Friday, March 25, 2011

City of Austin officials have spent several months negotiating 20-year recycling deals with two companies, Balcones Resources and Texas Disposal Systems.

On Thursday, Solid Waste Services Director Bob Gedert urged the City Council to sign a long-term contract only with Balcones and to consider new pricing options from both companies after three years.

The council could choose one firm, neither firm, or split the work; a vote is planned for April 7.

A 20-year contract with Balcones would cost the city an estimated $1.6 million to $3.8 million a year, Gedert said. That is cheaper than choosing Texas Disposal Systems, he said: $3.4 million to $4.6 million a year.

The estimates include something officials have not factored in before when talking about recycling: the cost of having city crews collect the recyclables from homes and truck them to a plant.

Gedert said it would cost even more — $5.7 million a year — to put the 4,500 tons of items Austin recycles each month into a landfill instead.

Under any scenario, Austin would earn a cut of the market value of the recyclables but would also have to pay processing fees and pay to collect and truck the goods to a plant. Gedert said that, weighing all of those factors, the city would lose the least money by hiring Balcones only.

The firms’ plants are in different areas , and a few council members and Mayor Lee Leffingwell asked Thursday whether it might be more efficient to split the work than to truck recyclables from the city’s edges to just one firm’s plant.

Gedert said Texas Disposal Systems has, so far, refused to accept a few key contract terms the city wants: matching lower rates and better terms that the company offers to other cities after an Austin deal is signed, and paying Austin a per-ton fee to offset carbon emissions generated by the plant and trucking materials to it. The fee would be spent on eco-friendly projects, such as planting trees.

Texas Disposal Systems also has been lukewarm to the city’s request to periodically renegotiate pricing, among other things.

The city has been searching for a recycling partner for the past few years because it doesn’t own a plant that can process big amounts of unsorted recyclables.

It hired Greenstar North America in fall 2008 to truck the materials to the company’s San Antonio plant and process them there. But Austin lost $2.8 million on that two -year, profit-sharing deal, partly because of a slump in the worldwide market for recyclables. (That loss didn’t include the cost of collecting recyclables from homes.) The council asked city staffers last year to negotiate long-term deals with Balcones and Texas Disposal Systems.

Texas Disposal Systems has a recycling plant in Creedmoor, south of Austin. Balcones runs a recycling facility on East Sixth Street and plans to build a bigger one on Johnny Morris Road .

Texas Disposal Systems pitched different fees and profit-sharing options for the 20-year deal, offering better rates if the city sends it a larger volume of goods.

Balcones has pitched a flat fee and a cut of the profits and has agreed to the city’s other contract terms.

Gedert said the city would pay lower fees to Texas Disposal Systems, but it would earn more money overall with Balcones’ profit-sharing offer. It would incur the cheapest transportation costs by sending some materials to each plant, he said, because the plants will be roughly the same distance from the Todd Lane facility from which city recycling trucks depart.

scoppola@statesman.com; 912-2939

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