Determined to deliver suburban-style curbside recycling to 359,000 Chicago households without it, Mayor Rahm Emanuel said Monday he would privatize four of six service areas and allow city employees to compete in the other two.
Within four months of the so-called “managed competition,” blue-cart recycling will come to 20,000 additional households in Wicker Park, Bucktown and Logan Square. Even more homeowners will get the service next year.
Six months into the competition, a cost-benefit analysis will determine how city employees measured up against two private contractors: Waste Management, which will service three of four private sector areas, and Midwest Metal Management, which will service one.
“When it’s comes to recycling, Chicago has been a tale of two cities. Half the city has had recycling. Half has not had recycling. I want to change that. But, to do that, we have to be price-competitive,” Emanuel told a news conference at a Far North Side Streets and Sanitation facility.
“My job is to make sure that we’re delivering services to the entire city — not parts of the city — and do it in the most cost-effective way for city taxpayers.”
City employees currently service 241,000 households at an annual cost of $13.8 million. Private sector companies offered to provide the same service for $6.6 million, Emanuel said.
Even so, the mayor said, “I have all the optimism that people who are on the city payroll can win, as shown in Charlotte,” North Carolina. But, even if they don’t, the mayor said, “I have an obligation to the city taxpayers — not to the city payroll.”
For now, at least, no jobs will be lost. Laborers and Teamsters currently collecting blue recycling carts will be reassigned to normal garbage collection. That will allow other laborers to return to the decimated Bureaus of Rodent Control and Forestry.
The decision to partially privatize household recycling was announced as top mayoral aides were holding a tense, 90-minute meeting with labor leaders furious about Emanuel’s decision to lay off 625 city employees without attempting to negotiate cost-saving work rule changes with local unions whose members would be impacted by those changes.
Chicago Federation of Labor President Jorge Ramirez said the recycling contracts “complicate matters” because the local unions were not notified.
“He didn’t do it in a way that is respectful of the process he wants to engage in,” Ramirez said. “He tells us he wants to be a partner and collaborate, yet the decisions over the past few days have been void of that process.”
Still, Ramirez said he was assured by Deputy Mayor Mark Angelson that, if a union consultant can identify $10 million in alternative savings, “Both the work-rule changes and the layoffs would go away.”
Teamsters Joint Council 25, one of only a handful of unions to endorse Emanuel, issued a statement in support of the mayor’s decision to “provide more services at lower cost.”
“We look forward to the opportunity to demonstrate that, when given the fair chance, our members will provide quality recycling services for the lowest possible cost while keeping our tax dollars in the city,” said union president John T. Coli.
Lou Phillips, business manager of Laborers Local 1001, responded to the mayor’s decision to partially privatize recycling by saying, “I wish we would have been part of [the decision]. I’m still hoping to. We’re hoping it’s a level playing field.”
He added, “If it’s costing them $13 million-a-year, you need to look at management.”
Emanuel’s decision to launch Chicago’s first-ever “managed competition” sets the stage for the city to do the same with normal refuse collection, as promised during the campaign.
Earlier this year, an independent arbitrator ruled that Emanuel is legally free to privatize household recycling, but that doing so would be a “shot across the bow” that would “stifle any realistic chance” to forge the partnership with organized labor needed to confront Chicago’s $1.2 billion-a-year structural deficit.
“The wrong signal will be sent if the city moves forward. . . .The labor unrest caused by any immediate move by the city to privatize the work in this case… will pale in comparison to what is on the near horizon,” Arbitrator Edwin H. Benn wrote.
On Monday, Emanuel said he opted to ignore that warning — days after saying layoff notices were going out — because he has a “series of things to weigh” that the arbitrator doesn’t.
“What is the best cost for the taxpayers? How do I make sure the whole city gets recycling in the most cost-effective and reliable and consistent way? That’s something I have to weigh — not the arbitrator. How do I make sure that I have a policy of recycling that’s on par with our reputation as a green city?” he said.
Last summer, aldermen from across the city demanded to know why curbside recycling has come to only one-third of Chicago households.
A few weeks later, the Chicago Sun-Times reported that at least 22,000 blue recycling carts — with a pricetag of $1 million — were stashed away in a Far South Side warehouse because City Hall bought them to make the citywide switch, but ran out of money one-third of the way through.
That still leaves 359,000 households in the lurch. Their only recourse is to bring their recyclables to drop-off boxes, an inconvenience many homeowners are not prepared to endure.
Earlier this year, former Mayor Richard M. Daley was poised to privatize recycling, only to have the Laborers Union challenge the move and pass the hot potato to Emanuel.
The union subsequently argued that private contractors would saddle homeowners with hidden costs, collection fees and late-night deliveries while depriving the city of millions of dollars in revenue from the sale of recyclables.
The arbitrator also questioned how private contractors “could realistically expect to produce the same level of service” with one-employee crews working 28 routes, compared to 45 routes with two-employee crews currently used by the city. He warned that there is a “potential for a public relations nightmare” if contractors don’t provide the same level of service now provided by city crews.
But Benn noted that, if the contractors “do not perform up to the city’s requirements, try to impose additional fees, make pick-ups at [inconvenient] times — even if the market for recycled materials steadily careens upward making use of city crews more profitable because the city can keep the revenues — the city can immediately terminate the contracts.”
Emanuel campaigned on a promise to cut the city’s annual garbage collection costs by as much as $65 million by implementing a four-step process that could end in at least partial privatization.
It would begin by establishing a “benchmark” price-per-ton after comparing the cost of collecting Chicago’s 1 million tons of annual garbage to costs in ten major cities.
“I wanted to do it in this space first. It is smaller, more manageable, No. 1. No. 2, it allows you to set up a grid, which is gonna be important if you decide to go that way for [all] garbage collection,” he said.
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Source: The Chicago Sun-Times
