Mayor and Council Brent Schmitt, Acting Senior Engineer, Water Utilities and Solid Waste Net Zero Waste Contract Amendment

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1 Co,~~ ABBOTSFORD COUNCIL REPORT Report No. ENG REGULAR COUNCIL Date: November 19, 2015 File No: To: From: Subject: Mayor and Council Brent Schmitt, Acting Senior Engineer, Water Utilities and Solid Waste Net Zero Waste Contract Amendment RECOMMENDATIONS 1. THAT Contract No , with Net Zero Waste Inc., be amended to include the coupon drop off program effective May 1, 2015, as set out in Attachment "D" of Report No. ENG ; and 2. THAT the Mayor and Corporate Officer be authorized to execute all documents related to this matter. SUMMARY OF THE ISSUE In May 2013, the City began a program where residents who receive curbside collection could drop off yard waste at Net Zero Waste Inc. (NZW) for free six times per year using a Cityprovided coupon. NZW then invoices the City for the tonnage dropped off with a coupon, and the City pays NZW. This program was approved in ENG (Attachment A) and again in ENG (Attachment B) as a pilot project. BACKGROUND NZW is a private company contracted by the City to provide a composting service for food and yard waste. The compostable waste originates from both curbside compostable collection and residential and commercial drop off. Yard waste drop off is used by residents when major yard work or cleanup is performed, which generates a large amount of yard waste, and the resident prefers to remove immediately from the property instead of using the curbside collection program. Direct residential yard waste drop off reduces the amount of yard waste that would otherwise be picked up at the curbside. Starting in May 2013, Abbotsford residents receiving curbside collection were able to drop off yard waste for free at the NZW facility with a City-provided coupon as a pilot project. The City pays NZW directly for all yard waste dropped off with a coupon. From May 2013 to present, this rate has been $45/tonne. Currently the coupon drop off program is not part of the contract with NZW, as it was a pilot project, and the contract amendment is needed due to the popularity of the program. DISCUSSION Approximately 1,1 00 properties have used the free yard waste drop off so far in It is projected that these properties would have 3,634 loads annually, with a total drop-off tonnage of 1,018 tonnes. The tonnage dropped off by Abbotsford residents has steadily increased since 2013 as residents become more aware of the coupon program.

2 Report No. ENG Page 2 of 2 On October 19, 2015 the City received a letter from NZW (Attachment C), requesting the coupon drop off program be formalized as part of the contract with NZW. NZW would like to support the coupon drop off initiative, and believes a fair rate would be the curbside drop off rate for the month, minus $5/tonne, backdated to May The City believes this is good value, because if materials were collected at the curbside, the City would be paying the regular drop off rate plus the costs of collection. This is also a good public service and is growing in popularity with the community. A draft contract amendment can be found in Attachment D. FINANCIAL PLAN IMPLICATION In 2013, when the City began the yard waste drop off program at Net Zero Waste, the City paid NZW $45/tonne as a verbally agreed upon rate. However, rates and costs have increased at NZW. The contract amendment has a suggested coupon drop off rate of the curbside rate for the month minus $5 per tonne. The current curbside rate varies monthly based on several Stats Canada indices, but is approximately $63/tonne, thus would yield a coupon rate of approximately $58/tonne. The City believes this is good value, when compared to other facilities and compared to what it would cost to pick up these materials curbside. The estimated annual cost increase is $5,500. For 2015, this equates to $3,667. This will be funded from the Solid Waste Compost Disposal Budget. There are sufficient funds in the current year budget and in coming years. Date reviewed and approved by the Chief Financial Officer: November 18, IMPACTS ON COUNCIL POLICIES, STRATEGIC PLAN AND/OR COUNCIL DIRECTION The free residential yard waste drop off program at Net Zero Waste Abbotsford Inc. addresses two of Council's strategic goals. They are: Achieving a Complete Community by supporting green community initiatives and programs; and Fiscal Discipline by managing City funds and financial assets with prudence and accountability. SUBSTANTIATION OF RECOMMENDATION It is recommended that the City amend its resid~te drop off with a coupon. BrentSitt,PTng. Acting Senior Engineer, Water Utilities and Solid Waste contract with Net Zero Waste Inc. to include 1 Peter Sparanese, P.Eng. General Manager, Engineering and Regional Utilities ATTACHMENTS Attachment A: ENG Yard Waste Drop Off Disposal Fees Attachment B: ENG Yard Waste Drop Off Coupon Attachment C: Letter from Net Zero Waste dated October 19, 2015 Attachment D: Draft Contract Amendment No. 1 ML!dh

