CITY TO SAVE MORE THAN $70 MILLION FROM RENEGOTIATED DISPOSAL AND TRANSFER STATION CONTRACTS
November 18, 2009 -- Today, Mayor Bill White and City Council unanimously approved and authorized the amended and restated waste disposal contracts with Republic Waste Services, Inc., for municipal solid waste disposal and management of the city’s three transfer stations. Collectively, all renegotiated items from the contracts represent savings to the general fund of more than $70 million over the term of the new agreement and more than $150 million from the previous agreements.
“I’d like to commend Solid Waste Management Department Director Harry Hayes and his staff, as well as the City Legal team for working so diligently on these contract negotiations. Late into many nights, these contracts were being revised and refined into an agreement that all Houstonians will benefit from and should be delighted to hear about,” said Mayor Bill White. “In tough economic times such as these our city and nation are facing, this is an exceptional achievement that brings tremendous rewards in offsetting operational expenses challenging the City’s General Fund.”
“The ‘Put or Pay’ clauses have been removed completely from the contracts and I am extremely happy to see these gone,” said Solid Waste Management Department Director Harry Hayes. “Put or Pay” meant the City had obligations to pay for guaranteed amounts of City Waste delivered, even if the actual amounts delivered were less than the Put or Pay requirement. “This made recycling expansion a challenge…We now don’t have to worry about having to meet the strict disposal quotas of the past. We save tax dollars and also generate increased revenue from transfer station use fees. This whole contract amendment is a great deal for the City. I thank Mayor White for his support and involvement in the negotiations.”
The Solid Waste Management Department has concluded negotiations with Republic Waste Services on municipal solid waste disposal and the management of the City’s three transfer stations. Key renegotiated provisions of the amended contracts are:
- The contracts are reduced in length from 2023 (landfill disposal) and 2027 (transfer station management) to a maximum of 10 years from the date of countersignature (2019).
- The disposal rates are reduced from an average of $32.00 per ton to an average of $19.25 per ton, a reduction of 40%. Further, the cost of junk waste disposal has been significantly reduced to $11.00 per ton for the first 50,000 tons and $14.25 per ton for any amounts above 50,000 tons. This represents over a 50% reduction in the cost of disposal for junk waste.
- The base disposal rate adjustment has been modified to exclude fuel from the inflation index.
- The transfer fuel cost adjustment has been modified so that the city only pays for fuel associated with the actual processing and transportation of city waste.
- The landfill fuel cost adjustment has been modified so that the City only pays for fuel associated with the actual processing and cover of city waste to exclude any federal or state taxes for off road diesel.
- The Put or Pay clauses in the contract have been removed completely. The city will now estimate amounts of disposal based on collection trends, but those amounts are not guaranteed. The city has also reserved the right to dispose of waste at other locations which would reduce the city’s operational costs for solid waste services.
- City Host Fees, which are paid by the Contractor (2nd party) and other disposers (3rd party) for access and use of city-owned transfer stations, have been increased from an average of $0.88 per ton, to $2.00 for 2nd party waste and $3.00 for 3rd party waste, with the amounts increasing 5% per year through the contract term. The Host Fees are expected to generate $500,000 annually to help offset solid waste costs and fund the expansion of automated curbside recycling.
The Solid Waste Management Department provides solid waste service to the citizens of Houston through the collection, disposal and recycling of discarded material in a manner that is safe, efficient, environmentally sound and cost-effective.