cover
TO: Mayor Richard C. Irvin
FROM: Alex Alexandrou, Chief Management Officer
DATE: November 18, 2021
SUBJECT:
Extending and amending the City's contract with Groot, Inc. for refuse, recyclables and yard waste collection services.
BACKGROUND:
In December 2014, the City approved a seven-year waste management contract with Allied Waste Services of North America, LLC d/b/a Republic Services of Aurora. The 2014 contract represented a significant change from all previous contracts and was reflective of changes to the waste hauling industry overall. At that time, the city contracted Walter Willis, Executive Director of the Solid Waste Agency of Lake County (SWALCO) to assist in the negotiations. We are fortunate to have maintained an ongoing relationship with Walter and he continues to be involved in the negotiation process as our subject matter expert.
The most significant change for the community with the 2014 contract was the change from a sticker program to our current cart program. The 2014 contract also maintained popular community options like the senior bag program, periodic free yard, leaf and brush waste collection, free holiday tree collection and stickered bulk waste collection. The sticker price was also frozen at $2.75 at the request of the Council.
A common practice in the waste management industry is for competing businesses to exchange trash collection routes with each other through the assignment of contracts. Consistent with its option under the 2014 agreement, Republic Services assigned its Aurora contract to Groot Industries, Inc. Since the assignment, Groot has provided excellent waste management services in Republic's stead in conformance with the 2014 agreement and now seeks the amendment described herein.
Walter Willis along with former Deputy Mayor Chuck Nelson and myself were approached by Groot in late 2018 to consider an extension of the 2014 contract. We began negotiations shortly thereafter and our efforts continued after Chuck's retirement and have culminated in the proposed amendment being provided for your approval.
DISCUSSION:
The current contract will continue to be the base contract for the extension as amended by the First Amendment. The extension is in two parts: Part 1 is from 7/1/22 to 6/30/27. Part 2 is from 7/1/27 to 6/30/32 and is contingent on Groot siting, permitting, building and operating a municipal waste transfer station in Aurora prior to 7/1/26.
The proposed amendment not only maintains all of the current programs but also includes some significant enhancements negotiated to improve resident services, effectuate cost containment and enhance program revenues. Here are some highlights of the benefits to residents:
• Refuse/Yard Waste Sticker: Price will remain $2.75 for the duration of the contract
• 14 Gallon Senior Bag: Price will remain $1.70 for the duration of the contract
• Starting in 2022, there will be no charge to the city for the two week "Spring Clean Up", which represents a savings of $50K/year.
• The free yard waste pickup program will be extended from November 30 to December 15 every year.
• Enhanced services during emergency situations.
• Cart movement fee remains fixed at $30 for the duration of the contract.
• If approved, once the extension period begins in 2022 residents will have 60 days to switch their level of service at no cost. This extension provides the city and Groot time to educate residents on the program so they can make an informed decision.
Cost containment elements of this proposal include annual rate adjustments being frozen from 7/1/22 to 6/30/23 and again from 7/1/29 to 6/30/30. Annual rate adjustment in remaining years will be fixed at 2.5% per year. In addition, City has a limited favored nations clause where there is an ability for review of contract terms compared to other municipalities.
Additionally, from a revenue enhancement perspective, this amendment has the following key financial elements: $150,000 franchise fee payment to the City within 30 days of City Council approval; effective 7/1/22 and annually thereafter until the municipal waste transfer station is built, a franchise fee of 3.5% of hauling related revenue (estimated at $335,500 in 2022). After the transfer station is operational the franchise fee rate shall decrease to 1.75%.
If Groot begins operating a transfer station by 7/1/26 the City will begin receiving host fee payments of $2.45 per ton of waste received at the facility. The first year estimate of payments is $555,000. Said facility is also estimated to generate $120,000 per year in property taxes.
Annual franchise fee and host fee payments to the City are estimated to range from $335,500 in 2022 and increase to $871,000 in the last year of the 10 year contract.
Lastly total estimated payments over the 10 year contract period are as follows:
Franchise Fee $2,631,000
Host Fee $3,606,000
Property Taxes $ 947,000
TOTAL Est. $7,184,000
IMPACT STATEMENT:
Approval of this contract will allow the city to improve upon the current refuse program over the life of the agreement, without having to go out to bid in the current business and waste industry climate and providing a stable, consistent and non-service disruptive option for our residents without having to change waste haulers.
RECOMMENDATIONS:
City staff respectfully requests that the proposed amendment be forwarded on to Committee of the Whole and City Council for full consideration and approval.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution authorizing an extension and amendment to a contract for refuse, recyclables and yard waste collection services presently assigned to Groot, Inc.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, on or about December 23, 2014, the City Council approved an agreement with Allied Waste Services of North America, Inc. ("Allied") to provide refuse, recyclable, and yard waste collection services within the City; and
WHEREAS, in 2017, Allied assigned said agreement ("2014 Agreement") to Groot, Inc., whereupon Groot, Inc. assumed the former contractual obligations of Allied; and
WHEREAS, representatives the City and Groot have negotiated an amendment to the 2014 Agreement as set forth in Exhibit A to this Resolution; and
WHEREAS, the City Council finds that the terms set forth in said amendment are in the best interests of the City and its residents and businesses;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the amendment to the 2014 Agreement as set forth in Exhibit A shall be and hereby are approved; and further
BE IT RESOLVED, that the Mayor and City Clerk shall be and hereby are directed to execute an amendment to the 2014 Agreement in substantially the same form as set forth in Exhibit A and, upon execution, deliver the same to Groot, Inc.