A resolution approving a proposed Agreement between the City and County of Denver and Alpine Disposal, Inc. for the sorting and recycling of the materials collected through the City’s Denver Recycles Program. Approves a revenue contract with Alpine Disposal, Inc. for three years and for an estimated amount of $500,000 to sort and recycle the materials collected through the citywide Denver Recycles residential collection program (201737957). The last regularly scheduled Council meeting within the 30-day review period is on 5-14-18. The Committee approved filing this resolution by consent on 4-10-18.
Thank you, Mr. President. You are welcome, Councilman Cashman. Thank you. All right. Next item, Councilman Flynn, for a question. 350. Thank you, Mr. President. Resolution 350 approves our agreement with a new provider for our city wide recycling sorting services. And if you recall, a couple of years ago, when the volatility in the recycling market caused us to amend the waste management contract, and now we've gone out again and we have a whole different structure now for how we will make money on recycling. And so when I read through the contract Exhibit C, which outlines the formula for how we will pay the contractor a certain amount, and then the city may make money back. It was so complicated that I thought it would be useful as Charlotte could spend maybe 3 minutes, Mr. President, explaining that we will pay the contractors $70 per tonne and and depending on the market, we may make money 5050 split on anything above that $70 and but if its bellows, if the market drops below $70, we may end up then paying additionally. So the entire three year contract has a $500,000 revenue estimate. But I wanted the members to know that doesn't necessarily mean that we are going to make that that half million dollars that that is just an estimate based on predictions of the market. Charlotte, could you walk us through that just briefly? Yes, of course. Thank you. Good evening. I'm Charlotte Pitt with Solid Waste Management. Councilman Flynn, you're correct. We had made a couple of concessions on our previous contract based on extreme market conditions with waste management, and then ultimately ended up settling that contract and letting them out, which is why we're here with a new contract. We did an extensive amount of research on what the changes in the market and how that impacted recycling contracts. Prior to this contract, we had a flat revenue. We were paid a flat rate for every tonne that we delivered because market prices on an average, sort of what we call a blended ton, which is all the different commodities was reasonably high and the vendors were comfortable with that at the time. The market has been extremely volatile the last two or three years and we realized we were not going to be able to get a flat fee, a flat revenue stream. We needed to ride the market with the vendor. And as you know, we collect multiple commodities with multiple market prices. The way we developed the formula is first we took an extensive look at what actually makes up our recycling stream. We did a full week, sort of multiple tons of recyclables collected from Denver residents to find out what percentage each commodity made up for the stream. So, you know, paper may be 20% pet plastic, maybe one and a half percent. And we created that blend of materials. Each of the recyclables that we recycle actually has a market index price. There are very various market indexes for recyclables in the country. So based on the percentage of the stream and the monthly market index price, we have a very complicated formula which comes out to what we call a blended an average blended ton. And then you are correct, we take the first $70 off the top, which is basically a fee to the contractor for sorting the material and then whatever's left over. After that, we split it 5050. I ran the numbers for March last month, just to give you a sense. And the blended ton average was $76.70, so we would pay $70 from that. And then our split would be $30, $3.35 per ton. The the estimate. It is an estimate, the 500,000. That's my crystal ball looking at what we've historically received and the percentage and what we think is going to happen and basically how much material we bring in each year. So we bring in about 40,000 tons of material each year. So over the three year contract, that would be about 120,000 tons divide the 500,000 by the 120, you get an average tonnage price of about $4.16. My estimate is that we're going to stay between the three and $5 mark on average, right? So that's where that number comes from. I'm fairly confident it's very conservative. I feel comfortable will likely hit the 500,000 over the three years. I don't think we'll exceed it too much more than that. Great. Thank you very much, Charlotte. And thank you for the intensive work you did on that. When I read through that chart and looked at all the different types of recyclables and thank thank you to whoever it was who went through all their household. And figure it out what percentage of each it was. But the work that you've done in facing a such a volatile market and perhaps losing this valuable service for Denver residents. I just want to thank you for that. And I, I hope that you're right that this is a conservative estimate. And then this that this approach works out. We feel very comfortable. We feel very good about our stream in Denver. We have a very clean mix of material. There are some communities that are not generating revenue at the moment. So the fact that we are still seeing revenue is a is a plus for us. Thank you very much, Mr. Breslin. That's all.