Sunrise Mayor Ryan: Renegotiate $1 Billion-Plus Garbage Deal
BY MICHAEL RYAN
Mayor, City of Sunrise
Taxpayers Need to Stop Subsidizing Waste Management Subsidiaries:
Learn the Economics of Garbage in Broward County
Over the next few weeks, the fate of garbage in Broward County will be decided.
Actually, that’s not true. The fate of our garbage was likely decided over 20 years ago, when a sweet-heart deal was struck that gave away the very facilities our taxpayers built. This give-away made certain our choices today would be limited.
The twenty-year contract to provide for the disposal of garbage county-wide through a cooperative agreement amongst the cities will soon expire. The current contract, in simple terms, requires cities to deliver all the garbage to Waste-to-Energy (“WTE”) plants in Broward County operated by Waste Management subsidiaries.
Sadly, the current discussion regarding this contract is mired in the bumper-sticker slogan of “no-bid contracts” and discussions about the sheer amount of money involved — over a BILLION dollars. But, the slogans and discussions miss entirely the real tale of woe and ignore the enormous corporate subsidy we as taxpayers are being forced to accept.
You see, over twenty years ago, a sweetheart subsidy deal was struck:
- The County would provide land to a private, third-party operator.
- The residents would fund completely the construction of the two Waste-to-Energy plants (including one on the land provided by the County).
- Taxpayers would fund the debt service on that construction.
- Taxpayers would guarantee an exclusive relationship for all the garbage to be delivered there.
- Taxpayers would be penalized if too little garbage was delivered.
- Taxpayers would pay even more if the plant operators could not generate as much revenue from the sale of electricity as predicted.
By the way, taxpayers actually did have to pay millions of dollars because electricity sales fell below a threshold.
I almost forgot. The companies operating the plants would own the facilities taxpayers paid for and built! Sounds like a great deal for someone. No risk, all funded by taxpayers, ownership of the facilities retained by the operators, and no disclosure of the profitability.
Rodstrom: We Were Bamboozled
Recently, Broward County’s Vice Mayor John Rodstrom stated that the taxpayers gave away ownership of the WTE facilities due to “some lawyer or someone who wasn’t paying attention because they would have given us that facility if we had asked for it 30 years ago. They would have done anything to finance them to have the management contract and that project for 30 years, but we never asked for it at the end which was a big mistake on our part.
Now, the contract will expire. What do we, as taxpayers, do with our garbage if we do not want renew the contract with Waste Management subsidiaries?
Well, we could put all our garbage in trucks and haul it around the state/county/country (likely to other Waste Management-related sites) and dump it in landfills. But, we would need to build smelly transfer stations in our own backyard.
Or, we could dump the garbage in our own cities and create more “trash mountains.
Both options are environmentally unpalatable, socially undesirable, and likely even more expensive than the current contract proposal from Waste Management subsidiaries.
We could try to build yet more of these WTE facilities, but then there would be capacity challenges with competing facilities in Broward County, not to mention the decade of construction and the hundreds of millions of dollars necessary to build.
That is why the criticism of “no-bid” is not really relevant to the analysis. All the cities generally know what it will cost to build transfer stations or haul garbage to wherever they want.
Yes, there is some variability in costs, but the costs are the costs are the costs.
When the sweetheart deal was struck twenty years ago giving away ownership of the facilities we paid for entirely, our choices were locked in if we owned the facilities then we could bid the operators.
Not surprisingly, the proposed pricing under the new Waste Management subsidiary contract would be just under what it would likely cost our City to haul our garbage out of the area. We can bid out the hauling all we want, but we can not change the economics of transportation and garbage.
Proponents of the new contract exclaim our rates will go down dramatically under the proposed contract. True. You know why? Because the bonds necessary to pay for the construction of the WTE plants are paid off and, therefore, taxpayers no longer have to pay a portion of their garbage fees to pay debt service on plants we do not own!
