The city of Key West is ready to consider putting its garbage services out to bid after its 12-year relationship with Waste Management, Inc. hit a snag over the company's refusal to share recycling revenues with the island.
City commissioners in December have three options before them: leave the contract alone, grant the company three more years on the existing contract, which is scheduled to expire in 2014, or begin the process that would solicit bids from other companies.
The commission had planned to make a decision at its 6 p.m. Wednesday meeting at Old City Hall, but on Monday the agenda item was pulled and rescheduled for Dec. 4, due to a death in the family of City Commissioner Jimmy Weekley.
Now, Key West has at least a month to debate the value of its garbage collection, estimated at a $5 million annual contract, and the revenue sharing details in the fine print.
If the city wants to share in any recycling revenues, Waste Management officials have said, it would have to tack on three more years.
The company's area director said Key West has been well-served by Waste Management, which retains employees by offering a $500 monthly housing allowance and exceeds environmental regulations on its own.
"Now we have two years to go on our contract and the city wants to make major changes," said Greg Sullivan, who runs the Florida Keys operation of Waste Management.
"If we were doing a bad job, I'd be the first to say, 'Hey, go ahead and throw us out,'" Sullivan said on Monday. "In the garbage industry you do long-term deals. In those type of contracts it allows you to become a good community partner."
Sullivan said the company agreed to spend $12,000 per year to promote recycling education in Key West, and he questions the math on the reported 8 percent recycling rate figure.
The consulting firm that reviewed the garbage hauler contract, and deemed it reasonable, told Key West leaders that it could see at least four companies bidding on the contract.
In a 258-page report released in August, which Key West commissioned for $379,000, Kessler Consulting said that in 2011 only 10 percent of Key West's solid waste was recycled, far below statewide goals that called for a 40 percent rate.
Kessler offered a solid waste master plan for the island that advised the city to begin demanding revenues from recyclables, which fluctuate between $30 to $70 per ton in other Florida counties.
The island's recycling also came under scrutiny.
"It is unreasonable to expect any improvement to the city's current 8 percent recycling rate without implementing changes to the city's current solid waste collection contract and by continuing the same collection program for residents and businesses," wrote City Manager Bob Vitas in a summary for the commission.
Originally, Waste Management had asked for a five-year extension, according to Vitas' report.
Citing the values of "competitive procurement," Vitas wants the commission's approval to start drawing up the bid documents now, allowing 1 1/1 years of preparation time before the Waste Management contract runs out.
Vitas said the city should ensure not only that it's getting the best deal, but that Key West's dismal recycling rate rises.
Waste Management landed the garbage collection and hauling contract for Key West homes and businesses in 2000, and hasn't had to compete for the bid a second time, as the deal included options for two five-year extensions.
But those extensions are finished come Dec. 31, 2014.
Having sat down at the table over questions about revenue shares, the company offered to make good on nine of the 10 "points" that the city wanted, everything but the recycling profit share.
Waste Management, however, did add a few extra offers to the city. In addition to the $12,000 annual recycling promotion campaign, the company said it will pay the city a flat rate of $30 per ton for all recyclables, except for the tons dropped off by self-haulers to the city's transfer station.
Any resident can call the company and request a free blue 18-gallon recyclable bin.
Vitas and his staff estimate that recycling revenue over five years totals about $756,000.
Nothing in the pending resolution mentions Key West asking for back revenues.
"We have been kind enough not to do that," said Commissioner Teri Johnston. "A revenue share is very common. Waste Management gives that to many municipalities. We should have always been getting revenue share from recycling."
Johnston is concerned about the fact the city hasn't put the huge contract out to bid since 2000, and pointed out that it's not personal.
"We're not negotiating with Greg Sullivan," said Commissioner Teri Johnston. "We're negotiating with the largest single waste hauler in America."
On Monday, the matter was pulled from the commission's Wednesday agenda because Commissioner Weekley cannot attend the meeting due to his mother-in-law's death. Weekley is headed to upstate New York today, city staff said.
The contract issue is important enough to wait for a full dais, Johnston said.
Vitas, who sponsored the resolution, set the item for Dec. 4 because he had planned to go out of town the week of Thanksgiving to see his family.
"I hope this does not cause any great concern, given the importance of this issue and the desire for the entire commission vote on the contract amendment," Vitas wrote Monday in an email to commissioners.