Quantcast

Barron: Outsourced trash, recycling savings are real

NORWALK, Conn. – It’s been more than a year since Norwalk outsourced solid waste and recycling collection to City Carting amid much controversy. Eight union workers were forced into lower-paying jobs, touching off howls of protest. Skeptical residents looked askance at the projected $17 million savings over the life of what was called an unprecedented 10-year contract. Residents questioned the loss of quality control by turning over the service to an outside vendor.

Others questioned the length of the contract, whether there was an escape clause for the city (there is), the lack of serious bidders (City Carting and the smaller Finocchio Brothers), the thousands of dollars City Carting officials donated to Mayor Richard Moccia’s re-election campaign months before the contract was issued, and connections  to people with ties to criminal activities, people that were not allowed to have anything to do with a contract the company pursued in Westchester County, N.Y.

City Carting city carting westchester newspaper report

But, in spite of the peripheral issues, the one thing most everyone wanted was this: “Show me the money.”

Nancy on Norwalk asked that question this week, and Bob Barron answered.

According to Norwalk’s director of management and budget, after nearly a year and nine months, the savings are real.

 SOLID WASTE-CONTRACT SAVINGS

SOLID WASTE-AMENDMENT SAVINGS

Barron’s response:

Back in January, Hal (Alvord, director of the Department of Public Works) renegotiated the rates with City Carting, which were approved by the City Council to provide further savings, as follows:

Contracting-out Garbage Collection

  1. I’ve attached two files that show the savings from the original contract and the recently amended contract
  2. The original contract’s total savings were $16.8 million or a net present value of $14.6 million over the 10 full and one partial year covered by the contract
  3. The total savings increase to $17.9 million or a net present value of $15.5 million when you include the amended contract’s rates for the 9 remaining years of the contract
  4. The Common Council, in its 1/14/14 meeting, approved a contracted rate reduction highlighted in pink in the SOLID WASTE-AMENDMENT SAVINGS attached file
  5. The amended contract will be effective 7/1/2014
  6. The savings in both analyses are generated from avoided contractually obligated increases in costs so the savings are not seen in a year-over-year Public Works budget reduction, rather the savings are in what the Public Works budget amount would have been if the contracting-out of garbage had not occurred
  7. To answer the question, “have we achieved the savings anticipated by signing the contract with City Carting?” and the answer is yes, the contracted rates from both the original and amended contracts are what the city is currently paying for the myriad of services covered by the contract

 

Barron continued:

Looking at the SOLID WASTE-AMENDMENT SAVINGS.pdf file you will find that there are five services identified, three of which are based on a contracted rate per month — these rates have been achieved and as a result the savings realized, specifically:

 1)  MSW Collection partial year (12/13) $607,760 savings and full year (13/14) $855,328 savings or a total of $1,463,088

2)  Recycling Collection partial year (12/13) $0.00 savings and full year (13/14) $206,200 savings or a total of $206,200

3)  Transfer Station operations, no savings forecast until next fiscal year beginning 7/1/2014

The remaining two categories, Recycling Revenue and Tipping Fees, have also successfully contracted the stated rates which has resulted in savings, but the accumulated savings depends on the volume in each of the last 20 months.

 4)  There was no change in revenue/ton contracted for recycling revenue in the partial year (12/13), but an additional $30,109 was anticipated in the current fiscal year (13/14) due to increased volume.  The forecast called for an incremental $30,109 from $101,500 to $131,609; however, we’ve already booked $136,053 as of today or an additional $34,553 before the year is even over.

5)  There were no savings forecast for Tipping Fees for the partial year (12/13).  In the current year Public Works reports in its MSW and Recycling Report-May 2014 that the total “tonnage out” is 21,654.38 so at a $1/ton savings ($86/ton to $85/ton) we’ve saved $21,654 in our Tipping fees.  Here’s where it gets tricky, part of the savings in this item is an avoided cost of hauling away the incremental recycling tonnage so Public Works reports that in the first 11 months of this fiscal year we’ve already recycled (sold for revenue, not carted off at $86/ton) an additional 1,114 tons so at the old rate of $86 (what it would have cost without the new contract) the additional savings is $95,791 before the year is even over.

