Title
Authorization to Enter into an Agreement for Accepting and Processing Recyclable and Additional Waste Streams from Waste Management of Arizona, Inc. (Ordinance S-48803)
Description
Request to authorize the City Manager, or his designee, to enter into an agreement with Waste Management of Arizona, Inc., to accept and process recyclable, green organics and food scrap materials collected by Waste Management of Arizona, Inc. and delivered to the City of Phoenix's North Gateway and 27th Avenue Material Recovery Facilities. Further request to authorize the City Treasurer to accept, and the City Controller to disburse, all funds related to this item. The City is estimated to receive $150,000 in processing fee revenues with the potential for additional revenue shares.
Additionally request to authorize an exception pursuant to Phoenix City Code section 42-20 to include indemnification and assumption of liability provisions that otherwise would be prohibited by Phoenix City Code sections 42-18.
Report
Summary
Waste Management of Arizona, Inc. has requested to enter into an agreement with the City of Phoenix to accept and process recycle, green organics and food scraps material. The terms of the agreement address the changing market conditions resulting in lower commodity prices and increased processing costs from contamination in recyclables. This agreement authorizes the City of Phoenix to charge a processing fee to Waste Management of Arizona, Inc. for recycling tonnage processed at the two City of Phoenix Material Recovery Facilities (MRFs), which is designed to ensure all costs associated with processing recyclables are recovered. In addition to charging the processing fee, depending on the recycling market conditions, the agreement includes the following revenue share provisions:
- In a market with low recycling commodity prices, the City of Phoenix will charge a processing fee to Waste Management of Arizona, Inc., and no revenue share to Waste Management of Arizona, Inc. will be available; and
- In a market with high recycling commodity prices, Waste Management of Arizona, Inc. will pay a processing fee and will receive 50 percent of the net revenue share and the City of Phoenix will receive the remaining 50 percent.
Annually, Waste Management of Arizona, Inc. will deliver up to 6,000 tons of recyclable materials to City of Phoenix facilities. In addition, for green organics and food scraps delivered to the City of Phoenix's compost facility, the City will assess Waste Management of Arizona, Inc. with the current processing fee.
Contract Term
The agreement term will begin on or about July 1, 2022 and will be for one year, with four, one-year options to extend.
Financial Impact
The City is estimated to receive $150,000 in processing fees, with the potential for additional revenue shares, over the term of the agreement. Under favorable market conditions, the City would provide a 50/50 revenue share split with Waste Management of Arizona, Inc. that would not exceed $300,000.
Funding is available in the Public Works Department's budget.
Location
North Gateway Material Recovery Facility - 30205 N. Black Canyon Hwy.
Council District: 2
27th Avenue Material Recovery Facility - 3060 S. 27th Ave.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Public Works Department.