$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.