Waste Management Doesn’t Want To Reveal Profits
But Waste Management didn’t want negotiators for the cities to learn how much profit Waste Management subsidiaries are still making off this taxpayer deal.
Recently, during a City Commission meeting, as Mayor of the City of Sunrise, I called to the podium a Waste Management representative. I wanted to know exactly how much profit the Waste Management subsidiaries are making off the taxpayers, considering we built their plants, we have virtually no options, and they own virtually all the alternative options.
The Waste Management representative refused to disclose the numbers. Actually, he acted surprised our Commission would want to know how much Waste Management is profiting off a project where taxpayers own part of the land and paid for the construction of the facilities.
Fortunately, we have some idea as to the profitability. As has been reported, in 2008 alone, the two WTE plants received $94.3 million in garbage fees and $79.3 million from the sale of electricity. It has been reported the return on equity for the two WTE plants was almost 60%. Using the lower garbage rates proposed under the new contract, Oakland Park officials believe that the return would still have been 46.5%.
So, what do we do?
Reject The Deal and Renegotiate
If cities that make up more than 20% of the current tonnage reject the deal, then it is scuttled and sent back to the drawing board. There are many cities that have already agreed to the deal. They were enticed by “bonus payments for signing early a strategy which is drawing criticism as well.
Our City of Sunrise will debate that issue on December 14, 2010.
But, with 16% of the tonnage, the City of Fort Lauderdale may be the deciding vote as to what happens for the whole county.
I believe we need to collectively reject the plan presently proposed until we receive a better understanding of how much money is being made by private entities off taxpayers-funded construction and demand a real plan from the County to break this virtual monopoly that is costing the taxpayers enormously. Reasonable return for reasonable risk seems fair.
But, remember, we own some of the land, we paid for the debt service, and we paid for the construction of the plants. There are other criticisms of the deal, but the biggest concern is the volume of profit our residents are subsidizing and the utter refusal to permit any disclosure of the profits we are guaranteeing from facilities we built but gave away ownership.
Those cities that have already agreed to the deal should act decisively and quickly to re-consider their support. Those who have not yet decided should strongly consider what this deal means for the taxpayers.
In the end, I personally believe Waste Management is banking on our lack of meaningful disposal alternatives to prevent real reform and transparency. For taxpayers, it appears that if we do not stand up now we will unreasonably continue to subsidize Waste Management profits at a time when our residents can least afford such “waste management.
December 10th, 2010 at 10:12 am
This is the best explanation of this issue I’ve read.
The people who negotiated that original arrangement should be prosecuted if they are still alive.
December 10th, 2010 at 12:07 pm
What are the provisions for recycling in this crummy agreement and who gets the money? Metals like Copper and Steel are getting more expensive so does Waste Management just keep it?
December 10th, 2010 at 12:21 pm
I wish Mike Ryan would come to my city. What a great common sense explanation that anyone can understand.
December 10th, 2010 at 1:26 pm
I agree it desperatly needs to be renegotiated. That’s why people vote for canidates like Mike Ryan. We are sick and tired of politicians who are out for personal gain and have little or no regard for the average taxpayer.
December 10th, 2010 at 1:44 pm
Jack Seiler should be paying attention to this. So far, he has been hiding from this issue.
December 10th, 2010 at 3:08 pm
Actually one can easily find out one of the players who is behind this round by simply looking in the past few months on this very website and others regarding a certain signing bonus that a Commissioner (now Mayor) proposed so that his city would sign onto an MOU regarding the renewal of the contract.
December 10th, 2010 at 4:16 pm
Thank you, Mayor Ryan,
You bring hope to taxpayers throughout Broward County. You managed to mobilize the voters in Sunrise and you were elected. You are a hero.
December 10th, 2010 at 4:27 pm
Mike Ryan is a politician who actually thinks about issues and how to help the public, rather than how to help himself.
I find it hard to believe that my town of Hollywood is not making a stink about this.
