste to energy facilities in the Twin Cities Metro area, and both of those facilities are at capacity.  There is a facility in Red Wing, but transport to that facility is cost prohibitive, and the City of Red Wing and Goodhue County are in negotiations to bring that facility to capacity with local waste.  After consult with the City Attorney, staff has issued agreement to Republic Services under the existing contract to tip waste at their transfer station, and to bring waste after processing at the transfer station to the Pine Bend Landfill. One of the impacts of this change is that disposal rates will decrease for 2019. Council should be aware that in the event GRE re-opens or if a new waste to energy facility becomes active we may need to resume using a waste to energy facility for disposal to remain compliant with MN Statutes 115A.471 and 473A.848.

The attached contract has been reviewed by, and meets with the approval of the the City Attorney.

Summary of Contract Changes

1. This First Amendment extends the agreement for services to December 31, 2021. A period of 2.5 years. The reason is to align price adjustments with the end of the contract.

2. Establishes a clear process and timeline for rate adjustments should they become necessary. Disposal rates will change on an annual basis based on actual cost and are subject to negotiations between the City and Republic. Collection rates are locked in at a 3.5% increase annually, with the exception of circumstances where waste must be transported a greater distance and Republic incurs higher costs. Collection rates may be anticipated to increase in the event we must transition back to a waste to energy facility.

3. Republic Services will begin distributing refuse and recycling carts owned by Republic Services as it becomes necessary. Republic Services will still collect a cart fee (adjusted from $0.37/mo to $0.55/mo) and that cart fee will still be remitted to the City to pay off the interfund loan taken out in 2014 to pay for the Shakopee owned carts. However, Republic will be entitled to deduct $1,950/quarter from these cart fees to pay for the use of Republic owned carts. The reason for this change is that the City would have to spend approximately $150,000 now on new carts if we were to continue to supply them. This adjustment allows for the City to gradually transition out of cart-ownership, while still ensuring repayment of the interfund loan. By establishing the fees at $0.55/mo the city will be able to recoup its investment as planned by some time in the middle-end of 2023. 

4. This amendment requires that Republic Services assigns an operations supervisor to be responsible for coordinating operations for the City of Shakopee (an action that Republic has already taken in good faith, and has shown early benefits so far). The purpose of this is to ensure that customer service that requires operations action (extra/missed pick-ups, new/replacement carts, weather alerts, etc...) are dealt with effectively and promptly.

5. Gives the City an additional avenue to work with Republic to make changes to routing to protect private driveways or roads with weight restrictions.

6. Additional minor changes that align what is actually happening with contract terms. For example,6 the City never had RFID tags installed on carts, so the elements of the contract that require it are removed.

Republic Services representative will be at the next regular Council meeting (agenda permitting) to give Republic's annual report.