STAFF REPORT

February 22, 2000

To: Works Committee

From: Barry H. Gutteridge, Commissioner, Works and Emergency Services

Subject: Toronto's Integrated Solid Waste Resource Management Process

Identification of Top-Qualified Proposals for Proven Disposal Capacity

Purpose:

The purpose of this report is to seek City Council adoption of the recommended list of top-qualified proposals in connection with Toronto's Integrated Solid Waste Resource Management ("TIRM") Process Request for Propoals ("RFP") for Proven Disposal Capacity, and to request authority to proceed to Stage 4 (due diligence and contract negotiations) of the TIRM Process.

Financial Implications and Impact Statement:

The financial implications of the TIRM Process will be dependent on the integrated waste management strategy selected for the City including diversion, disposal and emerging technologies. The cost analysis will form part of the June, 2000 report to Works Committee and Policy and Finance Committee.

Recommendations:

It is recommended that:

(1) the proposals from the following five qualified Respondents to the TIRM Request for Proposals for Proven Disposal Capacity be identified as the final group of top-qualified proposals and, as such, be advanced to Stage 4 (due diligence and contract negotiations) of the TIRM Process:

- BFI Waste Systems of North America Inc.

- Essex-Windsor Solid Waste Authority

- Green Lane Landfill

- Rail Cycle North

- Republic Services of Canada Inc.

And, subject to the approval of Recommendation No. (1), it is further recommended that:

(2) the Commissioner of Works and Emergency Services be authorized to proceed to conduct the necessary due diligence reviews of the disposal sites identified in the proposals of the top-qualified Respondents and to conduct contract negotiations with the top-qualified Respondents, as contained in Recommendation No. 1, and to report on the outcome of the negotiations and provide recommendations in the form of a proposed award of contract(s) with one or more of the top-qualified proposals;

(3) the recommendations contained in this report proceed to the City Council meeting scheduled for February 29 and March 1, and 2, 2000; and

(4) the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Background:

At its meeting of September 28, 29, and 30, 1999, City Council approved the issuance of a RFP for Proven Disposal Services. The RFP was subsequently issued on October 5, 1999 to the seven qualified that had successfully met the requirements of the TIRM Request for Expressions of Interest. The RFP for Disposal Services closed on December 15, 1999. Prior to the closure date one of the qualified Respondents, AGRA Resource Management Consortium, elected to withdraw from the RFP Process and did not submit an RFP. A second Respondent, Ref-fuel Canada Ltd., did submit an RFP proposal but did not provide one of the mandatory commercial requirements. City Council subsequently directed the Commissioner of Works and Emergency Services to conclude the processing of their submission.

The TIRM Process was initiated on October 2, 1998, when City Council provided the following direction to the Commissioner of Works and Emergency Services:

"…immediately proceed to engage the marketplace to secure solid waste management options including waste diversion and disposal capacity to meet the City's long-term requirements through a Request for Expressions of Interest and Request for Proposals process based on the work undertaken in the planning process to date, but without proceeding to the submission of an environmental assessment." (Clause No. 2 of Report No. 8 of the Works and Utilities Committee).

In addition, City Council provided direction on a comprehensive range of policy and operational matters, which are summarized below:

- the establishment of a 50 percent diversion rate by the year 2006 or sooner;

- inclusion of potential export to the United States;

- inclusion of Energy from Waste ("EFW") technology as a marketplace option;

- engagement of Regional governments in the Greater Toronto Area as potential partners with Toronto for future disposal capacity contracts;

- active consideration of potential partnership proposals with Toronto that may contain a range of options including transfer of ownership or leasing arrangements; and

- preparation of a planning process to engage the marketplace that includes public and industry consultation and development of multi-faceted evaluation criteria.

Comments:

RFP submissions from the following five qualified Respondents underwent an evaluation based on the criteria established in the RFP document:

Attachment A to this report provides a description of each Respondent, the haul mode, the location of the disposal site, and a description of the proposed contingency sites.

Respondents have provided contingency sites in response to Section 3.0 of the RFP document (P. B-6), which requires them to provide a "Proposed Service Plan" that describes how waste is to be managed from time of delivery/acceptance at the respective transfer station(s) to the time of ultimate disposal. One of the components of the Proposed Service Plan is "contingencies that will be in place to ensure uninterrupted service to Toronto".

Contingency sites will only be utilized in the event that services to the site under contract is temporarily disrupted, for example, by an event such as a storm which could impact service delivery. Contingency sites will not be considered as locations to receive Toronto's residual solid waste on a regular ongoing basis.

