Deal to outsource Ann Arbor city compost operations to WeCare Organics approved by City Council
Ann Arbor City Council Member Stephen Kunselman, D-3rd Ward, raised concerns about a contract to outsource city compost operations to New York-based WeCare Organics, but ultimately the deal passed by a 9-2 vote.
Ryan J. Stanton | AnnArbor.com
A proposal to outsource Ann Arbor's compost operations to New York-based WeCare Organics received a 9-2 vote of approval Monday night from the Ann Arbor City Council.
The vote came despite concerns raised by several residents who said it was a mistake for the city to put compost operations in the hands of a private company.
Ann Arbor resident Lou Glorie spoke at the start of Monday's meeting and said she thinks the WeCare contract offers a "rotten deal for Ann Arbor taxpayers."
"Even though the profits would be sent out of state, the responsibility for major repairs and capital improvements would reside here in Ann Arbor," she said. "It's a win-lose proposition, and the people of Ann Arbor are on the wrong end of that deal."
But city officials who favored the plan pointed to the savings — more than $400,000 a year — and said the city must be fiscally responsible in times of shrinking budgets.
"I don't see a downside," said Mayor John Hieftje, adding that WeCare offers a relatively harm-free way to reduce costs.
Hieftje said he was swayed by the fact that no city employees would lose their jobs — they'll be transferred to other city departments — and the city will continue to have control of the compost site. He said the city still will have a clean compost product, too.
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 city estimates a savings of at least $408,000 per year by developing a public-private partnership with WeCare Organics. But that still means some losses.
Council Member Sabra Briere, D-1st Ward, sent an e-mail to her constituents prior to Monday's meeting, saying the WeCare contract "doesn't affect compost pick-up at the curb" and is "not supposed to affect the quality or availability of compost."
"Compost for residents of Ann Arbor is guaranteed in the contract," she said.
The two council members who opposed privatizing the city's compost operations were Stephen Kunselman, D-3rd Ward, and Mike Anglin, D-5th Ward.
Kunselman pushed for postponement and said he'd like to see more citizens engaged in the decision-making process.
"Whether or not it's a good deal for the city remains to be seen," he said. "Remember, everything that we've received are all projected numbers. There's no guarantees. All we know is we're basically cutting operating expenses by cutting city staff from the operation and moving in WeCare's operation on public land. This is all land we own as taxpayers."
Kunselman said he also had concerns about details of the contract.
"One of the big concerns that I have is that other communities most likely will end up paying a tip fee that is less than what the city of Ann Arbor will have via their contract with WeCare," he said. "The principle of that, I think, is very wrong since our taxpayers have been going to pay for that facility for years and years and years."
Anglin said he's still afraid there's a chance that biosolids — sometimes called "sewage sludge" — could be brought into the city's compost facility at some point in the future.
"Down the road, if it's contaminated, we will be responsible for making it correct," he said. "I think we have to move cautiously on this."
Michael Nicholson, senior vice president of WeCare, appeared before the council. He said WeCare is committed to hiring local residents and already has started a job search.
Ryan J. Stanton | AnnArbor.com
Sue McCormick, the city's public services area administrator, said fears about biosolids are a "non-issue" because that'll never be a part of the Ann Arbor compost operation.
"This is about the least-cost way to provide the service," she said of the switch to WeCare.
Before outsourcing, Anglin suggested the city first should try to more aggressively market its compost product and raise the prices so they're more competitive. As it stands now, he said, the city is practically giving away the compost.
Tom McMurtrie, the city's solid waste program manager, said the city has attempted to do market research to find out best prices for its compost, but has lacked the ability to respond quickly to changes in the market. He suggested WeCare could do a better job.
AFSCME President Nicholas Nightwine let council members know his labor union isn't happy about losing the work at the compost site. He also raised the price issue.
"The problem with the compost center is not the product. It's not the equipment. It's not the workmanship of the employees," he said. "It's the prices set by the city managers."
Nightwine pointed out the city will continue to take losses at the compost center even under WeCare's operation — they just won't be as much each year. He asked the council to first try an in-house solution before turning the compost center over to a private company.
"Adjust the rates to the market level with a discount to Ann Arbor citizens and see how the numbers look in two years," he said. "If in two years the city is still taking a substantial loss … visit this idea again."
Michael Nicholson, senior vice president of WeCare, appeared before the council and said WeCare is committed to hiring local residents and already has started a job search.
