Austin America-Statesman
Sarah Coppola

The City of Austin lost about $900,000 from October to February in a contract to truck recyclable goods to processing plants in Garland, near Dallas, and in San Antonio.

A local environmental group that has analyzed public records blames the loss on a contract with the recycling company Greenstar that the City Council approved in May.

“We’re in a time of very tight finances, and the city is pouring money down the drain with this contract,” said Robin Schneider, executive director of Texas Campaign for the Environment. According to the group’s analysis, the city lost $922,505.

The city blames the loss — which it says is $870,000 — on a very poor global market for recycled goods. But Schneider and others say San Antonio and Dallas, cities that also contract with Greenstar, managed to make healthy profits because they signed better contracts. A Greenstar spokeswoman didn’t return a call Monday.

The city’s Solid Waste Services Department expected to make $1.9 million a year on the contract. The loss comes as the city deals with a budget crunch. City officials have already cut $20 million in services this fiscal year.

Austin hired Greenstar last year before starting a program that lets residents recycle more goods in bigger carts. Austin does not have the special type of recycling plant necessary to process those collections. Greenstar trucked the goods to its Garland plant, 214 miles away, for four months and now takes them to a newly expanded plant in San Antonio, about 80 miles away.

Under the contract, Austin is supposed to earn money once Greenstar sells the recycled goods. But Austin gets a smaller cut of the profits and pays higher processing and transportation fees than Dallas and San Antonio, Schneider said.

Texas Disposal Systems, a company that collects, recycles and composts trash and runs a landfill, obtained the data through open records requests and shared it with Schneider. The disposal company used to recycle goods at Austin’s now-closed plant on Todd Lane. Texas Disposal is interested in joining the city in building a recycling plant here, and that would suit the city’s new recycling program, President Bob Gregory said.

The city paid engineering firm R.W. Beck about $1 million last year to design a plant and then halted that work to first write a long-term plan for Solid Waste Services.

The city is now paying R.W. Beck $51,400 to figure out the best public, private or hybrid options for building the plant. The report is due in June.

Austin knew Greenstar’s rates with Dallas and San Antonio before signing a contract with the company, said Daniel Cardenas, an assistant director at Solid Waste Services.

City officials said they did not seek bids for the contract because there are only five recycling facilities in the state that could handle the material collected in Austin’s program: three in the Dallas-Fort Worth area, one in San Antonio and one in El Paso. Greenstar’s San Antonio plant was the closest and best option, Cardenas said.

Austin’s fees with Greenstar are slightly higher because it has a short-term, two-year contract.

Dallas and San Antonio have longer contract terms, he said, and they don’t pay transportation fees because they can truck goods to Greenstar plants in their areas — something Austin doesn’t have the trucks, staff or equipment to do.

Solid Waste Services still expects to make a profit on the contract by the time it ends in October 2010, but the department doesn’t have an estimate of how much, Cardenas said.

The city has a goal of cutting the waste sent to landfills 90 percent by 2040. The new recycling program has been successful at encouraging more residents to recycle, Cardenas said.

Austin residents set out 38 percent more recyclables in the program’s first five months than during the same time a year earlier.

The city saved $1.3 million in fuel, maintenance, equipment and staff costs by decreasing collection of recyclables to once every two weeks under the new program, Cardenas said.

Schneider said Austin should ask Greenstar to quote a “fixed-rate” price on recycled materials, something the city is allowed to do under its contract.

The city might consider doing that, Cardenas said. But he said Solid Waste Services doesn’t plan to try to renegotiate the whole contract because it’s a short-term agreement and the market for recycled goods is so poor.

Joaquin Mariel of Ecology Action of Texas, an Austin recycling business, said recycled plastic bottles that sold for $250 a ton last year are now worth $0. Corrugated cardboard, which sold for about $125 last year, is now worth $40 a ton, he said.

“The city should get back on track with its original plan — to build a recycling facility here so that local workers can have those jobs — and renegotiate the contract in the meantime,” Mariel said.