Summary of the Evaluation Methodology

The RFP document required Respondents to provide data in a series of input forms. The data characterized the proposals in terms of their environmental, GTA/Ontario benefits and financial cost performances. The data allowed the performances to be considered under the following terms: 5, 10, 15 and 20 years. The priority weighting points (established in the RFP Document) and assigned to the performances of the proposals allowed the proposals to be comparatively evaluated. Consideration of the outcome of the comparative evaluation resulted in the identification of the group of top-qualified proposals.

The weighted performance scores for each of the proposals indicates that no proposal is significantly disadvantageous in relation to the average performance of the group of proposals.

Each proposal submission has been determined to be fully responsive to the RFP and contained the information necessary to conduct the Stage 3 comparative evaluation.

Identification of Individual Proposals' Performance Per Tonne of Waste Managed

The data (e.g. total energy resource consumed per tonne of waste managed) submitted by Respondents (or, default data, used in the circumstances where the City did not accept the performance data claims by Respondents) were transferred to a series of performance per tonne tables; one for each of the 15 performance factors.

Where required, performance per tonne data was transformed, using specific algorithms (as were established in the RFP document) to determine the total value for the performance factor in question. For example, for the "greenhouse gases" performance factor, total performance is the sum of the greenhouse gases emitted in waste transportation and greenhouse gases emitted at the disposal facility, net of any greenhouse gas emission "off-set" credits accrued from energy recovery (e.g. landfill gas capture).

Calculation of Weighted Scores

The "z-score" statistical method was used to assign the priority weighting points for each of the performance factors to each of the proposals' performance per tonne. The z-score method is a refinement of the use of a "bell-curve", which captures the significance of a proposal's performance in relation to the performances of all of the other proposals.

At the conclusion of this step, the proposals were ranked in the following order:

* Republic's proposal was evaluated under four distinct options as noted in this table.

Consideration of Weighted Scores

As was established in the RFP document, the weighted scores of the proposals were considered to identify the group of top-qualified proposals. The top scoring proposals were progressively selected until they constituted, as a group, a total waste disposal capacity sufficiently in excess of Toronto's forecast waste disposal needs (both in terms of waste tonnage and in terms of potential contract time terms: short term; long term; and combined short and long terms) so as to foster a competitive context for negotiating a contract or contracts.

The following proposals are necessary to constitute the systems noted above: BFI, Essex-Windsor, Green Lane, RCN, and Republic (with truck and train-based haulage options).

TIRM Stage 4 - Due Diligence and Contract Negotiations

Stage 4 of the TIRM Process will encompass the due diligence and contract negotiations component of the RFP process. Another report listed on the Agenda of the February 24, 2000 Special Meeting of Works Committee discusses the due diligence process.

Through contact negotiations, the major points on which we will be engaging with Respondents are as follows:

- firm identification of contingency sites and terms and conditions for potential use in the event of service disruption;

- base bid cost per tonne for transport and disposal;

- the proposed exceptions and partnership offers;

- the length and terms of the contract;

- the proposed volumes;

- capability to accommodate reduced volumes to facilitate diversion objectives;

- the potential inclusion of tonnage volumes from Regional Municipalities of Peel, York and Durham; and

- treatment and management of tonnages received from the private sector.

Attachment B to this report provides a description of the major work tasks during the course of 2000 for the TIRM RFP Process for proven disposal capacity. As noted in item number 8 of Attachment B, the integration of the disposal and diversion components is scheduled to be presented in June 2000.

Conclusions:

Each of the five qualified Respondents whose proposals underwent the TIRM Stage 3 (comparative evaluation) process have been determined to be fully responsive to the RFP. The weighted performance scores for each of the proposals indicated that no proposal is significantly disadvantageous in relation to the average performance of the group of proposals.

Based on these results of TIRM Stage 3, and the need to foster a competitive context for TIRM Stage 4 (due diligence and contract and contract negotiations) we are recommending that the five proposals under consideration (BFI, Essex-Windsor, Green Lane, Rail Cycle North, and Republic) be identified as the final group of top qualified proposals and advanced to Stage 4.

Contact:

Lawson Oates, B.A., M.E.S.

Manager, Strategic Planning

Solid Waste Management Services

Works and Emergency Services

Metro Hall, 19^th floor

Phone: (416) 392-9744

Fax: (416) 392-4754

E-mail: loates@toronto.ca

Angelos Bacopoulos

General Manager

Solid Waste Management Services

Barry H. Gutteridge

Commissioner

Works and Emergency Services

List of Attachments:

Attachment A. Description of Proposals.

