Summary

Council is asked to provide direction to staff on the future of refuse and recycling services in the City. There are three primary options for consideration:

• Negotiate an extension with Republic Services
• Prepare for issuance of a request for proposals for refuse and recycling services
• Evaluate options and consider discontinuation of the organized collection system

Background

Shakopee has a long history of contracting with waste haulers to provide trash collection to city residents. Dating back to at least 1968, the city contracted with haulers to provide service at a set rate. In 1991, the city began transitioning to “organized collection," which allows the City to designate a hauler to collect trash.

Based on City records from 1991, the driving factor in the decision to adopt organized collection was the passing of MN Statute 115A.941, which requires cities with a population greater than 5,000 to ensure every residence and business has solid waste collection services. The City determined designating a single hauler reduced costs for ratepayers and City.

Shakopee is not the only community with organized collection. There are many communities throughout Minnesota that utilize this system. Additional benefits of organized collection include ensuring trash doesn't pile up in the streets or on the side of houses, reducing wear on city streets from heavy trucks and reducing the noise caused by multiple haulers traveling through neighborhoods at different times.

In 2014, Republic Services was awarded a five-year contract to collect trash in Shakopee through May 2019. In 2019, that contract was extended for two and a half years. It expires at the end of 2021.

There is no guaranteed, accurate method to measure whether an organized collection system is more cost-effective than an open system. However, in looking back at our records, we found that in 1991 – when the City last had an open collection system – it cost $12.76 a month for collection of a 65-gallon cart and a small recycling bin. As of Jan. 1, 2020, collection rates for a 65-gallon cart plus recycling bin are $15.62 a month. That's a difference of $2.86 per month (or 22.4 percent) over 27 years.

Evaluating the Options

The primary goal of organized collection is to ensure compliance with MN Statute 115A.941, which requires that cities with a population of more than 5,000 ensures every residence and business has solid waste collection service.

Additional considerations the Council may wish to consider while evaluating these options are:

• Likelihood of instances of illegal dumping, and the cost to city crews to clean it up
• Overall ease of administration
• Amount of truck traffic on city streets, which causes road wear and tear and noise pollution
• Resident/business preference, customer service, and pricing
• Cost and feasibility of administration

Additional Considerations

Interfund loan for purchase of Recycling and Refuse Carts. 

When the contract for services with Republic was executed, the City also decided to purchase approximately 27,000 carts to service residents. In 2018, when the new agreement with Republic was negotiated the city included that Republic would begin using Republic owned carts instead of City owned carts as needed. This saved an additional cash outlay in 2019 for new carts. There are an estimated 23,000 city owned carts in service, with approximately 2,000 per year being taken out of service due to damage. The carts are no longer under warranty. They also likely have negligible resale value.

As of the end of 2021, it is estimated that the balance remaining to be paid on the interfund loan will be $300,000. It is anticipated to be paid off in full at the end of 2024 at the current pace.

The Council is not legally obligated to "pay back" the interfund loan. It may be written off as a loss. This is what likely would have to happen if the Council chose to discontinue the closed system. We may be able to come up with some solution to offset part of the cost, but it is unlikely the entire cost would be covered.

RFP Timelines

The last time the City did an RFP it took approximately 18 months from issuance to the start of a new servicer. At this point, we have just under 14 months in the event that the Council chooses to issue another RFP. The current timeline is workable, because the City will not need to purchase all new carts as was the case during the last issuance. If Council wishes to issue an RFP, it would need to go out the first part of the year, with a decision by about April or early May of 2021, leaving about eight months to plan a potential transition.

Potentially Unknown Services and Benefits from the Organized System

The City and residents currently receive benefits from the organized system that may not be noticed. Republic participates at a reduced cost in clean up day, they collect trash and recycling in our parks and at City buildings as part of the contract, and have dumpsters for cardboard that are emptied three times a week (because they tend to fill up in two days or so) in front of the 500 Gorman building. When recycling revenues are good, we also receive a portion of those revenues.

Administration of the System

Both organized and unorganized systems require some administration. In an unorganized system, the Council would likely adopt an ordinance guiding the collection of refuse and recycling, and the statute requires that there is an enforcement mechanism. It is the legal responsibility of the City to ensure that all residences and businesses have refuse and recycling service, and opening the system would not relieve the City of that responsibility. Many cities with open systems ensure compliance through their water service billing. The City would also must have a mechanism to enforce on properties that do not have service. 

In the organized system, staff is responsible for resolving and troubleshooting certain customer service and billing issues. As the holder of the contract we have the responsibility to ensure customer service is at appropriate levels and issues are resolved. The City is also responsible for collecting severely delinquent bills. At the October 20, 2020 Council meeting the Council took the step to asssess delinquent garbage bills to property tax statements - which means that city staff spend a reasonable amount of time dealing with individuals with questions and concerns about delinquent bills.