 “This is a snapshot of the savings as of today (Monday, June 16), before we complete the first full fiscal year of the contract, Barron said. “Also, there has been additional savings negotiated beginning next month that Hal negotiated this past January.”

Comments

20 responses to “Barron: Outsourced trash, recycling savings are real”

  1. Aunt Bea

    Makes me feel like its the holidays. So, what are we gonna spend the $18 million on? New school? Fleet of shiny new patrol cars with cams and lapel cams for every patrolperson, maybe some new fire equipment? Spiff up Cranbury? Paving and new sidewalks for all?
    With enough left over for jumbotron screens at NHS and BMHS and reduce the tax burden on owner occupied homes. Momma used to say, “if its sounds to good to be true….

  2. John Hamlin

    If the math holds up, it’s good news for the city, and if this works out over several years, we should start outsourcing more parts of DPW and more city government functions.

  3. EveT

    “The savings in both analyses are generated from avoided contractually obligated increases in costs…” So in other words, did the union put themselves out of the running by insisting on automatic raises year after year? It is important for workers to be able to bargain collectively, but they need to be realistic about what the budget will bear.

  4. LWitherspoon

    Candidate Rilling stated during his campaign that he would carefully scrutinize the contract to verify savings for the City. Rilling is nowhere to be found in this article, but Bob Barron is an administration employee so let’s give Rilling partial credit on fulfilling his campaign promise. Most likely the lion’s share of the credit should go to NoN. Keep up the good work!
    .
    During the controversy over outsourcing, Common Councilman David Watts opposed $17 million in savings because it meant forcing eight union workers into lower-paying City jobs. Now that one and a half years have passed, the City has saved $1.8 million. Let’s hope that when election time comes, the voters remember that Mr. Watts actively opposed real taxpayer savings for the benefit of eight municipal employee union guys.
    .
    Do the pro-union, anti-outsourcing members of Common Council have any comment regarding the savings which they opposed? If there’s something everyone is missing, and the savings aren’t real, now would be the time to say so. According to past comments by Bruce Kimmel, the contract can be cancelled by the City for any reason.

  5. piberman

    Maybe the real story here is its hard to recall a similar instance of our City outsourcing to save taxpayer funds. What would happen if City taxpayers asked which officials were responsible for our 5th highest teacher salaries. Answer might be ALL OF THEM.

  6. Casey Smith

    @ Aunt Bea,

    I just want to clarify one thing that EveT briefly touched on that may partially answer your question about the 18 million. In the list, Mr. Barron was clear on Point #6 – a major chunk of the savings were actually ‘cost avoidance’.
    .
    Simply put, in September, if you and I both independently call our home heating suppliers for a fill up before winter sets in, and you lock in a price of $3.00/gal while I decided to chance it on the market and the market goes up to $4.50/gal, you actually avoided paying the extra $1.50/gal that I’m paying for however long that cost stays at that rate. You’re still paying the oil bill for the 1,000 gallon tank, but you’re “saving” $150.00 in comparison to what I’m paying. Now, if you actually budgeted to pay $4.50/gal, have the money set aside for that and got in on a really good deal, then the money’s there in your wallet. And good for you! But, if you are like those people who live from paycheck to paycheck, all you really have is a reduction in the amount you are paying for oil. However, just remember that I’m green with envy over here as I write my check out to the oil company.
    .
    It’s a bit more complicated than that, since there are employees involved (benefits, withholding, salaries and overtime, etc.) rather than a straight commodity, but that’s the basic idea.
    .
    As much as I’d love to see new police cars, fire equipment, etc, any “savings” would probably be redirected towards reducing debt service. But I totally agree that sidewalks would be nice, if and when Yankee Gas ever finishes their projects.

