The Art of the Waste Deal

In December 1995, the city of Signal Hill, Calif., was in a difficult spot: Its long-standing contract with Signal Hill Disposal, an exclusive franchised hauler, was expiring in 12 months, and state mandates were causing the city to consider switching haulers.

Since 1986, the city had a good relationship with Signal Hill Disposal. Although the city wished to renew the contract, the state's mandated 50 percent diversion goal (AB 939) made a careful analysis of the solid waste contract a necessity.

Signal Hill Disposal had an exclusive 60-day negotiation period at the end of its contract. The city council, however, directed staff to begin negotiations 12 months early because of the difficulty in resolving several issues. If the city didn't see progress toward an agreement, then it would request proposals from other haulers.

The city created a solid waste management contract subcommittee, hired a consultant and created a questionnaire to analyze the qualifications of potential franchised waste haulers. The questionnaire was reviewed by California Integrated Waste Management Board (Sacramento) staff, who requested permission to use the questionnaire for a similar waste hauler selection process that was underway in another county. Signal Hill Disposal completed the questionnaire first because it was in exclusive negotiations.

The questionnaire included:

Impact of switching to automated collection.

This included:

*Current experience. These answers helped define the haulers' experiences with automated collection and routing, including measurement of collection efficiency such as average households per route and pounds per household. Haulers were asked to determine which routes were the least and most efficient, and to analyze how automated collection could improve the efficiency of each route.

*Impacts on waste management costs and potential diversion rates. Haulers analyzed the impact of a 95-gallon container on residential diversion rates, the current average cost per household, the anticipated costs of automation and how they would amortize those costs over the contract term, and the anticipated change in the household collection costs.

Haulers also were asked to discuss the potential for using automated containers with a percentage of recycled plastic content. The city had expressed a strong concern for stimulating markets for all recycled materials, including plastics, and expressed a preference for using products made with post-consumer materials.

*Alternatives to the 95-gallon cart. This included the haulers' analysis of using smaller containers, offering more than one size of container and split containers for multi-stream collection. They also discussed automated refuse container sizes' impact on curbside recycling rates.

Review of source reduction and recycling element (SRRE) programs and projections. Here, haulers analyzed the city's SRRE (the plan for achieving AB 939 compliance). The hauler defined which programs had been implemented for residential, commercial and industrial customers, recommended changes in the SRRE and detailed why and how additional programs would affect their price projections.

Residential recycling rates/volumes analysis and recommendations for improvement. Residential participation in the city's recycling program was historically low. This section questioned the hauler on its recycling experience both within the city and in other jurisdictions.

Green waste collection and diversion. The city noted that most areas with high diversion rates (particularly residences) had large amounts of yard trimmings. The hauler estimated the potential volume of green waste that could be captured through diversion programs from several targeted sectors, including single-family and multi-family residential, commercial and industrial, and government facilities.

Reporting recommendations for hauler contract. Because the city wanted to start monthly, quarterly and annual reporting in the new contract, haulers recommended the type of reporting system that would be most effective. The hauler also recommended ways to verify tonnages delivered to the materials recovery facility (MRF) to determine the percentage that is recovered.

Commercial diversion opportunities. In its responses, Signal Hill Disposal asserted that post-collection processing of mixed, commercial waste for recycling is the most effective diversion method. In an effort to expand on this view, it discussed the effectiveness of MRF processing vs. source separation of commercial recyclables in terms of diversion volumes, diversion program costs and the avoided disposal costs to businesses.

The hauler described its experience in the separate collection of recyclables from commercial customers, including:

*cities serviced,

*commodities most often collected,

*collection method,

*impacts on disposal costs to commercial accounts,

*marketing strategies,

*average market value of recyclables and

*cost ranges for collection and processing

Effective Troubleshooting The questionnaire forced the city to carefully consider its service package, while providing a baseline to compare all waste haulers that may be asked to submit proposals.

Signal Hill Disposal's responses were compared to services, prices and programs being offered in the industry and surrounding jurisdictions with comparable customer bases.

The responses were used to create a list of negotiation points:

*an "agreed" list of items requiring no further discussion,

*a "needs discussion" list where the concepts were acceptable to both sides but needed clarification on execution, and

*a "negotiation needed" list where the two parties were in complete disagreement.

As items were resolved, they were moved to the "agreed" list.

Some of the items on the "negotiation needed" list that caused the greatest disagreement included:

Automated carts' capacities. The city wanted to use 65-gallon carts to limit residential customers' refuse capacity, forcing increased recycling and limiting the amount of space required for the residences to store the carts. The hauler, on the other hand, wanted to use 95-gallon carts, because it already had experienced negative reactions to using smaller carts.

