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Garbage hauler trims price to win contract

Posted Friday, Jan. 11, 2013  comments  Print Reprints
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FORT WORTH - Waste Management, the city's residential trash and recycling collector, agreed to pare its price to help win renewal of its contracts, city officials say.

The savings are likely to go toward closing the gap between expenses and revenue in Fort Worth's solid waste fund, according to city staffers.

The city staff is recommending that the City Council renew the trash contract for the same 10-year length of the current deal, which expires March 30. But with an eye toward rapidly advancing recycling technologies that help divert more trash from the landfill, the staff is recommending renewal of the recycling contract for five years instead of 10.

That will let the city study the idea of building a recycling facility in Fort Worth instead of having Waste Management haul the city's residential recycling to the company's plant in east Arlington, said Kim Mote, assistant code compliance director.

The staff plans to ask the council to authorize a consultant's update of Fort Worth's solid waste master plan, last done in 1995, and the recycling examination would be part of that.

"We need to take that next step and figure out how do we want to handle all of our waste in the future," Mote said.

The council will hold public hearings on the trash and recycling contracts Jan. 15 and 29 at City Hall. The staff is holding a community meeting 6 p.m. Jan. 24 at the Hazel Harvey Peace Center for Neighborhoods, 808 Missouri Ave.

The staff considered recommending rebidding the trash and recycling contracts, said Brandon Bennett, the code compliance director.

But the service has high satisfaction ratings among customers in surveys, and the city would risk getting a more expensive bid, Bennett said. The city also gets 75 percent of the revenue Waste Management makes by reselling the raw recycling materials, Bennett said.

Today, "the best we can do on the open market is 60-40," with the city keeping 60 percent, he said.

The city is a major customer of Waste Management's Arlington center, giving the company incentive to negotiate, he said.

The staff has been studying various models for a new recycling facility, aiming to increase the 24 percent of household refuse that doesn't now end up at the landfill. The most attractive option would be having a vendor, such as Waste Management, pay to build the center, operate it, assume the market risks and share the recycling revenue with the city, Bennett said.

Depending on the technologies added, a recycling center would cost $20 million to $50 million to build, Mote said.

Under the proposed trash and recycling contracts, Waste Management agreed to a rate of $11.82 per household instead of the $12.44 that could have been the 2013 rate without renegotiation. The contract also covers about 1,000 small businesses.

Waste Management would forgo a 31-cent-per-household inflation increase and agreed to another 31-cent cut.

The company would also turn over its fleet of vehicles, bringing on new energy-efficient vehicles powered by compressed natural gas.

The savings to the city would amount to about $19.4 million over 10 years. The city now pays $32.2 million annually to Waste Management.

Customer rates would not be reduced because the savings would be directed to the higher costs of the self-sustaining solid waste fund, staff members said.

"It looks like the best way to use [the savings] is to reduce the gap you've got," Mayor Betsy Price said Tuesday during a staff presentation on the contracts.

Waste Management will generate fuel savings by going to new vehicles, said Rick Losa, the company's director of public service solutions in Texas and Oklahoma.

"We've been here for 10 years; we understand the pressure that we have to remain competitive in our rate," said Steve Kellar, a Waste Management public sector manager in the region.

If the city goes out to bid on a new recycling center in Fort Worth, "we don't know if we're going to be the ultimate winner, but we're going to go after it pretty aggressively," said Kellar, a jovial presence at City Council meetings who recently rode behind Price in her Halloween community bike ride wearing a big wig on his helmet.

More contracts

Three other city trash contracts are also up for renewal March 30 and will be part of the public hearings and community meeting.

The staff is recommending renewal of Republic Waste Services' contract to run Fort Worth's drop-off stations for five years at the current rate, instead of the 10-year term on the existing contract. Use of the drop-off stations will also be part of the recycling examination, Mote said. The city operates three drop-off stations now, plans to open one in far north Fort Worth in 2014 and is looking for a site in far west Fort Worth.

In another contract, the staff is recommending a 10-year renewal of IESI's contract to pick up large piles. The staff is also recommending a 10-year renewal, at a lower rate, of Toter's contract to deliver and maintain trash and recycling carts.

The city's Southeast Landfill is under contract to Republic for the life of the site, and the contract is not open to renewal.

The city pays a total of about $40 million annually on the expiring contracts.

It will take the city's consultant about 18 months to complete the master plan, Mote said.

Scott Nishimura, 817-390-7808

Twitter: @JScottNishimura

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