$2MM No Bid Recycle Contract Not Worth the Risk

On Monday, Oct 21 at 7pm Council will vote on whether or not to extend the lucrative Kimble trash contract to 2019 without going out for bids.

Despite a month of meetings, it’s difficult to understand the ‘emergency’ of the legislation. The only info we have to go on is what the Administration and Kimble’s rep Don Johnson have told us in presentations or in answer to specific questions.   

This $2million a year contract is not a simple extension. There are significant changes, hence the need for a contract:

- An increase in per stop charge from $7.45 to $8.25

- A decrease in tipping fees from $42.50 to $39.75/ton

- An increase of fuel surcharges from $2.65/g(diesel) to $4.02/g(diesel).

- Moving to automated pickup;

- Outsourcing recycling

But with the vote just 5 days away, Council doesn’t have a copy of the contract.

Monday’s vote comes down to two issues:

1. The City’s claim of $500,000 in savings over the period of the extension;
2. The City’s claim that recycling tonnage will increase by 25%

ISSUE 1 - The City contends that Council has the ability to waive competitive bidding “if the reason is in the City’s best interest. In this case, the savings over the period of the extensions is over $500,000.”  

That’s misleading at best. In-house recycling is expected to exceed $100k a year. The extension is for five years. The $500,000 in savings is based solely on the fact that the City would not be doing its own recycling. The City would save $500,000 no matter WHO it contracted to.

As to the new charges, according to Service Dir Bock, “I believe there would be a savings of just over $400,000. This savings is done by a lowering of the tipping fee that [Kimble] charges at the landfill. The amount of tonnage, due to the automated recycling would be lower and hence lower cost.”

Whoa, whoa, whoa –Backup! The City is ASSUMING an additional 2,153 tons will be recycled. At the current price of $42.50/ton, that’s $91,502.50 the City ASSUMES we will save. The Administration is counting non-existent tonnage as a savings. YOU CAN’T DO THAT. Delving further, according to Kimble’s numbers, currently, the City is paying $678,257.50 in tipping fees for 15,959 tons. Under the new contract, for the same amount of tonnage, the City would pay $634,370.25. That’s a DECREASE of $43,887.25.

Sounds good, but then Mr. Bock said, “The fuel surcharge would be virtually eliminated. What I mean by that is [currently] once [diesel fuel] goes beyond [$2.65 a gallon] at that point a fuel surcharge kicks in and we pay a fuel surcharge. That fuel surcharge under the current agreement runs us on average about .55 cents per home per month [for a total cost of $7.45].”  We’re virtually eliminating the fuel surcharge at .55 per home/per month. That’s where we obtain the savings that are projected in the new contract if it were to be done.”

Whoa, whoa, whoa –Backup! Per Kimble’s own numbers, currently the City is paying $1,471,792.20 for 16,463 stops. Under the new contract rate of $8.25ph/pm the City would pay $1,629,837.00. That’s an INCREASE of $158,044.80.

When you put the two together, it’s a net loss of $114,157.55 per year – which virtually wipes out any savings from outsourcing the Recycling program and negates the argument for bypassing the bid process.

ISSUE 2 – The City anticipates a 25% increase in recyclables with automation.

The City contends that, “In all communities where they have gone to automated recycle collection with the larger carts, they have seen a substantial increase in tonnage.” That may be true, but the communities used as examples have two things going for them that Euclid does not. They have an aggressive Reduce/Reuse/Recycle educational program/policy and they have relatively stable populations.  

Euclid has yet to put in place a comprehensive educational program or any kind of policy that encourages landfill reduction. Mayor Cervenik has told Council that under automation people will be allowed to continue putting out as much trash as they want every week. Unlimited trash disposal does not encourage landfill reduction. In other automated communities, excess trash is permitted once a month. If the City put that in place, folks would think twice about bagging their grass or pitching items that could be restored, re-used or recycled.

Another reason to question the increase is the City’s high transiency rate. How is the City planning to inform and encourage new residents to recycle? What motivation does it plan to use for renters who don’t pay the garbage tax and who can pitch anything in unlimited quantities? Or for landlords clearing a recently vacated property?

Unless the City implements a true educational program and/or stabilizes its neighborhoods it cannot anticipate significant landfill diversion.

The way I see it, despite the Mayor’s assurances to the contrary, the City’s recycling program has become a money pit. What originally was going to cost the City nothing is now going to exceed $100,000 a year.

The Mayor is stuck in an increasingly costly in-house recycling program. Extending the current Kimble contract conveniently gets the monkey off his back that he put there. That’s why this is an emergency.

Council should vote Ord. 320-13 down. Let the City limp along for the remainder of the current contract. Use the time to put in place an aggressive Reduce/Re-use/Recycle policy before a new contract is awarded. A well thought through program can divert significant landfill tonnage. The full time Administration’s attempt has been a dismal failure. Here’s hoping the part time Council can do better. 