I hope Ryan is heard everywhere.
December 10th, 2010 at 5:03 pm
So what is the answer? The facilities are built, paid for and have been given away by previous deals from past elected officials. Yes this is wrong but here we are now. Is it “water under the bridge”? Can we renig on the giveawy deal legally? Where were the “people” when this deal was made originally?
If we can’t get the facility back legally, what are our options? Should we just stop sending our trash there? Make another “Mount Trashmore”? I don’t want another “dump” in my city or even my county. And forget about a transfer station.
Maybe WM should be more willing to share in this “profit” with our cities that sign an MOU. How can we force this to happen? All the cities in Broward should get together on this and work out a solution for our future now.
December 10th, 2010 at 7:04 pm
This is a great analysis of the situation. I live in Sunrise and while our Mayor & City Council can impact what we do … how can we affect what other cities do? This seems like “graft and corruption and/or incompetance from the past” … but, what can be done now – other than be sure that as much “light” as possible is thrown upon how today’s elected officials act now … and credit them or HOLD THEM ACCOUNTABLE!
December 10th, 2010 at 8:39 pm
Thank you Mayor for standing strong. Waste Management has had a monopoly way too long on this business. I think we could get a better hauling rate from a smaller company to take it out of Broward. The problem is that WM has bought up a lot of the smaller companies to eliminate the competition. Don’t give in to these people Mr. Mayor.
December 11th, 2010 at 6:52 am
In the 1980s when this thing was set up, it was two companies, Wheelabrator and Waste Managment who were going to each build an incinerator and compete. After the contract coummunities signed the deal, two things happened. Wheelabrator and Waste Management became one company, and the assistant County Administrator resigned and showed up working for Waste Management in the middle east.
My question is, why is Ilene Lieberman pushing so hard for this thing. You know the county residents have been overcharged billions over the last 20 years for garbage dumping, check the rate that other counties have paid. And the RRB has refunded some of the overcharge to contract communities and many put the overcharge into the general fund. This money legally can only go to reduce garbage rates and if a rate payer were to challenge, the cities would be in big trouble. That goes for the signing bonus also.
Is Stuart Michelson doing work for Waste or other related companies in another county? What about his relationship with Moskowitz?
You lay down with dogs, you get up with fleas.
December 11th, 2010 at 7:54 am
Mr Ryan should tell you about the BACKDOOR deal he and the City are doing with All Service Republic!!! They are going to raise the rate and split the money with City!!! They should bid it like the last five citys that got 30 to 40% reductions!!! SHAME ON YOU MR MAYOR AND COMMISSION!!!
December 11th, 2010 at 11:18 am
Lets not start a name calling,back stabing,dirt digging platform. The deal is Rotten, lets “WORK TO CHANGE IT.” Together!!!.
December 11th, 2010 at 11:32 am
So far the stump speeches and the writing are great, but will have to wait for the substance.
check the campiagn accounts and see who got money from wheelabrator its on the sunrise page
December 11th, 2010 at 12:41 pm
Mike Ryan, since elected mayor, has acomplished more than many mayors before him. His concern about the city’s garbage services is to be comended. His efforts to save what the city and its citizens pay for these services is greatly appreciated.
December 11th, 2010 at 3:25 pm
Janitor (better keep your day job): Which 5 cities received 30-40% reduction in the haulin’ contract?
December 11th, 2010 at 4:13 pm
mike ryan did much what?so far its a lot of talk the only thing we hear,we keep on hearing thanks you,appreciate talk is cheap,but we will be patient during this honey moon period
December 11th, 2010 at 4:41 pm
4:13, guess you have not been paying attention. You missed all the meetings, the votes, the budget, the issues. Please don’t use the label “knowledge” when you exemplify none.
December 12th, 2010 at 1:03 am
Look, all those years ago Broward was a very different place than it is today.
