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Home My WebLink About05/02/2000, 3 - REQUEST BY SAN LUIS GARBAGE COMPANY TO MODIFY THE CURRENT RECYCLING CONTRACT TO DISCONTINUE THE COLLECTION OF POLSTYRENE (ALL #6 PLASTICS). COUnat May 2, 2000 j Agen oa Rpm 3 CITY OF SAN LU I S O B I S P O FROM: John Moss, Utilities Director Prepared By: Ron Munds, Utilities Cons ation Coordinator SUBJECT: REQUEST BY SAN LUIS GARBAGE COMPANY TO MODIFY THE CURRENT RECYCLING CONTRACT TO DISCONTINUE THE COLLECTION OF POLSTYRENE(ALL #6 PLASTICS). CAO RECOMMENDATION Approve an amendment to the Residential Recycling Services Agreement with San Luis Garbage Company to eliminate Polystyrene from Article 5.3, Materials To Be Collected, as a material to be collected. DISCUSSION Up until the early 1990's, polystyrene, which is comprised of all number six plastics including styrofoam, meat packing trays and other related packaging products were, for the most part, not recycled in the United States. Under pressure from environmental groups and other interested organizations,the polystyrene industry pledged to set up a network of processing facilities across the nation to handle the material. In 1993, San Luis Garbage Company (SLG) initiated the collection of polystyrene because of the establishment of recycling facility located in Corona, California and favorable recycling market conditions for the material. At that time, the facility was owned by the National Polystyrene Recycling Company (NPRC) and Talco, a plastics remanufacturing company. NPRC/Talco paid $0.06 per pound for the material and provided shipping to the Corona facility. In 1997, Talco, who provided the collection funding, disassociated itself from NPRC which resulted in NPRC having to discontinue paying for the freight to deliver the material to Corona._ The freight charges at that point in time were about $575.00 per load. With the downturn in the demand for the material and the subsequent profitability of recycling polystyrene, in 1998 NPRC started charging its customer $0.05 per pound for the material (this on top of the freight charges). In addition, if NPRC determined that a bail of material was contaminated(usually from food waste), they would reject the load which meant customers were charged for the landfill costs on top of the freight charges. Later in 1998, the charge went up to $0.15 per pound for material delivered to the NPRC facility. The Corona facility is now owned by ELM Packaging Company which still charges the $0.15 per pound for material delivered to its plant. The $0.15 per pound is the equivalent of$300.00 per ton in comparison to local landfill cost which is approximately $25.00 per ton. Currently, SLG ships about three loads of material a year with an average charge per load of $750.00 for the material and $600.00 for the freight. This equates to $540.00 per ton, not 3-1 Council Agenda Report—Polystyrene Page 2 including collection and processing costs, or nearly twenty times the cost to send the material to the landfill. It is important to note that the City is one of the only jurisdictions in the county that collects polystyrene at the curb. Why should the City discontinue the collection of polystyrene? The primary factors driving the request by SLG (Attachment 1) to discontinue the collection of polystyrene are the rising cost to collect, sort, ship and process the material, and the growing concern regarding the reliability of the polystyrene market. The recycling network promised by the polystyrene industry now consist of two facilities, one in Corona and one in Chicago. There has been speculation that the Corona plant could close at any time because of the lack of customers. Staff from the member jurisdictions of the Integrated Waste Management Authority (IWMA) have discussed this issue several times over the past two years. The discussions have always revolved around when to discontinue the collection of polystyrene, not if we should discontinue collection. Polystyrene accounts for less than 1% of the City's waste stream and is the only material that consistently has a negative cash flow associated with it to recycle. Currently, SLG processes approximately 18 tons per year from the City. As indicated in the letter requesting the change (Attachment 1), the cost of processing polystyrene has greatly exceeded the value of the diversion gained. With the opening of the recently completed material recovery facility (MRF) at Cold Canyon Landfill, other recycling programs will yield higher diversion rates than the recycling of polystyrene. SLG proposes to discontinue processing polystyrene upon the approval of the contract change. Since it will take time to educate the public of the change, the Utilities Department and SLG will initiate a public information program to inform customers of the modification to service. The polystyrene that is collected at the curb during the transition will be deposited in the landfill. CONCURRENCES The San Luis Obispo County Integrated Waste Management Authority concurs with the recommendation. FISCAL IMPACT There is no direct fiscal impact associated with the recommended action. The net decrease in collection and processing costs related to polystyrene will be analyzed in the upcoming base year application due to be submitted to the City by SLG this summer. ATTACHMENTS Attachment I- San Luis Garbage Company's letter Attachment 2- Contract Amendment 3-2 Attachment 1 San Luis Garbage Co. 970 Monterey Street • San Luis Obispo, California 93401 • Telephone (805) 543-0875 City of San Luis Obispo Ron Munds 888 Mono San Luis Obispo, CA 93401 03/31/2000 Dear Ron, San Luis Garbage is formally requesting that our residential recycling contract be amended to reflect the realities of the marketplace in regards to polystyrene collection. Due to poor market conditions and rising costs we are asking that the requirement to collect these materials be removed from the current recycling