No good deed goes unpunished
There's good news and bad news about Austin's single-stream recycling program. In the five months from its inception in October through February, Austinites deposited a total of 20,186 tons of recyclables into their big blue bins – nearly double what Dallas recycled in that time frame and more per head than San Antonio. But while all three cities use the same recycling firm, Dallas and San Antonio made a profit off their programs, while somehow Austin's projected $1.9 million-a-year revenue stream is $922,000 in the red. But Austin's problem is not the recycling – it's the contract.
On Oct. 1, Austin signed a revenue-based contract with Vista Fibers (now Greenstar North America), under which the city collects recyclables and then Greenstar takes them to its material recovery facility (i.e., the MRF), sorts them, sells them on the open market, and splits the revenue with the city – minus fixed transportation and processing fees. But the terms of the Austin contract were struck when gas was expensive and the recycling market was strong. Since then, gas prices have plummeted, and the global recyclables market has collapsed. Prices for aluminum cans have fallen from $1,660 a ton to $880, and glass has no market value. Add the fixed processing and transport fees, and Austin ends up losing money on the deal.
Meanwhile, Dallas and San Antonio are still turning a profit. While their revenues are now a fraction of their October highs, their processing fees are roughly a third of what Austin pays because they're on longer contracts (10 years against Austin's two-year deal) – and they don't pay extra for transport. "How do they [Austin] strike a bad deal like this?" asked Robin Schneider, executive director of the Texas Campaign for the Environment. "You really have to look to the competence of city staff."
The only reason the city hired Greenstar is that the Solid Waste Services Department, after having been instructed by council to begin planning its own MRF, let the project disappear in the decision-making process (see "City Adds Costs and CO2 to Recycling Program," Oct. 24, 2008), which led to a departmental audit (still ongoing) run by Austin Energy staff. Solid Waste Advisory Commission Vice Chair Rick Cofer said last week, "I think there will be consequences for the mismanagement of the department." While Austin is still likely to have its own MRF some day, for now the city is locked into the Greenstar contract for two years ending in October 2010 – and even if a local facility is built during that time, Austin is obligated to send Greenstar a guaranteed volume of trash. If the city is still in the hole at the contract's end, it will pay in recyclables, which will reduce the initial value of a city-owned MRF.
"The market is probably a good ways off to making the city whole on this," said Bob Gregory of Texas Disposal Systems. It was Gregory who first put the numbers together, and he says he doesn't blame Greenstar for negotiating a favorable contract (in fact, his firm uses Greenstar's MRF to process the recyclables it collects in San Marcos). Instead, he says he blames Austin's rush to save $3 million a year by shifting from weekly collection with noncompacting trucks (which fill up quickly and have to return to the depot) to biweekly collections with compacting trucks. Solid Waste Services concentrated on getting that one saving in place as fast as possible rather than taking the extra time to ensure the best terms and biggest savings through a competitive bidding process. Instead, says Gregory, "Greenstar cut their own deal, and the city signed it."
Cofer and Gregory say they are optimistic that the contract can be renegotiated. ("Greenstar doesn't want to be known as the company that hosed Austin," said Cofer.) There is an option to lock in at fixed prices, but Council Member Laura Morrison urges caution. "If we were to lock in [a price] at this point, it would not be a good one," she warned.
Schneider said the council should look at local options, and Gregory said his firm is looking at new projects, such as mulching cardboard and using pulverized glass for sediment filtration, to cut down on what has to be shipped for processing. But Schneider remains frustrated at Dallas and San Antonio getting better contracts. She added: "The work being performed of putting waste through a big machine to be sorted, it's the same work. So why are we paying two to three times the money for our stuff to get on the same sorting line?"
Yet in practice, single-stream has been a huge success: Austinites have increased their recycling by 47%, and the city made a small profit in October, proving the project's viability. Also, the "losses" can be carried forward and costs deducted from future sales. Greenstar spokeswoman Kiska Workman said: "It's kind of sad that recycling is getting a bad name, because it's the right thing to do. It's unfortunate for everybody that commodity prices worldwide have collapsed. But think about how much material is not going to landfills and the cost associated with that. There is a net benefit."