MAKE NO MISTAKE. One look at the last three years of financial statements of Recycle Ann Arbor, and the company’s losses make it clear that CEO Melinda Uerling was struggling to keep the company, controlled by the Ann Arbor Ecology Center, afloat. Most recently, city staffers went before Council with a resolution for a taxpayer bailout of Recycle Ann Arbor because the estimates of how much more would be recycled when single-stream recycling went live were off by 40 percent.

There was finger-pointing. Tom McMurtrie, the city staffer who oversees the management of the recycling program, who approved the estimates made by a consultant from a company owned by a member of Recycle Ann Arbor’s Board of Director’s, a man who also sits on the Ann Arbor Environmental Commission, blamed RRS, the consulting firm. Recycle Ann Arbor’s CEO blamed city officials whom she claimed never allowed Recycle Ann Arbor to have input concerning the estimates of projected increases in collections. McMurtrie’s boss, Sue McCormick, spent millions on new recycling carts, even as tens of thousands of old carts, also worth millions of dollars, lay unused in a giant heap at the Water facility on South Industrial. Tens of thousands of containers, discarded so that the city could purchase new matching containers, are junked in a pile that is 300 feet long by about 50 feet wide, according to a disgruntled city staffer who took photos this month (below) of the approximately 45,000 perfectly useable, discarded bins.

City Council members rallied behind Recycle Ann Arbor as a “local” company that “needed the city’s support.” In 2010, Michael Garfield, head of the Ecology Center, the company that controls Recycle Ann Arbor, gave glowing political endorsements to Fifth Ward Council member Carsten Hohnke, as well as John Hieftje, both of whom voted to repay Garfield’s characterization of them as forward-thinking environmentalists with a recent $1.7 million dollar taxpayer bailout.

In short, Recycle Ann Arbor was being badly mismanaged, and up until recently only the city’s taxpayers paid the price. A source within Recycle Ann Arbor told A2Politico that John Hieftje, Melinda Uerling and Michael Garfield  have been feeling the heat from a recent series of posts A2Politico did on Recycle Ann Arbor’s financial problems. Members of the Recycle Ann Arbor Board of Directors became concerned with the embarrassing details of salary increases awarded to Uerling even as Recycle Ann Arbor’s losses approached $700,000.

The cast of characters in this ongoing multi-million dollar public money Ponzi scheme is a tight web of political cronies that begins in City Hall and encompasses both the Ecology Center and Recycle Ann Arbor.

In September of 2000, The Ecology Center put out a lengthy statement announcing the hiring of Melinda Uerling. That statement gives a bit of background:

Uerling comes to RAA after working four years in Toledo as the Assistant Director of the Lucas County Solid Waste District and as the Executive Director of the University of Toledos Engineering Technology Outreach Program. In the latter position, she directed a program that provided approximately $1 million worth of process improvement recommendations to industrial manufacturers and other businesses. In the former position, she oversaw the District’s recycling drop-off collection program, its education program, and waste assessment assistance initiatives. Prior to working in Toledo, she served as a Project Manager for Resource Recycling Systems, an Ann Arbor-based solid waste consulting firm, which has played a major role in the development of the City of Ann Arbor’s waste management programs.

The statement ends on an upbeat note: “We are delighted to welcome Melinda to the organization, and look forward to her leading RAA to an even greater future.”

Between 2000 and 2009, the cost of solid waste removal in Ann Arbor doubled. The number of tons collected by Recycle Ann Arbor stagnated, as the graph, below, from the city’s web site, clearly shows. The number of tons of materials sent to the landfill actually rose after Uerling took over at Recycle Ann Arbor.

However, there is one area where we have seen a dramatic increase with respect to recycling: the amount of money taxpayers spent to pay Recycle Ann Arbor to haul our recyclables has skyrocked since 2004, when the City of Ann Arbor granted the non-profit a 10-year contract to haul our materials. That merit-based contract called for the City to pay Recycle Ann Arbor $766,000, according to minutes from the December 15, 2003 City Council meeting.

Ann Arbor taxpayers foot the bill for the trucks, fuel, and repairs of Recycle Ann’s Arbor’s collection vehicles. Look again at the chart above at the number of tons recycled.

