“It wasn’t easy or pleasant,” says Ward Two’s Kirk Westphal on council’s vote last summer to hire Recycle Ann Arbor to process, ship, and sell the city’s recyclables. “It’s rare [for council] to come to different conclusions from staff. But this recycling issue was one of them.”

In July 2016, city administrator Howard Lazarus closed the city’s Materials Recovery Facility on Ellsworth Rd. Citing safety problems, he also fired the private company that ran it. On an interim basis, staff brought in the national company Waste Management to bale recyclables and ship them to processing facilities elsewhere.

Instead of continuing that contract, council voted 10-1 to hire Recycle Ann Arbor to haul the material uncompressed. The nonprofit had vociferously criticized Waste Management’s bale-and-ship approach for destroying potentially reusable material. Loose shipping would cost more but cause less damage.

Lazarus initially objected to hiring RAA because of their “lack of experience on contracts of this scale.” Six months into the one-year contract, the most he’ll say of their work is “Recycle Ann Arbor is meeting the requirements of its contract.” But the nine council members who responded to the Observer’s emailed questions all seemed satisfied with their decision. “They seem to be doing a fine job,” says Ward Five’s Chuck Warpehoski of Recycle Ann Arbor. Ward Four’s Graydon Krapohl agrees but says it hasn’t been easy. “The MRF is a challenge.”

Everyone agrees that the MRF is a shadow of its old self. So is the city’s recycling staff. Ten years ago the city employed four people in recycling, and five years ago it was making money on processing increasing amounts of recyclables from outside the city. But those employees left or retired, and the high volume overwhelmed the MRF and degraded its equipment. Now the city has one person handling recycling contracts, and recent reports say it could take up to $2 million to restore the MRF to safe operation.

In hindsight, many councilmembers are unusually blunt in their criticisms of staff. “If we still had someone dedicated to overseeing the operations, a lot of turmoil could have been averted,” says Westphal. Ward Five’s Chip Smith, council’s rep on the environmental commission, is blunter. “We lack anybody on staff who knows what they’re talking about on this stuff!”

Lazarus says Smith’s criticism is “overly harsh and in that sense not true.” But he concedes that the city needs “to reintroduce expertise … You’ll see a rebuilding of the capability as well as good, strong contract management.”

That’s not all Lazarus has in mind for recycling. Instead of a city-owned MRF, the administrator is thinking about regional recycling. And he’s working on a comprehensive waste management plan that could include a new curbside recycling contractor–a service for which the city currently pays Recycle Ann Arbor $1.8 million a year.

Like many on staff, Lazarus is at best uneasy about RAA’s mixed role as a recycling advocate and a city contractor. “Recycle Ann Arbor will always be an important part of advocacy and education,” Lazarus says. “But we need to make sure that when we look forward at contracting that we’re getting best value for our residents.”

RAA spokesperson Bryan Weinert acknowledges that “there’s always been tension with our multiple roles, and with the MRF, our advocacy became a sore spot for the city. I can understand how that can ruffle feathers,” particularly when it was criticizing a competitor’s performance. There was also, he adds, “a perception that Recycle Ann Arbor was just advocacy and didn’t have chops to operate the MRF.”

No one questions RAA’s chops at curbside collection: it’s been doing it since 1977. The question is whether reorganizing services could save money. Staff is working on a request for proposals for a new “solid waste resources management plan” that includes recycling, composting, and trash disposal. “The opportunity we have over the coming year and a half is to get better value for the collection,” Lazarus says, “perhaps by reducing the number of contractors.”

RAA was founded by young environmentalists who simply hated the idea of reusable material going to waste. But the city, which began supporting the group in 1982, has always calculated the financial implications as well.

In recent years, the math seemed to favor recycling. According to former MRF contractor ReCommunity, from 2011 to 2015 the city made almost $3 million from sales of materials it sorted and sold there. It also saved the cost of landfilling tons of garbage.

But Lazarus–a civil engineer with a master’s in environmental engineering and chemistry–doubts that recycling ever really made money. “When you factor in all the costs of a recycling program–true overhead cost, true depreciation costs, and long-term capital replacement–you never recover the full cost,” he says.

And lately it’s gotten harder. The price of recycled newspaper dropped from $88 per ton in 2012 to $62 in 2016. Glass fell from $4 to $1.50. When China stopped accepting two dozen types of “foreign waste” in January, it slashed demand for recycled plastics. That’s led some cities to stop collecting glass and plastics.

Meanwhile, trash disposal is getting cheaper. When the city’s contract came up for renewal recently, “we had programmed a 30 percent increase in landfilling costs,” Lazarus says. But the final bids came in 36 percent lower, saving the city approximately $775,000 a year.

All this factors into the question of what to do with the MRF. “Because of the change in commodity pricing, the change in packaging, and the need to constantly adapt equipment, the issue is whether the city is best positioned for the long term to operate a facility like that,” Lazarus says. It might make more sense, he says, to use its site “to partner with someone else to provide a facility that is adaptable and meets our objectives.”

Lazarus acknowledges that likely means regionalizing recycling. “We are working with the county.”

Evan Pratt, the county’s water resource commissioner and director of public works, says “it should be cheaper to do it regionally, but I’ve got to see an analysis. We’re the biggest place in the state that doesn’t have regional authority.

“The county’s role would be primarily financial,” Pratt continues. “We have a little money in hand because the county receives a cut of the gate” at the Arbor Hills landfill in Salem Township. He feels “an independent authority would be [the] best and fairest” way to structure regional recycling, but that will be up to the communities that want to take part. “My role would be to help get it off the ground, to find out how many communities are interested.”

Lazarus stresses that whatever happens, the city won’t abandon recycling. The goal, he says, is “to be more agile, to be able to adapt to changes in the market”–even if that means contracting with someone other than Recycle Ann Arbor.

RAA’s Weinert emails that the group “has served as the area’s resource and conscience in advocating for maximum recovery for 40 years, a role that we believe is understood and appreciated within the community.” Since the group took over hauling and sales last year, he says, they’ve found better markets for the city’s glass and mixed paper and reduced the amount of damaged material that has to be landfilled. He adds that RAA provides “union jobs with fair wages and benefits,” and keeps profits “in the local community supporting local environmental endeavors.”

Chip Smith acknowledges that getting value for money is important. But he also believes the city’s staff wants to replace RAA “because of personalities and personal histories with some of the staff and some of the RAA personnel.” Council overrode staff’s objections to hire RAA last year, he says, because “staff did a terrible job of developing the [request for proposals] and bids and did not build trust or credibility with the Environmental Commission or Council.”

This time, Lazarus says, the city and county have hired a consultant whose final report is due next month. That will launch a yearlong project to update the solid waste plan, including a new request for proposals from would-be contractors. At that point, city council will again have to determine the future of recycling–this time, for a much longer term.