  7. Don’t Panic

    It’s interesting that everyone is attributing the savings of $1.8m to the reassigning of 8 muni employees. That would work out to $225,000 an employee–actually far less, since the city is still paying them at a lower salary. Most of the cost savings for employees was supposed to be in lower workers comp costs anyhow, or at least I heard that as a justification back when this was eing debated. Did we attribute savings to “avoided” WC costs (estimates that could be very arbitrary)?
    .
    It seems that most of the savings came from negotiating lower tipping fees, which we surely would have been able to do even if we hadn’t outsourced. Have these “avoided” costs been calculated to neutralize savings that we could have realized without privatizing?

  8. Don’t Panic

    *excuse me, not tipping fees, but hauling fees*

  9. LWitherspoon

    @Mark Chapman
    .
    Panic raises an interesting question.
    .
    How is City Carting hauling our garbage for $82k per month when it previously cost the City $154k per month? Is City Carting really able to haul garbage for 47% less than what it cost the City to do so?
    .
    Do any of the savings in Mr. Barron’s calculation of hauling fees include reduced workers comp expenses to the City? I could be wrong but I believe that during the outsourcing debate, workers comp savings were ultimately excluded from the City’s calculations because it was impossible to quantify the amount of the savings, and when they would kick in.

  10. peter parker

    Well this all sounds very good on the paper they are reveling to the public. Has anyone verified these numbers? Are they correct? Are they fudged? One has to wonder how creative they might be getting on the financials. Numbers are an interesting sort, you can make them appear in many different ways and still keep it legal. Don’t believe everything you hear and only half of what you see. Something is missing in these numbers.

  11. piberman

    Maybe when the City has its annual audit we can have verified numbers. Actually the more intetesting story is outsourcing school custodian services. With a top grade reportedly in the $80 to 90k grade the custodians are likely doing better than most City residents. Median family income is about 70k. Outsourcing might make the City affordable once again. Provided our piliticos don’t give away the farm. Dream on.

  12. Oldtimer

    Mr Barron’s numbers look good, but it is hard to understand how moving eight city employees into lower pay grades and paying a privately owned for-profit contractor to do their jobs, could possibly save all that much. He has left out the $273,000 no-bid deal with City Carting to replace three compactors at Crescent St. We, and Mr Barron, will never know if we really get new or rebuilt units and we now know, after the $273,000 has been approved, City Carting is only going to replace two now, or, maybe only get one repaired.

  13. Oldtimer

    Mr Barron also fails to mention that City Carting gets all the revenue from recycling metals. That is where the money is in recycling.

  14. Oldtimer

    PIBerman
    Contract calls for top pay for top grade custodians to be $52,980, not your “reported” 80 to 90k. Now, if the management is allowing a lot of overtime, individual custodians could go higher, but 90k would be a lot.

  15. One and Done.

    @PeterParker aka SpiderWatts. Are you suggesting the numbers are contrived? That would be illegal. Please explain yourself before throwing baseless accusations. Aren’t you able to read your DPW packets with your IPAD yet? Surely if you read these you might understand. But I might be assuming too much here.

  16. Dennis DiManis

    That’s too much money to be paying school custodians. Most city employees get too much pay.

  17. Oldtimer

    Barron’s spreadsheets don’t seem to show the truck fuel City Carting gets from the DPW pumps. That has to be a pretty substantial number. Is City Carting paying for that fuel, or is the DPW giving it to them and should it show as a contract expense ?

    1. Mark Chapman

      @Oldtimer

      The contract allows City Carting to purchase fuel from the city. It will included in a story I am working on for the weekend.

  18. Oldtimer

    HOUR reported, when the first contracts went into effect, that City Carting would supply a lot of things, including machinery. Aren’t compactors machinery ? Why did Alvord ask for $273,000 to replace 3 compactors in a no-bid deal with City Carting ? Why did the council approve giving him the money ?

  19. LWitherspoon

    @Oldtimer
    .
    As you quoted in another post, the Hour reported that City Carting would supply machinery for HAULING. Stationary compactors are not used for hauling.
    .
    Mark Chapman confirmed this to be true in the comments on the story about janitorial outsourcing: “The contract mentions equipment only for pickups and hauling, not for the transfer station.”

Leave a Reply


Recent Comments