October 18, 2012
recycling contract renewal saga finally ended when the Greensboro
City Council voted to sign a new contract with ReCommunity, the company that has had the city's recycling business since 1992.
ReCommunity was one of two respondents to the request for proposals (RFP) to make it to a "best and final offer" phase of the RFP process, along with Waste Management of Carolinas. ReCommunity had the recommendation of city staff and city's consultant on waste management issues, Joe Readling of HDR Engineering.
Representatives from both companies were present at the Tuesday, Oct 17 council meeting in the council chambers at city hall.
Councilmember Dianne Bellamy-Small asked Director of Field Operations Dale Wyrick for his recommendation. Wyrick said that his recommendation was to accept ReCommunity's offer to pay the city a fixed rate of $31 per ton of recyclables received from the city.
The offer from Waste Management was to give the city a guaranteed $26 per ton payment for recyclables as well as a share in the net revenue from the sale of recycled goods.
In the current contract with ReCommunity, and all the contracts going back to 1992, the city has paid ReCommunity for recyclables and paid in total about $22 million. Waste Management has been paying Winston-Salem for their recyclables since the mid-1990s.
Bellamy-Small immediately made a motion to accept the recommendation and enter into the fixed-rate contract with ReCommunity. However, Councilmember Trudy Wade had some questions for staff and the applicants.
One of the main disputes between Waste Management and staff has been the cost of transportation, since the Waste Management materials recovery facility (MRF) in Winston-Salem is about 15 miles from Greensboro
's solid waste transfer station. Waste Management has maintained that the city is significantly overestimating transportation costs. Wade asked Wyrick if that was still an issue.
Wyrick said that transportation was still an issue but that the primary reason was that "after we went back and did some clarification with their best and final offers we did find that ReCommunity was willing to start all the terms of a new contract basically immediately following us signing a contract."
"But that's not really a fair evaluation," Wade responded, "because Waste Management doesn't have anything to do with when the contract starts."
ReCommunity had maintained that to end the current contract before April 1, 2013, the city would have to buy itself out of the contract, but changed that stance after the best and final offers were submitted.
According to ReCommunity, their calculation for a buyout effective Sept. 1 would have been $1.3 million. This penalty would still apply if the city had chosen another vendor. ReCommunity later reduced the price for a Nov. 1 buyout to $543,000, and still later to zero.
Wyrick responded that from a "pure revenue" perspective, right now ReCommunity offers the best option.
Wade pointed out that Waste Management was willing to enter a three-year contract, while the shortest contract term offered by ReCommunity was for five years.
"To me that was pretty desirable, since this particular industry seems to be changing technologically every day," Wade said.
When Wade asked Stan Joseph from Waste Management questions about his offer, Councilmember Nancy Vaughan attempted to force a vote, but Wade insisted that she still had the floor. Mayor Robbie Perkins acknowledged that Wade was correct.
"You always said the hauling wasn't going to cost that much, that you could change the route," Wade said, asking Joseph if his company could guarantee the lower transportation costs.
Joseph responded, "Just on the initial look of the routes we've found at least three significant areas, as far as the city's routes, have not been rerouted for a very long time." He said the routes had "significant imbalance" due to city growth.
Joseph also suggested that the city consider going from its current four-day-a-week route to a five-day route to increase efficiency. However, he did not go as far as guaranteeing a transportation cost, since the city would be handling collections, not Waste Management. But he said Waste Management could show the city how to optimize the routes for a cost of "$7 or under" per ton, compared to the $10 to $11 per ton that staff and city staff and HDR had estimated.
Wyrick said the city rebalanced its routes in 2010 to maximize efficiency. Wyrick also said he didn't think working a five-day week to increase efficiency would be feasible because Wednesday is currently used for fleet maintenance.
Wyrick then said; "Primarily this wasn't an exercise in us and the efficiency of the city, it would be in processing our recyclables."
Wade responded that she had no problem with being more flexible if it meant being more efficient and saving money on recyclables.
Joseph pointed out that his estimation of transportation costs wasn't predicated on a five-day route, but that it was a suggestion.
Wade said she had a number of concerns about ReCommunity, including their contract term and their history with the city
"As a business person it's just not good business to do business with someone you already know is overcharging you for so many years," she said. "It just concerns me, with the business practices, and that we just want to turn around and do it with the same people."
Councilmember Zack Matheny said that while he understood Wade's concerns, looking at the fixed-rate offer as it stands today, it offered the most revenue to the city. He commended the fact that the city would be turning what has been a net drain on funds into net revenue.
Bellamy-Small's motion to go with ReCommunity passed 8 to 1. Mayor Perkins and Councilmembers Yvonne Johnson, Marikay Abuzuaiter, Nancy Hoffmann, Jim Kee, Bellamy-Small, Matheny and Vaughan voted in support of the motion. Wade voted against it.
The City Council also voted 6 to 3 to allow Downtown Greensboro
Inc. (DGI) to retain $18,000 it failed to spend last year from the taxpayer funded City Projects Grant.
Wade pointed out that the city gives DGI $200,000 on top of giving them the revenue from the downtown Business Improvement District (BID) tax, and questioned why the organization would need to keep the $18,000 they were unable to spend.
"It would seem to me that we could use that in other areas of the city if they didn't use it," Wade said. "I'm sure we all have areas that need additional money."
Wade then mentioned a neighborhood in her district she had visited on a neighborhood walk the night before where residents were afraid to enter a park at night for lack of lights and security cameras.
Wade pointed out that information about terms of length of service of DGI board members wasn't readily available, and that she would be interested in that information.
Wade also questioned whether or not DGI money was being spent equitably on the various parts of downtown, pointing out that the expensive hanging baskets put up by DGI were missing from many areas....continued on page 2