Compost outsourcing delayed as Ann Arbor council members and AFSCME union cite concerns
Speaking before the Ann Arbor City Council, AFSCME Local 369 President Nicholas Nightwine continued to express concerns about outsourcing city of Ann Arbor compost operations Monday night.
Ryan J. Stanton | AnnArbor.com
A deal to privatize the city of Ann Arbor's compost operations was delayed Monday night, with City Council members citing concerns about farming out the work to a New York company.
The issue is being postponed until the council's Dec. 6 meeting.
Some council members appear hesitant to even consider outsourcing compost work at all, citing concerns of losing direct control. Other council members say they still have too many unanswered questions, and some question why a Michigan firm that offered a lower price was overlooked during a city staff review of proposals.
AFSME Local 369 President Nicholas Nightwine, who has been fighting to keep the compost work in the hands of city union workers, spoke at Monday's meeting. He suggested the city might not need to outsource if it just charged competitive rates for its compost product.
"I'm sure that you noticed that the city would still be taking a loss throughout the next five years whether or not this contracting out happens," Nightwine told council members. "The city would just be taking less of a loss. Why should the city take any loss at all?"
Nightwine said prices at the city's compost center are so low right now that it's impossible for the city to make a profit. He said the prices are $9 per cubic yard under 10 yards, $7 per cubic yard for 10-24 yards, and $5 per cubic yard for 25-40 yards.
"Believe it or not, these prices are actually higher than last year," he said. "In doing some further research, the union has found these prices to be extremely lower than other establishments selling the same product. As a matter of fact, the closest price to the city's price we found was $15 per cubic yard for any amount of compost."
Nightwine said the union even found prices as high as $50 per cubic yard.
"So I ask again, how was the city ever going to be successful with these low prices?" he said. "The city has priced themselves out of this business."
Matt Kulhanek, the city's fleet and facilities manager, gave a detailed presentation to council members last week in which he said the city could save more than $376,000 annually starting next year under a five-year contract with WeCare Organics.
The city's compost operations have struggled to bring in revenue, losing $683,000 last fiscal year. The year before, the city saw a loss of $568,000.
The proposal to contract with WeCare Organics still would have the city losing about $128,700 a year on compost operations. Michigan-based Spurt Industries offered a contract that would see losses at $124,000 annually.
Council Member Sandi Smith, D-1st Ward, said Monday night she was "very uncomfortable" with choosing a New York company over a Michigan company. Smith also expressed general hesitations about outsourcing, saying the city has made a lot of investments with taxpayer funds in recent years to improve the compost system that could end up benefiting a private firm.
Nightwine said the union has concerns that the city could go with WeCare Organics, sell it's equipment, and then find out its not happy with the company.
"Will the city then have to buy new equipment and retrain employees at a cost higher than it was to get out of the compost business?" he said, suggesting the city should instead raise the rates to "where they should have been all along" but with possible discounts for Ann Arbor residents.
Council Member Stephen Kunselman, D-3rd Ward, said he wanted to know if WeCare Organics would pursue contracts to bring sewage sludge to Ann Arbor.
Concerned residents have circulated e-mails linking to a SourceWatch article stating that WeCare's compost "is made from sewage sludge (renamed biosolids) by the company WeCare Organics LLC. Under USDA organic standards, sewage sludge may not be used in organic agriculture. However, companies such as WeCare that market sewage sludge in fertilizer and compost products often claim to be 'natural' or 'organic.'"
A WeCare representative could not be reached for comment.
Council Member Mike Anglin, D-5th Ward, expressed similar concerns and said he feared the city could end up with an environmental cleanup bill due to materials dumped here.
Two residents spoke at Monday's meeting in favor of keeping the compost operations in the city's hands.
Ray Ayer called the proposal to outsource "ill-advised."
"I think it stinks and I think the site will stink under a new operator," he said, adding he thinks the city does a good job of operating the site right now.
Thomas Mesko, who said he's a 20-year resident of Ann Arbor, reiterated what Ayer said and encouraged council members to spend more time looking into the issue.
"I mean, our compost center is a great part of what this city is," he said. "I'm coming to you as a resident who's been using it for 15 years."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.
Comments
Rbud
Sat, Nov 20, 2010 : 1:34 p.m.
Why are we even thinking about outsourcing more MI jobs---especially when a MI firm is the lower bidder? Why can't a more competitive rate be charged? Considering the track record of WeCare, who is getting the kickback $$$$$ from this firm? Sounds like politics as usual. Are there transplanted politicos from the old Kwame-Detroit machine now residing in AA? I bet more AA citizens would be up in arms if this were the good old (and real) AANews instead of this bogus online advertizing blog.
AlphaAlpha
Thu, Nov 18, 2010 : 6:06 a.m.
Mr. Stanton - Something is missing here: Who sets the price of A2 compost? That individual or committee may have some comments...
onlytruth
Thu, Nov 18, 2010 : 1:03 a.m.