3 ENG Attachment A On,~ ABBOTSFORD COUNCIL REPORT Report No. ENG April 22, 2013 File No: Executive Committee To: From: Subject: Mayor and Council Barry Azevedo, Solid Waste Engineering Manager Yard Waste Drop Off Disposal Fees RECOMMENDATIONS 1. THAT Report No. ENG , dated April 22, 2013, from the Solid Waste Engineering Manager, regarding Yard Waste Drop Off Disposal Fees, be received; 2. THAT Option 3 - The City provide coupons to residents for yard waste drop off, be approved; and 3. THAT staff be directed to develop and implement the residential coupon program as described in Report No. ENG BACKGROUND The City operated a residential drop off yard waste facility in Abbotsford from 1992 until October 8, In 2012, the amount of residential yard waste drop off was approximately 1,900 tonnes. Net Zero Waste Abbotsford Inc. (NZW) began accepting residential yard waste drop off on October 9, 2012, at 5050 Gladwin Road. NZW is a private company contracted by the City to provide a receiving and composting service for food and yard waste from both curbside collection and direct drop off. The NZW facility is an advanced composting technology which receives and processes food and yard waste from both the residential and commercial sectors. A tipping fee for dropped off yard waste was required at past drop off facilities to cover the cost of receiving, transferring and processing materials. The new NZW facility also requires payment to cover the cost of receiving and processing the dropped off yard waste. The City has the option of Abbotsford residents paying a tipping fee to NZW to receive and process dropped off yard waste, or Abbotsford residents dropping off yard waste for free with the City paying NZW directly for all yard waste dropped off. ANALYSIS Yard waste drop off is generally used by residents on an occasional basis when major yard work or cleanup is being performed. Residents typically drive a pickup truck or utility trailer full of yard waste to the disposal site. The average weight per load is

4 Report No. ENG Page 2 of4 approximately 200 kg. Tipping fees at the NZW site for yard waste, 'not containing food waste, is approximately $45 per tonne. The tipping fee for 200 kg of yard waste is approximately $9.. The contractor, NZW, must be paid for handling and processing compostable materials. To cover these costs the City has the option of: Abbotsford residents paying a tipping fee to NZW (status quo); Abbotsford residents dropping off yard waste for free and the City pays NZW directly for tonnage of material dropped off; or The City provides Abbotsford residents with a coupon, which Abbotsford residents then submit to NZW when the yardwaste is dropped off. These options are further dis.cussed below. Option 1 - Residents pay NZW directly for dropped off residential yard waste This option is the model used at the City yard waste drop off facilities from 1992 until operations ceased last year. Pros: This model is a 1 00% user pay system and is the most commonly provided method of payment for these services (see Attachment A for examples around BC).. Residents that rely solely on curbside collection do not subsidize the cost of a "free" drop off service at the NZW facility. Cons: Does not address rural concern that curbside collection is not convenient for rural areas which generate large amounts of yard waste which is more appropriate for drop off. Rural customers may be more inclined to burn large amounts of yard waste rather than pay the tipping fee. Customers may put out large amounts of compostable materials when performing yard work rather than paying the tipping fee at the NZW facility. Though much, or all, of the material may be yard waste, the City is charged the higher food waste tipping fee (double) when mixed loads of materials are taken to NZW. Option 2 -The City pay NZW directly for yard waste dropped off by residents This option has never been used by the City since the yard waste drop off started in It is used in a number of cities in BC, but is not very common. Pros: Residents that generate a large amount of yard waste would appreciate free drop off. Provides a more convenient option to burning yard waste. Provides an alternative to leaving large amounts of yard waste at curb side. A lower tipping fee would be charged for loads that contain only yard waste and no food scraps. Provides an attractive alternative to burning in the rural areas.

