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Council likely to postpone Greenstar vote, opt for executive session

Thursday, February 25, 2010 by Michael Kanin

A majority of City Council members tell In Fact Daily they would prefer to postpone today’s scheduled consideration of an extension of the recycling contract with Greenstar (Mid-America Recycling) and discuss the matter in executive session with their attorneys. The move comes amid a flurry of activity related to the city’s handling of recycling and solid waste.


The renegotiated contract would reduce the processing costs incurred by the city of Austin by $3.50 a ton, if approved. It would also extend the deal for up to two years. City staff said that poor economic conditions over the first year of the existing contract have cost it $2.6 million — an amount the city will have to pay Greenstar whether they extend the contract or not. 


Texas Disposal Systems CEO Bob Gregory says his company will take the city’s recycling for free, saving $2.5 million per year for up to three years. Still, city officials are more than a little wary of Gregory’s offer.


Greenstar and seven other bidders have responded to the city’s request for proposal for a Materials Recovery Facility (MRF). It had been assumed that TDS would also respond to the bid request.  However, when TDS was accused of violating the city’s anti-lobbying ordinance in connection with the MRF RFP, it elected not to respond.


After sending a copy of their complaint about TDS to the city attorney, Greenstar was also accused of violating the city’s anti-lobbying ordinance. That ruling has since been overturned.


Greenstar and the other bidders have since resisted the temptation to comment publicly on TDS’ proposal after seeing how little it takes for the city to decide that a bidder has violated the anti-lobbying ordinance. So, it is possible that they are offering equally generous terms to the city.


In place of an RFP, TDS offered the city an opportunity to renegotiate its existing 30-year solid waste and yard trimmings contract. In that proposal, TDS pitched two MRF concepts, a new trash transfer facility in north Austin, a path to curb-side composting, and other solid waste handling ideas.


Assistant City Manager Robert Goode told city officials on Wednesday that TDS’ effort to renegotiate portions of its existing contract to include provisions for a MRF was invalid. City Attorney David Smith ruled that the offer was in fact a response to the MRF RFP. Smith said that because the offer was received after the Feb. 9 deadline for that RFP, it could not be considered by the city (see In Fact Daily, Feb. 24).


TDS’ proposal was, in part, aimed directly at the pending extension of the Greenstar contract. The company had told the city that it could provide it with a recycling program that would come at no cost to Austin taxpayers. TDS chairman and CEO Bob Gregory maintains that his company’s proposal was not a response to the MRF RFP.


Austin’s Solid Waste Advisory Commission was set to offer the Council it’s take on a proposed Greenstar extension—at least until Tuesday’s winter weather forced a cancellation of a special meeting called for that purpose. On Wednesday, the city’s director of Solid Waste Services, Bob Geddert, recommended that SWAC commissioners “consult (their) represented Council member” about the very fluid city recycling situation. He also voiced his support for adopting the Greenstar extension.


In an email to SWAC commissioners, Geddert cited five reasons for his support of Greenstar. These were:


§       “Stronger audit rights for the city.” There has been some question about whether Greenstar has been accurately reporting the mix of materials it collects from Austin residents. Even a minor mistake in this regard could cost the city money. According to Geddert, the new contract “strengthens the City position on this matter.”

§       An amendment that would fix “the market value of the cardboard and paper fibers” to the “high side” of the Southwest Region market index by which those prices are measured. There is some fluidity with newsprint pricing in Greenstar’s current deal.

§       An amendment that “has strengthened language to guarantee the material is recycled.”

§       A flexible “timeline of extensions.” Geddert says that the Greenstar extension would give SWS maneuverability when it comes to awarding its MRF contract.


“My professional opinion favors the Greenstar amendment as a means to fix certain identified problems in the existing contract, and to guarantee uninterrupted processing of the City’s recyclables until a new MRF is built and operational,” he wrote.


SWAC vice chair Rick Cofer does not agree with Geddert’s assessment. In an email, Cofer told Mayor Lee Leffingwell and members of the Council, “approving the proposed amendment to the Greenstar contract is problematic.”


Cofer added that the city would be obligated to send all of its recyclable material to Greenstar until Sept. 2011 under the renegotiated deal. He pointed out that no such obligation exists in the current agreement. He also said that the city could choose instead to activate the two six-month options contained in the current deal to create a bridge to a new MRF. Under the current deal, he wrote, the city is only obligated to send one-third of its recycling to Greenstar.


Cofer also addressed the TDS situation. “I don’t know enough of the details to comment on the City Attorney’s opinion concerning the TDS proposal,” he wrote.  “(But) I believe that if the City were to bid out the recycling contract then TDS could respond to such a bid. It just seems like a shame for the City to not even evaluate the TDS proposal compared to the Greenstar contract amendment.”


In an email to In Fact Daily, Gregory pointed out what he saw as an inconsistency in the city’s position. “If Greenstar (who is a respondent to the RFP) can amend an existing contract that matches the MRF scope of work from the RFP,” he wrote, “then why can’t TDS amend its existing 30 year contract that clearly allows the negotiation of a MRF during the RFP review process?”


Gregory said, “It’s time the current City Manager explained why he wants the City Council to close the door on a $7.6 million savings over the next three years, as compared to his choice of MRF contractors, Greenstar.”


City Manager Marc Ott responded early this morning: “Mr. Gregory is entirely responsible for where he finds himself regarding this matter.”


Despite yesterday’s set backs, Gregory remained optimistic about his firm’s chances. “I will work to defend the right to do business in Austin,” he said. “(They) didn’t close the door on anything.”

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