City Staff Agenda Responses Answer Some Questions About Landfilling of Glass Recyclables

by Patricia Lesko

The Ann Arbor Independent recently reported that for a period of time thought to be several years, prior to July 2016, Ann Arbor’s recycled glass hauled by Recycle Ann Arbor and handled by ReCommunity had been processed (crushed) and then “layered” into the city’s landfill. ReCommunity had a contract with the city from 1993 to 2016. It’s not yet known for precisely how many years this practice went on or how many thousands of tons of glass recyclables were hauled to the city’s Materials Recovery Facility (MRF) only to be used as landfill material. Council member Chip Smith (D-Ward 5), who is running for re-election, alleged in an email that city staff told him in July 2016 the practice had gone on for “a few years” and that he had been “upset” by the revelation. Council member Jack Eaton (D-Ward 4) corroborated Smith’s assertion.

On Mar. 3, 2017 the Ann Arbor Ecology Center sent out an email and posted to its website a news update in which Ecology Center officials said its subsidiary Recycle Ann Arbor’s (RAA) bid to run the city’s MRF, “encourages ‘recycling best practices’ by hauling recyclables loose, and by actually recycling glass (instead of using it as landfill cover).”

City staff written answers to Council members’ written questions submitted prior to Council’s Mar. 6 meeting concerning handling of glass recyclables hauled by Recycle Ann Arbor reveal that the Ecology Center’s Mar. 3 news update/email contained an important misstatement of fact. In asserting that Recycle Ann Arbor would process glass collected more ecologically, Ecology Center was ignoring the fact that the current MRF operator, Waste Management, according to city staff, was already recycling the city’s glass hauled to the MRF by RAA.

At stake for Ecology Center and its subsidiary Recycle Ann Arbor is yet another city contract, this one worth $1.68 million to operate Ann Arbor’s MRF until June 2018. Federal tax returns show the contract would increase non-profit Recycle Ann Arbor’s revenues by as a much as 25 percent. The current MRF operator, Waste Management (WM), a for profit company headquartered in Texas, submitted a slightly lower bid to continue its operation of the MRF. According to city staff, WM has operated the MRF satisfactorily since July 2016, according to written answers from city staff to Council members’ written questions.

Ecology Center has, for the past months, criticized WM’s handling of the city’s recyclables because that company bales the materials prior to separation, which results in a lower quality end product. According to Ecology Center officials, “Baling unsorted recyclables leads to the interlocking of items, making materials much more difficult to segregate at the MRF, which leads to far higher residuals at the end of the sorting lines, and at the end markets.”

However, it’s possible RAA could end up baling the materials as well, but at a bid cost of over $1 million more than the bid submitted by Waste Management. This is just one of several reasons why city staff recommended to Council that it accept Waste Management’s bid to continue to operate the MRF until June 2018.

Agenda Questions

Prior to their twice monthly Council meetings, City Council members may submit written questions to city staff. The questions and staff answers are published in a single document, “Agenda Responses.” Those responses are posted to the city’s Legistar website prior to the Council meeting. The Mar. 6, 2017 meeting Agenda Responses contained several questions regarding a resolution submitted by a trio of Council members that directed the City Administrator to negotiate a contract with RAA, the least experienced and highest bidder, to run the city’s MRF on an interim basis.

For instance, Council member Lumm asked city staff: “The Administrator’s email indicated that this resolution is a ‘bit different than a normal contract resolution.’ That certainly seems accurate as (1) we are negotiating with the high bidder, and (2) the resolution provides for the high bidder to experiment with something and if it doesn’t work, abandon that and do what is in the base bid that they were not the low bid on. That just does not seem fair or proper purchasing process to me so can you please explain how you’ve concluded this is an appropriate competitive-bidding process and not simply ‘bidding’ to set a price for a pre-determined vendor?”

The questions and answers provide the public with important additional details concerning what has been happening with the city’s glass recyclables. City staff present data that track the rising costs of collection/hauling our recyclables, and the acknowledgement of city staff that they evaluated and re-evaluated local non-profit Recycle Ann Arbor’s proposal objectively, even as a trio of Council members used their legislative power to over-ride staff’s conclusions, experience and concerns. In addition, in its Mar. 3 news update, Ecology Center sent out a call to residents to attend the Mar. 6 meeting to speak in favor of directing city staff  to negotiate the $1.6 million contract with Recycle Ann Arbor as opposed to the most experienced, lowest bidder recommended in a six-page memo written to Council by City Administrator Howard Lazarus.