5 Report No. ENG Page 3 of 4 Cons: Potential increase in solid waste utility fee for residents to pay for cost of receiving and processing yard waste dropped off at the private processing facility, regardless if residents use yard waste drop off or not. This would be mitigated somewhat by the lower tonnage fee for dropped off yard waste vs. the mixed waste fee if this yard waste were to be picked up at the curb. The City would rely on a private company to confirm that yard waste is from an Abbotsford single family residence, and not from a commercial landscaper, multifamily property, or institutional, commercial, or industrial (ICI) property. NZW would have an inherent conflict of interest in making this determination. Unless limits are somehow applied, there is a risk of this service being abused. This was the case when the City provided a free collection service for Spring Clean-up. Option 3 - The City provide coupons to residents for yard waste drop off This option has not been used by the City in the past. The only examples found, were all smaller cities in the United States. This is the option recommended by staff. Pros: Residents that generate a large amount of yard waste would appreciate free drop off. Provides a more convenient option to burning yard waste. Removes the conflict of interest for the private composting facility to determine whether yard waste is from single-family residential, or not. A lower tipping fee would be charged for large volumes of yard waste hauled directly to the NZW facility than the same amount of material picked up at curbside. Provides a service that many residents are requesting. Cons: A coupon system for yard waste would result in some printing and administration costs for City staff. Increased costs for the utility, which are passed on to all utility customers, as tonnages over and above what would be placed at the curb by residents would now be paid for by the City as residents drop off at NZW. This would be mitigated by lower tipping fees for tonnages diverted from the curb to drop off by residents. DISCUSSION A coupon system addresses the requests from many residents for a free drop off system for residential yard waste and will reduce the inefficient collection of large mixed loads of food waste and yard waste at individual residences. It is proposed that each Abbotsford solid waste customer be provided with a single drop off coupon at City Hall and that each resident be provided with an additional coupon in the next utility billing. Further additional coupons will be provided to individual customers at City Hall, based on a demonstrated residential need. The costs of this program are difficult to predict and will be monitored closely. Based on last year's drop off tonnages of approximately 2,000 tonnes, the tipping fees could be in excess of $90,000. These costs could be offset by reductions in curbside mixed tonnages which have double the. tipping fee. It will be important to closely monitor the program to ensure that it is limited to residential and not commercial drop offs. Staff will monitor and report back to Council on the program in the fall.

6 Report No. ENG Page 4 of4 FINANCIAL PLAN IMPLICATION Projections are for the overall solid waste system to be approximately $300,000 under budget based on very early projections discussed in report ENG These savings are largely due to the diversion of compostables from the waste stream. The worst case would be for these savings to be eroded by $100,000 as a result of the recommended coupon drop off program; however, it is likely the net cost of the program will be significantly Jess. STRATEGIC DIRECTIONS Improved customer service and greater environmental benefits by providing an increased separation of compostables_ from the waste stream and a more convenient alternative to burning yard waste. COMMUNICATION PLAN Option 1 has already been communicated to the community. Any changes would be communicated through City Page ads, the City website and a mail out included with tax notices or utility bills. SUMMARY Many residents are requesting free drop off of yard waste at the contract NZW facility. Though there will be increased costs to the City, these will be mitigated somewhat by reduced tonnages of double cost mixed food and yard waste collected at the curb and the provision of a widely requested service. It is proposed that a coupon system be developed to provide this service and that it be closely monitored to ensure that it is utilized only by residential customers. Staff will report back to Council on the program in the fall. Jim Gord9, P.Eng. General/Manager, Engineering & Regional Utilities BNsv Attachment

