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Thursday, December 3, 2009

Next city property to go private: garbage sorting facilities?

Posted By on 12.03.09 at 06:37 PM

UPDATE: City officials say they are not currently seeking bids for a long-term lease of the MRRFs but rather for private-sector management of their daily operations. Streets & San spokesman Matt Smith says the city has put the long-term lease plan on hold until "until market conditions improve."

The city is moving ahead with its next plan to privatize taxpayer-owned property. Proposals are due next Friday, December 11th, from firms interested in leasing the city's three garbage sorting centers, which were byproducts of one of the most striking and costly public policy flops of the mayor's 20-year tenure: his failed recycling programs.

If the city can wring any money out of the sorting centers through privatization it will simply confirm that its own management of Chicago's waste stream has been an environmental and financial catastrophe for 15 years.

It may sound like I'm exaggerating. I'm not. Let me explain.

The city is responsible for picking up the garbage at about 750,000 homes and buildings (those with four or fewer units; others use private-sector waste haulers). It now offers single-stream recycling pickup to less than half, and due to the tight 2010 budget nobody else is scheduled to get recycling services for at least a year.

Back in 1989, Daley's first year in office, his administration launched a pilot curbside collection program that was eventually supposed to be extended citywide. Then he scuttled it for what he promised was an innovative, cost-effective alternative. This is from a 2006 investigation I did into the city's recycling program:

Later that year [1990] Mayor Daley announced that recycling would be offered to all low-density buildings inside a year—but through the Blue Bag program, which he promised would be "extremely convenient, environmentally sound, and the least expensive method to administer." City officials said it would cost about $13 million a year, plus start-up costs of $28 million to build four Materials Recycling and Recovery Facilities, where Streets and San trucks would dump their loads for sorting. The city would hire a private company to run the MRRFs (usually called "murfs"), and that company's workers would pull out the blue bags and any recyclable commodities they happened to see as the trash moved along conveyor belts. Other workers would take the recyclables to processors and haul the remaining trash in semis to private landfills, and the company would get to keep whatever money it made selling the commodities. Daley was apparently convinced this approach would work on the recommendation of officials with garbage giant Waste Management, which was then running a blue bag program in Omaha, Nebraska. (The mayor's brother, Bill Daley, was on the board of one of the company's subsidiaries.)

In October 1993 Mayor Daley announced that Waste Management had won the contract to build and run the MRRFs with a goal of diverting a minimum of 25 percent of the trash it picked up. He also announced that the costs of building the MRRFs—three on city property, one on Waste Management land—had more than doubled, to $60 million . . .

Waste Management's contract was up at the end of 2002, and the city put the deal up for bid. Allied Waste won the new contract, worth more than $128 million over three years. (Among the lobbyists Allied employed were a former Daley aide and Daniel Katalinic, who would plead guilty to mail fraud in 2005 because he'd helped trade city jobs for political favors when he worked for Streets and San and after he retired.) Waste Management did get a consolation prize: it wound up owning the taxpayer-financed MRRF on its property.

That is, we gave one of those $15 million facilities away, leaving us with three to lease out now.

As I'm sure you recall, the blue bag program was an expensive failure, costing taxpayer millions of dollars a year to extract a few recyclables from the trash and dump the vast majority of them into landfills. Last year city officials finally announced that they were killing the program and would be replacing it with "Blue Cart" single-stream pickup across the city by 2011. But because of the budget cuts, half the buildings that rely on city garbage collection don't have any kind of recycling service.

And that's not to mention the mess that's multi-unit recycling.

The MRRFs were designed for the specific purpose of sifting blue bags out of the trash. As the program withered and then disappeared, they became far less useful, if not obsolete.

In the blue cart program, all kinds of recyclable materials are thrown into the same bins, picked up by city workers, and taken to private facilities with state-of-the-art technology that sorts them by paper, plastic, glass, and types of metall. The MRRFs are not equipped to do this kind of sorting.

City crews still take about 75 percent of the trash they pick up to the MRRFs, where it's transferred to bigger trucks that haul it to landfills. But since these facilities are outfitted with conveyor belts and other equipment intended to pluck out Blue Bags, the MRRFs are more expensive to maintain than the uncluttered, warehouse-like transfer stations used by private-sector haulers.

Administration officials first tried to lease the MRRFs in 2007 but couldn't put a deal together. Now they're trying again. (Click here to see a PDF of the city's request for proposals.)

For the sake of the budget, let's hope they pull it off soon. According to city records, they've already spent more than $210,000 on fees for attorneys from private firms who were hired—without a bidding process—to put a lease agreement together.

Yesterday aldermen debated whether it was wise to use $270 million from the 75-year parking meter lease deal as a one-time budget fix, as Mayor Daley had proposed. To no one's surprise, the mayor got his way. So his administration will have spent all but about $200 million of the deal's $1.2 billion in proceeds by the end of 2010, with 73 years of the agreement remaining.

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