Under the contract with WeCare, the city will pay a tip fee for each ton of compost brought to the facility, starting at $19 per ton in 2011 and declining in future years.
In the first full fiscal year, it is estimated the city will pay WeCare $171,000 in tipping fees. The city plans to budget up to $200,000, though.
On the revenue side, the city will receive $1 per ton for incoming merchant tons brought to the facility, as well as 50 cents per ton for outgoing finished product. City officials estimated that will total $36,000 in the first full fiscal year.
WeCare could take over the compost center by January.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.
Comments
Carole
Wed, Dec 8, 2010 : 10:38 a.m.
Thank you mayor and council members for sending the taxpayers to an out-of-state business. Lay off our city workers--maybe mayor and council members who voted yes need to be laid off. This goes right along with mayor/council wanting to pay firefighters as they are called -- let's get real here folks.
onlytruth
Tue, Dec 7, 2010 : 11:57 p.m.
@stunhsif, I don't think your reading the current AFSCME contract or you just don't know how to interpret the language. Allow me to educate you. The members of AFSCME only recivied one pay increase in this contract, 3% this year. All the other years the Union members recivied a 5% lump sum payout. You are saying they got a raise every year and that is not true. Get your facts straight and stop spreading rumors about Unions that you know are not true. As a matter of fact AFSCME agreed to the 5% lump sum payouts because they are not a greedy Union. While all other Unions were requesting pay increases this was actually AFSCME's idea to save the City money. I for one am extremely disappointed that Council made this decision. The problem was created by the City and the Union gave the City many ideas to fix this issue. The front line employees know way more about the Compost Center operations than the City managers do. All Mike Anglin and Steve Kunselman wanted was two more weeks to let the public have more time to communicate their concerns. The City Managers argued that two more weeks would cost about 65,000 in saving. That's wrong! How can they lose money when compost is not even being sold right now? Answer, they can't. This was a lie. Did anyone else notice the way the Mayor was behaving during this conversation? His body language was that of a little child. He is the mayor of our town and I expect better behavior. If Council members have question, then let them ask without attitude. I would say that 95% of the people commenting on this subject are against what Council's decision was. I hope that this works out for the sake of this City. If it does not, we the tax payers need to hold them responsible.
Speechless
Tue, Dec 7, 2010 : 11:05 p.m.
"... If they [city employees] are no longer needed, and/or we cannot afford them anymore, then let's thank them for their service, and then let them go...." Geez, that makes it sound pleasant and benign, like the last day of summer camp out at the lake, when counselors wave goodbye to departing campers. But in situations like these — as was discussed and/or implied at length on the now-closed report on the current spat in Congress over extending unemployment coverage — "letting them go" could well mean a limited number of months of modest unemployment benefits followed by one form or another of ongoing destitution. For too many, the future promises either no new permanent employment, or underemployment, or accepting full-time work that doesn't pay enough to cover even minimal, basic needs. This is the sort of routine, casual cruelty which is arbitrarily built into corporate economics. The essentially amoral 'market economy' is incapable of consistently engaging in responsible, humane behavior without being forced to do so by laws, vigorous regulation, and strong, democratic unions. This is one basic reason why it's very good that at least some Ann Arbor city workers belong to unions. Like employees everywhere, they need collective protection against poor, rushed decisions like the one city council just made last night. Because of their union, the current compost center staff will still have jobs with the city next year. Otherwise, their future paychecks are toast.
AlphaAlpha
Tue, Dec 7, 2010 : 10:58 p.m.
Not to mention Food Gatherers...
AlphaAlpha
Tue, Dec 7, 2010 : 10:56 p.m.
So, last time, Ed was discussing MSU's Moo Poo compost. MSU = semi clever, though a tad disingenuous. Freebie for marketing A2 Compost: "For best results, use Ann Arbor's Mi Poo. Mi Poo is the best. Not their poo, not your poo, Mi Poo. And, best of all, Mi Poo does not stink." Donate any royalties to Food Gathers...
stunhsif
Tue, Dec 7, 2010 : 9:56 p.m.
Thanks Ed for posting the link to the contract for the city and the AFSCME local 369. The contract is 160 pages long, what a joke. How much did the city pay their attorneys to get this put together, how many hours were spent doing this? Last contract 2007 through 2011 I believe give just over a 3% raise each year, a 5% bonus off base pay and Cadillac Healthcare/paid vacations/sick days etc. When I signed on for my job 11 years ago, I didn't sign anything, it was done with a handshake. Government unions need to have benefits no greater than the average private employee or they need to disappear quickly.
