Last July, Ann Arborites switched from sorting recyclables into two plastic totes to using a single ginormous wheeled cart. Since then, the city’s overall household recycling rate has risen 21 percent–from 8,857 tons in the twelve months before the change to 10,718 tons in the year just ended.
At the current rate, the average single-family household will recycle 721 pounds this year, an all-time high. Yet the more efficient automated system has allowed Recycle Ann Arbor, the nonprofit that handles curbside collection for the city, to eliminate one collection route, with matching financial savings. And because more recycling means less trash, the city has also been able to cut one of its eight garbage collection routes.
Then there are the amazing numbers coming from the city’s recently expanded Materials Recycling Facility. In the past year, the MRF has tripled the amount of recyclables it handles (see related story). Though it’s operated by a private contractor, ReCommunity, the city gets a cut when the materials are sold–and that revenue also has tripled, to $1.3 million a year. At that rate, the city in just three years could recoup the $3.6 million it spent to expand the MRF.
It all sounds good. So why is Recycle Ann Arbor facing a $338,000 revenue shortfall? And why is it asking for a contract revision that would raise by its compensation by $107,000 this year?
Blame big promises, based in part on bad projections.
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First off, Recycle Ann Arbor’s payments from the city are based partly on the number of carts “tipped.” When the contract was negotiated, the city’s consultants were projecting that about 33,000 carts would be deployed–but only 30,000 were.
But being 10 percent under projections for carts was nothing compared with being 40 percent under in predicting the amount of materials collected. Based on numbers provided by Recyclebank, the private company that the city hired to create a recycling incentive program, a consultant estimated that with single stream Ann Arbor’s household recycling would more than double, to 18,400 tons annually. The 10,718 tons actually collected through June, while up 21 percent from the preceding year, is 40 percent short of the projection.
So who screwed up? The cart estimate “came from city sources [household counts] and Recycle Ann Arbor [cart counts],” explains Tom McMurtrie, the city’s solid waste coordinator. “There was some overlap when the numbers were combined, [and] some were double counted.”
But the number was off mostly because the city decided not to deploy all 33,000 carts, says Jim Frey of Resources Recycling Systems, the consultant who predicted that recycling would double. “A lot of duplexes received one cart instead of two, triplexes got one cart instead of three, and four- to twelve-plex multi-families still have just two carts,” Frey explains. “This decision had a significant impact on cart count.” And, he adds, “all this effort to keep cart counts down impacts RAA on its compensation.”
To encourage maximum use of its carts, the city contracted with Recyclebank. For $149,000 a year, the company digitally tracks which carts are tipped each week, awarding the households “points” that can be redeemed for discount coupons. But while Recyclebank projected that half of the city’s households would have signed up for its reward system by now, the actual number is just 41 percent.
Atul Nanada, Midwest vice-president for Recyclebank, disclaims responsibility for the city’s optimistic planning. “We didn’t do any of the projections in terms of overall tonnage,” Nanda explains. “We provided the amount of recycling that occurs in other cities in terms of pounds per household.” But the two Michigan examples the company provided, Westland and Rochester Hills, both have much higher percentages of single-family homes than does Ann Arbor, which is roughly split between single- and multi-family units. Single-family units produce more recyclables, and this skewed the projection upward.
Since Recycle Ann Arbor’s compensation is based upon both the number of carts tipped and the tons of materials collected, it overestimated its revenue under the contract–creating this year’s $338,000 shortfall.
The nonprofit’s loss, of course, is the city’s gain–that’s $338,000 it doesn’t have to pay. This month, council will decide whether to pay some of it anyway.
The city spent $1.4 million on the single-stream carts, and another $1.2 million to buy four new recycling trucks–though McMurtrie doesn’t consider the trucks part of the conversion expense, since the old ones were already scheduled for replacement (see related story). The city planned to get its investment back through lower trash collection and landfill costs, and by paying Recycle Ann Arbor less per ton of material collected. Collecting fewer recyclables than projected wasn’t part of the plan.
Why Recyclebank’s incentives haven’t delivered is debatable. “The program’s not reaching as many people as it could,” suggests consultant Jim Frey. “I’m not quite sure what’s going on there, but I think more awareness, more communication, is needed.”
