July 26, 2012Once again Greensboro has issued a request for proposals (RFP), received a number of qualified bidders, and the city staff has recommended staying with the current contractor without giving much consideration to the other bidders.
While all this was explained to the City Council at a work session in the plaza level conference room on Tuesday, July 24, Mayor Robbie Perkins and the Perkinettes sat around nodding like a bunch of bobbleheads, and then Perkins said, "I'm ready to go." He suggested the council accept the recommendation of Field Operations Director Dale Wyrick and award the 10-year recycling contract to ReCommunity, which is what Wyrick wanted to do back in March.
Councilmembers Zack Matheny and Trudy Wade had some questions about the proposals, and Matheny said he was not ready to vote or indicate that he wanted to award the contract to ReCommunity. Traditionally, binding votes are not taken at work sessions, but often straw votes to indicate the will of the council are, and they count just about as much as a real vote.
Matheny said after the meeting that the proposals were complex and he wanted to have a chance to look at some of the analysis that was done by none other than Joe Readling of HDR Engineering.
Recently Readling complicated the city's 2012 garbage RFP process when he advised the council to throw out the low bid from Waste Connections in favor of the city's current vendor, Republic Services, a move that would cost the city around a million dollars a year more. When The Rhino Times revealed that HDR had numerous contracts with Republic and none with Waste Connections, the council voted to hire another consulting firm to review the solid waste proposals and put off awarding the contract for three months.
Everyone knows it is nearly impossible for a government employee to be fired, but who knew the city would keep using the same consultant when his work had caused in embarrassing and expensive results.
Perkins said ReCommunity was the recommendation of staff and the council should award the 10-year contract to ReCommunity. However, Wyrick had recommended to the council back in March, before the RFP, that the city accept the proposal from ReCommunity and it was for a payment to the city of $20 a ton for its recycling. Since ReCommunity had to go through the RFP process and had competition, that payment to the city rose to between $29 and $31 a ton. That would be an increase of about 50 percent. In other words, ReCommunity back in March planned to rip the city off like it has been doing for years.
If Perkins believes the city should take the staff recommendation just because the staff is recommending it, why not go back and take that $20 a ton price and give ReCommunity even more money. For years while other cities made a profit on their recycling programs Greensboro has paid ReCommunity to recycle its waste.
According to Readling, last year the city paid ReCommunity $165,000 for recycling. If the contract that the staff recommended is approved then the city, instead of paying $165,000, would make a profit of over $800,000. So it's a difference of about $1 million for the city, which is good news. The bad news is that the contract with ReCommunity goes back to 1998, which means that for years the city has been paying when it should have been profiting. And the City Council apparently wants to keep doing business with these same people.
Waste Management, the country's largest waste management company, has a brand new recycling facility in Winston-Salem and also submitted a recycling proposal. But according to Readling, the deal from ReCommunity was more beneficial for the city.
On Wednesday, July 25, both Stan Joseph and Greg Peverall of Waste Management said they were surprised that they didn't get to sit down and discuss their proposal with the city and go over some of the issues. They also said they felt their proposal was not accurately represented by Readling. Peverall said the figures Readling used for transportation were not favorable to Waste Management. He said Readling used 13 tons per trailer to figure the transportation costs and that Waste Management gets 18 to 20 tons in a trailer.
Peverall said that could be a "reasonable error" but that Waste Management was surprised that they were never invited to the table to discuss just that kind of issue or actually to discuss anything.
Joseph said there were a couple of email volleys but no face-to-face meeting about what they were proposing.
One point that Joseph made that he said didn't appear to be considered in the calculation is that the amount of material that cannot be recycled at the Waste Management facility is projected to be between 6 percent and 8 percent while the amount that was not recycled by ReCommunity was in the 26 to 28 percent range. Joseph said those are amazingly high figures, and the city doesn't get paid for the material that is not recycled. So the city stands to make more money from a company that is recycling 94 percent of the material it receives compared to 74 percent, even if the amount per ton is lower.
Joseph said that although Republic Services did not bid on the recycling contract, Republic is one of Waste Management's biggest competitors, and the company certainly wants to keep Waste Management out of Greensboro, so the previous possible conflict of interest that worried the council is still there.
Readling also told the council something that was not accurate about the length of the contract. Readling said the contract being considered was for 10 years. The RFP asks for proposals on contracts from five to 10 years.
Readling said that ReCommunity bid 10 years because it will need to upgrade its facility and needs a 10-year contract to pay for it. Why the city is concerned about how ReCommunity pays for the upgrade to its facility is hard to imagine, but evidently according to the presentation yesterday Greensboro needs to help ReCommunity upgrade their facility. Another way to look at it is that ReCommunity could upgrade its facility with the excessive profits it has made by doing business with Greensboro.
Joseph said that Waste Management had just completed a new recycling facility in Winston-Salem and didn't need Greensboro to help pay for it. He also said that Waste Management submitted a bid for a five-year contract because that seemed to make more sense considering Greensboro's current situation.
Greensboro has probably lost millions of dollars because, in 1998, the city signed a ridiculous 15-year contract with FCR, which became ReCommunity, in an industry that is evolving every day. So now the recommendation for the council is not to accept a beneficial five-year contract but to commit Greensboro to a 10-year contract because ReCommunity needs a long-term contract to upgrade its facility.
ReCommunity is the same company that back in March offered to pay the city 50 percent less for its recyclables than it offered in July.
Even if the majority on the City Council does what Perkins wants them to do and gives the contract to ReCommunity, the city should send a thank you letter to Waste Management for getting the city that additional $10 a ton.
The other companies submitting proposals were Sonoco Recycling and Tidewater Fiber Corporation.
All the councilmembers except Dianne Bellamy-Small were present.
The meeting included an update on the capital investment program (CIP), which is a plan for future capital improvements that are generally large construction projects that can be funded with bonds.
During the discussion, Matheny advocated the city buy land and prepare it for industrial development. Making it "shovel ready" is the term that is used, which means getting the infrastructure in place and doing preliminary site preparation.
"Every consultant we've had over the last seven years has said we need to get shovel-ready sites, and we haven't quite gotten there yet," Matheny said, suggesting that buying up large tracts of land could facilitate such projects. Perkins noted the city would not get its money back because no industry would be willing to buy land from the city. He said they would expect the city to give them the land as an economic incentive.
Perkins said the major companies located in areas because of personal relationships, not land.
Wade suggested to Matheny that development could also be fostered by lowering taxes and water rates, thereby making operating in Greensboro more profitable for small businesses.
Matheny said the city should spend $10 million on buying and developing a site. Wade said, "Instead of taking the $10 million and spending it, just reduce taxes and water rates and everyone will want to move to Greensboro because we will have the lowest rates."
At the end of the meeting Perkins once again got Matheny's goat by announcing that he had had some ideas for a bar and restaurant ordinance and had given the information to City Attorney Mujeeb Shah-Khan to see if anything could be done.
Matheny said, "I'd like to talk to you about it because I've only been working on it for two or three years."
Perkins responded, "I started working on it yesterday, gave it to Mujeeb today and I'm telling you about it this afternoon."
Before the meeting Councilmembers Jim Kee, Nancy Hoffmann and Yvonne Johnson met in the plaza level conference room with former Councilmember Bob Mays and Mac Sims from East Market Street Development Corp. about developing the land around the landfill. Much of the land the city owns in that area was acquired for buffer and to provide fill dirt and has never been used as a landfill. Mays told them with the outer loop going right past it was prime land for development.