JoeNuke
Tue, Dec 7, 2010 : 9:42 p.m.
I do not understand all of the vitriol on this topic. Composting is not an "essential government service." The city is not well structured to run this service as a business might. Shedding this type of service allows city talent to focus on efficiently providing essential services such as public safety - maybe even balancing the budget. The dismissive comments on cost savings estimates provide no analysis that places doubt on the estimates; merely argument by assertion. Lame. How much council time and city admin effort needs to spent on these distractions?
M-Fan
Tue, Dec 7, 2010 : 4:59 p.m.
Well, next we pay the U to take Fuller park, give Miles of Golf Huron Hills, let DDA run the parking lots so they won't have to make any "...hard..." decisions, give developers anything they want, At least Mike and Steve care about what the tax-payers/voters want. The others really don't care, and take care of their friends. I'm looking for the website that shows where all the canidates get their $$$ from.
sbbuilder
Tue, Dec 7, 2010 : 3:55 p.m.
Speechless; If there is a bonafide need for these employees, then transfer them. If there is only a 'make work' transfer in the works, then I say this is a bad decision. You must be kidding about the discarding human lives like so much trash thing. What has that got to do with the price of rice in China? Last time I looked, the City was suppossed to be run like a business, not a charity, especially when employees are concerned. To be clear: City employees are here to serve the citizens of Ann Arbor. If they are no longer needed, and/or we cannot afford them anymore, then let's thank them for their service, and then let them go. More and more, I'm beginning to feel like the citizens of this city are the ones being treated like so much trash.
tim
Tue, Dec 7, 2010 : 2:16 p.m.
The compost is only "black gold " if people want it otherwise it's just dirt. At one time when demand was high the city had a good thing going but just like housing starts there's no demand, hence it's a money loser now.
Cash
Tue, Dec 7, 2010 : 2:07 p.m.
Lovin It, So you think the City of Ann Arbor union employees are bad? What is that opinion based on? Good grief. Further, does anyone stop to think that the retained staff is replacing retiring staff?
Joel Batterman
Tue, Dec 7, 2010 : 1:53 p.m.
I too thank Kunselman and Anglin for their "no" votes. Combined with the other votes at this meeting, however, this vote leaves me increasingly concerned at our town's direction.
LovinIt
Tue, Dec 7, 2010 : 1:42 p.m.
TO: Marshall Applewhite The union contracts are online...that should answer your question about retaining employees. It only takes a couple of clicks and a little effort to read the contract on your or anyone's part. Maybe all these bad union workers AND their families should be put out on the street...that might satisfy you. But then again, maybe one of them would take YOUR job, assuming you are working.
blahblahblah
Tue, Dec 7, 2010 : 1:37 p.m.
Since when did city supplied compost become an inalienable right? Wake up people, the city can no longer afford to be all things to all people. With tougher budgeting decisions still ahead, this was a logical decision.
Speechless
Tue, Dec 7, 2010 : 1:15 p.m.
From the article: "... Anglin suggested the city first should try to more aggressively market its compost product and raise the prices so they're more competitive. As it stands now, he said, the city is practically giving away the compost. Tom McMurtrie, the city's solid waste program manager, said the city has attempted to do market research to find out best prices for its compost, but has lacked the ability to respond quickly to changes in the market...." McMurtrie's excuse comes across as completely bogus, like he's reading from a poorly-written script provided for him by his administrative masters. Just how hard is it to post new prices on signage, web pages, and printed handouts? Other operations, both public and private, seem to manage this. Let's be clear... until very recently, the City of Ann Arbor made not even the most modest, basic effort to price its compost at the much higher rates found elsewhere. Further, we all but gave it away for free to wholesale purchasers. The very sudden handwringing in public over losses at the city compost center is disingenuous and also utterly cynical. Why was this not a topic for wide public discussion one, two, three or more years ago? Neither the city council, the city administration — nor this news blog — has come forward to openly discuss our pricing in comparison with that for other municpal compost operations in the Great Lakes region. The public is being expected here to treat Ann Arbor's highly peculiar situation as existing in a total vacuum, as if it is the only public compost center in existence. I think we should have information on how other, similar operations are run, how well they do financially, and what their staff thinks about oursourcing. From further above:  "... Exactly what are these workers going to be doing once transferred?... Which Union line item in their contract stipulates continued employment after their usefulness is no longer needed?" "... Why are these union jobs being retained?" Yes, let's all champion an economy designed to discard human lives like so much unwelcome trash. The holiday sprit of Scrooge survives and thrives!
denise1inaa
Tue, Dec 7, 2010 : 12:59 p.m.