Tom McMurtrie rolls his eyes when he hears that. “We’ve worked hard on this. We’ve sent out notices, done multiple mailings, done phone calls. And we’ll continue to send mailings out. But it might not go up past 50 percent” participation–the level McMurtrie calls sustainable.
“We try to get above 50 percent in every community,” says Recyclebank’s Nanada, “but every community is different. Ann Arbor is around 41 percent, while other communities are at 70 percent … Ann Arbor is the first large community we’ve worked with a high student population, and for our first foray to be at 41 percent is not totally upsetting. [The incentive program is] not in any multi-family units yet, and that was part of the original plan. We’ve done that in other cities successfully. It was put on hold in Ann Arbor, but we’re able to do it once they give the okay.”
McMurtrie say the program won’t be in the multi-family units for at least a couple more years, “due to budget issues and to allow us more time to evaluate. They’ve done real well in other communities, and we think the program will work here.”
And if it doesn’t? “We cut the funding,” he says.
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Despite the shortfall and shortcomings, mayor John Hieftje supports amending Recycle Ann Arbor’s contract, even though it was renewed only last year.
“It’s really pretty simple,” says the mayor. “The [volume] estimates were too high, so their contract [price] was too low and they lost money. They knew they were going to [lose revenue] when they agreed to move to single stream, and they knew it would take a few years to get it back up. We’re just helping them until they get there.” The proposed amendment would raise the tipping fee by 10 percent, increasing the city’s payments by $107,000 per year.
In Hieftje’s view, Recycle Ann Arbor has done a good job, and single stream has been successful. “They’ve done … what they were supposed to do,” says the mayor, who twenty years ago chaired the group’s board of directors. “It’s a good showing overall, but we need to do more … particularly with students. So we’re going to focus more of our attention on education.
“Single stream has clearly been successful,” agrees council member Sabra Briere. “A 20 percent increase wasn’t what they projected, but it’s still pretty good.” During initial consideration, however, she opposed what some were calling a bailout.
“I certainly am in favor of Recycle Ann Arbor,” says Briere, “but I am not in favor of Recyclebank. We were told the program relied on a combination of going to single stream and Recyclebank, that it was something we had to do as one. Recycle Ann Arbor was overly optimistic when they came up with their numbers because they believed Recyclebank’s numbers … It didn’t happen because here in Ann Arbor, we already recycle heavily.”
Melinda Uerling, CEO of Recycle Ann Arbor, says the group didn’t come up with the numbers; the city did. “We weren’t allowed any input into how the numbers were created.”
“We provided information on the business carts and locations that were in place under the old system,” she elaborates in a follow-up email. “This information was used in the model developed by Resource Recycling Systems, which predicted the volume of material to be collected under the new single-stream collection system based on performance data from other Recyclebank cities, including ones that started with high-performing programs like Ann Arbor’s. Only the number of cart lifts and the volume of material to be collected over a five-year period were shared with Recycle Ann Arbor.”
For this reason, Uerling believes amending the contract is the right thing to do. “In any contract, if the data is inaccurate, the contract should be reopened. And it should be noted that we’re not asking for [the full $338,000] but only for $107,000, because we’ve already made significant cuts to the organization, including to administration, and we’ve renegotiated [employee] health care and benefits.”
Mike Garfield, longtime director of the Ecology Center and a Recycle Ann Arbor board member, says there’s still room to increase recycling by single-family households, but adds that “there’s a lot more room in multi-family. Multi-family is half the population, and it’s been our biggest problem for twenty years … Theoretically, Recyclebank should be able to help. God knows nothing [else has] worked well yet!”
Garfield says amending a signed contract is not unusual. There is no “reopener clause in this contract, but I think they want to deal in good faith because Recycle Ann Arbor has provided good service over the years.”
Mayor Hieftje concurs. “They’ve always been an asset to the city. But we still treat it as a business because they are a business: they’re a contractor with the city, and last year, we extended their contract to 2018.”
That renewal speaks of the faith the city had in Recycle Ann Arbor before the switch to single stream. That relationship has been shaken by rosy estimates that didn’t come true and an incentive program that, so far at least, hasn’t accomplished much. But the good news is that recycling volume is up and expenses are down–and if council decides to bail out Recycle Ann Arbor, it can tap the moneymaking machine called the MRF.