@jondhall, I think maybe you should take some time and read this article again. In his speech to City Council, President Nightwine did in fact say raise the prices to market levels and give a discount to the A2 residents. If your going to post a comment at least post the truth and get your facts straight. It is pretty clear to me that you have no clue how Unions work. I normally don't comment on other people's posts, but I am sick of people that have no idea what Unions are about making false claims and comments about Unions. In this case how can anyone even start to blame anyone but the City Manager? The rates for compost are ridiculously low, that's the problem. I do agree with another post, raise the prices to the market level for two years and see the change. WE pay the City Managers over one hundred thousand dollars a year to run our great City and they can't see what the real problem is. Hire new management. Did anyone else notice that when the President of AFSCME spoke he did not complain about Union jobs disappearing or Union work, he simply provided facts and numbers. That's what I wanted to hear. There are way to many "ifs" in this situation to contract out the Compost Center. Bottom line, raise the rates to where they should be and see the difference. It makes no sense to me that the City is going to bring in a contractor, from another State, to make a profit while the City takes a lose. Please fellow citizens of Ann Arbor help support keeping the Compost under City control and don't let someone else run a program that we have all paid for over the years.
AlphaAlpha
Wed, Nov 17, 2010 : 10:44 p.m.
Tom Teague - agreed. Clearly, our stuff is underpriced. Edward - thank you for the numbers. So, clearly, A2's compost is underpriced. One of the benefits of being a government entity is a reduced emphasis on profitability, but this is a bit much. The city should boost rates a minimum of 25% immediately, and likely a bit more. Raise the price until sales drop, then back down a bit. Maybe that process is too complicated for our city managers? We could repeat it, maybe in bold font. Also, Edward, Moo Poo? Disingenuous. If you want results, use Mi Poo. Mi Poo is the best. Not their poo, not your poo, Mi Poo.
Tom Teague
Wed, Nov 17, 2010 : 4:58 p.m.
@AlphaAlpha - I think the answer you're looking for is that Ann Arbor can sell compost for whatever the market will pay. In other words, we can't sell $25 a yard compost if no one is willing to pay $25 a yard for it. If there's a compost glut (say, some time after a horrendous storm knocks down a lot of trees) then I assume prices would fall as cities try to empty their compost storage yards. On the other hand, if I were pricing this, since people are buying us out at $9 a yard, I might be tempted to try $12 and see if they're still buying.
Speechless
Wed, Nov 17, 2010 : 12:37 p.m.
"... Moo Poo is a different product than A2 compost. Not comparable." About the compost available at the MSU Surplus Store, as quoted by Ed: "... Uncured Good Stuff will be selling for $7 per yard... Cured Great Stuff will be selling for $25 per yard or $15 per half yard, and Cured & Screened Awesome Stuff will be selling for $7 per 40lb. bag...." Excerpted from the compost sales page on the City of Ann Arbor web site: "... Ann Arbor's municipal compost is registered and licensed through the Michigan Department of Agriculture as a fetilizer and soil conditioner. The city's cured, screened compost is tested and certified three times/year by the U.S. Composting Council." •  $9/cubic yard up to 9 yards per truck load •  $7/cy for 10-24 cubic yards per truck load •  $5/cubic yard for 25+ cubic yards per truck load If I am reading the descriptions and pricing correctly, it would appear that Ann Arbor charges $9 to $5 (wholesale) per cubic yard for compost at a declared quality level for which MSU asks either $25 per yard or $7 for a limited 40 lb. bag. What's not clear from the limited descriptions is how MSU's $25 per yard "Cured & Screened" compost (or their 'deluxe' 40 lb. bag) compares to the City of Ann Arbor's "cured, screened" compost. Calling Consumer Reports! Does someone more with further details care to step in (it) and dish the dirt?
BobbyJohn
Wed, Nov 17, 2010 : 11:47 a.m.
ed Ed Moo Poo is a different product than A2 compost. Not comparables.
tim
Wed, Nov 17, 2010 : 7:52 a.m.
The city may be losing money but so are alot of private companys in these bad times. I'm a landscaper so I know prices and even Jackson is charging more than A2. If the city can't make money then I'd be concerned that a private company has somthing up their sleeves to use the compost site for somthing other than composting city yard waste.
Cash
Wed, Nov 17, 2010 : 7:29 a.m.
At the same time the city is pouring out money like water to a foreign sculptor....they are trying to cut wages for locals. Go figure.
a2junkie
Wed, Nov 17, 2010 : 6:32 a.m.
This smells like bad management to me
AlphaAlpha
Tue, Nov 16, 2010 : 9:52 p.m.
So, key question: what is the fair market value of compost? We know the other numbers. What will the market bear for compost? Anyone?
kbk
Tue, Nov 16, 2010 : 9:51 p.m.
