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Tuesday October 20, 2020
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MRF Manager Steve Pratt

Reviving the MRF

Steve Pratt says he's warned his wife and kids not to expect to see him for a year.

by James Leonard

From the October, 2020 issue

Pratt is the new manager of Ann Arbor's Materials Recovery Facility (MRF, usually pronounced "murf"). Built to sort and sell the city's recyclable materials, it's been largely idle since being shut over safety concerns four years ago. Recycle Ann Arbor (RAA), which collects the city's recyclables, has used it only to hold them temporarily before trucking them to a recycling facility in Southfield.

Pratt is so busy because under a contract signed in June, RAA is spending $7.3 million to rebuild the MRF. On its side, the city has committed to paying the nonprofit $147 a ton to process its recyclables, which works out to about $2 million a year.

Recycle Ann Arbor began as a volunteer project in 1978, and the city has funded its collections since 1982. It got the hauling contract when the MRF closed-but only after its parent, the Ecology Center, persuaded council to reverse a staff decision to use a private company.

It was the first of three council votes favoring the respected local nonprofit. First, council killed discussion of privatizing the city's three curbside pickups-trash, recycling, and compost-by requiring that any new system not cut city jobs. When staff came back with a proposal to hire additional employees to take over recycling collection, council nixed that too-staff estimated the plan would save the city three-quarters of a million dollars a year.

Instead, council directed staff to negotiate with RAA to reopen the MRF. The ten-year contract, concluded after months of at times delicate negotiations, requires RAA to process the city's 14,200 annual tons of glass, paper, and plastics. To do that, it will have to replace most of the equipment, expand the "tipping floor" where materials enter the facility, and install a new control system. It's financing the work with a $6.5 million loan from Level One Bank and an $800,000 federal grant.

With RAA's annual operating costs already at $7.5 million, CEO Bryan Ukena acknowledges that taking on the

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MRF is a "big risk." But he also points out that it's such a "good investment we had four companies that said 'we want to loan money' on this project."

That's still bold talk in an industry suffering since commodity prices dropped and China stopped taking America's recyclables. Vietnam soon followed, and now we sell our stuff to countries like Bangladesh that can't afford to be fussy. Facing greatly increased costs, many towns have considered limiting or ended their recycling programs.

Not here: Ann Arbor has a dedicated solid waste millage. "Collection is considered an essential service," Ukena says. "We don't see that changing."

The MRF opened in 1995, and in the five years before it closed, its private operator, ReCommunity, paid the city almost $3 million-its share of the MRF's earnings from selling the materials it processed. But to do that, ReCommunity had force-fed 75,000 tons annually to machines designed for 30,000 tons. The company did it, Ukena believes, because "they were positioning themselves to sell to Republic" Services, the country's second-largest trash and recycling provider-which they did in 2017.

Because the city owned the MRF, staff was concerned that it might be liable for worker injuries. Ukena says the new contract "protects the city in a very real way--the risks are equally shared."

Molly Maciejewski, the city's public works manager, agrees in nearly the same words. "We have arrived at a ten-year MRF service agreement and land and building lease that equitably shares risk and optimizes measurable economic and environmental community benefits," Maciejewski writes in an email. "RAA bears risk and liability for accidents, injuries, and legal claims related to the MRF operations unless the City is found to be negligent or fails to comply with material obligations in the Agreement.

"The key differences with the new arrangement with RAA compared to ReCommunity is that RAA is leasing the MRF building and site from the City," she explains. "Maintenance, upkeep and any needed modification of the MRF will be RAA's responsibility."

Until the MRF is functional again next August, RAA will continue to ship our recyclables to Southfield. After operations resume, revenue from the sale of its recyclables will be deducted from the city's processing fee. If the revenue becomes greater than the fee, the city will keep 55 percent of the surplus, and RAA the rest.

"If the markets go up even mildly," Ukena says, "the city stands to make a great deal of money." While he "can't predict markets," Ukena guesses it could be up to "$1.5 million a year" for the city.

If it happens. Industry experts think it's unlikely recycling will ever pay for itself again, meaning that the folks using the service will pay for it. Maciejewski writes that the city "will not speculate on the future of recycling markets [but] we hope the commodity markets rebound because it would ultimately lead to increased diversion rates across Michigan and the country … The City and RAA have negotiated a contract in good faith, and we feel comfortable with the terms and requirements of that agreement."

Despite the obstacles, Washtenaw County Water Resources Commissioner Evan Pratt says, "I think they can do it." One of the founders of the current effort to coordinate recycling in the county's eastern half through a central authority, Pratt has "seen some of the documentation of how they plan to do it, and I asked a lot of questions. I didn't see anything in there [that had me asking] 'Well, how in the hell are you going to do that?!'"

Reopening the MRF will add 30,000 tons of annual recycling capacity to the county. Currently the Western Washtenaw Recycling Authority processes about 6,600 tons annually for the cities of Chelsea and Dexter plus Lyndon, Manchester, and Lima townships. The rest of the county's recyclables wind up in the Southfield MRF, which is near capacity.

Since Ann Arbor produces about 14,200 tons of recyclables annually, RAA hopes to use most of the remaining capacity for other communities. "Our processing rate is competitive," says Bryan Weinert, RAA's director of strategy. "We are very confident that there're a lot of players in the region that are hungry to do business with us."

RAA's goal is to process 20,000 to 25,000 tons annually, so while they're rebuilding the MRF internally, they're talking informally with communities plus local colleges and universities. More importantly, says Weinert, "there's a potential for [the Washtenaw Regional Resource Management] Authority to ultimately buy into this."

Most members of the regional authority are from the county's east: Ann Arbor, Pittsfield, Scio and Ypsilanti townships, plus the cities of Ypsilanti, Saline, and Dexter. They're currently considering a weighted voting system based on tons delivered rather than one vote per town-which would make participation much more attractive to populous Ann Arbor.

So far, however, council seems uninterested in joining the authority. It tabled a motion to join twice in 2019 and hasn't looked at it since. County public works director Theo Eggermont emails that the authority hasn't gotten "a clear path to understanding if the City wants to be in or out, or any clear conditions for joining." But he adds that "adopting a contract that large is highly unlikely at this point."

It would certainly be advantageous to the city if they did. As Maciejewski explains, "The City gets a host fee of $13.50 per ton for whatever they process that doesn't come from the city which will be deducted from what the City owes RAA for processing the City's materials."

Ukena admits that post-China recyclables markets are "some of the worst markets I've seen [in] thirty years." But his faith in the future is unshaken and probably unshakeable. "If markets do return--and they will, they always do--it's a commodity, it's a resource, and there's less and less of it. So recycling will become very profitable."

In a follow-up email, he adds that " [t] he true value of recycling is not generally accounted. What gets lost in this equation is how much it costs not to recycle. Not just the cost of transportation to a landfill or incinerator, or the tip fees once you get there but the environmental and health impacts of the emissions of that transportation and disposal. ... In an authentic calculation of us living on this planet with limited resources and a suffering climate--recycling is always going to be cheaper, smarter and better.

"Will recycling cost money if we do not include these other real and life impacting costs in comparison?--yes it does cost money and it will. But landfilling and incineration are not free."     (end of article)

 

 
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