Resolution: The city insisted on using the 65-gallon carts, and the city council decided that the increased recycling potential outweighed the possible negative reactions. As a concession, the city agreed to actively help address residential customer complaints. After the carts were distributed, however, few citizens reacted negatively.

The curbside recycling program type. The hauler's primary objection to automated curbside recycling was that commingled recyclables had a decreased resale value.

Resolution: The city insisted on automated curbside recycling. To address the contamination concern, the city researched other collection methods, including a split cart pilot program operated by the city of Los Angeles.

Ultimately, the city decided that the added efficiency of automated commingled collection compensated for the possible increase in contamination. (For more information on Los Angeles' pilot project, see "L.A. Recycles: The Next Generation," World Wastes, July 1997, page 36.)

Since conversion, Signal Hill Disposal has found contamination to be only slightly higher, and decreasing with each week. Also, no noticeable increase of illegal dumping has been noted.Post-consumer recycled content percentage used in the automated carts. Although the city wanted to stimulate markets for recycled materials, the hauler was concerned about the effect of using recycled material on the cart's durability.

Resolution: The city assisted the hauler in researching companies that produce carts using 20 percent, post-consumer recycled material. City staff also helped the hauler prepare performance specifications. The city's cost of labor during negotiations and staff time when complying with AB 939 during the new agreement period. The city proposed two revenue sources: from sharing the sale of recyclable materials collected curbside and an AB 939 fee. This fee was based on Signal Hill Disposal's gross receipts, and the fee percentage based on the cost of anticipated staff time.

Resolution: The hauler agreed to a 50-50 split of all revenue from recyclable materials that exceed an annual base amount. The hauler also agreed to an AB 939 fee without raising residential monthly service fees. It actually reduced the monthly service fee for commercial/industrial customers for the first three years of a six-year agreement.

Establishing a green waste program. The hauler said that a curbside green waste collection program wasn't economically feasible considering the low volume being generated.

Resolution: The city recognized the hauler's concern, but did not want to completely abandon a green waste program. The hauler agreed to provide up to 600 backyard composting machines to residents at a subsidized cost of $15 each.

The hauler also agreed to host backyard composting workshops. The workshops have been well-received, and more than 150 composters have been distributed (and will continue to be until all 600 are placed with residents).

The negotiation extended past the original 60-day time limit, and the new agreement was approved by the city council 11 months from the date of the initial subcommittee meeting.

Reaping the Fruits of Cooperation While this process was developed as a negotiating tool, the cooperation it created between the hauler and the city has become valuable in the efforts to comply with required diversion rates. The exchange of ideas has helped the hauler maximize efficiency while increasing the city's recycling.

Some examples of this cooperation include:

1. The city discovered that a large portion of the city's self-haul tonnage delivered to the landfill were from the Street, Sewer and Water Division excavations, including large quantities of clean dirt, asphaltic cement pavement and concrete. The hauler developed a process to separate these materials, achieving an approximately 80 percent diversion rate.

2. During the conversion to automated curbside collections, the hauler collected old refuse containers from residential customers. Originally the containers were headed for the landfill, but at the city's direction, a recycler diverted about 75 percent of the material.

3. Each year, the city was landfilling up to 600 tons of street sweepings, composed mostly of organics and sands (and no appreciable amounts of contaminants).

Research showed that it could compost approximately 95 percent of the sweepings and divert almost 570 additional tons.

4. After a 4,000-square-foot building was demolished creating almost 100 tons of construction and demolition (C&D) debris, the city asked the Redevelopment Agency to require C&D debris recycling in all agency-financed demolition projects.

Within two months of adoption, the agency had bid contracts to demolish 36,000 square feet of commercial structures. Approximately 65 percent of this C&D was diverted. Using this as a model, the city drafted an ordinance requiring mandatory C&D recycling.

Signal Hill calculates that it already has diverted 39 percent of its waste stream. With the additional diversion expected from automated collection and increased use of the MRF, the projected 40 percent intermediate diversion rate required by December '98 should be exceeded.

Trucks. 3 trucks, 2 front loaders, White Volvo with Bowles bodies for commercial/ industrial and multi-family. 1 front-loader, White Volvo with Bowles body and Heil automated conversion for residential.

Containers. 64-Gallon, Rehrig-Pacific fully automated carts.

Customers. 1,700 residential, 450 commercial/industrial.

Employees. 4 dedicated to city operations.

Service area. Entire city limits.

Services. Recycling, construction and demolition debris removal and recycling, business and industry. All services - exclusive franchise.

Local tipping fees. $17.57/ton at landfill. $27.57 at waste-to-energy facility.