Council member Lane Lumm (Ward 2-Independent) was the author of many of the questions submitted to city staff prior to the Mar. 6 Council meeting. Lumm’s questions show she goes through the Council’s meeting packets (which are often several hundred pages) in an effort to understand precisely why she is being asked to consider consultant contracts. One question to staff revealed that Lumm caught inadvertent omissions from subsequent versions of staff-sponsored and Council member sponsored resolutions.

City Staff Answers to Questions About Handling of Glass Recyclables at MRF Since July 2016

Before voting on the Mar. 6 resolution put forward by Council members Jason Frenzel (D-Ward 1), Zach Ackerman (D-Ward 3) and Chip Smith (D-Ward 5), Lumm, along with Council members Sumi Kailasapathy (D-Ward 1) and Jack Eaton (D-Ward 4) submitted a variety of questions to city staff concerning DC-2 – Resolution to Direct City Administrator to Negotiate a Services Agreement with Recycle Ann Arbor for Interim Operation of the Ann Arbor Material Recovery Facility and Waste Transfer Station and to Amend the Solid Waste Fund Operations and Maintenance Budget by Appropriating $1,680,000.00 from the Solid Waste Fund Balance (8 Votes Required) that elicited detailed written responses. No other Council members submitted written questions to staff about the Mar. 6, 2017 meeting agenda or DC-2.

Important questions have arisen concerning Ann Arbor’s glass recyclables. They include questions about how many tons of glass taxpayer’s paid Recycle Ann Arbor to haul to the MRF were landfilled, under whose direction and for how long the landfilling went on. Three of Ann Arbor’s Council members asked for clarification concerning what WM was doing with the glass hauled to the MRF by RAA. They all received the same answer: Since July 2016, WM had been recycling Ann Arbor’s glass hauled to the MRF.

Question: There has been a good bit of discussion/confusion regarding recycling of glass both in terms of what the City has been doing the past 6-9 months or so and what it will do under this interim contract. Can you please clarify what happened and whether glass will be recycled under the staff-recommended interim contract with WMM and under the resolution-recommended interim contract with RAA? (Councilmember Lumm)

Response: Glass under the current contract with WM is being recycled, and has been since WMM began operating. Glass will continue to be recycled by WMM or RAA under the interim contract. Glass under the previous contract with ReCommunity was being crushed and sold as landfill cover.

Question: It is my understanding that the MRF under the previous operator did not recycle glass materials, such as bottles. It also is my understanding that while Waste Management Inc. has been operating the MRF, glass has been recycled. Will glass collected in curbside recycling be sent for recycling by Recycle Ann Arbor under this proposed contract? (Councilmember Eaton)

Response: ReCommunity glass was sent for daily landfill cover, WM glass is recycled, RAA proposes to recycle glass.

Question: In the past I was told that the glass that was collected through RAA was crushed and sent to the landfill. I was pleasantly surprised to hear during budget session that WM was actually recycling glass. I was told that glass did not have a recycling market and therefore it was being sent to the landfill. Kindly explain what changed? Is it the markets or WM being a big corporation is able to find a market due to economies of scale? (Councilmember Kailasapathy)

Response: The WM Akron Ohio MRF is located near a glass processing facility. All three proposed to recycle glass. We understand that the market is making a rebound.

Paying Extra for “Good Recycling”

At the Mar. 6 City Council meeting, Ecology Center Exec. Dir. Michael Garfield said: “In fact, the recycling program has always been good financially for the city. And I don’t want folks to get the impression that the city now has to ‘pay extra’ for good recycling.” Ecology Center and RAA have come under media scrutiny and weathered criticisms of having been awarded no-bid contracts as the result of political cronyism.

Staff answers provided to a Council member’s question about the city’s many no-bid contracts and no-bid contract amendments with Recycle Ann Arbor reveal residents have, indeed, been paying more and more for Recycle Ann Arbor to collect virtually the same number of carts and the same tonnage of materials since 2011.

