August 09, 2012The Greensboro City Council continued its trend of indecisiveness when it voted 9 to 0 to delay awarding the city's recycling contract by at least six weeks at its Monday, August 6 meeting in the council chambers at city hall.
The meeting was held on Monday because National Night Out was scheduled for Tuesday.
The city issued a request for proposals (RFP) in March, and after Monday's action the two most competitive respondents, ReCommunity and Waste Management of Carolinas, have the opportunity to return with a "best and final offer."
Other actions taken by the council at the meeting included authorizing the distribution of roughly $18 million from the now defunct city-county joint water and sewer fund to extend water and sewer along I-40/I-85, and approval of the purchase of the former YWCA building for its appraised value of $1.67 million.
On the recycling RFP City Attorney Mujeeb Shah-Khan noted that allowing companies a second chance to bid could lead respondents to future RFPs to be less competitive with their initial bids, because they would expect it to only have to be "good enough" to get to the second round rather than be their best possible offer.
The council was expected to award the contract to one of the respondents Monday night, but after presentations from both companies the councilmembers were left with unanswered questions. In an unusual RFP process promoted by Shah-Khan, the councilmembers have been prohibited from communicating with representatives of the companies submitting proposals. Shah-Khan said the policy is meant to shield councilmembers from lobbying and preserve the fairness of the process for bidders.
The companies were also prevented from giving presentations at the work session where Joe Readling of HDR Engineering presented his analysis of the proposals. So the first opportunity for the council to hear from the companies was at the council meeting where they were supposed to make a decision on awarding the contract.
ReCommunity is the city's current recycling contractor and the city has been paying the company to recycle Greensboro's material since 1992. By comparison, Waste Management has been paying Winston-Salem a percentage of the money it makes selling that city's recyclables since 1999. The proposal from ReCommunity recommended by Greensboro Field Operations Director Dale Wyrick, based on research by Readling, agrees to pay the city between $29 and $31 per ton on recyclables depending on monthly volumes.
Waste Management has argued that their offer, which includes a $25 per ton guaranteed payment to the city and a 60 percent share of net revenue on the sale of those recyclables, was burdened with unreasonable transportation costs by Readling's analysis.
In his presentation to the council at the meeting, Matt Jones of Waste Management said that based on established "industry standards," hauling recyclables from Greensboro to their Waste Management Materials Recovery Facility (MRF) in Winston-Salem could cost the city as little as nearly half what Readling assumed in his calculations.
Jones then mentioned the possibility of Waste Management covering the cost of transporting recyclables from the city's transfer station to the MRF in Winston-Salem, thereby reducing the cost to the city and increasing its potential profits.
Until Monday's meeting Wyrick said he assumed that Greensboro would be incurring those costs under Waste Management's contract, whether the council chose to haul to Winston-Salem from the transfer station or directly from the collection routes.
When pressed on the issue by Councilmember Zack Matheny, Jones qualified his statements by saying he didn't have the authority to guarantee anything himself, but that his company would be willing to negotiate on the matter if given a "second look" by the city.
ReCommunity's presentation by Jeff Fielkow, which devoted several PowerPoint slides to explaining the company logo and describing the company's goal of becoming an "extension" of the communities they serve, focused on the investments the company would make under their proposed contract.
The current ReCommunity contract has been a financial disaster for the city. "We've never made a profit in 18 years; we've always come out at a loss," said Councilmember Trudy Wade during questioning. "Over 20 years, I would think you've made a lot of money off Greensboro."
Fielkow attributed the millions of dollars Greensboro has paid to ReCommunity to the late arrival of recent improvements in recycling technology and the recycled commodities market. He said the reason ReCommunity had not done more to give Greensboro better contract terms was due to an RFP in 2010 for the opening and operation of White Street Landfill, which included recycling in the scope of the work. Fielkow said that provision prevented the company from ethically talking with staff about renegotiating the contract. He didn't explain why Winston-Salem has been seeing a profit since 1999 with Waste Management running its recycling while Greensboro has been paying for its recycling.
