Title
Contract Award for Processing of Plastics #3 - #7 into Liquid Fuel and Enter into Land Lease at City of Phoenix Resource Innovation Campus - RFP 19-SW-007 (Ordinance S-45501)
Description
Request to authorize the City Manager, or his designee, to enter into a new contract with Renew Phoenix for the processing of plastics #3 - #7 into liquid fuel; and to enter into a land lease at the City of Phoenix's Resource Innovation Campus (RIC) located at 27th Avenue and Lower Buckeye Road. Further request authorization for the City Treasurer to accept all funds related to this item. Total revenue from the land lease is estimated to generate between $8,400 to $12,000 per year for an estimated total of $252,000 to $360,000 over the anticipated life of the contract, including extensions.
Report
Summary
In 2013, the City Council adopted the goal of diverting 40 percent of trash from the landfill by the year 2020. In April 2016, this goal was expanded to achieve Zero Waste by 2050. To achieve these goals, the Public Works and the Community and Economic Development departments have been collaborating to create public-private partnerships to build the City's circular economy by redirecting materials back into the economy instead of sending them to the landfill.
Plastics #3 - #7 include low-density polyethylene (LDPE), polypropylene (PP), polystyrene (PS), and other mixed plastics, which are found in things such as shrink wrap, plastic toys, frozen food bags, yogurt cups, and Styrofoam containers. The City sorts an estimated 521 tons of these plastics annually. This represents the tons of plastics #3 - #7 processed through the materials recovery facilities (MRFs), captured during the sorting process and baled for sale as a mixed plastics commodity. Recent changes in commodities and recycling markets have impacted how the City handles these plastics. Previously, plastics #3 - #7 were bundled and sold on the open market, whereas today there is no longer a market for most of these materials. Currently, the operator of the City's MRFs separates plastics #5 from the mix and sells the material as a commodity.
Procurement Information
Request for Proposal (RFP) 19-SW-007 was issued on June 7, 2018 seeking one or more entities to lease land at the RIC and provide mixed plastics diversion service and redirect materials currently in the municipal waste and recycling streams and divert them for waste-to-product or waste-to-liquid fuel technologies. The RFP was conducted in accordance with Administrative Regulation 3.10. There were three offers received by the Procurement Division on July 18, 2018.
An evaluation committee consisting of five members including City staff from the Public Works and Community and Economic Development departments, and subject matter experts in entrepreneurship, sustainable engineering and the plastics industry evaluated the offers. The offers were evaluated based on the following criteria: Business Plan (300 points), Financial Return and Benefits to the City (300 points), Proposed Technology (250 points), and Qualifications and Experience (150 points). The evaluation committee determined that two firms were within a competitive range and both firms were invited to participate in an interview. After interviews were concluded, the evaluation committee reached a consensus and is recommending an award to Renew Phoenix as the highest scored, responsive and responsible offeror. The offers and their final scores are as follows:
Renew Phoenix: 839 points
PolyFuel LLC: 773 points
Renew Phoenix will lease approximately 30,000 square feet on the RIC. The estimated lease rate is $0.28 to $0.40 per square foot per year. Rent during the initial lease term will be between $8,400 to $12,000 per year, plus applicable taxes, which is within the range of market rents as determined by the Finance Department Real Estate Division. Rent at the beginning of each renewal option period will be at the then-prevailing market rate, plus applicable taxes.
Contract Term
The initial anticipated term of this agreement is 10 years, beginning upon Council approval. Provisions to this contract may include up to two 10-year renewal options, which will be exercised by staff in the best interests and sole discretion of the City.
Financial Impact
Total revenue from the land lease is estimated to generate between $8,400 to $12,000 per year for an estimated total of $252,000 to $360,000 over the anticipated life of the contract, including extensions.
Concurrence/Previous Council Action
This item was recommended at the Water, Wastewater, Infrastructure and Sustainability Subcommittee meeting on March 6, 2019, by a vote of 3-0.
Location
27th Avenue Transfer Station, 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.