contract. The market for these materials have been. declining since 1996 and have continued to lose value. The cost of processing has greatly exceeded the value of the diversion we gain from collecting these materials. Polystyrene accounts for less than one half of 1% of our waste stream. It costs $540 per ton to process and ship it to market. It is the only recycling commodity that we lose money on. According to the IWMA, we have reached our 50% reduction goal. With the Cold Canyon MRF coming on line that will recycle more construction debris in one day than a years worth of polystyrene, we would ask that you follow the example of Pismo Beach and Arroyo Grande and not include those commodities as required collection items. Sincerely, Tom Martin, Controller San Luis Garbage Company 3-3 Attachment 2 AMENDMENT NO. 1 AGREEMENT WITH SAN LUIS GARBAGE COMPANY TO PERFORM RESIDENTIAL AND MULTI-FAMILY RECYCLING The AGREEMENT dated August 20, 2000, between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as "City" and SAN LUIS GARBAGE COMPANY, hereinafter referred to as "Contractor", is hereby amended as follows: SECTION 5.3 "Materials to Be Collected", is modified as follows: ■ Materials to be collected are to include but not limited to: newspaper, aluminum, tin and bi- metal cans, clear and colored glass containers, High Density Polyethylene (HDPE), Polyethylene Terephthalate (PET), corrugated cardboard, and mixed paper (Including white and colored ledger paper, chipboard,junk mail, magazines and phone books). All other terms and conditions of the AGREEMENT remain the same. Both CITY and CONTRACTOR do covenant that each individual executing this addendum on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. INWTTNESS WHEREOF, the parties hereto have caused this instrument to be executed on this day of April, 2000. ATTEST: CITY OF SAN LUIS OBISPO A Municipal Corporation Lee Price, City Clerk John Dunn, City Administrative Officer APPROVED AS TO FORM: CONTRACTOR <��Illltii Yyfiorons7 Ci Attorney Tom Martin, Controller 3-4 ARTICLE 5 DIRECT SERVICES 5.1 General The work to be done by Contractor pursuant to this Agreement shall include the furnishing of all labor, supervision,equipment, materials,supplies, and all other items necessary to perform the services required as presented in the Contractor's proposal incorporated in this document as Exhibit A. The enumeration of,and specification of requirements for,particular items of labor or equipment shall not relieve Contractor of the duty to finish all others, as may be required,whether enumerated or not. The work to be done by Contractor pursuant to this Agreement shall be accomplished in a thorough and professional manner so that the residents within the City are provided reliable,courteous and high-quality Recycling Collection service at all times. The enumeration of,and specification of requirements for,particular aspects of service quality shall not relieve Contractor of the duty of accomplishing all other aspects in the manner provided in this Section,whether such aspects are enumerated elsewhere in the Agreement or not. 5.2 Recycling Services Contractor shall Collect and remove all Recyclable Materials placed in or adjacent to Containers at the designated Collection locations for Single Family Dwelling Units and Multifamily Dwelling Units. Recyclable Material Collection shall be a minimum of once each week on the same day of the week as Solid Waste Collection service. Contractor will notify Recycling customers of holiday Collection schedules. Should the Solid Waste collection day change, Contractor shall re-route Collections within sixty(60)days of the notification by the change in Solid Waste collection days to provide same day service. 53 Materials To Be Collected Materials to be collected are to include but not limited to: newspaper,aluminum,tin and bi-metal cans,clear and colored glass containers, High Density Polyethylene (HDPE), Polyethylene Terephthalate(PET),pelysoffear., corrugated cardboard,and mixed paper (Including white and colored ledger paper, chipboard,junk mail, magazines and phone books). 5.4 Refusal to Provide Collection Services Contractor may refuse to Collect Recyclable Materials and shall not be obligated to continue to provide Recycling Container(s)to any participant in the Recycling program who, after reasonable warning, fails to properly sort and set out Recyclable Materials. Contractor shall report monthly to City any warning notices issued. 3-5 OtOUNaL aCDD DIR MEETIV AGENDA 3 KCA 0 FIN DIR G �"o°}ACAO O FIRE CHIEF DATE 5 ITEM # ffATTORNEY ❑PW DIR eLERKIORIG [7 POLICE C15 (REVISED, 4rItEl' • p i uf. ❑REC DIR 3. 0 PERS IR Attachment 1 I�It'e(9�i(�f• ❑PERS DIR AMENDMENT NO. 1 AGREEMENT WITH SAN LUIS GARBAGE COMPANY TO PERFORM RESIDENTIAL AND MULTI-FAMILY RECYCLING r The AGREEMENT dated August 20, 1_996, between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as "City" and SAN LUIS GARBAGE COMPANY, hereinafter referred to as "Contractor", is hereby amended as follows: SECTION 5.3 "Materials to Be Collected", is modified as follows: ■ Materials to be collected are to include but not limited to: newspaper, aluminum, tin and bi- metal cans, clear and colored glass containers, High Density Polyethylene (HDPE), Polyethylene Terephthalate (PET), corrugated cardboard, and mixed paper (Including white and colored ledger paper, .chipboard,junk mail, magazines and phone books). All other terms and conditions of the AGREEMENT remain the same. Both CITY and CONTRACTOR.do covenant that each individual executing this addendum on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. IlVWITNESS WHEREOF, the parties hereto have caused this instrument to be executed on this day of IR 200Q ATTEST: CITY OF SAN LUIS OBISPO A Municipal Corporation Lee Price, City Clerk Allen.Settle,Mayo APPROVED AS TO FORM: CONTRACTOR Jeffrey Jorgensen, City Attorney Tom Martin, Controller RECEIVED MAY Z - 2000 SLO C4T v