+1 for city run compost. raise the bulk rates; someone in this town should be able to build a sustainable operation out of this. hire new management if necessary.
Stephen Landes
Tue, Nov 16, 2010 : 9:26 p.m.
"I mean, our compost center is a great part of what this city is," I doubt Mr. Mesko intended this as comic relief, but in large part what we're talking about is....compost. Run the operation like a business: charge what private providers charge for the material and pay what private contractors pay to run the service. This is not exactly complicated. However, for those who quail at the thought of negotiating with the union to obtain a reasonable deal for all (keeping their jobs at prices that are affordable and competitive) the choices do become complicated. We have a city manager who is supposed to be managing the business. If he can't handle the job then lets get someone in here who can.
Tim Darton
Tue, Nov 16, 2010 : 8:57 p.m.
No AFSCME workers would be laid off if the city decides to make this switch. In fact more workers would be hired to replace those working there now who would go on to other jobs that are vacant. It appears the only difference would be hundreds of thousands of dollars saved to be put to better use in the city's solid waste budget.
Speechless
Tue, Nov 16, 2010 : 8:25 p.m.
This is insane. I don't mean the decision to delay a vote on outsourcing, which is good, but the fact that this whacked-out proposal is under consideration in first place. In recent years, when it comes time to set the annual budget for services, the city administration typically cries poverty. Top officials at city hall proceed to ask council members for permission to wield the axe or play grim reaper toward existing public programs, especially those small and vulnerable. Yet, for no apparent reason that's obvious to mere mortals, the administration turns around and quietly sells large volumes of compost at fire sale prices — especially to wholesale commercial buyers who can afford to pay more. In this report, readers get basic numbers on prices charged for compost, along with some sense of just how unreasonably low they are compared to elsewhere. That's the real problem area by a long shot, and the city's attempt to demonize its AFSCME employees in the compost program is sickening. Are too many tea parties being held in the upper reaches of Larcom? The needed policy changes for the city compost program are so clear: •  Raise compost pricing significantly. •  Largely eliminate the subsidy to wholesale buyers. •  Offer city residents a modest discount.
lynel
Tue, Nov 16, 2010 : 6:02 p.m.
I think I read earlier that the city sold out of compost. Selling mainly to landscaping companies which were able to purchase it at $5.00 per cubic yard because of the quantities they bought. Can someone speak to this?
Mick52
Tue, Nov 16, 2010 : 5:44 p.m.
At the low price is the city selling all its compost? If so, then he price should be raised to make more and try to break even. I still do not see the wisdom of running this project if it looses that much money in a time of budget difficulties. The city should not be in a retail business if it is loosing money, whether it is run by city employees or contracted out. Makes no sense to me. Shut this down and save the $683,000. Then rehire the laid off firefighters. How would you like to be laid off and find out the city is running this operation that is costing over half a rock?
Bob Martel
Tue, Nov 16, 2010 : 5:42 p.m.
Not sure what the surprise here is. The only way to lower costs of a labor intensive operation is to lower the labor costs. Of course the outsourcing is an effort to get around the "union thing" and lower the labor costs. As an alternative, the union could also help to lower the labor costs and preserve the union jobs they deem so important, but that would be overly simple. This will not be the last time that a municipality looks to outsource some function to lower labor costs.
lynel
Tue, Nov 16, 2010 : 5:31 p.m.
Certainly any private company that takes over the operation will increase the fees. So why not give it a year or two with it being city run, but with increased fees?
townie
Tue, Nov 16, 2010 : 4:49 p.m.
"So I ask again, how was the city ever going to be successful with these low prices?" he said. "The city has priced themselves out of this business." Ah yes. But that was the whole point, right? First, you put everything the City does into the framework of a for-profit "business." Then, you intentionally inflate costs by tacking on absurd administrative service charges. Finally, you suppress revenue by pricing the "product" below cost, or providing services to other communities below cost. The result? All the apparent justification required to privatize City services, sell off City property (or "lease" it), or lay off workers. I urge the City Council to value the compost operation for what it is--an environmentally responsible yard waste recycling operation that saves money over landfill tipping fees. It was never intended to make a "profit" and was certainly never intended to be a receptacle for sewage sludge!
jondhall
Tue, Nov 16, 2010 : 4:44 p.m.
We will soon see who runs this town, the union thugs or City Council. AFSME what a program they have. Raise prices to the taxpayers, nice idea, then you can get some union dues, No thanks AFSME!
a2grateful
Tue, Nov 16, 2010 : 4:43 p.m.
We Care? Yea, right. Their sentiment is truly compost... http://www.sourcewatch.org/index.php?title=WeCare_Compost#Toxic_Sewage_Sludge_Given_Away_as_.22Organic_Biosolids_Compost.22 http://www.sourcewatch.org/index.php?title=Portal:Toxic_Sludge