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Council nixes Greenstar extension, will wait for MRF bids

Tuesday, March 30, 2010 by Michael Kanin

The city seems to be inching closer toward a decision about its recycling future. Last Thursday, as expected, City Council voted against a proposed extension and modification of the current contract with Mid-America Recycling (aka Greenstar) to handle the city’s blue bin processing. The unanimous vote reflected Council members’ desire to focus on a long-term recycling solution before settling on a stopgap bridge to the project.


The resolution of the Greenstar question came two days after Solid Waste Services Director Bob Gedert issued a formal response to another lingering issue – the repeated criticism of the city’s arrangement with Greenstar by one of the company’s competitors, Texas Disposal Systems (TDS).


Council Member Randi Shade was quick to dispatch what has been a contentious issue. At Thursday’s hearing she immediately moved to reject staff’s recommendation to approve the Greenstar contract extension (see In Fact Daily, March 23, 2010).


“We have a…process in place for a long term partner for managing our recyclables,” Shade said. “The public need not be worried that we will not have a transition plan in place,” she told the chamber. “It just seems to me that there are multiple options for how we might handle that transition period and that it would be more prudent and more financially favorable for the city, to wait and see who the long term partner might be so that we actually know what our transition plan needs would be.”


The process she referenced is the hotly debated request for proposals (RFP) for a new local Materials Recovery Facility (MRF). In February, the city received eight proposals from seven bidders, each of whom would like to take over the Greenstar gig. Greenstar currently ships Austin’s recyclables to a facility in San Antonio. Under the agreement, the city could owe the company more than $2 million unless the price of recycled materials improves.


In addition to the bids, city officials also received two MRF proposals from TDS that were part of a proposed amendment to that company’s existing Waste Disposal and Yard Trimmings Contract. In February, City Attorney David Smith ruled that the portions of that amendment that could be considered as a response to the MRF RFP could not be considered by the city (see In Fact Daily, Feb. 24, 2010).


Shade reassured Austinites that, as the recycling situation was resolved, their recycling bins would continue to be serviced. “Your recyclables will continue to be picked up, and you need not fear that they will be picked up,” she said.


The Council then voted, unanimously, to reject the Greenstar extension. The whole thing took just over two minutes.


Shade told In Fact Daily that the extension debate “has always been about what we’re supposed to do for a transition plan.” With the long-term solution in place, she added, the Council would be able to “really know better than just a guess (about) how long a transition (it) will be.”


She also said that a positive shift in the market for recycled goods had relieved some of the pressure associated with the Greenstar contract (see In Fact Daily, Dec. 18, 2009).


Gedert told In Fact Daily that he was “just fine” with the Council’s decision. He noted that the city would continue with the existing Greenstar contract. That deal expires on Sept. 30 of this year, but the city holds two six-month extension options. Gedert said that his department has until mid-summer to choose whether or not to activate those options.


“This allows us to review over the MRF proposals and present the Council the best MRF proposal and see what our timelines are and react from there,” he said.


He noted that each of the eight proposals currently under review have different timelines. “In May, we’ll know what our preferred selection is through the review process, and then it’s Council action from there,” he added.


Earlier in the week Gedert also responded to a nine-page letter sent to the city by TDS chairman and CEO Bob Gregory (see In Fact Daily, March 23, 2010). In his letter, Gedert stood by the department he inherited just this past February.


A centerpiece of TDS’ argument against the Greenstar extension and its existing deal is its contention that the proposed new deal would cost the city millions. Gregory further argued that he could provide the city recycling at no charge to the citizens of Austin.


In his letter, Gedert disputed Gregory’s claims.


“I am projecting a net benefit to the City for the remaining option terms of the Greenstar contract based on recent four-month trending, and projected revenue trends that were validated by several national recycling market specialists,” Gedert wrote.


“Although all projections are subject to validation by actual market conditions, I believe these projections are realistic and verifiable.”


“As to the other claims Mr. Gregory made regarding savings on his proposal,” Gedert continued, “Staff has not formally evaluated the TDS proposal, as TDS failed to follow the required procedures for submittal of a response under the City’s clearly delineated process for responding to RFPs.”


Gedert also noted that his department had evaluated a claim made by Gregory that the city could save $1.1 million on transportation costs by shifting to a TDS plan. He called that estimate “unrealistic.”


“If City recycling trucks were directed to the TDS facility in Creedmoor, there would be some savings in reduced operations at the Todd Lane facility,” Gedert wrote. “(H)owever, we would also incur increases in expense in fuel and truck expenses for the added roundtrip mileage south on I-35 to the Creedmoor facility. Staff’s preliminary estimate of these savings and expenses is a net increased cost of $822,000 per year (includes facility savings minus added road mileage, depreciation and labor costs.)”  


Gedert also rejected Gregory’s suggestion that the city might try and stop his construction of a MRF. 


“In my professional opinion, the Austin region needs more recycling capacity above and beyond a City of Austin contracted processing facility, and I strongly encourage construction and operation of multiple MRFs in this region,” he wrote. “With that in mind, city staff will support all efforts toward increasing recycling processing capacity through multiple recycling processing facilities, including Mr. Gregory’s efforts.”


Gregory has indicated that TDS will build a MRF in Creedmoor, regardless of the outcome of the city’s RFP.

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