Fielkow also argued that Waste Management was significantly underestimating the long-term costs of hauling recyclables to Winston-Salem. He said the cost of regular fleet maintenance and the inevitable incidental damage to equipment made HDR's higher figures conservative, and made Waste Management's estimate unrealistically low.
As part of a "no conflict policy" in their operating model, Fielkow said that ReCommunity does not own any trucks. When questioned about the no-conflict provision by Wade, and how he could estimate transportation costs when his company didn't own a truck fleet and Waste Management did, his colleague Bill Leonidas said that the company did in fact have trucks, just not side-loading garbage trucks.
Several councilmembers expressed concern over the 10-year length of ReCommunity's proposed contract. Councilmember Jim Kee said he was worried such a long contract could prevent the city from taking advantage of future developments in recycling markets, much as the city's current 15-year contract with ReCommunity has kept the city paying for recycling while other municipalities have been profiting on recycling for more than 10 years. He brought up the city's waste disposal contracts, in which the city dealt with three-year terms in expectation of "alternative ways of disposal."
Waste Management's original bid had been for five years and Jones said that an even shorter contract may be negotiable. However Fielkow said the 10-year option in the RFP had allowed them to offer a "strategic capital investment" of $4 million in facility upgrades. "You really do need the added time to make those investments pay off," he said.
"I personally cannot support a 10-year contract," Kee said, after questioning the relevance of the ReCommunity's infrastructure investment to the RFP.
Councilmember Nancy Vaughan made the motion to carry the RFP process into a "best and final offer" phase with ReCommunity and Waste Management, which passed 9 to 0. The companies are scheduled to submit their final offers to city staff by August 20, which will then be presented to the council at a special work session on Sept. 10. The City Council is expected to select a vendor at their regular meeting on Sept. 18.
A resolution authorizing the allocation of roughly $18 million from the now defunct joint water and sewer fund to extend city water and sewer along I-85/I-40 passed 9 to 0. According to Mayor Robbie Perkins the project would provide water and sewer service to roughly 9,000 acres. Although the joint fund contract was terminated on Jan. 1, 2011, the county has held on to the city's portion of the money.
Before voting on the item Perkins asked Shah-Khan to clarify that his business relationship with the owner of the land in question did not constitute a conflict of interest. Shah-Khan confirmed that the relationship with the owner, did not constitute an impermissible conflict of interest.
Wade cast the only dissenting vote on the purchase of the former YWCA building for $1.67 million, which does not include the $130,000 cost of demolishing the building. On July 24 the council had voted 8 to 1, also with Wade opposing, to authorize City Manager Denise Turner Roth to enter negotiations for the purchase, with a price ceiling of $1.8 million.
The Greensboro YWCA has been experiencing financial troubles, and as a result vacated the building five years ago. Perkins on July 24 spoke in favor of the purchase because the city owned all the adjacent land.
Wade however did not seem impressed with the price. "In this economy everything seems to sell below what the appraised value is. Did we do any negotiation whatsoever?" she asked.
"We did explore those questions with the YWCA's representatives," Roth responded. "What we came out with was paying the actual appraised value."
"I just can't see how we're making a good deal for the taxpayer at this point," Wade said before the vote.
The purchase was approved with Perkins, Councilmembers Nancy Hoffman, Marikay Abuzuaiter, Yvonne Johnson, Matheny, Kee, Vaughan and Dianne Bellamy-Small, who was participating by telephone, voting in favor.
Former Police Captain Charles Cherry tried the Council's patience yet again during speakers from the floor, this time prompting this council's second Cherry-inspired inquiry into limiting speakers from the floor. Cherry gave an explicit, though not profane, description of a sex act by a police officer, which upset Vaughan, who expressed concern that children watching the meetings might be exposed to vulgarities and explicit material. "Mr. Cherry, I have an 11-year-old daughter who's watching this right now," she told him.
At the end of the meeting Vaughan and several councilmembers asked Shah-Khan about the possibility of "beeping" out undesirable words and phrases on broadcasts and Perkins suggested limiting how many times a month a particular speaker could speak from the floor. Shah-Khan said he would look into it and that there were some legal options, but he advised that the council had to follow the First Amendment.