We were looking to grow then and there was noplace to put the garbage. There was nowhere to put it. No private waste company was going to build a waste to engergy plant using their own funds and this backhand assumption that it would happen is crazy. Looking forward from that day, and even if you look back on it now, the last thing our county needs is another expensive plant to run.
Yes the public paid for it and yes the private sector now owns it. But that’s no different than FPL charging us rates montly to finance the plants they own.
We the users ALWAYS pay whether it’s through rates or taxes. Get that straight. It was smart financing on government bond rates which are always lower than private financing.
Under this arrangement the government has not had to finance the many upgrades and maintenance costs through taxes that the private company has had to pay all these years. Taxes would have had to pay for that instead of user fees which is fairer because those that use it more pay more.
The post above hit it on the head; where to from here and I didn’t get that answer from our good Mayor. Only revisionist history. Stop focusing on yesterday and instead pay attention to tomorrow. Where do we go from here?
FROM BUDDY:
Your history is revisionist history. I was here and I remember.
The county commission planned for over five years, trying to figure out someway to replace the landfills. This county had plenty of space for landfills and so did neighboring counties. Instead, the county was sold on a technology of waste-to-electricity that they found out was flawed only after spending $615 million to build two Broward plants.
Within two years of opening the plants, the waste stream predictions proved wrong and Broward had to start making up the difference in $$$$. Broward even actively sought garbage from other counties!
Oh, by the way, hauling the trash to dumps would have cost taxpayers HALF what they paid the two plants!
Lets see what else. It was supposed to be a competitive process. Two companies bid. Shortly after the bid was award, the companies merged. Hmmmm.
The chief lobbyist was the ubiquitous Don McClosky.
There was always places to put garbage. There are cities in Broward that never used the facility and they aren’t overrun with garbage. That is just a scare tactic used by those who want this no-bid deal.
The Resource Recovery Board has been run by Ilene Lieberman for years. Other commissioners even nickname her “Ms.Trash.” She tried to steamroll this new deal through last year, but the cities balked. Now the RRB is trying to push it through again with the kicker that the county Board will now be independent and less answerable to the public.
The Board handpicked its director, politician Ron Greenstein. He lives in Tallahassee but gets paid six figures to run a Broward agency!!!!
The new deal was done largely out of the Sunshine. No bids were taken so we don’t know what it would cost to haul garbage to other landfills.
I’ve covered this numerous times on Browardbeat.com. It has been picked up by the daily newspapers and Browardbulldog.org.
The deal smelled from the start. It still smells.
December 12th, 2010 at 1:08 pm
I am so happy to see someone else in Sunrise quoted in the media besides that bitchy self-promoter Sheila Alu.
Mike Ryan is a great change. How long will it be until Alu tries to stab him in the back?
December 12th, 2010 at 1:36 pm
17.Janitor? says:
December 11th, 2010 at 3:25 pm
Janitor (better keep your day job): Which 5 cities received 30-40% reduction in the haulin’ contract?
ANSWER:
Lauderhill West Park Dania(which choose a Higher Bid) Tamarac and Miramar!!! Lets not forget the SWS Deerfield Beach bulk disposal also!!!
PS I LOVE MY DAY JOB!!
Hey Buddy Check Those and Score Me Please!
CHECK OUT THE DEAL SUNRISE IS GOING TO PASS ON GARBAGE VERY SOON…IT STINKS AS BAD AS ILA DEAL!!!
December 12th, 2010 at 3:26 pm
Janitor in the know?: Where did you get that info? 30-40% reduction in each city? Who got the contracts?
December 12th, 2010 at 6:45 pm
“Janitor in the know” works for Waste Management! That’s how Janitor has knowledge. They want the hauling contracts too!
