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File #: 64004    Version: 1 Name: Authorizing a new contract with Pellitteri Waste Systems
Type: Resolution Status: Passed
File created: 1/29/2021 In control: Streets Division
On agenda: 3/16/2021 Final action: 3/16/2021
Enactment date: 3/22/2021 Enactment #: RES-21-00203
Title: Authorizing a new contract with Pellitteri Waste Systems for the sorting, processing, and marketing of recyclables collected by the City of Madison Streets Division and that the contract shall be for five years.
Sponsors: Satya V. Rhodes-Conway, Syed Abbas
Fiscal Note
The proposed resolution authorizes the Streets Division to enter into a five-year contract with Pellitteri Waste Systems for sorting, processing, and marketing recyclables collected by the City’s Streets Division. Under the current contract structure, the City pays Pellitteri a per ton tipping fee for processing the City’s recyclables. The City also receives a payment from Pellitteri based on the value of the sale of the City’s recyclables. In 2021, the City budgeted $933,660 for costs of the City’s recycling contract and $515,000 in anticipated recycling revenue.

Pellitteri has been providing recycling services for the City since 2012 (authorized under Legistar 23489). In 2014, Legistar 34379 authorized an extension of the initial contract through 2021. The following table shows actual recycling revenue and contract costs since 2015.

Year Recycling Revenue Contract Cost Net Recycling Revenue (Cost)
2015 841,013 799,346 41,667
2016 866,761 794,312 72,449
2017 1,218,608 894,314 324,294
2018 956,449 976,333 (19,884)
2019 548,752 894,148 (345,396)
2020 751,489 1,040,970 (289,481)

The new contract includes a base rate with an annual escalator. This rate will be increased based on the percentage of the City’s recycling that is “contaminated”, or not recyclable. Under the new contract, rather than receiving a rebate for the value of recyclables sold, the City’s rate will be adjusted based on the market value of the mix of recyclables if the market value falls outside of the range of $35-$65 per ton. The following table includes a range of potential recycling costs in each year of the contract. The range reflects different scenarios ranging from a strong market for recyclables (lowest contract costs) to a poor market for recyclables (highest contract costs.

Year Minimum Likely Cost Annual Cost-No Rate Adj. Maximum Likely Cost
(Market value $83/ton) (Market value $35-65/ton) (Market value $83/ton)
2022 380,483 708,136 ...

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