Latest Forecast on Recycling Savings Is Suspect

Every forecast Cervenik has
made has proven wrong

Bill Cervenik should have been a weatherman. No matter how many times his forecasts are wrong, he never apologizes. He ignores failed predictions as though he never made them and presents new forecasts with confidence. Like the weatherman, Cervenik is never held accountable for his failed projections no matter how often he makes them. The amazing thing is Councils past and present continue to believe him. Case in point…

On Monday, Oct 21, Euclid City Council will vote yes or no to grant a 4yr 9mo extension to Kimble, the company picking up our trash. The extension is contingent upon Kimble doing 3 things: Moving to automated pickup; taking over Recycling; and lowering its tipping fees for landfill trash. There’s also a mutual option to extend the contract out for another five years, again without a bid.

The current contract ends Feb 28, 2015. The way it’s supposed to work is that in the Fall of 2014 the City normally would go out for the lowest and best bid for trash pickup. Four years ago, 4 companies bid – J&J (now Kimble), Republic, Rumke and Waste Management. Kimble offered the lowest price, and won the $2million-plus contract.

If this new deal is approved, the City will bypass the bid process. With the mutual option to extend, the City may never go out for bids again. It’ll just keep extending never knowing if it could get a better arrangement in price and service. The Administration contends that Council has the ability to waive competitive bidding “if the reason is in the City’s best interest. In this case, the savings over the period of the extensions is over $500,000.”

Service Director Lee Bock has said the savings would be over $400,000 over the next year and a half. Well which is it - $400k or $500k? IT IS NEITHER. In fact, it’s more likely the contract will INCREASE the City’s costs anywhere from $100,000 to $200,000.

In the Fall of 2010 Mayor Cervenik assured Council that if it approved in-house recycling he guaranteed it would pay for itself. He even said it very likely would show a profit. In the 3 years since, every forecast Cervenik made regarding the program has been wrong.

Forecast #1 Sept 22, 2010 – Curbside Recycling Will Cost the City Nothing: “The bottom line is, we can do curbside recycling basically for free and with the grant money being used initially until we build up to 4,000 tons, we really cost the general fund no money at all in doing this.”(Cervenik, Sustainability Committee Meeting) FACT: 2012 cost the City $62,949.80. 2013 is expected to cost the City about $100,000.

Forecast #2 Oct 4, 2010 – Recycling Tonnage Will Exceed 5,000 Tons: “I believe we can get 5,000-6,000 tons and with the revenue from the consortium, we will save money and actually make money or save expenses on our trash contract.” (Cervenik, Council Meeting) FACT: The second year (2012) brought in 1720 tons. Tonnage remains relatively flat.

Forecast #3 A New $90,000 Truck Is Adequate For the Job – Prior to approving a small 1-ton truck, Cervenik told Council, “Since [the crew] won’t be picking up that much on a daily basis we feel the size of the truck which is 12 yard compactor will allow us to have to do only one trip if in fact we decide to take the recyclables out [to Kimble] rather than having them pick them up.” FACT: “Although the one ton can complete the task, it is certainly not the most efficient, nor effective means to do so.” (Service Dir Randy Smith Jan 24, 2011 Sustainability Committee)

Forecast #4 Purchase of a Used Truck Worthwhile – Because the Rabbit Truck had proven inadequate, the Program needed a second truck to haul recyclables to Kimble and act as backup. In Feb, the Administration came back to Council requesting approval to buy a second 9-year old BIG recycling truck for $30,600. Cervenik assured Council that, “If you permit us to purchase the second truck…I certainly expect it to last longer than five years because of its limited use…. This should be the final change of the program.” (Cervenik, Jan 24, 2011 Sustainability Committee) Once again Council prostrated itself at the weatherman’s feet and approved the purchase of a second used truck. All except Gilliham, Minarik and Langman. FACT: The truck expected to last five years continues to break down and will probably be sold for scrap. Council has been told the program must buy another truck to continue.

Mayor Cervenik has been wrong on every forecast since the program’s inception. So Why Is Council Accepting His Projected Savings as Fact? Not one councilperson has challenged the $500k savings in the legislation. If tonnage does not increase significantly, this contract will cost the City.

Should Council negate its responsibility to go out for bids, it will do a disservice to the residents. It will lose the opportunity to negotiate potentially better service and lower costs in a year and a half. Council should find out what the competition has to offer before locking itself into a 5 year contract. But it has not even asked. It should demand implementation of the long-promised education program first. But it's not.

Cervenik told Council the no-bid contract is, “worth taking the risk.” Relinquishing one’s freedom to choose is never a good idea. Given the Mayor’s history of bad forecasting, this is a risk Council can’t afford to take. Given Council’s history, it probably will.