7 ENG Attachment B as ~A ABBOTSFORD COUNCIL REPORT Report No. ENG November 25, 2013 File No: Executive Committee To: From: Subject: Mayor and Council Barry Azevedo, Solid Waste Engineering Manager Yard Waste Drop Off Coupon RECOMMENDATIONS 1. THAT Report No. ENG , dated November 25, 2013, from the Solid Waste Engineering Manager, regarding Yard Waste Drop off Coupon, be received; and 2. THAT the City of Abbotsford continue to provide coupons to residents for yard waste drop off in BACKGROUNO Net Zero Waste Abbotsford Inc. (NZW) is a private company contracted by the City to provide a composting service for food and yard waste. The compostable waste originates from both curbside compostable collection and residential and commercial drop off. A tipping fee is required at NZW to cover the cost of receiving, transferring and processing compostable materials. Starting in May 2013, Abbotsford residents receiving curbside. collection are able to drop off yard waste for free with a City-provided coupon. The City pays NZW directly for all yard waste dropped off with a coupon. This was approved in Report No. ENG , which also stated staff would report back to Council in the fall with a future recommendation. DISCUSSION Yard waste drop off is used by residents occasionally when major yard work or cleanup is performed. The average weight per drop off is approximately 200 kg. This is comparable to the average free residential drop off in Mission of 140 kg. Most other municipalities with free yard waste drop off do not weigh individual drop-off loads. The tipping fee at the NZW site for yard waste, not containing food waste, is approximately $45 per tonne; therefore, the fee for 200 kg of yard waste is approximately $9. In 2013, the yard waste drop off tonnage from single family residential homes projected to the end of the year is estimated to be approximately 220 tonnes, which equates to $10,000 in tipping fees.

8 Report No. ENG Page 2 of 3 In 2013, the City provided residents currently receiving curbside collection a coupon allowing them one free yard waste drop off at NZW. Additional coupons are available online and at City Hall. It is recommended that this service be continued into 2014 because: it provides a convenient option to burning yard waste. The City Fire Service Bylaw regulates and limits burning of yard waste (Bylaw ) on non Agricultural Land Reserve (ALR) land only. Many residents chose to burn as it is the cheapest and most convenient option; it saves money by diverting yard waste, which has a higher tipping fee by approximately $25 per tonne, from mixed curbside food and yard waste; it has less potential for collection worker injury by reducing curbside yard waste; and it provides a service that many residents requested. When first introduced, a concern with handing out the coupon was that commercial landscapers would abuse the free drop off. NZW has carefully monitored license plates and addresses and there is no indication of abuse as of yet. We will request NZW to continue to monitor and report on this matter. It is estimated that if the 2013 program was available for the full year, 500 tonnes would have been received. It is expected 2014 tonnages will be higher due to greater program awareness. For 2014, the estimated tonnage is 700 tonnes. The program is not expected to grow significantly more after 2014 due to the convenience of weekly unlimited curbside compost collection. There are no impacts to other solid waste plans for the future. It is recommended the free yard waste coupon program continue into FINANCIAL PLAN IMPLICATION Report No. ENG predicted that the yard waste coupon program would cost the City significantly less than the worst case of $100,000. Between May and October 2013, the City paid NZW $6,400 for yard waste dropped off with a coupon during those months. The estimated cost projected to the end of the year is $10,000. The amount budgeted for 2013 is $15,000. If the program started in January, the cost for the program to the end of 2013, would be $22,500. The proposed 2014 Solid Waste Budget includes $31,500 for the 2014 coupon program to allow for a moderate growth in use. COMMUNICATION PLAN The coupon will be available on the City's website, in the newspaper on the City Page and may be delivered in the first utility bill of No further communication plan is required.

9 Report No. ENG Page 3 of 3 SUMMARY It is recommended that the free yard waste drop off coupon program continue into Jim G rdon, P.Eng. Gen ral Manager, Engineering & Regional Utilities ~ Solid Waste Engineering Manager ~n. Eng~ Senior Engineer, Water Utilities and Solid Waste <> oc::::::j Monique Lieuwen, EIT Recycling and Solid Waste Coordinator MUsv

