Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services

SUBJECT:

Development of City Receiving and Transfer Yard for Recyclables

 

RECOMMENDATION

POLICY

Council has established a goal of reducing the solid waste stream by 50%.

All expenditures from the Solid Waste Capital Reserve require Council approval.

On August 1, 1996, Council approved the acquisition of the property at 900 E. Kent as the site for the primary use as an Aggregate Handling and Asphalt Plant Operation.

PURPOSE

This report seeks Council approval for the acquisition and development by Engineering Services of 1.25 acres of Parcel P, at 900 E. Kent for use as a City owned, contractor operated, receiving yard for Blue Box and Apartment recyclables. This facility would be leased to the City's Processing and Marketing (P&M) contractor. All of the City's Blue Box collection trucks, as well as our Apartment Recycling contractors trucks would take their materials to this location.

A City owned facility will help increase competition among P&M contractors, reduce risk associated with changing the P&M contractor and should increase revenues generated by the sale of recyclables.

BACKGROUND

The City currently collects approximately 17,000 tonnes of recyclables each year from the Blue Box program. In addition, the Apartment Recycling Program is anticipated to generate an additional 8,500 tonnes of recyclables per year.

All of this material is received by the City's Processing and Marketing (P&M) contractor, BFI, at 901 East Kent Avenue. At this location the material is checked for contaminants and then shipped for further processing or, in the case of old newsprint, shipped directly to the Newstech deinking plant in Coquitlam.

Every 2 to 5 years the P&M contract is retendered to ensure that the City continues to receive best value for our product. In addition to processing and marketing the materials, contractors must provide a receiving and processing yard that can receive all of the collection vehicles and recyclables and is located close to Manitoba Yards. Being within 3 kilometres of the yards ensures that the City's fleet of 22 vehicles is used efficiently.

The Processing and Marketing contract has been tendered and awarded 3 times since the Blue Box program began in 1989. The most challenging item for tenderers has been finding and obtaining suitable land to act as a receiving yard. Bidders would often find parcels of land whose lease was dependent on being awarded a contract. Other difficulties with land acquisition include an uncertain contract duration as well as permits, site development, and preparation. Potential eviction can be a very big problem as evidenced in 1995 when complaints from neighbours forced BFI to relocate.

These challenges require that the tender process be much longer than would otherwise be necessary as the new contractor has to develop a site (including all necessary permits) prior to contract changeover and receiving of recyclables. This also places the City at risk of not having a receiving yard should the successful contractor fail to develop their anticipated receiving yard.

Issues surrounding the receiving yard make evaluating tenders more difficult and may result in some companies being excluded from the process or placed at a disadvantage as they do not have the real estate experience or access to a competitive site.

The existing contract with BFI expires on May 1, 2000. It has two 1 year extension options (requiring agreement from both parties) remaining.

DISCUSSION

To summarize the background, the current contract configuration for Processing and Marketing the City's Blue Box and apartment recyclables requires that the contractor supply a developed and ready to use receiving yard for the City and its contractor's collection vehicles. This configuration is undesirable for the following reasons:
· It requires a long lead time (6 months to a year) to tender and award a new contract, or change contractors if required. It would be very costly to quickly change contractors should the need arise.
· It leaves our contractor (and thus the City) at risk of a land ownership change, and property eviction.
· The difficulties in acquiring a site can reduce competition for processing and marketing our materials. A contractor with an exclusive lock on a prime site could charge a higher processing and marketing rate and remain competitive. This would reduce the City's revenues.

As a result of the difficulties encountered in the past 3 P&M contracts, it is proposed that the City provide a partially developed site to the P&M contractor at a lease rate of $1 per year. The site would be paved with the required utilities and amenities available for a contractor to move on site and set it up the way they deem most effective.

A City owned yard would allow for quick and seamless change of P&M contractors if and when required. It would eliminate site acquisition and development from the tendering process which would increase competition and decrease the cost charged to process and market our materials. It would also improve the tendering process for collection from apartment buildings as all collection contractors would know exactly where they have to deliver their materials.

It is anticipated that the cost of acquiring and developing such a site would pay for itself in the long run through decreased processing and marketing costs as well as a decrease in risks associated with tendering the P&M contract every 2 to 5 years.

The City already owns a few parcels of land for such a receiving yard. The best land for our purposes is at 900 East Kent Avenue (Parcel P). This is the site of the new City asphalt and aggregate handling plant. Parcel P at 900 East Kent consists of 11 acres of land, of which the asphalt plant occupies the western most 6 acres. 5 acres remains for various materials handling options as identified in the June 3, 1997 report to Council for approval of the new asphalt plant. That report identified handling residential recyclables as a potential future use on the remaining 5 acres.

As a result of potential uses on some of the undeveloped land, it is proposed that a receiving yard for recyclables be located on the most eastern portion of Parcel P. The receiving yard would require up to 1.25 acres which would be purchased from the PEF. This purchase would be funded from the Solid Waste Capital Reserve.

The advantages of 900 East Kent over some of the other properties available in the area are:
· the receiving facility falls within existing zoning
· the land is already owned by the City, with the rest of the land slated for various material handling uses
· the land is close to Manitoba yards, ensuring that the City's fleet of Blue Box collection trucks is efficiently used
· the land is less expensive than alternative properties
· development costs are about the same as the alternative properties.

It is proposed that Engineering Services acquire the land, hire a consultant for design and development, and then contract for site development. Site development includes installing drainage and utility services as well as paving and installing the appropriate fencing, etc.

The target completion date for this project is April 1, 2000 so that we may successfully tender a new recyclables P&M contract in early 2000.

FINANCIAL IMPLICATIONS

The $1,275,000 capital cost for the purchase and development of 1.25 acres at 900 East Kent Avenue will be funded from the Solid Waste Capital Reserve. This capital cost is composed of:

The land for 900 East Kent was originally purchased at $650,000/acre for the P.E.F. As this 1.25 acre portion is small in comparison to the entire site, the price per acre is higher. This safeguards the P.E.F. from absorbing costs for unusable acreage caused by the introduction of smaller subdivisions.

It is anticipated that due to increased competition during the P&M tendering stage, as well as reduced contractor costs (contractors will no longer pay expensive property leases), revenues from the recyclables processed will increase. The increase in revenues will be used to offset Blue Box and Apartment Recycling collection costs.

CONCLUSION

In order to reduce the risks and administrative costs associated with having the P&M contractor for City recyclables supply a receiving yard close to Manitoba Yards, it is recommended that Engineering Services acquire up to 1.25 acres of land at 900 East Kent from the Property Endowment Fund for the purposes of developing a City owned, contractor operated, recyclables receiving yard. The $1,275,000 capital cost of development, to be funded from the Solid Waste Capital Reserve, should be offset by a decrease in P&M costs.

A city owned receiving yard will greatly reduce the City's risk relating to contractor default as well as during contract renewal, or new contract award.

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