Albany sees green in new trash pact
Published on 6/29/2010 by the Times Union written by JORDAN CARLEO-EVANGELIST, Staff writer
ALBANY -- The city has renegotiated its contracts with the largest customers of the Rapp Road landfill, a move that will boost revenue by more than $800,000 over the next year, a city attorney said.
But in doing so, Albany made a deal with one company, County Waste & Recycling, to dump nearly all the landfill's daily guaranteed tonnage -- the amount haulers promise in exchange for a reduced rate. Until now, two big companies evenly split that burden.
The city relies on the landfill to subsidize essential services -- so the relatively arcane details of the contracts have a direct impact on taxpayers, who might otherwise be called on to make up any significant loss of revenue.
Facing a potential $20 million budget gap next year and pressure from city lawmakers to demand more from trash haulers as the city borrows millions to expand the landfill, officials are banking that higher income now will counteract the risk of a weaker bargaining position later.
Currently, the city is guaranteed 600 tons of trash daily, split evenly between County Waste and Allied Waste. Each pays a $47.67-per-ton tipping fee, a little more than $6 less than everyone else.
Some members of the Common Council, however, have been pushing the city to increase the fees paid by all who dump at the landfill to offset the costs of an $18 million project to restore Pine Bush habitat mandated by the state in exchange for permission to expand the landfill.
The city is borrowing to pay that bill, a plan Councilman Dominick Calsolaro has called fundamentally unfair because city residents account for only a fraction of the trash dumped there and yet, he contends, are being asked to pay the whole bill for the environmental restoration.
Initially, the city was hesitant to scrap its existing contracts fearing the volatility of the trash market might prompt County Waste and Allied to rebid at a lower rate, resulting in even less money for the city.
But last month, the Times Union reported that County Waste was willing to pay up to $52.51 per ton, the same rate it pays to dump at the Colonie town landfill, as long as Allied would agree to the same deal.
That prompted louder calls from the council to cut new deals with the haulers.
Allied, however, bid just $45 per ton.
At the end of the negotiations, County Waste agreed to provide the full 600 tons for $50 per ton, said Assistant Corporation Counsel Brad Burns, who negotiated the contracts. That deal essentially froze out Allied.
The city also accepted a third offer of $50.50 per ton for a guarantee of 100 tons from Waste Management.
Combined, the new contracts guarantee the city $8.9 million over the course of the yearlong pacts, $818,040 more than the city would have otherwise expected from the same three companies, Burns said.
Currently, Waste Management has no contract with the city and simply pays the gate rate of $54 per ton at Rapp Road.
Burns acknowledged the risk in losing Allied Waste as a guaranteed customer once the new one-year deal with County Waste expires. At that time, County Waste could have significantly less competition when bidding next time.
With the city's need for more money now, Burns said, "It's kind of difficult to not take an additional $2.33 a ton. ... I'm hoping (Allied) can still succeed in the area and we'll have them available."
"We're trying to think about this in the long term," he said, "because there's no way to anticipate what the market conditions are going to be."
Councilman Michael O'Brien, chairman of the general services committee and among those who called on the city to take a harder line in negotiations, praised the results but said he'd hoped County Waste would have paid even more.
"It definitely dispelled the prophecy of doom that they had us over a barrel and were going to leave" if the city tried to increase its tipping fees, O'Brien said. "I think it's better than what they had."
A rift remains between Mayor Jerry Jennings' administration and the council on how to use the extra cash. Some on the council -- including O'Brien -- believe it should be set aside for the Pine Bush restoration.
Jennings' administration, however, insists any additional revenue should be used to close next year's budget gap and avoid layoffs and cuts to city services.