By 2008, the cost to taxpayers to have Recycle Ann Arbor haul virtually the same number of tons of material to the MRF that the company hauled in 2003, had risen from $766,000 to a whopping $1.6 million dollars. City Council approved the payment of $1.8 million dollars to Recycle Ann Arbor for fiscal year 2010. The November 2009 resolution to move to single-stream recycling includes the following information from city staff to justify the expenditure and support the resolution by the politicos:

Whereas, Implementation of upgrades to the Material Recovery Facility (MRF) to accept single stream recycling provides a number of benefits to the City, including a cleaner community, greater operating efficiencies, overall increases in recycling and rewards to City’s residents for recycling

The following net savings are anticipated as a result of these changes in the recycling program.

·       $30,000.00 annual savings in recycling dumpster collection

·      $450,000.00 annual savings in curbside recycling (RAA contract)

·      $450,000.00 annual revenues from merchant MRF users

The 2010 $1.8 million dollar allocation to Recycle Ann Arbor obviously impacts the alleged $450,000 savings touted by the three city staff who prepared (Tom McMurtrie, Systems Planning Unit), reviewed (Sue McCormick, Public Services Administrator) and approved (City Administrator Roger Fraser) the resolution presented to Council at the November 2009 meeting. At that meeting, Council member Carsten Hohnke touted the “savings” taxpayers would realize by switching to single stream recycling.

The recent $1.4 million dollar bailout completes wiped out any projected savings.

“It costs less to pay city workers to pick up the garbage, even with the generous pay and benefit packages provided to them, than it costs to contract with Recycle Ann Arbor to drive the city-owned and maintained trucks to pick up our recycling,” said a city staff member who works in the solid waste department and who asked no to be identified. In fiscal year 2009, actual salary and benefits to city employees for residential garbage collection came to $738,093. In 2011, budgeted salary and benefits for city employees for residential garbage pick-up is $789,271.

In 2009, Recycle Ann Arbor spent $809,090 on salaries and benefits for its collection workers, and has budgeted $865,682 for the 2011 fiscal year. In 2009, for the City of Ann Arbor to contract with Recycle Ann Arbor to provide drivers to collect multi- and single-family recycling, the contract labor was $1,580,794 to run eight recycling trucks. The City of Ann Arbor spent $1,171,020 to run 10 city trucks to collect multi- and single-family solid waste.

Ann Arbor provides only about 35 percent of the materials that are recycled at our own Materials Recovery Facility.

Sometime in late August or the beginning of September, Recycle Ann Arbor very, very quietly parted ways with Melinda Uerling (pictured, right). The first public mention of the change came in a short snippet posted by the AnnArborChronicle.com: “The financial stress at RAA may have played a role in the replacement a few weeks ago of its CEO, Melinda Uerling. The RAA website now lists Kirk Lignell in that position.” Between August 12th and September 21st, Recycle Ann Arbor posted no news to its web site. There is not a peep about Uerling’s departure or the hiring of Lignell on either the Recycle Ann Arbor or the Ecology Center web sites.

If, in fact, as AnnArborChronicle.com posits, “The financial stress at RAA may have played a role in the replacement a few weeks ago of its CEO, Melinda Uerling,” a public announcement of her replacement could lead to some uncomfortable questions. For starters, Melinda Uerling was, obviously, responsible for the financial health of Recycle Ann Arbor, but Michael Garfield, as head of the Ann Arbor Ecology Center, was responsible for Uerling’s performance. The Ecology Center and Garfield control the Recycle Ann Arbor’s Board of Directors. Garfield sits on that Board, and as a member of the RAA Board presumably reviewed Recycle Ann Arbor’s monthly financial reports that would have tracked the growing losses. Garfield and the Board of Directors increased Uerling’s pay in each of the year’s Recycle Ann Arbor lost money.

That Melinda Uerling has been let go so quietly, and her replacement brought in without an announcement, appears an attempt to get Recycle Ann Arbor back into the black without having to alert Ann Arbor taxpayers, who pay a good portion of the company’s bills, that there have been serious financial problems. In 2009, the Ecology Center lost $335,935, according to the company’s 990 forms, and between 2006 and 2009 Recycle Ann Arbor had racked up almost $700,000 in losses.

It’s not immediately clear what background in environmentalism, management and solid waste management, if any, Kirk Lignell brings to his new job as the head of Recycle Ann Arbor. Lingell has his work cut out for him. Recycle Ann Arbor, according to city staffers who prepared the resolution to bail out the company, is having trouble meeting its day-to-day expenses. While residents are paying ever more under the terms of a no bid contract that sets out the terms of recycling collections, it remains to be seen whether the collected materials are being sold, or simply land-filled. That information has not been released by city staff, or provided to a Council member who requested it.