Attachment B. Project Schedule

LJO/rs/top2.doc

Attachment A.

Summary of Five Recommended Top-Qualified Proposals

This attachment contains a summary of the five recommended top-qualified proposals. Each summary contains a description of the Respondent, the quantity of waste they propose to manage, the haul mode, the location of the disposal site, and a description of the contingencies and backup sites proposed.

BFI Waste Systems of North America, Inc.

Participants

BFI Waste Systems of North America, Inc., a Delaware Corporation has submitted a proposal to provide landfill disposal services to the City of Toronto for a five-year term with an option to extend for additional five-year terms for up to twenty years. Verspeeten Cartage, Ltd. (VCL) of Ingersoll, Ontario will be responsible for waste haul.

Haul Mode

VCL will transport waste from the City's transfer stations to BFI's Arbor Hills Salem Township Michigan, USA.

Facility/Sites & Location

BFI's existing landfill, Arbor Hills West Expanded Sanitary Landfill, is located approximately 418 km from Toronto, in Salem Township Michigan, USA.

The landfill has a double composite liner system which provides for a primary leachate collection system above a primary layer of composite liner, followed by a secondary leachate collection/leak detection system sandwiched between the primary composite liner system and second composite liner. Leachate is collected from each cell of the landfill, pumped to storage tanks, aerated and discharged into the sanitary sewer servicing the site. A landfill gas collection system is in place at the landfill. Gas is collected and piped to an on site co-generation facility and used in the production of electricity through a closed loop system of turbine and steam engines.

Contingencies and Backup Sites Proposed

In the event that a backup disposal location is required, BFI proposes the use of American Ref-Fuel Company of Niagara Falls, New York; Vienna Junction Landfill; Carbon Limestone Landfill; Ottawa County Landfill; Ridge Landfill; Niagara Landfill; Sauk Trail Hills Development, Inc.; and Citizens Disposal, Inc.

Essex-Windsor Solid Waste Authority

Participants

Essex-Windsor Solid Waste Authority located in Essex, Ontario, has submitted a proposal that proposes to provide landfill disposal services to the City of Toronto for a twenty-year period. The Authority is a public body comprised of representatives of the City of Windsor and County of Essex.

Haul Mode

Essex-Windsor proposes to provide truck haul, through the use of a yet to be named sub-contractor, from a Toronto transfer station to its landfill in the County of Essex, Ontario.

Essex-Windsor will obtain performance guarantees from the hauling sub-contractor.

Facility/Sites & Location

The sole facility proposed is the existing Essex-Windsor Region Landfill site in the Town of Essex, formerly the Township of Colchester North, in the County of Essex, Ontario. Essex-Windsor proposes to install a landfill gas collection and energy recovery system at the facility. The collected landfill gas will either be used for the direct generation of electricity or as a replacement fuel for boilers. The landfill site's existing leachate management system is based on a hydraulic trap (inward ground water gradient) in a deep clay setting. Collected leachate is treated on site using physical chemical and an innovative natural biological greenhouse based system.

The Ministry of the Environment issued a Provisional Certificate of Approval for the Essex-Windsor Regional Landfill Site in 1995. The site has been in operation for approximately two years.

The Authority has a Host community agreement impact compensation program with the local community involving the payment of royalties in the amount of 5 $ per tonne.

Contingencies and Backup Sites Proposed

Essex-Windsor has signed a Memorandum of Agreement with a third party - Republic's Michigan landfill site (this information known from Republic's proposal) to provide contingency disposal capacity if circumstances prevent the disposal of waste at the Essex site.

Green Lane Landfill

Participants

Green Lane, a division of St. Thomas Sanitary Collection Services Limited has submitted a proposal that proposes to provide landfill services to the City of Toronto for a five-year term with an option to extend for additional five-year terms up to twenty years. Green Lane Environmental Group Ltd. will be subcontracted for waste haul.

Haul Mode

Green Lane Environmental Group will transport waste by truck from the City's transfer stations to its landfill located in Southwold Township in the County of Elgin, Ontario.

Green Lane Environmental Group, as the haulage subcontractor, possesses the necessary Certificates of Approval to operate waste transportation systems throughout Ontario.

Facility/Sites & Location

The existing facility is located in Southwold Township in the County of Elgin, Ontario. Green Lane proposes to install an on site leachate treatment facility and a landfill gas collection/flaring system.

Green Lane formed a Liaison Committee in 1994, which operates to inform the surrounding community of issues including operational compliance.

