Turner touting recycling deal

Mayor delays hearing after questions raised

The city would send all 65,000 tons of bottles, cans and boxes its citizens recycle each year to a new processing facility to be built in northeast Houston under a 20-year deal Mayor Sylvester Turner will present to City Council next month.

The contract with Spanish firm FCC Environmental, worth up to $57 million, would allow citizens to again put glass in their 96-gallon green bins, along with cardboard, newspaper, steel cans, aluminum and plastic.

Turner, faced with a poor commodities market and rising recycling costs upon entering office last year, negotiated away hard-to-process glass in hammering out a twoyear stopgap deal with the city’s current contractor, Waste Management.

Council members raised enough concerns about the new contract’s length and cost and the speed at which it was being considered that Turner canceled a Tuesday committee hearing on

the topic minutes before it was to begin and pulled it from Wednesday’s council agenda.

Turner stood firmly behind the deal at a Wednesday news conference, however, saying the proposal would not only return glass to the city’s recycling program but also would require FCC to share in the risk of a crash in the commodities market, ensuring the city never pays more to recycle than it would pay to throw the same materials in a landfill.

“When you take a look at what this offers, let me simply say: state-of-the-art technology, a brand-new facility, including glass, capping the floor of what the city would have to pay should the market turn down,” Turner said. “This is an excellent deal.”

Terms of the deal

Under the proposed deal, if the revenue generated by selling recycled materials is less than $87.05 per ton, the city would pay FCC the difference, up to a maximum of $25 per ton. If the materials sell for more than $87.05, the city would get a quarter of that excess revenue.

Under the current Waste Management contract, the city’s per-ton processing fee is $92, and there is no cap on the city’s costs.

Houston’s per-ton costs have ranged between $20 and $53 per ton under that deal.

Prior to the commodities market crash, the city paid a $65-per-ton processing fee.

The FCC contract also would have the city borrow $2.4 million to add eight new trucks to its aging fleet and repay the loan at a 10 percent interest rate. That is significantly higher than what the city would pay if it borrowed the money itself.

“That’s weird,” Councilman Mike Knox said. “I can go to a bank and get a car loan for less than 6 percent.”

Turner and Solid Waste Director Harry Hayes said adding the trucks would prevent the city from paying costly transport fees in the new contract, but neither gave a clear reason for why the city would not simply borrow the money needed to buy the vehicles itself at far lower rates.

The proposal’s $87-perton processing fee also happens to be 24 percent higher than the fee the city pays on a quarter of its recycled materials now, at a northside facility run by Independent Texas Recyclers. That company’s representatives declined comment Wednesday.

The Independent Texas Recyclers fee is lower, Hayes said, to account for the fact that the city uses its own trucks and staff to take any leftover materials that cannot be recycled at the facility to a landfill. That firm’s equipment’s also is far older than the equipment that would be used in the new FCC facility, Hayes said, which will let the city squeeze more value out of each load.

“You need to take into account the contract as a whole,” Turner said. “When you look at the total package, the city of Houston is getting a tremendous financial deal.”

Some have doubts

Some council members, however, have raised concerns about the procurement process.

In the city’s request for recycling proposals last fall, documents repeatedly envisioned the contract term as running 10 years, with up to two 5-year extensions.

Knox said FCC representatives told him they had been allowed to propose a 15-year term with one 5-year renewal. FCC representatives declined comment.

“I asked them if that was available to the other applicants and they said that, as far as they were aware, no, that because they were going to build a new facility they were given an exemption,” Knox said. “It makes me a little uncomfortable about the process that was used to get this contract.”

Turner’s office confirmed FCC was the only bidder to propose a new facility.

The mayor, however, pushed back against any hint of favoritism in the procurement. “Everybody was subject to the same terms,” Turner said.

FCC’s $20 million, 120,000-square-foot facility, to be built on 11 acres at 9172 Ley Road near the McCarty Road landfill in the northeast corner of the city, would create about 100 jobs.

The current Waste Management contract expires next spring, about when the new facility would be finished.

Councilman Jerry Davis, who represents the area around the proposed plant, said the site is mostly industrial but he plans to hold town hall meetings to answer residents’ questions and to try to connect job seekers with FCC officials.

“The information they’ve given is it’s a recycling facility, it’s not a transfer station, it’s not any of that as a negative,” Davis said. “That was the No. 1 thing some of the people in my district wanted to make sure of.”

As for the merits of the proposal itself, Davis said he still is sifting through the terms.

Councilman Mike Laster, who was to chair the canceled committee hearing on the topic Tuesday, echoed his colleague.

“There’s still a lot of questions to be answered,” he said. “That gives me concern, and I look forward to doing all I can to get the best information.”