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Austin American-Statesman, June 9, 2010 By Sarah Coppola

Austin recycling contract still up in the air

The Austin City Council is scheduled to choose one of three firms today to build and run an Austin recycling plant so the city can stop shipping recyclables to San Antonio. But the city's multiyear quest to figure out what to do with recyclables might have hit another snag.

Some council members don't want to hire either of the firms that scored highest in the bidding process — Allied Waste Services or Waste Management — because of their histories operating local landfills that some neighbors consider noxious and poorly run. The third choice, Balcones Resources, would cost the city $13.4 million over 10 years, according to city estimates.

A fourth firm, Texas Disposal Systems, has offered to process Austin's recyclables for free for up to three years, but city lawyers say the council can't consider that offer because the company did not follow normal bidding procedures.

It's possible the council might scrap the bids and start over.

"I'm not really happy with any of the three proposals," said Mayor Lee Leffingwell. "I'm concerned about the amount some of them would cost the city."

Council Member Sheryl Cole said she would prefer not to redo the eight-month bidding process and is leaning toward supporting Balcones, an Austin firm that she said has the best environmental record. Council Member Randi Shade said she's also leaning toward Balcones because it would build and privately run its facility, unlike the other options, in which the city would be more of a partner and might bear more risk and cost.

Council Members Chris Riley and Bill Spelman said they have concerns about hiring Allied or Waste Management because of their landfill histories. Council Member Laura Morrison said she's still weighing the options. Council Member Mike Martinez didn't return calls.

If the council does pick a company today, city staffers would negotiate a contract and bring it back to the council for a vote.

The city's recycling woes began in fall 2008, when it started a curbside recycling program but didn't have the right type of plant to process the materials. It hired Greenstar North America to truck materials to that firm's San Antonio plant. But despite getting a cut of the profits from recycled goods, the city estimates that it will have lost $637,000 when the contract ends in September.

The city began seeking proposals last fall from firms interested in building and running an Austin recycling plant. Seven applied, and a city team scored the bids and whittled the field to three.

Allied and Waste Management, which are bigger national players in the garbage industry than Balcones, each proposed building a plant on city-owned land on FM 812. Balcones, which has run a recycling facility on East Sixth Street since 1996, proposed building a plant on land it owns in Northeast Austin.

Allied and Waste Management each offered to pay to build a facility that the city would own at the end of 20 years, city purchasing officer Byron Johnson said. Balcones would build a plant and give the city the option to buy it. Waste Management also said the city could pay for the plant construction and own it from the start, Johnson said.

Under every option, the city would get a cut of the profits from the recycled goods. The city estimates that over 10 years, it would earn $10.5 million on the Allied deal, lose $19 million to $24.9 million on Waste Management's offers and lose $13.4 million on the Balcones option.

The three firms declined to comment Wednesday.

City staffers have recommended that the City Council choose Allied, which scored highest overall. One category the city rated was the firms' community values. But the parameters of the scoring process allowed city staffers to assess only things like whether the firms offer living wages and safety programs. So they did not consider prior complaints, environmental concerns or city disputes.

Allied owns what was formerly BFI, a company that used to operate an East Austin recycling plant that neighbors complained was noisy and spewed litter onto nearby properties. In the late 1990s, BFI said it would move if the city awarded it a 30 -year recycling contract that was up for bid, according to news reports at the time. The city picked another firm and used eminent domain to condemn and buy the BFI site for $3.9 million. BFI eventually moved to Metric Boulevard.

In addition, landfills run by Allied and Waste Management off of Giles Road, northeast of Austin, have long been criticized by some neighbors as loud, smelly and poorly run. Both firms applied to the Texas Commission on Environmental Quality in recent years to expand the landfills. The City of Austin initially opposed the Allied expansion, then dropped its opposition when Allied agreed to close the landfill by 2015. The city still opposes the Waste Management expansion. The state granted both companies expansion permits that are under appeal.

Rick Cofer, a member of the city commission that advises the City Council about recycling matters, said it would defy common sense to award the recycling contract to either firm, given their histories.

"It would be like saying, 'We oppose your community values, but hey, let's go build a recycling plant together,' Cofer said.

The Texas Commission on Environmental Quality said Wednesday that only one of the three firms has a judgment or fine on its record in the past five years. In 2005, the state levied a fine of $3,475 against Waste Management for petroleum storage tank and sludge disposal violations in Jefferson County. The state also levied a fine of about $240,000 against the company in 2003 for violations related to odors at the Giles Road landfill, according to news reports at the time.

The wild card in today's decision is Texas Disposal Systems, which runs a landfill and is building a recycling plant in southeastern Travis County. City lawyers tossed that firm from the bidding process in January for violating anti-lobbying rules by criticizing another bidder in an e-mail.

Texas Disposal Systems' CEO Bob Gregory has fought the disqualification and has continued to pitch his offer to council members, even though city lawyers said the council can't consider it. The offer includes options for a long-term recycling agreement, under which Gregory estimates the city would earn a profit of $9 million to $22 million over 10 years.

Leffingwell and Morrison said they would like to find a way to weigh Gregory's offer against bids from the other three firms.

Texas Disposal Systems "has a reputation for doing quality work and delivering their product on time, at a reasonable cost," the mayor said.