December 12th, 2010 at 9:32 pm
The cost to dispose of waste at our waste-to-energy plants carry some of the highest rates IN THE COUNTRY! What people do not realize is that this fee comprises approximately 40% of the total cost of almost every Broward County resident’s garbage bill. Also, companies and other cities from out of County that deposit their waste at our facilities pay a LOWER RATE to dispose there, also known as the gate rate. If this is not a scam, I don’t know what is. Based on what other landfills and transfer stations charge at their gate, Wheelabrator/Waste Mgmt. are making a fortune at our expense. Ilene Lieberman should be investigated next, like the rest of her colleagues. She hired her buddy Ron Greenstein for the Director job when there were MANY qualified applicants. Stop the back room deals and put everything out to bid!! Competition=lower prices and sometimes better service!
December 13th, 2010 at 8:32 am
Buddy, I rarely flat out disagree with you. This is one of those cases.
The clear fact is that Broward County went into WTE mode years ago precisely because it did not want anymore landfills. It was one or the other and they chose the plants over the smelly and wasteful landfill option. It was the right choice and even if the energy figures didn’t pan out as well as proposed. It was the only strategy offering any return on investment and was a worthy effort to recoup cost.
No private company would build a WTE plant without government financing. Period. Nobody knows that fact better than you, c’mon. Those are the facts that drove the current arrangement and that is the history.
Continued bullshit, conspiracy theories, etc., however entertaining, about what was, how we got there, who screwed who, etc., gets you and me and Broward County nowhere closer to solving today’s issues.
The question is where do we go from here. Nobody appears to be offering that solution except for the proposal on the table. This troubles me because I too think the plan on the table is too expensive.
FROM BUDDY:
I agree that a debate about history will not solve today’s problems.
However, the county should learn from history. It should not rush into a deal without exploring all options. As far as landfills, who decided the county didn’t want to use landfills? Who says the landfills would be in Broward County? If trash can be shipped to Central Florida cheaper than it can be processed here, why not use their landfills?
Broward County has more than 500 acres of virgin land set aside for landfill year ago near U. S. 27. You could put any garbage technology on it. New technologies would allow for a solid waste stream to be separated on site. Broward’s waste stream has been declining for years because of recycling.
We are not locked into anything, unless you listen to Ilene Lieberman, Ron Greenstein and Eric Hersh.
Technology in the waste industry, like everything else, is moving so fast that to lock ourselves into a 20-year-deal is foolish and borders on malfeasance. They failed to predict what would happen with trash stream when the last contract was signed. Why should we believe they have a clear crystal ball now?
December 13th, 2010 at 1:15 pm
same old clown 4:41PM The Sunrise city hall is on oakland park blvd,unless you are a Ryan sic-a fan,yes Ryan speaks and writes well but so far wheres the beef?so far the Mayor talks well,but that is about it,he doesnt even have control of his council but we will wait during this honeymoon period,sam old unknowledgeable hack
December 13th, 2010 at 2:52 pm
I live in SW Broward. Nobody is going to create a cancer causing landfill or any other burning or other issue for me and my family out there. Be clear on that. I don’t want anymore landfills and we will rise up and throw anybody out of office that tries to throw the garbage problem where we live. Make no mistake about that.
FROM BUDDY:
You already have one out there. There is nothing you can do to change that. They are dumping construction debris in southwest Broward every day of the week.
Nobody is suggesting anything. The problem is that nobody explored any other options…shorter contracts, competitive bidding, different price structure, etc., etc., etc.
December 13th, 2010 at 2:54 pm
So then what is the alternative to the plan? I keep hearing intelligent comments about not doing it. What are the intelligent alternatives? Please be specific.
December 13th, 2010 at 3:36 pm
Buddy is having a lively debate with someone anonymous. Does anybody want to bet it is Ron Greenstein?
While Greenstein is suppose to be the Broward Resource Recovery Director, he is a paid lobbyist.
