R2016-57 AUTHORIZING CONTRACT - Midwest Fiber Inc.

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Item Coversheet Page 1 of 2 �a Management Services DATE: MEMO: TO: Honorable Mayor Julie Moore Wolfe and City Council FROM: Tim Gleason,City Manager Billy Tyus,Assistant City Manager for Development Services SUBJECT: Resolution approving recycling processing agreement with Midwest Fiber SUMMARY RECOMMENDATION: Staff recommends approval of this agreement with Midwest Fiber to accept materials provided as part of the city's recycling program for an additional5 year period. BACKGROUND: The City's single stream recycling program was implemented in 20ll and by all accounts has been a resounding success.Participation today is up from about 15%in 2010 to almost 60%today and other communities have called on several occasions looking to utilize Decatur as a model.Aside from the usage rates,there's also the environmental protection provided by diverting,as best we can,materials from the landfill for collection to be re-used. The city entered into a 5-year agreement with Midwest Fiber in 2011 as part of the waste and recycling program overhaul.The agreement called for Midwest to accept and process recyclable material at no cost to or payment to the City and to pay haulers$10 per ton of material accepted.The recyclables market has changed drastically since the city first began its program with the value of the materials being down drastically over the last several years from where they were five years ago.Among other reasons,this is due to falling oil prices—it is now cheaper in some cases to make new plastic where oil is a chief component than to recycle-and a weakened Chinese economy,as China is a principal consumer of recyclables. Today it is standard practice for communities and haulers to pay a processor to take materials a market rate which the city has not had to do over the last 5 years.However,under terms of this agreement,the city's maximum exposure would be limited to a cost of$15 per ton capped at a maximum of 325 tons this year for 2016 and based on the community average in subsequent years. Conversely,if the recycling market recovers and the value of materials increases,the city can earn up to$10 per ton which we are not capturing under the current agreement.This protection is significantly different than other communities where both municipalities and haulers are required to pay a cost equal to the market rate of materials minus processing costs with no limit on the amount to be paid.One hauler that operates in another market reported paying$33 per ton delivered for processing.Both Bloomington and Normal operate under a similar contract where the cost to process materials is based upon the material value minus the processing costs but neither community currently have the benefit of a monthly maYimum cost. The relationship with Midwest Fiber over the years has been good and mutually beneficial.The company operates and maintains two facilities in Decatur for the collection of local materials at 1302 N.Water Street and 1781 Hubbard Ave.and handles the processing of materials in Normal,Illinois.We anticipate being able to cover the cost of this expense with the current budgeted amounts. POTENTIAL OBJECTIONS: There are no known objections to this resolution. INPUT FROM OTHER SOURCES: Midwest Fiber,market information,other municipalities and haulers. BUDGET/TIME IMPLICATIONS: Estimated cost of agreement covered in current budget. ATTACHMENTS: Description Type resolution Rcsulutiun I.ruer https://decatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemID=600 5/13/2016