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Full Circle Organics - Contract Amendment Copyright 2014 City of Dubuque Consent Items # 13. ITEM TITLE: Full Circle Organics - Contract Amendment SUMMARY: City Manager recommending approval for the City of Dubuque to send its second load of yard debris and food scraps to the Full Circle Organics facility on any day when the tonnage fee savings equals or exceeds the additional fuel cost. RESOLUTION Approving the First Amendment to Agreement between Full Circle Organics, LLC and the City of Dubuque SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type ❑ Full Circle Organics Contract Amendment-MVM Memo City Manager Memo ❑ FCO Amendment Staff Memo Staff Memo ❑ FCO Composting Agreement First Amendment Supporting Documentation ❑ FCO-Resolution-Approving Agreement Resolutions THE CITY OF Dubuque UBE I erica .i Masterpiece on the Mississippi 2007-2012-2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Full Circle Organics Contract Amendment DATE: April 28, 2015 On March 13, 2015, the City of Dubuque signed a notice letter extending the City of Dubuque contract with Full Circle Organics through June 30, 2017. Citing a continued need for more "carbon" yard debris to mix with the large amounts of food residuals and paper pulp it is receiving from its commercial customers, Full Circle Organics' Max Milinkovich has tendered an offer of a reduced fee ($5.00 per ton instead of$15.00 per ton) for partial truckloads of yard debris/food scraps. The City would still pay $15.00 per ton for the first (usually full) truckload of materials it delivers each day, but Mr. Milinkovich is willing to provide more financial incentive for the City to send partially-loaded second trucks. During the winter months of November through March, there are no second partial load trucks from the City's Thursday-only collections. In fact, even during the warm weather months of April through November, there are no second loads on Mondays. Public Works Director Don Vogt recommends City Council approval for the City of Dubuque to send its second load of yard debris and food scraps to the Full Circle Organics facility on any day when the tonnage fee savings equals or exceeds the additional fuel cost. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Don Vogt, Public Works Director Dubuque THE CITY OFkrabd A11-America City UBkE 1 Masterpiece on the Mississippi 2007.2012.2013 TO: Michael C. Van Milligen, City Manager FROM: Don Vogt, Public Works Director DSV SUBJECT: FCO Contract Amendment DATE: April 21, 2015 INTRODUCTION The purposes of this memorandum are to provide information and recommend action regarding Full Circle Organics' (FCO) new offer to reduce the fee it charges some City of Dubuque trucks delivering mixed loads of yard debris and food scraps to its composting facility near Farley. BACKGROUND The City's contract with FCO was originally due to expire at the end of June. It provides the City the ability to unilaterally extend the contract for four additional two year terms by written notice no later than ninety (90) days prior to the expiration of the current term. Given the importance of the FCO facility to not only the City of Dubuque's food scrap collection-for-composting program, but also the City's pending requirement for the use of compost as a soil supplement for construction and development projects, last month I recommended that the agreement be extended through June 30, 2017. You concurred and signed the extension notice letter prepared by City Attorney Barry Lindahl on March 13th. A copy of the notice letter was subsequently provided to the City Council on March 30th as part of the consent agenda for its meeting on April 6th DISCUSSION Citing a continued need for more "carbon" yard debris to mix with the large amounts of food residuals and paper pulp it is receiving from its commercial customers, FCO's Max Milinkovich has now tendered an offer of a reduced fee ($5.00 per ton instead of$15.00 per ton) for partial truckloads of yard debris/food scraps. The City would still pay $15.00 per ton for the first (usually full) truckload of materials it delivers each day, but Mr. Milinkovich is willing to provide more financial incentive for the City to send partially- loaded second trucks. Of course, during the winter months of November through March, there are no second partial load trucks from the City's Thursday-only collections. In fact, even during the warm weather months of April through November, there are no second loads on Mondays. My calculations show that our second yard debris/food scraps truck on any given day would have to be transporting a minimum of 756 pounds of materials to FCO's facility to cost-justify the additional fuel used to travel beyond the Dubuque Metropolitan Area Solid Waste Agency's (DMASWA) composting