Title
Resolution to Remove Not-to-Exceed Limit on Purchase Order for Service Agreement with Waste Management of Michigan
Memorandum
On March 2, 2009, City Council approved Resolution R-09-082 authorizing a service agreement with Waste Management of Michigan for the City’s commercial franchise program. The approved agreement had an initial term of five years, with two renewal options of three and two years respectively for a possible total of ten years. This resolution does not change the service agreement.
The terms of the agreement call for contractor compensation to be based on a service fee schedule that includes container type and size as well as service frequency. The contract document itself does not have a maximum compensation amount identified since the total expense for these services depends on these variables. As part of the move to this commercial franchise program, there was a two-year phase-in process to allow commercial properties with existing private contracts time to transition into the new, required program. With the franchise program now fully implemented, there will continue to be some variation as commercial property uses change and refuse generation declines through increased recycling.
The original resolution as approved placed an annual not-to-exceed amount of $900,000.00 on this agreement. This dollar amount was based on an estimate on the total number of commercial accounts thought to be within the City of Ann Arbor, which at that time included accounts with the City as well as with several private waste haulers. Now with the franchise program fully implemented, the actual contract billing will exceed this original estimated amount. It is projected that the Waste Management billing for services provided by the end of the fiscal year will be approximately $1,100,000.00 for the current fiscal year.
This expense is offset by the revenues that are being captured by the rates established as part of the commercial franchise pr...
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