What planet do the majority of city counsel members live on? They certainly are not listening to the majority of their constituency. I read everyones comments on this article and it's rare that all of us are in agreement. I have felt that city counsel has failed to make reasonable decisions on other recent issues. I hope that we replace most of them next time we vote on new members.
Dog Guy
Tue, Dec 7, 2010 : 11:26 a.m.
I missed the solicitation of bids for this contract. When was it published?
xmo
Tue, Dec 7, 2010 : 11:11 a.m.
Thank goodness the city is getting out of the recycle business! Leave this work to those geedy corporations who make a profit by having people work for them. Maybe there are a few other businesses the city should turn over to the capitalist also. Then are taxes would go down and we would have more people working for the private sector instead of the public sector. Let's celabrate CAPITALISM and end socialism in the U.S.!
iamwrite
Tue, Dec 7, 2010 : 11:08 a.m.
@Frank D - Too bad all of these elected officials just recieved a voters extension. They do not have to listen to the people for another year and a half.
Frank D
Tue, Dec 7, 2010 : 10:40 a.m.
I haven't read one post so far that is in favor of this "deal", and it appears that there were dissenting views from the residents at the public meeting. It seems that these elected officials are not "representing" their constituents. It's time to hold our elected representatives accountable for their actions and let them know that they will not be re-elected if they continue to make decisions that are not the will of the people.
Marshall Applewhite
Tue, Dec 7, 2010 : 9:36 a.m.
Why are these union jobs being retained? If they are going to follow through with this cost cutting measure, actually follow through with it!
Ignatz
Tue, Dec 7, 2010 : 9:06 a.m.
At least Odysseus didn't succumb to the songs of the outsourcing sirens... I just hope the city does not crash upon the rocks.
tim
Tue, Dec 7, 2010 : 9:03 a.m.
The demand is low for compost, that's why the price is low. 10 yrs ago lanscapers would mix compost with topsoil for new lawn installations. When the bulding ended so did the demand for new lawns and compost. Back in the day the city couldn't make compost fast enough.
rouzer
Tue, Dec 7, 2010 : 9:01 a.m.
Wow...where to begin? I'll just say either the council is totally inept (with the exception of Kunselman and Anglin), or someone is getting something out of this deal - read kickback.
sbbuilder
Tue, Dec 7, 2010 : 8:49 a.m.
Cash I was not meaning to disparage the individual employees. They are at the tail end of a lot of faulty decision making; union contracts, council quibbling, staffing cronyism, etc. Somewhere, somebody made the decision to keep these employees. What was that decision based on? Was there a genuine need elsewhere that was unmet? Was another department in dire need of more workers? Or, and this is just a guess, were there other factors that came in to play here?
a2junkie
Tue, Dec 7, 2010 : 8:44 a.m.
The city practically giving the compost away and loosing money. Sounds like someone in the city admin is gettin a kickback off this deal by dumping this stuff on the market losing money on it and getting a kickback from convincing council to take this out of state bidder to take it over.
LXIX
Tue, Dec 7, 2010 : 8:27 a.m.
I watched the Council Meeting on CTN last night and it was clear that the City has failed yet again to advantage another potential asset - its organic 'Black Gold'. Sue McCormick obviously did not know what she was doing there, couldn't answer questions, and even admitted that it was too difficult for her organization to grasp the fundamentals of running a straighforward in -process-out enterprise without more professional help. Right. If the City ever wants to fix its budget it must replace all of their inept buck-stops (unions too) with smarter, more eager entrepreneurs. The City could be leasing its property base for money and population regulation but instead choses to lose in sales of taxable land (4% of revenue just from UM-Pfizer alone) while subsidizing ugly-rises and then leasing parks for defacement instead. It costs every taxpayer MORE for each added user according to their own greenbelt folk. The City Council failed once again in its governance ethics test (Anglin & Kunselman aside) in that they voted to submit to another bass-ackward offer they could not refuse. Ann Arbor takes in composting waste from many Southeastern Michigan communities and then redistributes the 'black gold' product. Wecare admitted that it was a mass volume business but would not mass market bags of Ann Arbor brand black gold. In explaining why A2 is charged more than say a "Detroit" for tipping fees at your own A2 facility it is because Motown would have to pay to truck their cuttings all the way here and input might be too low otherwise (so WeCare also processes New York City - will A2 pay even more to truck their's here too?). City Council unwittingly voted to soon be mass-processor for all of Michigan's "to be re-regulated'" waste. Idiots!
tim
Tue, Dec 7, 2010 : 8:18 a.m.
