Report to: General Committee -                                                Report Date: April 2, 2007

Community Services and Environment

 

 

SUBJECT:                          Public Space Recycling Contract Extension

PREPARED BY:               Claudia Marsales, Manager, Waste Management, Ext. 3560

 

 

 

RECOMMENDATION:

THAT THE report titled, “Public Space Recycling Contract Extension” be received,

 

AND THAT the Town extend the contract with EcoMedia Direct Inc. for a period not to exceed five years at no additional cost,

 

AND THAT the number of public space recycling units under the contract be increased from 164 units to 170 units,

 

AND THAT the current contract’s revenue provision to the Town be replaced with an increase in the allocation of the free advertising spaces by the Town from 8 to 20,

 

AND THAT EcoMedia be requested to aggressively pursue a community based advertising strategy for all recycling stations located in the Town,

 

AND FURTHER THAT the Mayor and Town Clerk execute a contract extension with EcoMedia satisfactory to the Town’s Solicitor.

 

 

EXECUTIVE SUMMARY:

Not applicable

 

 

FINANCIAL CONSIDERATIONS:

Operating

The first five year term of the contract included no revenue provision in exchange for the supplier servicing and maintaining all containers while the business was built up.  A revenue provision would be included in the contract extension only, pending approval of such extension.  The contract extension proposal replaces the revenue provision with an increase in the advertising allocation from 8 advertising spaces to 20.

 

Staff recommends replacing the revenue provision of the contract extension with increased access to free advertising spaces.  The free advertising provision of the existing contract has an estimated annual value to the Town of $19,200.  The proposal for the five year extension will increase the advertising value to the Town to $48,000 per year.

 

Table 2 compares the avoided operating costs of the existing contract to that of the contract extension proposal on an annual and contract term basis.

 

Table 2. Public Space Recycling Agreement

 

5 YEAR EXTENSION PROPOSAL ANALYSIS

 

 

Current Agreement

Proposed Agreement

Term

5 years + 5 year extension option

5 years + 5 year extension option

Units

164

170

Waste Streams

Paper Fiber

Paper Fiber

 

Cans/Bottles

Cans/Bottles

 

Refuse

Refuse

Maintenance Duties

EcoMedia

EcoMedia

Waste Collection Duties

EcoMedia

EcoMedia

Cost Avoidance per year

$17,726

$18,375

Free Advertising Allocation

8 advertising spaces

20 advertising spaces

Cost Avoidance per year

$19,200

$48,000

Revenue (for extension period only)

$10/unit/month

None

Value per year

$19,680

$0

 

 

 

TOTAL OPERATING COST AVOIDED PER YEAR

$58,606

$66,375

TOTAL OPERATING COST AVOIDANCE OVER 5 YEAR TERM

$283,030

$331,875

 

The waste collection cost avoidance estimate is the cost the Town would have to incur to collect litter from the recycling stations under each scenario at the residential waste and recycling collection rate.  Similarly, the advertising cost avoidance is cost the Town would have to pay EcoMedia if the Town was to exclusively reserve either 8 or 20 advertising spaces on an annual basis.

 

Capital

The Town would incur a significant capital expenditure to purchase its own public space recycling stations if it was to implement a public space recycling station without a private partner.  Further, the initial capital outlay would have to be replaced as the units reach the end of their useful life.

 

Each unit in the public space recycling station is valued at $1,750 and has a useful life of 10 years.  Purchasing 164 units would cost $287,000.  Purchasing 170 units would cost $297,000.  By partnering with EcoMedia, Markham is able to provide public space recycling program without incurring any capital costs.  Table 3 compares the capital costs of the current public space recycling contract with those of the contract extension proposal.

 

Table 3.

PUBLIC SPACE RECYCLING CAPITAL COSTS

 

UNITS

VALUE

 

 

164

$287,000

 

 

170

$297,500

 

 

1. Purpose                     2. Background                      3. Discussion                        4. Financial        

 

5. Others (Environmental, Accessibility, Engage 21st, Affected Units)             6. Attachment(s)

PURPOSE:

To recommend that the Town exercise its option to extend the public space recycling service for a period of five years.

