Palo Alto Weekly

Spectrum - July 30, 2010

Another big surprise in city's 'green' costs

Palo Alto awakens to an appalling fact — that it could owe millions for garbage it never delivers to a landfill

In the real world, if someone doesn't go to the city dump that person doesn't pay, right?

But in the world of landfill contracts, Palo Alto's "successful" program to reduce waste from residents and businesses, coupled with a recession-related drop in construction and other waste, is adding up to hundreds of thousands of dollars the city is paying each year for garbage and waste it is NOT delivering to a landfill.

Over the next decade, the city could pay $12 million to $13 million for refuse not delivered.

The reasons include that Palo Alto residents and businesses have been more enthusiastic than expected about cutting back on their waste under the city's "Zero Waste" priority, coupled with effects of the economic downturn.

The complex situation is outlined in this week's cover story and in detailed city staff reports on the city's website, www.CityofPaloAlto.org (CMR:301:10, July 6, and CMR:313:10, July 20).

Overall, overlapping contracts and conflicting priorities are running into each other expensive ways.

It's beginning to smell something like a scandal or communications failure, but it may be too soon to reach such a harsh conclusion. City staff and City Council members are struggling to sort it all out. The messy situation began to surface this June as the council's Finance Committee wrapped up its annual city budget review.

New Councilman Greg Scharff peppered the staff with questions, which were answered in a July 6 Q&A report replete with details about what happened. But it lacks strategic recommendations as to what if anything can be done. Follow-up staff reports suggest rate increases.

Basically, the city has entered into overlapping contracts as to how it handles its refuse disposal and recycling. The alarming new fact is that the nearly $650,000 penalty the city just paid for not meeting a minimum-tonnage requirement could double if the city keeps pushing its successful refuse-reduction and recycling efforts.

What that means to rates paid by residents and businesses has yet to be determined.

The early1990s landfill contract with Kirby Canyon near Morgan Hill sets annual tonnages Palo Alto must deliver, including per-ton penalties if the minimums aren't met: a "put or pay" provision.

For the past two years Palo Alto has come up short on its minimum-tonnage commitment of 41,348 tons: 4,739 tons short in 2009 and 17,633 tons short for the just-ended 2010 fiscal year. Translated at more than $36 per undelivered ton, the city paid $171,283 in 2009 for refuse that was never delivered. This ballooned in 2010, when the city had to pay $648,218 for tons not delivered.

Still worse, that amount could increase by $550,000 to $600,000 a year — meaning the loss would double to between $1.2 million and $1.3 million — if the city continues its push to increase recycling and reduce refuse, according to staff projections. Over the decade remaining in the Kirby Canyon contract the prospect of paying $12 million or more for refuse never delivered is appalling.

To be fair, in the early 1990s — when the city entered into a three-city partnership to create the SMaRT Station (for Sunnyvale Materials Recovery and Transfer Station), a partnership that includes the Kirby Canyon contract — few officials anywhere envisioned a world where garbage simply didn't just continue to pile up into small mountains, as in Palo Alto's baylands. There was real fear that local landfills would run out of room, so officials scrambled to sign long-term contracts with distant landfills.

But times and priorities change. Pursuing a long-time vision of cutting back on waste, in 2008 Palo Alto entered into a new contract with GreenWaste, Inc., to pick up refuse and institute an aggressive recycling and outreach effort.

And Palo Altans, as they did in the early 1970s when the city pioneered municipal recycling when cans and bottles had to be separated, responded enthusiastically and are now approaching the goal set for 2012.

What is needed now is a clear, complete explanation of this dilemma, what if anything the city can do about it, and how much ratepayers are likely to get hit: a thorough audit, in other words.

There is a broader yet very real danger: that the city's "green" initiatives lose credibility and public support, which no one wants to see happen.

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