All land use, development and environmental approvals are in place for the long-term operation of the landfill. In August 1998, a landfill expansion was approved to proceed under the Environmental Assessment Act without hearing by Order-in-Council. Green Lane Landfill and Green Lane Environmental Group Ltd., have long-term service agreements with host municipalities Southwold Township and St. Thomas.

Contingencies and Backup Sites Proposed

Should site closure occur, Green Lane Landfill would secure replacement capacity in consultation with Toronto.

Rail Cycle North

Participants

· Canadian Waste Services Inc. (CWS), wholly owned by Waste Management Inc., USA - construction and operation of landfill;

· Notre Development (Notre) - owner of the Adams Mine site;

· Miller Waste Systems (Miller) - truck transport of waste from transfer station service to railhead;

· Canadian National Railway Company (CN) - rail transport and intermodal facility;

· Ontario Northland Transportation Commission (ON)- rail transport; and

· Gas Recovery Systems (GRS) - Landfill gas management.

RCN has submitted a proposal to provide landfill disposal services to the City of Toronto for a twenty-year period.

Haul Mode

Waste will be transported in fully enclosed intermodal containers via truck from Toronto's transfer stations to CN's MacMillan Yard located in Vaughan. The containers will be loaded onto flat-bed train cars, approximately 80 cars will comprise a train.

One train per day will travel from Vaughan to North Bay. Jurisdiction for the train will transfer to Ontario Northland at North Bay and the train will proceed to the Adams Mine site located south of the Town of Kirkland Lake (Vaughan to Adams Mine Landfill: 600 kilometres).

Facility/Sites & Location

Rail Cycle North proposes to build a landfill facility in the "South Pit" - an open pit approximately 800 feet deep.

The facility has been designed and approved as a hydraulic containment landfill to take advantage of the ground water conditions surrounding this former open pit mine. The landfill has also been designed to take advantage of the depth of the pit and the higher groundwater levels surrounding the site to maintain inward groundwater flow to the waste, thereby preventing leachate from entering groundwater. Leachate will be collected from the bottom of the site by pumps, pumped to the surface and treated in a dedicated on-site leachate treatment plant. A landfill gas collection and energy recovery system will be installed.

The Ministry of the Environment issued a Provisional Certificate of Approval for the Adams Mine Landfill in 1999.

Rail Cycle North proposes to establish partnership agreements with the surrounding municipalities pertaining to community liaison, monitoring, impact mitigation and benefits sharing.

Contingencies and Backup Sites Proposed

Use of alternative tracks including CPR. Use of Canadian Waste/WMI existing landfill site capacity in southern Ontario and north-east USA.

Republic Services of Canada (Truck and Rail haul Options)

Participants

Republic Services Canada, Inc., a wholly owned subsidiary of Republic Services, Inc. USA (Republic) has submitted a proposal to provide landfill disposal services to the City of Toronto with options to contract within a range of 5 to 20 years (including 5-year increments). Wilson Logistics, Inc. (Etobicoke) will be subcontracted for waste haul.

Haul Mode

Truck

Wilson Logistics will transport waste from the City's transfer stations in closed top truck trailers to Republic's Carleton Farms Landfill in Sumpter Township, Wayne County, Michigan.

Train

Wilson Logistics will transport waste from the City's transfer stations in intermodal containers to the CPR railhead (either to Milton for smaller tonnages or to a reactivated Junction Triangle yard for larger tonnages). CP would transport to their Detroit intermodal yard. The containers would then be truck hauled 50 kilometers to the landfill site. Total distance approximately 450 kilometers.

Facility/Sites & Location

Republic's existing landfill facility is located approximately fifty kilometers southwest of the Ambassador Bridge between Windsor, Ontario and Detroit Michigan. The facility was opened as a "greenfield" site in 1993 on a 640-acre site.

The facility has a leachate collection and removal system with on-site leachate holding tanks. Leachate is hauled off site to a licensed municipal sewage treatment plant. The landfill has a landfill gas collection and energy recovered system.

The site is permitted and licensed by the State of Michigan and is permitted to accept waste from Ontario.

Republic has a Community Agreement with the host municipality pertaining to the operation of the facility.

Contingencies and Backup Sites Proposed

In the event of the need for a backup disposal site, Republic proposes to use its Brent Run Landfill located north of Flint, in Genesee County, Michigan. In the event of the closure of the Canada-USA border, Republic has an agreement to utilize the Essex-Windsor Landfill site.

Attachment B.

Project Schedule

The following project schedule identifies the major work tasks scheduled for completion in 2000 and identifies the target date for completion.