Ron Greenstein
Mailing Address:
225 S Adams St Ste 250
Tallahassee, FL 32301
Phone Number:
954/610-7745
Principals:
City of Coconut Creek
4800 W Copans Rd Coconut Creek, FL 33066
Industry Code: 921140
Effective: 01/05/2010
Florida Medical Association
123 S Adams St Tallahassee, FL 32301
Industry Code: 813920
Effective: 01/05/2010
Florida Retail Federation
225 S Adams St Tallahassee, FL 32301
Industry Code: 813910
Effective: 01/05/2010
December 13th, 2010 at 8:30 pm
Landfills are for ancient times. It is how the barbarians got rid of their trash. Nobody serious is or should consider landfills anymore. Go to North Jersey and ask around they have the highest incidence of cancer in the world from all the landfills around them. Waste to engergy sounds a lot smarter and is better for our health and the environment. Pay a reasonable fee and do it right.
FROM BUDDY:
Even with the waste-to-energy, there is a landfill. It is filled with ash from the burning.
Plus, what about the smoke from burning the trash? Is that healthy?
December 13th, 2010 at 9:03 pm
Facts:
Tamarac went to bid, rates still higher than Sunrise
West Park went to bid, rates still higher than Sunrise
Dania went to bid, rates still higher than Sunrise
Sounds like someone blowing smoke for Southern Waste System aka Waste Management
FROM BUDDY:
You can’t compare one city to another.
Everything from distance to the disposal to who is competing to the amount of waste in the waste stream changes the bid.
December 13th, 2010 at 10:08 pm
What are The COMMERCIAL and MULTI FAMILY RATES IN SUNRISE?
West Park Almost same price with NO commiercial offset..
Buddy is Right there are no two alike Cities when it comes to GARBAGE!!!
I do know that the Equipment and Containers in SUNRISE looks like crap seeing most of it is from Lemelo Days!!!
Listen Sunrise Garbage Stinks Republic can polish the Turd All Service all they want and Sunrise can be the BUTT polishing there new Found MONEY with no-bid Contract!!!
December 14th, 2010 at 8:05 am
As to Lauderhill, we are presently going through bids on garbage disposal. Waste Management, SWS, Choice, All Service and Waste Pro bid on it. Whoever wins, rates will be coming down substantially.
While we have delayed the process due to a protest, there was one curious alternative bid by Choice. (though a legal opinion stated it had to be rejected since we are still subject to the ILA until 2013), it showed rates without using the WTE facilities. These rates were substantially less than everyone else.
The problem is that there are too many questions to know how to proceed. But it does raise the questions over the ILA and continuing with it.
At this point no decisions have been made, and I have not concluded anything. But this is something that elected officials of Broward County have to get together on and discuss. It will affect all of us.
FROM BUDDY:
This is very interesting. Notice what Mayor Kaplan says about the low bid without using the Waste-to-Energy facilities.
Very, very interesting.
And his comment also brings up another point. The current agreement lasts until 2013. What’s the rush?
December 14th, 2010 at 10:28 am
[…] December 14, 2010Richard J. Kaplan on Sunrise Mayor Ryan: Renegotiate $1 Billion-Plus Garbage Deal […]
December 14th, 2010 at 11:09 am
Glad the Mayor backed my statements about last bids substantially lower. Thank You.
As for why the rush because Greenstien and Leiberman are being greedy and scared. A. Look at the Cities that have signed agreement:
Who picks them up Waste Mgt and who own the Burners Wheelabrator which is Waste Mgt. Tamarac had a lower propasal by almost 1 million per year and they are going to use the Waste and pay more why? Cause if they choose the cheapest hauler they may have had a better deal and Greenstien and Liberman dont want that.
Lets look at the facts Buddy and look into it.
Who wrote and gave greenstien his extension with Resource Board none other than a Coconut Creek Commissioner where Greenstien is a paid lobbyist! wow…that sounds legal!!!
December 16th, 2010 at 5:33 pm
Good Job Mayor Ryan…You KNow Your Stuff!!!
You aer the Man!!!
January 15th, 2011 at 4:58 pm
Thank goodness only 2 more years