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City owes recycling contractor more than $100,000

Friday, January 23, 2009 by Austin Monitor

The generation that survived the Great Depression told us that part of the formula for coping with a bad economy was to save and reuse everything possible. But the current growing recession has apparently become so deep that it’s even made recycling costly, just when the city is pushing the concept to the forefront.


“We need to rethink the concept of trash, and recognize that it is a commodity,” said Mayor Will Wynn on Thursday, as he asked Austinites to help the city improve its recycling processes and implement the Zero Waste Program approved by the City Council last week.


But many of the numbers surrounding Zero Waste and the city’s recycling efforts just don’t add up right now. And critics of the city’s Solid Waste Services Department (SWS) say some steps taken by the city staff may have made the situation worse than it might have been.


Indeed, trash, like other commodities, is worth a lot less than it was just a few months ago. For SWS, that means instead of receiving fees for all the things citizens recycle, the department now owes recycling contractor Greenstar more than $100,000. 


In October, the first month of the much-criticized contract with the private contractor, the city made $27,444. But after the recession took hold worldwide in November, the latest month for which information is available, recycling cost the city $161,000, according to SWS Director Willie Rhodes.


Rhodes had projected the city would receive $1.5 million in revenues from recycling on an annual basis. However, that projection was based on pre-recession prices for recycling.


In a memo to Mayor and Council, Rhodes explained why that isn’t going to happen.


“The most important drivers affecting this market condition are Asia’s temporary cessation of purchasing processed post consumer recyclable materials, the weak global economy, and consumers’ response in terms of their significantly decreased buying habits,” he wrote.


Gerry Acuña, chair of the city’s Solid Waste Advisory Commission, says based on the current market the city could end up owing Greenstar $1 million by this summer.


Acuña is in the recycling business himself and monitors the prices closely. He agrees the Zero Waste Program is a good one but is worried about how the city will be impacted by the low prices for recycled materials such as paper, cardboard, metal and plastic. Acuña and other members of the commission have criticized SWS for how it handled the planned city single-stream recycling facility.


“The City of Austin at one time discussed their own materials recycling facility, a MRF,” he said “We asked Willie back then, ‘why don’t we save money, do a MRF through public-private venture?’ Now the economy has headed south, we did not cover ourselves.”


Acuña adds, “I was very impressed by the Mayor’s news conference,” on Thursday.  At that time, Mayor Will Wynn asked for public input on recycling. “We don’t want to literally do anything to discourage recycling. It’s just a very bad situation, a very poorly written contract.”


Acuña and Bob Gregory of Texas Disposal Systems said that the price for cardboard has gone up slightly, but overall, prices for most recycled commodities have dropped as much as 75 percent across the board in recent months.


“We heard cardboard recycling has gone up,” Gregory said. He said he had received an offer of $5 a ton; it previously was $0. “In October, we were getting $91 and now it’s $31 for newsprint. We have not yet seen any bottoming out.”


He said the price of recyclables depends to a large extent on foreign markets like China.


“The mills here are just packed,” Gregory said. “That’s the reason we’re going to need a combination facility for pulping and remolding and some biomass and source separated materials for this area. That way as the market changes, we’ll have different alternatives for it other than all going to the landfill.”


Austin’s SWS customers currently recycle an estimated 30-40 percent of their trash. Under the Zero Waste Program, the Mayor said, the city aims to recycle 90 percent of its trash.


The city began its Single Stream recycling program last fall, converting from small bins collected once a week to large, 90- gallon bins that collect an expanded array of material every other week. The program’s success has contributed to the problem with the Greenstar contract. As the city has more materials to process, it means a greater loss in a collapsed market.


According to Jill Mayfield with SWS, the city will not have to pay it bill to Greenstar in cash. The city will merely need to deliver the equivalent value in recyclable materials to them within the term on the contract.


Acuña said that’s part of why it’s such a bad deal.


“Even though this is a two year deal, as bad as it is, the city won’t be able to get out of it,” he said. “The city pays its bill by providing more recyclables, so it may go on for years and years. That’s part of the reason this is such a bad contract.”


The city wants to know what you think about recycling. You may take their survey at:

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