Greenstar offers city lower recycling rates in return for contract extension

Greenstar North America, the company trucking Austin’s recycled plastic, cans, and paper to San Antonio for recycling, has offered the City of Austin a lower price for recycling in return for an extension of its contract.

 

According to a letter sent to the City Council this weekend by Greenstar lobbyist Carole Keeton Strayhorn, the city must repay Greenstar the approximately $2.2 million in past due balances it currently owes in order to negotiate a better deal than it has now.

 

Solid Waste Services Acting Director Tammie Williamson confirmed Tuesday that her staff had been negotiating with Greenstar for several months and that the city does plan to pay the overdue money next month. However, she said because the amount is so large the City Council must approve the payment.

 

Austin is currently also seeking Requests for Proposals to build a materials recovery facility (MRF) for Austin’s recycling needs, but the date such a facility might open is uncertain. That uncertainty is what might make the Council decision on how long to contract with Greenstar more difficult.

 

Williamson said she expects the Council to select a contractor and/or operator for the city MRF in January. On Monday, the city issued a request that allows proposers to come up with either a private proposal or one based on a public/private partnership.

 

The city currently pays Greenstar $90 per ton to haul and recycle paper, cans, and plastic waste. The current contract between the city and Greenstar is scheduled to end on Sept. 30, 2010. Originally, the city was supposed to make money from the contract, but when the recession hit late last year the market for recycled material collapsed with it. As a result, the city began to lose money on the contract almost immediately. (See In Fact Daily, April 7, 2009; April 8, 2009.)

 

Strayhorn said, and Williamson confirmed, that Greenstar is offering these options:

 

1. Reduction in price of $5/ton in return for the city delivering 100 percent of recyclable materials for one year, through September 2011; or
2. A reduction in price of $3.50/ton in return for the city delivering 100 percent of recyclable materials for the first six months of a one-year extension and at least 50 percent of all such materials for the second six months. That contract could be extended for six months at a time if the city’s MRF is not yet ready; or
3. A reduction of $20/ton in processing fees in return for a three-year extension of the contract.

 

In her letter to Council, Strayhorn expressed concern that staff would not present the third option to the City Council, but Williamson said that SWS intends to give Council all the options put forth by Greenstar. She estimates the city would save about $1 million per year under the third option.

 

“They’ve been great and negotiating in good faith,” said Williamson. “We want to make sure we’re good neighbors and good partners.”

 

Strayhorn sent the letter describing the options over the weekend to make sure that her client did not violate the city’s rules regarding contact between representatives of a bidder and the City Council or staff during the time between release of an RFP for the MRF and a Council decision on the winner. Her concern about those rules indicates that Greenstar is considering making a proposal to the city. 

 

Strayhorn’s client would of course prefer to have the longer contract. In making the decision, the City Council will have to make an educated guess on how long it might take to build the city’s own facility.