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Waste services chief says recycling program may never outpace costs

Tuesday, April 5, 2011 by Michael Kanin

Bob Gedert, the director of the City of Austin’s Solid Waste Services Department, has told members of the Austin City Council that the overall costs of its residential single stream recycling program “will not be completely offset by the revenue we get from the material.” 


That statement came as part of a memo sent Monday defending his staff’s analysis of proposals from Balcones Recycling and Texas Disposal Systems to handle the city’s recycling, and explaining two contractual sticking points.


In the memo, Gedert also asked Council to delay until April 21 so that staff can work out a few final details in the contract.


“If you want to skip ahead to the end of this book to find out how it ends, you may wish to just look at the graphics that I’ve attached,” wrote Gedert, “They show that in the 18 different market scenarios that we modeled, the 100% Balcones proposal is the better financial offer.”


However, Gedert’s statement about profitability may prove to be the most interesting portion of his memo. “I don’t believe the complete collection and delivery costs were ever factored into the equation in the beginning,” he wrote. That, Gedert argues, robbed the Council and members of the community of a full picture of “the nature of this program.”


“The program saves our community millions of dollars every year compared to landfilling the recyclables, and is a great success,” he continued, “but the program was never really going to offset the overall expenses.”


Just how much the city makes from its single stream residential recycling program has been at the heart of a debate that has raged for some time at City Hall. In 2008, Greenstar Recycling became the program’s first contractor. That year also proved to be the beginning of an unusually low period for the prices of the commodities sold for reuse by recycling firms.


The fact that the city ended up paying a substantial amount of money to that firm – when expectations were that it should have been collecting revenues – played a key role as the city rebid that contract. Both Texas Disposal and Balcones were involved in that process.


Gedert told the City Council on March 24 that its best financial option over the next three years is to award the entire contract to Balcones. Texas Disposal has disputed the numbers that led that conclusion (see In Fact Daily, March 25, 2011, April 4, 2011).


Gedert’s memo appears to respond to Texas Disposal’s concerns. In it, Gedert explains that the five months of commodities market data used by city staff to evaluate the contracts had produced an accurate look at the respective contracts. He notes that the market figures were intended as test points, set “to evaluate the proposals in differing market conditions.” Their historical context, in other words, was not of key importance.


“It doesn’t matter what you call the market, it just matters how the proposals perform under those conditions,” he wrote.


The five months selected by Gedert had been a point of contention for Texas Disposal. That firm’s CEO, Bob Gregory, has argued that the slice taken by city staff represents an all-time market high, and is thus unreasonable to use in staff’s attempts to look ahead.


Several members of the Council had planned to ask Gedert questions about recycling proposals at today’s work session.

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