Selectmen Approve a Five-Year Extension on Solid Waste Contract with Pinard

April 22, 2016

 

 

by Len Lathrop

Hudson Road Agent Kevin Burns brought the following presentation to the selectmen on Tuesday, April 12; his document is so complete and the comments that the selectmen had were minimal, so the best way to understand the contract is to simply read Burns’ presentation.

“Our current solid waste contract with Pinard Waste Systems of Manchester, NH started on July 1, 2012, and runs through June 30, 2017.  Pinard had the previous five-year contract as well that started on July 1, 2007.

“We have implemented many changes in our solid waste program starting in 2007.  The first major change was implementing the automated trash collection system in 2007 using 64 gallon carts and limiting the amount of trash residents could dispose of weekly.  The next major change was implementing a single -stream automated recycling collection program using 96 gallon blue carts in 2012.  There have been many other smaller changes in the last nine years to adjust our program, but those were the major changes.

“Prior to 2007 we had a very unregulated trash collection and recycling program that set no limits on trash amounts and generated very little in recycling.  Before implementing the drastic changes beginning in 2007 we were anticipating our solid waste bill would be in excess of two million dollars annually.  I am proud to report that these changes we implemented reduced our solid waste bills to between 1.3 and 1.5 million dollars annually for the first 10 years of the program,  a cost savings to the taxpayers of Hudson conservatively at between six and seven million dollars over that period.

“I also want to report that Pinard Waste has done an excellent job during this entire period.  I have years of experience with other national waste companies, and, in my opinion, Pinard Waste out performs all of them by a wide margin.

“That was a brief history of where we have been in our solid waste program.  The next step I want to implement is to recommend to you a five year contract extension that has been offered by Pinard Waste.  This extension would run from July 1, 2017 through June 30, 2022.  I have been in discussions with Pinard over the last several months to insure Hudson continues to have an excellent solid waste program at the most cost effective rate possible.

The contract extension has the following changes;

In the final year of the existing contract (7/16-6/17) Pinard will waive the automatic 2% price increase with the exception of our trash disposal fee which will be $70.36 per ton.  2% is a cost savings of $21,655.

The first year of the extension (7/17 – 6/18) Pinard will again waive the 2% price increase.

The first year of the extension, starting 7/1/17, Pinard will roll back our solid waste disposal fee to our 2012 rate of $65.00 per ton from $70.36 per ton.  Pinard will also agree to drop our disposal rate for clean days from $68.45 to $63.00 per ton.

Starting 7/1/17, the town will agree to a recycling disposal fee of no more than $25.00 per ton for the life of the contract.  The market for recyclables has collapsed.  The current disposal rate in our area is $35.00 plus.  Pinard has agreed to cap our rate at $25.00.  The gate rate will be reviewed monthly.  Any rate over $25 Pinard absorbs.  Any price between $0 and $25 will be the rate the town pays.  If the recycling market recovers, any moneys paid for recyclables will be paid to the town.

“The $0 disposal rate for single-stream recycling is not sustainable.  This formula above will limit our exposure for this disposal to $5,000 a month.  It is very similar to our fuel cost adjustments clause in the contract now.  I implemented this to try to keep bidders from protecting themselves from raising fuel cost and bidding high to cover their potential exposure.  I never dreamed that fuel would drop and we would be the ones receiving a credit.  This year I anticipate that credit to be around $30,000.  This would be the same scenario when and if the recycling market rebounds.

I estimate the annual costs for this extension to be as follows per fiscal year:

FY16-$1,510,448

FY17-$1,519,002

FY18-$1,534,829

FY19-$1,564,326

FY20-$1,594,413

FY21-$1,625,101

FY22-$1,656,403

Please take into consideration; this is our worst case scenario.  These figures are based on the $25.00 per ton disposal fee on recycling.  The annual rate could be much lower if the disposal rate drops or maybe even turns a profit in the next six years.  It also does not include any fuel credits ($30,000 a year currently) or yellow top trash container sales ($15,000 annually).

“I would also like to point out the cost if Pinard had simply offered to extend our contract without any modifications, and how much more we would have paid, with no hope of relief from the recycling market.

FY16-$1,510,448

FY17-$1,540,657, an increase of $21,655

FY18-$1,571,470, an increase of $36,641

FY19-$1,602,900, an increase of $38,574

FY20-$1,634,958, an increase of $40,545

FY21-$1,667,657, an increase of $42,556

FY22-$1,701,010, an increase of $44,607

“That is a total of $224,578 in concessions granted by Pinard.  Again, this number could grow substantially if the market changes.

“In closing, I recommend the Board of Selectmen approve this contract extension with Pinard Waste Systems.  Pinard was the low bidder in the last two contracts.  Their price they are offering now is below what they could have proposed with a straight forward across the board extension.  The town has grown with 235 new residential units since 2012 when this contact began and they asked for no increase to account for that number or any future growth in the next six years.  Pinard has proved to be an honest and reliable contractor the past nine years, and I believe this to a very fair proposal.  This would also guarantee a very little increase in the tax rate through 2022 for our single largest contract.”

Following Burns’ presentation, the board of selectmen unanimously approved the five-year contract extension with Pinard, 5-0.