facility. This calculation is based on our current cost of diesel fuel ($2.1245/gallon), the additional mileage (21 .34 miles round trip between the two facilities' entrances), and our collection trucks' averaging five (5) miles per gallon on U.S. Highway 20. And if or when our diesel fuel costs return to the level they were at just a year ago, our second load trucks would have to be transporting at least 1 ,112 pounds of materials to FCO to cover their additional fuel costs. It should be noted that the above rather-simplistic financial model does not take into account the additional mileage on our trucks or the additional, albeit incremental, increase in our collection operations' carbon footprint. And, as Mr. Milinkovich is already aware, a substantial segment of every City yard debris and food scraps load during the warm weather months is made up of grass clippings — a nitrogen-loaded "green" compostable. In consideration of the above-noted importance of the FCO facility to the City of Dubuque, and in anticipation of your and the City Council's acceptance of FCO's newly- proffered cost term, Barry has prepared a resolution and contract amendment providing for this new price schedule. Mr. Milinkovich has already reviewed and agreed to the amendment. Since the City Council does not meet again until May 4th, and given FCO's immediate need for additional yard debris, Barry has opined that your assent to my recommendation would be sufficient for us to immediately take advantage of FCO's new price structure prior to formal Council approval. ACTION STEP I recommend that the City of Dubuque send its second load of yard debris and food scraps to the FCO facility on any day when the tonnage fee savings equals or exceeds the additional fuel cost. In concert, I recommend that the attached resolution and contract amendment be forwarded to the City Council for its approval. CC: Barry A. Lindahl, City Attorney Attachments 2 FIRST AMENDMENT TO AGREEMENT BETWEEN FULL CIRCLE ORGANICS, LLC AND THE CITY OF DUBUQUE, IOWA This First Amendment to Agreement between the City of Dubuque (City) ,a��d Full Circle Organics, LLC (Contractor) is dated for reference purposes the J,.� day of 717141 , 2015. Whereas, the City and Contractor entered into an agreement for receiving and processing Acceptable Compostable Materials (the Agreement) dated April 15, 2013, which agreement expires on June 30, 2017; and Whereas, the City and Contractor now desire to amend the Agreement as provided therein. NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: Section 1. Section 11.1 is amended to read as follows: 11.1 Processing Fee. The Contractor Processing Fee is $15.00 per ton for receiving and processing the first truckload of Acceptable Compostable Materials each day. Additional truckloads of Acceptable Compostable Materials on the same day will be charged a reduced Contractor Processing Fee of $5.00 per ton. The Contractor Processing Fee for the first truckload of Acceptable Compostable Materials received each day after 1,300 tons of Acceptable Compostable Materials have been received in the current Fiscal Year is $13.00 per ton. Additional truckloads of Acceptable Compostable Materials received each day after 1,300 tons of Acceptable Compostable Materials have been received in the current Fiscal Year will be charged a reduced Contractor Processing Fee of $5.00 per ton. Section 2. All other terms and conditions of the Agreement shall remain in full force and effect. 1 CITY OF DUBUQUE, IOWA FULL CIRCLE ORGANICS, LLC By: ,/ `�. - By: Michael C. Van Milligen Max Milinkovich City Manager President By:oo- Kevin S. Firnstahl Trish L. Gleason City Clerk Assistant City Clerk F:\USERS\tsteckle\Lindahl\Agreements\FullCircleOrganicsCom postingAgreem ent_Fi rstAm endm ent_042215.doc Preparer: Barry A. Lindahl Address: Suite 330 Harbor View Place 300 Main Street Dubuque IA 52001 Telephone: (563) 583-4113 RESOLUTION NO. 147-15 APPROVING THE FIRST AMENDMENT TO AGREEMENT BETWEEN FULL CIRCLE ORGANICS, LLC AND THE CITY OF DUBUQUE WHEREAS, the City of Dubuque (City) and Full Circle Organics, LLC (Contractor) have entered into an Agreement dated April 15, 2013 for receiving and processing Acceptable Compostable Materials; and WHEREAS, City and Contractor now desire to amend the Agreement as set forth in the attached First Amendment to Agreement. NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS: Section 1. The First Amendment to Agreement attached hereto is hereby approved. Section 2. The City Manager is hereby authorized and directed to sign the First Amendment to Agreement on behalf of the City. Passed, approved and adopted this 4th day of May, 2015. Attest: Kevi S. Firnstahl, City tuf Zel/ poy D. Buol, Mayor F:\USERS\tsteckle\Lindahl\Resolutions\ApprovingFirstAmendmentToFullcircleOrganicsAgreement_042215.doc