March 15, 1999

To:Works and Utilities Committee

From:Barry Gutteridge, Commissioner, Works and Emergency Services

Subject:Operating Agreement for the Commissioners Street Material Recovery Facility (Ward 25)

Purpose:

The purpose of this report is to obtain Council authority to enter into a two-year agreement with Canadian Waste Services Inc. for the operation and maintenance of the Material Recovery Facility located at 400 Commissioners Street.

Funding Sources, Financial Implications and Impact Statement:

The preliminary 1999 Operating Budget submission for Costing Unit O SW210 R70022 Recycling Operations/Materials Recovery Facilities includes provisions for the operation and maintenance of the Material Recovery Facility located at 400 Commissioners Street for 1999. A preliminary estimate for the facility's operation and maintenance for the year 2000 has also been prepared.

Recommendation:

It is recommended that authority be granted to enter into an amending agreement with Canadian Waste Services Inc. for the operation and maintenance of the Material Recovery Facility located at 400 Commissioners Street for a period of two years commencing January 1, 1999 and concluding December 31, 2001, subject to termination on 60 days' notice and pursuant to the terms and conditions of the previous operation and maintenance agreement which expired on December 31, 1998.

Council Reference/Background/History:

At its meeting held on September 24 and 25, 1997, Metro Council adopted Clause No. 6 of Report No. 12 of the Environment and Public Space Committee entitled, "New Operating Agreement for Commissioners Material Recovery Facility". The report included the recommendation that Metropolitan Council authorize the Commissioner of Works to enter into an operating agreement between Metro and Canadian Waste Services Inc. (formerly WMI/Canada CRInc. Ltd.) for the operation of the Material Recovery Facility (MRF) at 400 Commissioners Street (Commissioners MRF), based on the existing agreement which was then in effect between the parties but subject to a number of terms and conditions. Among others, the report recommended that the term of the operating agreement will be one year with a month-to-month extension clause of up to 24 additional months; any cancellation of the agreement after the first 12 months will be at the sole discretion of the Commissioner of Works, subject to providing 60 days' notice.

Comments and/or Discussion and/or Justification:

At its meeting held on August 15, 1990, Metro Council adopted Clause No. 47 of Report No. 23 of the Management Committee which awarded a contract to New England CRInc. for the design and construction of a Recyclable MRF at the former Commissioners Street Incinerator site. The report further authorized the Metropolitan Corporation to enter into detailed discussions/negotiations with New England CRInc. and to enter into an operating, maintenance and marketing agreement for the above-mentioned facility. The operating maintenance and marketing agreement commenced on June 1, 1992 when the plant officially opened and was scheduled to terminate 24 months thereafter. The contract also contained two 12-month extension terms which could be exercised upon mutual agreement by both parties. Metro staff and representatives from Canada CRInc. (a Canadian subsidiary of New England CRInc.) were unsuccessful in their efforts to negotiate an extension to the contract before the scheduled termination date of May 31, 1994. Council subsequently authorized the Commissioner of Works to enter into a Continuation Agreement with Canada CRInc. for a period of up to 120 days, and subject to terms and conditions to be negotiated by the Metropolitan Solicitor and Canada CRInc. The Continuation Agreement provided staff with sufficient time to issue an operation and maintenance tender call for the MRF, to review the submissions, and to award the contract while the plant was still in operation.

At its meeting held on September 28, 1994, Metro Council adopted Clause No. 13 of Report No. 27 of the Management Committee entitled, "New Operating Agreement - Commissioners Street Blue Box Material Recovery Facility". The report recommended that authority be granted to enter into a new operating agreement with Canada CRInc. for the operation of the MRF at 400 Commissioners Street, for a period of 26 months effective October 31, 1994 until December 31, 1996, subject to a number of terms and conditions. The new agreement included an option to extend on a month-to-month basis for a period of up to 12 months at the discretion of the Commissioner of Works, subject to terms and conditions satisfactory to the Commissioner of Works and the Metropolitan Solicitor. The award of the operating agreement to Canada CRInc. was the result of a competitive bid process.

