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Agenda Report
February 26, 2024
TO:Honorable Mayor and City Council
THROUGH: Finance Committee (February 26, 2024)
FROM: Department of Public Works
SUBJECT: AUTHORIZATION TO INCREASE CONTRACT NO. 31537 WITH AMERICAN RECLAMATION, INC. BY $1,673,568 AND ADD TWO
ADDITIONAL ONE-YEAR OPTIONS TO PROVIDE MATERIAL
RECOVERY PROCESSING
RECOMMENDATION:
It is recommended th at the City Council:
1. Find that the recommended actions are exempt from the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15061 (b)(3), the "common sense" provision that CEQA only applies to projects that may have an effect on the environment;
2. Authorize the City Manager to increase contract amount with American Reclamation, Inc. by $141,024 for the second one-year option from March 4, 2024 to March 4,2025;
3. Authorize the City Manager to add two additional one-year options from March 4,2025 to March 4, 2027 in an amount of $766,272 for each of the one-year options; and
4. To the extentthis transaction could be considered a separate procurement subject to the Competitive Selection Process, grantthe proposed contract in crease with American Reclamation Inc. an exemption from the Competitive Selection Process set forth in the Competitive Bidding and Purchasing Ordinance pursuant to the Pasadena Municipal Code, Section 4.08.049(8), contracts for which the City's best interests are served.
BACKGROUND:
The Public Works Resource Recovery and Recycling Division actively manages integrated waste managementsen/ices to over 27,000 households, including providing a variety of recycling opportunities. The Division operates a curbside recycling program that collects approximately 7,800 tons of recyclable material per year. To achieve the success of this program, Public Works contracts with material recovery processing vendors to properly divert recyclable materials from landfills.
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MEETING OF02/26/2024AGENDA ITEM NO.12
Amend Contract No. 31537 with American Reclamation
Febmary 26, 2024
On August 19, 2019, City Council awarded an initial th ree-year contract to American Reclamation, Inc. for $975,774, with two additional one-yearoptionsof $325,248 annually at the discretion of the City Manager. During the initial th ree-year contract term, the American Reclamation recycling facility suffered a catastrophic fire on November 1,2019 th at caused the facility to shutdown their operations. During that time, the City recycled materials at the Puente Hills Material Recovery Facility (PHMRF) th rough an existing agreementwith the Los Angeles County Sanitation Districts.
On September 1, 2021, American Reclamation resumed their sorting operations and material recovery processing. The City of Pasadena began processing its materials at th is facility an d observed a significant increase in recycling tonnage diversion. Since then, the average diversion tonnage has increased to an estimated 625 - 650 tons per month,which is 30% higher than the average tonnage per month processed atPHMRF.
On September 14,2022, staff received notification that American Reclamation was requesting an increase in the current contract pricing from $42.24 to $89.88 per ton due to:
declining commodity prices; increases in labor, fuel, residual dump fees; and final destination transportation costs. Staff concurred with the proposed increase since the cost is comparable to other similar material processing facilities, factoring in time and travel costs such as was the case for PHMRF. Hence, on January 23, 2023, City Council authorized a contract increase to the two additional one-year options from $325,248 to $625,248 as a result of the 2022 increased rates.
Since then, staff has been informed that the current pricing of $89.88 per ton will be increasing by 9.3% to $98.24 per ton effective March 1,2024. This is due to increased industry expenses associated with processing and sorting the material. At this time, staff recommends that the City continue working with American Reclamation since they provide efficient material processing, third-party residual processing, and their centralized location facilitates delivering multiple loads daily for the cost. Even with the proposed cost increase, American Reclamation's cost are competitive with other providers.
The City Manager would like to exercise the second one-year option to extend the contract from March 4, 2024 to March 4, 2025. However, since the authorized annual contract amount is proposed to increase by $141,024, from $625,248 to $766,272, the proposed increase is included in the recommended action. The annual estimate of $766,272 is based on a yearly tonnage of 7,800 at the new rate of $98.24 per ton.
In addition, since the City was not able to utilize the initial contract until September 2021 due to the facility fire and closure, staff is requesting that two additional one-yearoptions be added to the contract, cumulatively extending the contract from March 2024 to March 2027. The recommended annual contract amount of $766,272 is based on an estimated monthly tonnage of 650 tons, or 7,800 tons annually at $98.24 per ton.
Extending the contract by up to two additional years from March 2025 to March 2027 will provide staff with sufficient time to monitor industry trends and issues comprehensive Request For Proposals in 2026 that will solicit proposals for not just recycling, but also mixed waste and organics processing at the same time due to the expected closure of Scholl Canyon Landfill in 2027.
Amend Contract No. 31537 with American Reclamation
February 26, 2024
The proposed contract changes are summarized below:
Contract No. 31537Contract Term
Authorized
Contract
Amount
Proposed
Contract
Increase
Price Per Ton
Original 3 Year
Contract
3/4/20 - 3/4/23$975,774$0$42.24
First Contract
Amendment - First
Year Extension Option
3/4/23 - 3/4/24$625,248$0$89.88 (as of Sept 2022)
Second Year Extension
Option3/4/24 - 3/4/25$625,248$141,024$98.24 (as of March 2024) Proposed Two
Additional One-Year
Options ($766,272
annually)
3/4/25 - 3/4/27
$0
$1,532,544
($766,272
per year)
$98.24
Total$1,673,568
COUNCiL POLICY CONSIDERATION:
This contract is consistent with the City Council's goal of Strategic Plan: Increase conservation and sustain ability. It also supports the United Nations Urban Environmental Accords of 2005 Action 4 of achieving zero waste to landfills and incinerators by 2040.
ENVIRONMENTAL ANALYSIS:
The actions proposed herein are exempt from the California Environmental Quality Act (CEQA), pursuant to State CEQA Guidelines Section 15061 (b) (3), the "common sense" provision of CEQA which only applies to projects th at have the potential for causing a significant effect on the environment. Amending the material processing contract will not result in any significant effect on the environment.
Amend Contract No. 31537 with Amehcan Reclamation
Febmary 26, 2024
FISCAL IMPACT:
The total cost of this action will be $1,673,568. Funding forthis action will be addressed by the utilization of existing budgeted appropriations in the Refuse Collection Fund (Fund 406) without any impacts to the City's General Fund.
Respectfully submitted,
TO^y OLM6S, P.E.
Director of Public Works
Prepared by:
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Thanos Gauthier
Public Works Administrator
Approved by:
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MIGUEL-MARQUEZ
City Manager