In a previous question submitted to city staff on Mar. 3, 2017 asked by Ward 4 Council member Eaton about why a consultant’s contract had not been bid out, city staff replied (emphasis is ours) “The proposed resolution is for a renewal of the contract, not an amendment to the existing contract.” This answer from city staff suggests that each of the amendments to Recycle Ann Arbor’s contracts listed below, then, were required by city procurement policies to have been competitively bid out. Public records show none of the multiple renewals and amendments were competitively bid.

Garfield’s assertion that the recycling program has always been good for the city is brought into question by a July 2016 federal lawsuit filed against the City of Ann Arbor by ReCommunity, long-time MRF operator. According to a July 2016 article published in the industry magazine Waste360: “ReCommunity’s contract included a requirement that the city pay ReCommunity when sale revenues fell short of the amount of ReCommunity’s cost to operate the site.”

“When the markets turned and Ann Arbor had to pay us $20,000 or $30,000 a month, everything changed,” said ReCommunity’s CEO Sean Duffy. ReCommunity said Ann Arbor “maximized their profits when market prices were up, receiving nearly $3 million since 2011, and then refused to pay required shortfall payments and invest in critical equipment when the market was down.”

Ann Arbor has not realized either the doubled increase in collections, increase in landfill diversion rate or promised savings from the switch to single-stream recycling recommended to Council by the Environmental Commission (EC), which at the time included David Stead, an Ecology Center Board member. Mr. Stead is principal and vice president of Resource Recycling Systems, an environmental consulting and engineering firm. He has consulted with communities across the United States, including (after the EC subcommittee he sat on recommended that the city move to single-stream recycling) Ann Arbor.

Question: Recycle Ann Arbor has had many contracts with the City. Can you please provide the list of contracts, whether they were competitively bid, and whether there were any requests from RAA for price/fee adjustments during the contract period? (Councilmember Lumm)

Response: Recycle Ann Arbor currently has the following contracts with the City. Staff did not have time to research the history and nature of the procurement process.

Curbside Recycling Collection – Municipal Resource Recovery Services Original contract December 2003, developed as a performance based contract. Recycle Ann Arbor had been providing recycling services for 20 years before that date.

• First amendment March 2005.
• Second amendment 3/15/10 for change to single stream collection, and to extend the 10-year contract by five years, to June 30, 2018. Before amendment the contract paid $19.30 per ton to $102.58 per ton (depending on the annual tons), as well as $2.41 per service unit, with 48,886 service units (also known as per dwelling unit). Per the amendment the contract paid a revised rate of $18.74 to $30.00 per ton, as well as $3.35 per cart, which replaced the service unit fee. The estimated program will start with 32,800 single stream recycle carts.
• Third amendment 7/5/11 to adjust the monthly per cart tip fee to $3.55. Annual additional payment of $107,042.00
• Fourth amendment 8/17/15 because the Annual Recycling Cost adjustment Factor in the contract became obsolete. The contract amended changed to the use of a 4% flat adjustment for the final three years of the contract, eliminating the use of a calculated Annual Recycling Collection Cost Adjustment Factor. City FY 2016 (July 1, 2015- June 30, 2016) $3.70, City FY 2017 (July 1, 2016- July 1, 2017) $3.84, City FY 2018 (July 1, 2017 – June 30, 2018) $4.00, per cart.

Multifamily Recycling Incentive Pilot Program

Student Move In/Out Awarded June 2014; $35,000/year for three years

• Increased by $15,000/year April 2015

Operation and Maintenance of Drop Off Station Maintenance

Began January 1, 2006 at $10,000/year

• Renewed January 1, 2008 at $10,000/year Operations originally funded by Washtenaw County and Pittsfield Township in addition to Ann Arbor. Co-funding stopped beginning 2010 and fees for non-City residents were implemented. December 2011 – service agreement approved at no cost to the City of Ann Arbor.
• First amendment August 2015 to compensate for compostable deliveries by City residents ($7,500)

Recycle Ann Arbor’s 2003/2010 extended contract to haul Ann Arbor’s recyclables ends in 2018. Should RAA be awarded the MRF contract, that one would end in June 2018.