What happens when the grinding equipment (that the tax payers paid for) gets old and has to be replaced, who pays for this ( very expensive) replacement? What a racket I wish I could start a business and have someone else pay for the overhead.
Brad
Tue, Dec 7, 2010 : 8:02 a.m.
So who is it that is calculating the "savings" this time? Please tell me it isn't the same accountant who worked on the brilliant streetlight deenergizing plan. Who actually believes that they know what they're doing *this* time?
Cash
Tue, Dec 7, 2010 : 7:33 a.m.
sbbuilder, Right. That's not reality. The reality is that if an employee is in an unnecessary job, that is the fault of the employer!! Stop shifting the burden to manage the operation of the city to a group of employees. Management manages operations and staff. Management negotiates contracts. Put the responsibility where it belongs! Oh and don't hold your breath to see any cuts coming from the management line items in the budget. Won't happen.
jcj
Tue, Dec 7, 2010 : 7:24 a.m.
"The city estimates a savings of at least $408,000 per year by developing a public-private partnership with WeCare Organics This will not be the 1st or last time "The city estimates" are useless! Mark it down. The actual savings WILL turn into a loss!
sbbuilder
Tue, Dec 7, 2010 : 7:13 a.m.
Exactly what are these workers going to be doing once transferred? How many are there? Which department is inderstaffed and needs the extra bodies? Which Union line item in their contract stipulates continued employment after their usefulness is no longer needed?
Lets Get Real
Tue, Dec 7, 2010 : 7:06 a.m.
Let's Get Real - the only thing WeCare cares about is the profit they will realize from more Michigan, specifically Ann Arbor money, leaving the state. What happened to the Michigan company, from the west side of the state, in businesses for years? Is our council so naive that they yield to a slick NY marketing pitch? Does the second brainist city in the country have no one that can learn (or figure out) the more effecient methods this company appears to have mastered? No world-class educational institution in MIchigan that could offer suggestions for improvement? Normally in favor of smaller government replaced by more effeciently operated small business taking the lead, in this situation I am disgusted with the outsourcing. I thought, at one time, we were a model in recycling and waste handling? This was not a council working collaboratively to find the RIGHT solution. This was city council taking the EASY way out - let somebody else take care of it. "Give it away, we're happy to pay" Yes, we will still be operating at a deficit and WeCare will be making a profit! Are you kidding me? Why would we agree to that? Congrats to the two dissenting. I have a different perspective on why, but they stood for thier values and stayed the course. Too bad everyone else caved - tired of the discussion, an annoying thorn in their sides. An attitude of, "We have more important things to discuss." Yes, like focusing on the next drain on the budget - an ill-designed, misfit of a conference center with 150+ rooms that can also go 50% filled by people who complain about the 11% added to their bill for taxes. You heard me - 11%: the 6% sales tax and the 5% county loding tax (a budget increase of 150% for the Convention & Visitor's Bureau) which resulted in what benefits to the city's economy? This is just another losing proposition for Ann Arbor. Aren't you pleased we use all our brain power so effectively? Let's Get Real - brainiest doesn't mean wisest or smartest. We have evidence.
KeepingItReal
Tue, Dec 7, 2010 : 7:04 a.m.
I applaude Kunselman and Anglin for voting no on this contract. If the City had to privatize this operation, why not do so locally for a number of reasons including keeping the money in the state. There should have been a much more aggressive campaign to market this operation and the benefits to locals about the use of compost. I've not seen materials marketing the use of compost and I use it all the time in my gardens and yard. Bad move.
Pete Warburton
Tue, Dec 7, 2010 : 6:49 a.m.
Mayor Hieftje"... no city employees would their jobs - they'll be transferred to other city departments." The Mayor forgot to explain that the other Departments will layoff or terminate these or other City Workers shortly after the transfer.
Lets Get Real
Tue, Dec 7, 2010 : 6:35 a.m.
Let's Get Real - the only thing WeCare cares about is the profit they will realize from more Michigan, specifically Ann Arbor money, leaving the state.