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Almost three years after
announcing the long-term agreement with a new contractor to run its C&D
Riverside Recycling Facility, the City of Portland, ME, now has hard data
confirming the educated hunch it had as the ink was still drying on the
contract: they were entering into a public-private partnership that was destined
to be a success for all involved.
Based on lower costs for
operations and new revenues from more aggressive materials marketing, the bottom
line is that the City is saving almost $1,000,000/year under the new agreement.
The expectations set forth in the summer of 2005 are finally becoming a reality.
In 2004, the City of Portland
faced a situation where the operator's contract from 1996 had been amended
several times and was set to expire. Major issues included little to no data
regarding tonnages - overwhelmed immediately; no scales - all transactions
initially by estimated volumes - lot of "freebie" tonnages; operator received a
set management fee per month - no incentives to perform well; contract
artificially limited operator's cash flow and hindered his ability to move
materials; lack of direct City involvement with site management operation;
material not moving; poor record keeping; fires; and unpleasant customer
experience.
The City hired GBB to review
the history and evolution of the existing Riverside Recycling Facility, evaluate
the services being provided at Riverside, review the economics of the business
arrangement with the Contractor and recommend options for moving forward once
the current contract term expires.
In a press release published in
August 2005, GBB Executive Vice President Bob Brickner noted something that
rings even more true today, with the luxury of hindsight: "Jurisdictions that
take a close look at the details of their operations and options can often
generate important savings. The City of Portland had the foresight of
questioning what they were doing and looking for expert opinions. They avoided
simply going through the motions, and this decision will pay off for years to
come."
Ultimately, GBB developed a
Request for Proposals to find a partner with expertise in material handling;
equipment or available capital to get equipment; demonstrated commitment to
recycling and the ability to help the City clean up and redevelop the site. A
new and improved Riverside Recycling Facility was born with a public-private
partnership with the selected contractor, CPRC Group (formerly Commercial Paving
and Recycling).
With the new contract, the City
pays the contractor a set fee per ton on material leaving the facility (with
exceptions); the contractor has financial incentive to recycle; the City
controls the scale, the money and the customer service experience; the City
keeps all tip fee revenue; and the contractor accepts ownership of the material
as soon as it hits the ground. Incentives for the contractor are fees per ton
equal to landfill transfer and disposal cost and raising their profit margin by
finding lower cost alternatives to landfill.
Annual Savings of Almost $1
Million
Two and a half years after
starting the new and improved facility, approximate annual costs are $350,000 (CRPC
costs of $3,000,000 minus revenue from commercial customers of $2,650,000) as
opposed to approximate former costs of $1,280,000 (city operations of 16,000
tons + Resident "freebies" of 16,000 tons = 32,000 tons x $40/ton) for an annual
savings of almost $1 million plus better customer service.
Mission accomplished!
An overview of a case study
entitled "Evolution of Managing C&D in Portland Maine" is available at:
www.gbbinc.com/speaker/portland.pdf
Related
Web Links:
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Selected GBB C&D Project Experience
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