10 ENG Attachment C Nl:l ZERO WASTE ABBOTSFORD INC City of Abbotsford South Fraser Way Abbotsford, BC V2T 1 W7 Tel: Fax: October 19,2015 Attention: Monique Lieuwcn, EIT; Recycling and Solid Waste Coordinator Rc: Net Zero Waste Abbotsford Contract Amendment for Residential Coupon A big thank you to the City of Abbotsford staff for your continued support of the Net Zero Waste Abbotsford Facility on 5050 Gladwin road. We remain odour free and Abbotsford has now successfully made a substantial green shift and significantly decreased the amount of waste going to the landfill (while saving money). We are happy to support the city through our educational programs and charitable contributions as well as through our support in the implementation of new programs the City choses to implement such as the green waste coupons. We wanted to support the initiative and initially agreed to do so and charge our green waste gate rate ($45/tonne). We have since had to raise our gate rate for the green waste to $65/tonne (in-line with Metro Vancouver processors and transfer stations) due to added costs pre-grinding this material before processing it. When we raised the gate rate at the start of 2015, we never revised the coupon rate which should have been done at that time. We have since taken a closer look at the accounting since the implementation of the program which is when we saw a corresponding decrease in curbside material and an increase in the Public drop-offvolumes with the use of the coupons. We have stated in our previous CO!Tespondence that we would be willing to revise the rate for materials received through the coupon program to the curbside rate of approximately $63/T (minus $5/tonne) which will provide additional discounting to the City of Abbotsford below what is charged at other locations. It was our intent to bill this amount on the September Invoice as well as re-calculate retroactively commencing in May The coupon program was not part of our contract and these materials would normally be charged our gate rate of $65/tonne if dropped off without the coupon program. Since the start of the coupon program, coupon use has increased resulting in a corresponding decrease in the weights in materials received through the curbside program negatively impacting our operation and necessitating the above revision. Very truly yours, NET ZERO WASTE ABBOTSFORD INC. Mateo Ocejo, P.Eng.; Director (604) Gladwin Road, Abbotsford, V4X - 1X8,

11 ENG Attachment D AGREEMENT AMENDMENT NO. 1 THIS AGREEMENT AMENDMENT dated for reference the 2th, day of October, AGREEMENT No: BETWEEN: AND: CITY OF ABBOTSFORD A municipal corporation under the British Columbia Local Government Act, as amended, having the mailing address of its Municipal offices at South Fraser Way, Abbotsford, British Columbia V2T 1W7 (hereinafter called "the City") OF THE FIRST PART NET ZERO WASTE INC. A body corporate under the laws of Canada having its offices at 1oth Floor, 595 Howe Street, Vancouver, in the Province of British Columbi, Canada, V6C 2T5 WHEREAS: (hereinafter called "the Contractor") RECITALS OF THE SECOND PART A. The City and the Contractor entered into an agreement (the "Agreement") regarding Compostable Waste Disposal and Processing Service on May 18th, B. Each capitalized term not otherwise defined herein shall have the meaning ascribed to it in the Agreement. C. The City and the Contractor have agreed to amend the Agreement. AGREEMENT THEREFORE this Agreement Amendment No. 1 witnesses that in consideration of One ($1.00) Dollar and other good and valuable consideration paid by each of the parties to each other (the receipt and sufficiency of which each party hereby acknowledges) the parties hereby covenant and agree with each other as follows: A. The Agreement is hereby amended as follows: 1. The addition of a coupon drop off program which will be at the current curbside drop off rate, less $5.00/tonne commencing May 1, 2015, as per the letter dated October 19th, 2015.

12 Net Zero Waste 2 October 27'h, 2015 B. Due Execution The Contractor hereby represents and warrants to the City that this Agreement Amendment No. 1 has been duly authorized and executed by the Contractor and that the delivery of this Agreement Amendment No. 1 has been duly authorized by all necessary corporate action on the part of the Contractor. C. Full Force and Effect The City and the Contractor hereby agree that the Agreement shall hereinafter be read and construed in conjunction with this Agreement Amendment No. 1 and be regarded as being amended only to the extent herein provided that all the terms, covenants, provisos, conditions and provisions of the Agreement, as amended hereby, shall continue to be in full force and effect and nothing herein contained shall operate or be construed to modify or otherwise affect the rights and obligations created by the Agreement as amended hereby. D. Enurement This Agreement Amendment No. 1 shall enure to the benefit of and be binding upon the respective successors and permitted assigns of the City and the Contractor. IN WITNESS WHEREOF the parties have executed this Agreement Amendment No. 1 as of the date set out above. Accepted on behalf of Net Zero Waste Per: Per: Accepted on behalf of the City of Abbotsford Per: