City on verge of signing new waste-handling deals

May. 26, 2013 @ 06:54 PM

City Council members are likely to approve next month new garbage- and recycling-disposal contract that officials say will save taxpayers about $1.1 million a year for the next decade.

The separate deals with Waste Industries Inc. and Sonoco Recycling LLC are on the consent agenda for the council’s June 3 meeting, meaning members expect to approve them without debate or serious controversy.

The Waste Industries contract is the larger of the two. Officials intend to hire the firm to operate and haul off the garbage the city’s Solid Waste Management Department delivers to a transfer station off East Club Boulevard.

As part of the deal, Waste Industries will build a replacement for the existing transfer station, a $3.4 million project the company will pay for without cost to the city.

Bidders proved willing to build the station “in return for a longer-term contract,” Solid Waste Management Director Donald Long told council members as he briefed them on the deal Thursday.

The Waste Industries contract would have an initial term of 10 years, with the city holding options for two five-year extensions. The company would replace the city’s present transfer contractor, Republic Services Inc., starting July 1.

The Sonoco Recycling contract would in essence extend an existing partnership between company and city that dates to 2009. Waste Industries would be in charge of delivering recyclable goods collected by the city to a Sonoco sorting plant in Raleigh.

Administrators propose giving Sonoco a new five-year deal, with three renewal options that could extent the contract for up to 15 additional years to match the arrangement with Waste Industries.

The proposed contracts grow out of a move last year by Long and City Manager Tom Bonfield to request offers from private-sector firms interested in handling the disposal of the city’s waste.

Council members were clearly pleased by the results.

“I’m really impressed with the savings and the fact we’re getting a new facility,” Councilman Steve Schewel told Long.

Waste Industries went head-to-head with Republic Services for the garbage contract. Both firms said they could better the $44.15 a ton price the city is now paying to get rid of its trash. Republic offered $41 a ton, Waste Industries $36.82.

The winning firm will deliver the garbage to a landfill in Sampson County, about 97 miles from the city’s transfer station.

Long said the city’s bargaining position was stronger for having reached deals in April with neighboring Hillsborough and Orange County for those communities to send their trash to Durham’s transfer station.

In both the trash and recycling trades, bargaining power rises with the tonnage a city can deliver to its contractors. The Orange County deal alone promised to increase use of the Durham transfer station by up to 40 percent.

The Sonoco deal, meanwhile, resulted after officials sized up competing offers from that firm and Waste Management Inc. Sonoco wound up offering a more generous revenue-sharing deal to the city than the one already in place.

As with trash, Long thinks the city could benefit long-term by working with neighboring communities on recycling.

Sonoco now uses a sorting plant in Raleigh, but it might place one in Durham if the city can pledge to deliver about 20,000 tons of recycled goods to it each year.

The city’s analysis of the finances of the new contracts assumes it will deliver about 14,800 tons a year to Sonoco, Deputy City Manager Wanda Page said.

But if the company placed a sorting plant in Durham, “I think they’d realize their 20,000,” Long said. “Orange County and Chapel Hill drive right through us to get [goods] to the Sonoco facility in Raleigh.”