Bureaucrats’ last minute demand alters Broward trash negotiations and could lead to higher rates

By Buddy Nevins, BrowardBulldog.org

The promise of the lowest price for waste disposal could be thwarted by a last-minute demand from top Broward County administrators.

The county was in the throes of negotiating a multi-million dollar waste disposal contract when suddenly the government issued a requirement that any company must provide a list of disposal sites.

“This is a big issue, a very big issue…Cities will have problems that they don’t know where their garbage is going,” Thomas Hutka, Broward’s public works director, explained during contract negotiations this week.

Newcomer Sun/Bergeron immediately complained that the new mandate favored Wheelabrator Technologies, the Waste Management subsidiary which has held a near monopoly on Broward’s waste disposal for over 20 years and already owns a landfill and a pair of waste-to-energy plants here.

“When Wheelabrator won this contract 20 years ago, they didn’t have a disposal site. We are newcomers,” said Aleida “Ali” Waldman, Bergeron’s general counsel.

Sun/Bergeron Vice President Phil Medico contended residents and businesses could get a better deal by disposing of the waste in whatever facility has the best price rather than tie themselves to one site for five years.

Under Sun/Bergeron’s proposal, waste would be sent to various transfer stations around Broward and then sorted through for recyclable material.  Anything that could not be recycled would be trucked to yet-unnamed disposal sites.

Wheelabrator proposes to continue disposing waste in its two company-owned existing sites. The waste is minimally processed for recyclables and is either burned or buried – in a landfill along Florida’s Turnpike in North Broward or in an incinerator just south of Interstate 595 in Davie. The burned trash at both locations is used to generate electricity.

The sites were built in the late-1980s under a contract with Broward County that will expire in 2013. Under its current agreement, Wheelabrator handles the disposal for 26 of Broward’s 31 cities.

Waste removal involves two separate jobs.  A hauler has a franchise with each city to pick up waste at homes and businesses. That waste is then hauled to a disposal site that tacks on a fee. The hauling and disposal fees are generally rolled into one fee paid by residents and business owners.

The current negotiations involve only disposal, but it is a contract worth tens of millions of dollars over five years.  Negotiators are working over details of the contract at this point and no final prices have been set.

DEAL TO MAKE OR BREAK TRASH MONOPOLY

With the end of its contract on the horizon next year, Wheelabrator at first proposed extending its monopoly for 20 years through 2033. Sun/Bergeron saw an opening and launched a lobbyist effort to block the renewal of the contract.

The lobbying worked. Enough cities, and eventually the Broward County Commission, voted to reject renewal with Wheelabrator. They gambled that better rates could be obtained by pitting Wheelabrator against Sun/Bergeron in competitive bids.

Miramar agreed to be the first city to ask for competitive bids from the two disposal companies. Wheelabrator’s bid was $52.50 per ton, compared with Sun/Bergeron’s $43.25 per ton. Sun/Bergeron got the nod, and a deal is being negotiated. The negotiations by the county and other cities is their attempt to fine-tune the Miramar bid to see if an even a better deal can be reached.

Sun/Bergeron is a joint venture, which is headquartered in Davie in an industrial area near I-595.  Sun Recycling, the operating partner, is a subsidiary of the veteran waste company Southern Waste Services of Lantana.  Bergeron Environmental and Recycling is the latest venture of Broward entrepreneur Ron Bergeron, who is already a dominant force in road building, storm recovery, real estate and rock pits.  Medico, a long-time waste industry executive, is the chief negotiator for Sun/Bergeron.

Medico told county negotiators that “supply and demand” would lower the price over the next five years because numerous new waste disposal sites are expected to open in South Florida, and there would be a “surplus of opportunities to dispose of waste.”

There sites in Miami-Dade, Lee and Okeechobee Counties. Palm Beach County is building a waste-to-energy incinerator that is scheduled to go online in 2015. Any site picked by Sun/Bergeron – like all legal disposal sites in Florida – would have gone through a rigorous permitting procedure by the state.

“Any waste will have a final resting place in a legally permitted class one facility,” Medico said.

MISSED OPPORTUNITIES?

Speaking to negotiators this week, Medico warned that Broward should not make the same mistake it did in the 1980s by binding disposal to one company’s sites. The county missed opportunities to lower prices because “you were tied up in a 25-year monopoly.  You didn’t have a choice” about what sites to use, Medico said.

Under the rules of the negotiating sessions, each company gets a day to be grilled and explain its position on why they should be chosen to dispose of Broward’s waste.  The discussion of the sites came on Thursday when county staffers and two city managers – Lee Feldman of Fort Lauderdale and David Rivera of Coconut Creek – were going over Sun/Bergeron’s proposal line-by-line.

Thursday was Sun/Bergeron’s day to be questioned. Wheelabrator’s Vice President of Operations Bill Roberts and Senior Legal Counsel Emily Kahn sat in the audience taking notes.

In an interview earlier with Broward Bulldog at Wheelabrator’s sprawling computerized incinerator plant in Davie, Roberts made his case for his company to continue the contract.

“We have a proven technology that’s reliable…The infrastructure exists. These facilities are strategically located,” Roberts said.

He added that having the disposal sites in Broward contributed $23 million in wages, goods and services and other indirect spending to the county’s economy.  He said disposing waste locally takes vehicles off the road because it doesn’t have to be transported to another county.

“Our system has worked very well for 20 years,” he said.

The county led negotiations are scheduled to conclude and go to the County Commission for its approval by May 8.  On paper the negotiations only involve the small slice of Broward that is unincorporated, but several cities are expected to piggyback on the agreement, hence the presence of Feldman and Rivera.

Deputy County Attorney Noel Pfeffer, who is leading the negotiations, said the company that is chosen is expected to go out and sell the agreement to the 26 cities now using Wheelabrator.  “There will be some period of time (built into the final contract) for the company to go out and market the agreement,” he said.

COMPETITION AND LOWER RATES

Competition has already driven down the price of disposing of garbage in Broward. More price pressure is likely. For instance, there is an overcapacity at Wheelabrator’s South Broward waste-to-energy plant.

The plant was built to handle 1.5 million tons a year. A few years ago it was processing 1.2 million tons. Today, it’s just 900,000 tons due to the failure to forecast increases in recycling and the struggling economy.

“In the end, they have to have waste to keep that facility going.  If they lose this contract and aren’t getting enough waste, they’ll cut the price and accept waste from other counties,” predicted a waste industry source.

Roberts confirmed that Wheelabrator’s local facilities would have to take waste from other counties if they failed to get enough from Broward.

One company that could conceivably help fill Wheelabrator’s plant is Sun/Bergeron,  if rates drop far enough.  Sun/Bergeron would collect the waste at transfer stations in Davie and elsewhere, then send it to the plant for disposal.

“We have a contract with them for disposal in other places,” Medico said.