On November 20, 1996, Metro Council adopted Clause No. 1 of Report No. 19 of the Environment and Public Space Committee which authorized the extension of the operating agreement between Metro and Canada CRInc. for a further one year until December 31, 1997. The rationale for extending the agreement was to provide staff with the necessary time to review future processing needs and resolve outstanding issues with respect to the future of Metro's Blue Box processing facilities. Specifically, the extension provided staff with time to prepare, issue, review and report on the Request for Proposals (RFP) for Blue Box processing. Canada CRInc. was subsequently 'taken over' by Waste Management of Canada (WMI) during the term of the extension.

At its meeting held on September 24 and 25, 1997, Metro Council adopted Clause No. 6 of Report No. 12 of the Environment and Public Space Committee entitled, "New Operating Agreement for Commissioners Street Material Recovery Facility". The report recommended that Metro enter into a new agreement with Canadian Waste Services (formerly WMI/Canada CRInc. Ltd.) for the operation of the MRF at 400 Commissioners Street. The new agreement included a number of new conditions including a one-year operating term with a month-to-month extension up to 24 additional months. At the time, staff chose not to prepare a tender call for the operation of the MRF for a number of reasons. The results of the RFP process were imminent. The preferred Blue Box processing alternative could have resulted in the closure of the Commissioners Street MRF, or the operation of the Commissioners Street facility at a lower capacity. Staff believed that a one-year operating agreement, which was the longest time period that Metro was prepared to commit to in light of the RFP evaluation process, would have resulted in higher processing fees through a competitive bid process. Further, the provision to terminate the operating contract after the first year, upon 60 days' notice, provided staff with the necessary flexibility to integrate the Blue Box material processing activities with future facilities and/or activities as they became available over the next one to three years.

The agreement dated January 1, 1998 (the Agreement) between the City and Canadian Waste Services Inc. (CWS) for the operation and maintenance of the MRF located at 400 Commissioners Street expired by its provisions on December 31, 1998. It had been intended that Council authority would be sought to extend the one-year term for an additional two-year period as contemplated by the option in favour of the City contained in the Agreement. That was not obtained prior to expiry of the initial term. CWS has agreed to continue to process materials in accordance with the terms and conditions of the Agreement pending Council approval of a new agreement.

The new agreement will embody the same terms and conditions of the Agreement save and except for the length of the term (which would be for the contemplated two-year extension, effective January 1, 1999, but still subject to termination on 60 days' notice).

Staff informed CWS that the City plans to have the Dufferin MRF in operation by the fall of 1999. Once the Dufferin facility is operational, less material will be directed to the Commissioners Street MRF for processing. Preliminary estimates indicate that the Commissioners Street MRF will still receive in excess of 25,000 tonnes of material in 1999. Therefore, the annual processing rate of $57.50/tonne (including GST and all taxes) would apply for 1999. However, during the final year of the new agreement, staff anticipate that the Commissioners Street MRF will receive 15,000 to 20,000 tonnes of material at a processing rate of $66.50/tonne as stipulated in the Agreement.

CWS has reviewed a draft copy of the proposed agreement prepared by the City Solicitor and concur with the terms and conditions contained therein.

Conclusions:

The proposed agreement is, simply stated, an extension of the original contract as provided for by the option in favour of Toronto contained in that contract. It was contemplated that the option would be exercised prior to expiry of the initial term but inadvertently was not. The two-year term of the proposed agreement, subject to termination on 60 days' notice, provides staff with the necessary flexibility to manage material tonnages between the Commissioners Street MRF, the Metro Waste Papers facility (which processes the former City of North York's commingled container material), and the new Dufferin MRF. This operational flexibility will enable staff to meet contractual processing (tonnage) commitments at the lowest possible costs.

Contact Name:

Richard Butts

Director - Transfer, Processing and Disposal Operations

Solid Waste Management Services

Works and Emergency Services

Phone: (416) 392-8286

Fax: (416) 392-4754

E-Mail: Richard_Butts@metrodesk.metrotor.on.ca

Angelos BacopoulosBarry H. Gutteridge

General ManagerCommissioner

Solid Waste Management ServicesWorks and Emergency Services

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