 

 

BACKGROUND:

 

At its meeting of November 27, 2001 Council approved entering into a five year contract with Olifas Marketing Group Inc. (OMG) with an option for a further five year extension for the provision of a public space recycling program in exchange for the right for OMG to sell advertising on its public space recycling station.  The terms of the agreement include the following;

 

·         the number of public space recycling units not exceed 164 units in the first five years;

·         OMG Media be responsible for the installation, monitoring and maintenance of all units at no cost to the Town;

·         OMG Media be responsible for the collection of garbage and recycling materials from the units and that the service levels meet or exceed the Town’s existing service levels for litter containers currently owned and collected by the Town;

·         OMG Media be responsible to collect, process and market all recyclable materials collected and to receive all revenues realized from the sale of the recyclable materials;

·         OMG Media provide, at no cost to the Town, with 10% of all available advertising space on the units the first year and then 5% of all available advertising space on the units for the following four years, and the top and end areas of all units be provided to the Town for the duration of the five year term;

·         OMG Media would pay the Town $10 per unit per month revenue for the five year extension of the contract should the agreement be extended for a further five years;

·         all advertising sold by OMG Media must abide by the Town’s advertising standards

OMG Media was also requested to aggressively pursue a community based advertising strategy for all recycling stations located in the Town.

 

The program was officially launched on October 25, 2002.

 

 

OMG is Now EcoMedia

The public space recycling contract was executed in 2002 with Olifas Marketing Group (OMG) of the City of Vaughan, Ontario.  OMG had only installed 85 of its committed 164 recycling stations before it was purchased in late 2003 by Urban Equipment of Canada (EUCAN) from Mexico.

 

EUCAN did not install any additional public space recycling stations in Markham while it tried unsuccessfully to implement a new business plan.  The new business plan included replacing the “Silverbox” style litter receptacles with more upright units that could accommodate 3:4 aspect ratio advertising media.

 

In late 2006, Pro-Kyoto International Inc., a 100% Canadian owned and operated company, purchased EUCAN and re-branded the EUCAN public space recycling program as EcoMedia Direct Inc. (EcoMedia).

 

EcoMedia has expressed to Markham staff its commitment to the “Silverbox”.  In addition, EcoMedia has committed to increase the number of public space recycling stations in Markham to 170 and to complete their installation in 2007.  EcoMedia is also developing a strategy to aggressively pursue community based advertising and to support special events in Markham.

 

Public Space Recycling Has Helped Control Litter

Since 2003, Markham’s public space recycling program has collected 430 tonnes of litter of which 40% on average was recycled.  Table 1 lists the amounts collected and recycled each year.

 

Table 1.

2006 Public Space Recycling Collection Statistics

YEAR

RECYCLED

(tonnes)

DISPOSED

(tonnes)

TOTAL

(tonnes)

DIVERSION

2003

45

88

133

40%

2004

50

42

142

35%

2005

37

54

91

41%

2006

42

72

114

37%

TOTAL

174

256

430

40%

 

EcoMedia proposes to work with the Town to improve signage on its recycling stations in order to further increase the amount of material recycled through the public space recycling program in Markham.

 

 

Public Space Recycling Provides Advertising Benefits

The free advertising allocation in the public space recycling contract has benefited many of Markham’s communication campaigns.  These include;

 

·         Character Community

·         The Green Bin Program

·         Anti-Littering

·         Pesticide Reduction

·         20-Minute Makeover Community Litter Clean Up

 

 

OPTIONS/ DISCUSSION:

After discussion with the supplier, staff concludes that it is in the best interest of the Town to exercise its option to extend the public space recycling contract for a further five (5) years with the following amendments;

 

1.        Increase the number of units to be installed from 164 to 170

2.        Replace the revenue provision in the term extension with an increase in the free advertising allocation from 8 spaces to 20

 

The free advertising provision of the existing contract has an estimated annual value to the Town of $19,200.  The proposal for the five year extension will increase the advertising value to the Town to $48,000 per year.

 

 

FINANCIAL TEMPLATE: (external link)

Not Applicable

 

 

ENVIRONMENTAL CONSIDERATIONS:

 

Providing a public space recycling program is consistent with Markham’s Mission Green and its goal of 70% diversion of waste from landfill.  It is also consistent with the Town’s corporate goals of Environmental Focus, Infrastructure Management, Quality Community, Managed Growth and Fiscal Stewardship.

 

 

ACCESSIBILITY CONSIDERATIONS:

None.

 

 

ENGAGE 21ST CONSIDERATIONS:

Not applicable

 

 

BUSINESS UNITS CONSULTED AND AFFECTED:

The Legal Department will be consulted regarding amending and extending the public space recycling contract with Eco Media.

 

 

 

 

 

RECOMMENDED

BY:                           

 

 

 

 

 

 

 

 

________________________                  ________________________

      Peter Loukes, P.Eng                             Jim Sales

      Director, Operations                             Commissioner, Community and Fire Services

 

 

 

 

ATTACHMENTS:

None

 

 

Q:\Commission Share\Operations and Asset Management\Reports\2007\Waste Management\Public Space Recycling Program Extension.doc