City Hall Hustle: Recycling an Old Issue

Talks on awarding the city's long-suffering long-term recycling contract dominated City Council's meeting last week. And while Solid Waste Services' suggestion to award the contract entirely to Balcones Resources would create the most value for the city, the contract ain't in the bag just yet.

We last left the trash talk saga in June of last year, when City Council, with a comparatively rare split vote, approved negotiating a joint contract with Balcones and Texas Dis­pos­al Systems. Balcones had scored well in the city's competitive bidding process; TDS, meanwhile, was booted from bidding over a violation of no-contact rules in the city's lobbying provisions. But seemingly dissatisfied with bids from the TDS-free field, council scuttled the competitive process, and voted 5-2 to talk with TDS and Balcones about long-term recycling services. That didn't sit well with Sheryl Cole, who, along with Bill Spelman, were the only votes against the switch up, with Cole saying, "The sanctity of the procurement process is on the line." (See "TDS, Balcones To Split City Recycling Work," July 2, 2010.)

Fast-forward some nine months to SWS Director Bob Gedert's presentation to City Council last Thursday. According to Gedert, SWS looked at "four legs of the full fiscal analysis" to make its decision, including: processing fees, facility fee reimbursements to the city in the form of carbon offsets (either cash, or, in TDS' proposal, an actual tree for every 1,000 tons processed); revenue shares with the city; and collection and delivery costs. They tabulated these costs for the competitors under several different scenarios, with one company receiving all the city's stream, or sharing the stream in different ratios.

SWS estimated lower processing fees from a 100% TDS arrangement, and the best collection and delivery costs in a 60/40 Balcones/TDS split. In the remaining categories, SWS proposed awarding 100% of the contract to Balcones, a recommendation that carried over to their "bottom line" recommendations, estimating Balcones' costs between $1.6 million and $3.8 million, vs. TDS' between approximately $3.7 million and $4.6 million.

Gedert noted that Balcones also agreed to terms TDS did not, including a "most favored nation" clause allowing the city to renegotiate should the company take on another municipal customer from the area at a lower rate. The 20-year contract also contains "reset dates" – the first of which is in three years – when the city could resolicit the companies (and presumably others) for the best bids. Gedert said the flexible contract is "a national model that [is] being watched fairly carefully by zero-waste communities across the nation. And as we design this contract, including the master agreement and the service schedules and these concepts here, this is a model agreement that will set the tone for future recycling contracts across the nation."

Despite Balcones' acceptance of all the city's terms, and Gedert's declaration the contract "saves the city approximately – if you look at low, medium, and high markets – about $400,000 a year from the next closest proposal, or $1.2 million over the first three years," council seemed concerned about giving the entire stream to Balcones or shutting out the politically connected TDS. Mayor Lee Leffing­well said, "There's probably some inherent value [albeit] probably hard to quantify," in having two separate contractors with their own material recovery facilities. "It seems like we were in this situation not too long ago where we had 100% of our recycling resources dedicated to one – to one recycler, and we had problems with that because when the economy went down, we were in a situation where it was hard; we were kind of stuck, and we had to look for things we could do. And that's where we are now." Gedert replied that throughout SWS staff's six-month negotiation, they considered competition "a high value to the city," but ultimately, "The question is, is the value of that split load worth sacrificing that $1.2 million. And 'sacrificing' is a harsh term. It's a trade-off. Is that value a good trade-off? I find that differential too high to make that trade-off."

Leffingwell offered another twist, suggesting that he wasn't convinced yet: "When we make our decision, it will be more than just strictly numbers because those numbers are estimates anyway. There is no guarantee what those numbers are going to be. We thought we had one before and we didn't."

A final presentation on the contract winds back to the Solid Waste Advisory Commission on April 6, with council action expected the following day, April 7. All we can really say at this point is, expect the unexpected.

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