By Dan Christensen, BrowardBulldog.org
The first shot was fired last week at Oakland Park City Hall in a brewing rebellion among Broward cities over the high cost of garbage disposal.
County officials have offered a proposal they say will save the cities nearly $49 million a year over what they now pay to get rid of their trash – plus get them a share of a $12 million bonus that giant Waste Management is willing to pay if they sign up early for another 10 years.
But some outraged city leaders say those contract renewal savings are not nearly enough.
They contend that Waste Management has used its local trash monopoly to make enormous profits on the backs of Broward customers and they fault the county’s Resource Recovery Board – and RRB chair and Broward Commissioner Ilene Lieberman – for not moving to end that monopoly by putting the $1.5 billion deal out for competitive bids.
Unhappiness is most acute in Oakland Park, where commissioners have taken a step that until recently was unthinkable: asking city staff to seriously explore alternative methods of trash disposal, including trucking it to a dump upstate.
“I’m tired of being held up,” Commissioner Steven Arnst said at Wednesday’s meeting.
Broward’s current disposal rate is among the highest in the state, city officials told commissioners.
Lieberman provided Broward Bulldog with a spreadsheet which shows that Oakland Park will save $1.7 million a year under the deal her board has negotiated with Waste Management.
But David Womack, Oakland Park’s public works director, told commissioners a preliminary study indicates the city could bank “$500,000 to $650,000” more than the county deal in annual savings if they break away from the 26-city municipal alliance that was formed 24 years ago to address Broward’s solid waste problem. That’s up to $6.5 million over 10 years.
“I have no idea where they are going to find that,” said RBB executive director Ron Greenstein after being told of Womack’s statement. “I have not seen a better deal put on the table anywhere.”
The RRB is the governing body of the Broward Solid Waste Disposal District. It establishes the rates for disposal fees, and its members include elected officials from eight cities, including Oakland Park and Fort Lauderdale. Pompano Beach, Parkland, Dania Beach, Hallandale Beach and Pembroke Pines don’t participate.
The county contracts with Waste Management subsidiaries Wheelabrator North Broward and Wheelabrator South Broward to operate local waste-to-energy plants where trash is incinerated.
Trucks deliver garbage to the plants where it is weighed, tipped out and burned at temperatures hot enough to create piles of ash that are later buried in nearby landfills.
Wheelabrator received $94.3 million in so called “tipping fees” in 2008, according to its audited financial statements. But it also cleaned up selling electricity generated during the incineration process.
Audited financial statements for the two Wheelabrator plants show those sales totaled $79 million in 2008. The financial statements for 2008 are the most recent available.
Oakland Park officials reviewed those financial statements in January. They found Wheelabrator’s return on equity from those plants was a whopping 59.4 percent. Return on equity is a measure of profitability that is equal to a company’s net income divided by shareholder’s equity.
If the proposed lower rate of $49.75 had been in effect, the rate of return would still have been 46.5 percent, according to a letter sent to Greenstein by Oakland Park City Manager John Stunson. The proposed rate has since dropped $2 to $47.75 a ton.
Stunson argues that Broward consumers would pay much lower rates if garbage disposal was treated like other regulated public utilities.
In his letter to Greenstein, Stunson pointed out that the state Public Service Commission recently increased rates to accommodate a 10 percent return on equity for Florida Power and Light. Assuming a 10 percent rate of return for Wheelabrator, its tipping fee would be $13.50 a ton – which would generate $397 million in savings over the ten year term of the proposed contract.
“We were making a statement that you can and should negotiate a deal that would be based on a fair rate of return,” Stunson said in an interview last week.
Lieberman discounted Stunsons’ remarks and said he may just be looking for a way out of the municipal alliance.
“Maybe they never wanted to be part of the system,” she said, adding that the county searched for the best rate three years ago when it sought disposal proposals from other private companies.
More than two dozen responses were reviewed, she said. But it was decided instead to negotiate exclusively with Wheelabrator.
In an interview, Lieberman repeatedly described that search as a “competitive procurement.” But the 21-page document the county used to seek those proposals – called a “request for expressions of interest” – declares at the outset that it was merely a fact-finding process and “not a procurement.”
Other Broward cities have seen Oakland Park’s calculations and agree that the current proposed rate of $47.75 must come down further. Cities that have expressed concerns about disposal rates include Cooper City, Coral Springs, Lauderdale-by-the-Sea, Lauderdale Lakes, Miramar, Sunrise and Weston.
A public works director for one city in west Broward that has yet to take a position on the matter said in an interview that the Resource Recovery Board’s proposed deal is unacceptable. The official, who asked not to be named, said he expects his city commission will also go out to market to find a better price.
In Fort Lauderdale, some commissioners talked of going out for bids last week after the RRB did not produce certain rate information they had requested. Greenstein said the information was turned over to the city after last week’s meeting.
Fort Lauderdale Mayor Jack Seiler, an RRB member, said “a number of cities” are unhappy about the board’s sluggish responsiveness to inquiries about rate setting. He added that Stunson’s questions are good ones.
“I believe there are more savings there, too” said Seiler. “When John spoke other city managers listened. He’s one of the best city managers around. He does his homework.”
The deadline for cities to approve a new, 10-year garbage agreement with the county and Wheelabrator – and be eligible for the signing bonus – was recently extended until Oct. 31. The deal includes an option for a second 10-year extension.
At last week’s meeting, Oakland Park commissioners voted to extend that deadline until next March to buy time for further study. Lieberman said that won’t happen.
In the meantime, city leaders in Oakland Park say the path is clear.
Commissioner Susanne Boisvenue declared flatly last week that she won’t vote for any deal that “doesn’t go out to bid.” And Vice Mayor Anthony Niedwiecki suggested the time has come for Broward’s dissident cities to band together to form a new purchasing alliance.
“If we do this, there will be other cities that would be interested in joining us,” he said. “That would kill the agreement and give us leverage.”