Though at first glance, the city of Berkeley’s waste transfer station and recycling center look much the same as they always have, the monetary aspects behind them tell a different story.
Located in the outskirts of West Berkeley near the freeway and the bay beyond, the recycling center — managed by a third party contractor — processes local residential and commercial recycling, while the city-operated transfer station performs a similar service for trash and green waste.
Over the last two years, as the city’s Solid Waste Management Division has attempted to overcome a several million dollar structural deficit in the refuse fund — which supports the collection of waste, recycling and green waste and the contracts that allow for those services — a series of measures has been taken to create a more sustainable program.
Earlier this summer, the Berkeley City Council approved new contracts, altering the city’s relationships with the Ecology Center — the agency responsible for operating the city’s residential recycling program — and the Community Conservation Center, which processes those recyclables as well as commercial recyclables collected by city crews. The conservation center also runs a drop-off and buy-back operation.
Under the new contract with the conservation center, which took effect this fiscal year, the center will remit 7.5 percent of gross receipts resulting from the sale of the city’s recyclables and use the remaining 92.5 percent of the revenue to fund its operating and capital expenses. Total remittances are estimated to be about $1 million over the next four years, with an additional $500,000 available if the contract is renewed for both of its potential one-year extensions.
“We are going to be in charge of basically buying new forklifts, any machinery that we need and in charge of maintaining the equipment — but we’ve always been in charge of maintaining equipment,” said Jeff Belchamber, general manager of the conservation center. “Our facility is in good shape — we think that we can maintain it and continue to run it for the next several years without any large capital investments.”
Historically, the conservation center has charged the city a per-ton price for processing and selling materials delivered to its Materials Recovery Facility at the recycling center as well as for items at its drop-off and buy-back station. The conservation center previously paid the city with money made from the sale of recyclables.
Additionally, in the past, the city reimbursed the conservation center for any major capital equipment purchased or repairs as well as costs associated with the recycling facility.
As part of the new relationship with the Ecology Center, the center agreed to adjust its 10.5-year contract — which spans from Jan. 1, 2010 through June 30, 2020 — by about $2.4 million, mostly through the implementation of single-person collection trucks, as opposed to the two-man system currently used.
These contractual adjustments were made to help close a projected $2 million to $3 million deficit in the refuse fund for this fiscal year. The fund, which is part of an overall city budget of about $318 million, anticipates revenues of about $32 million and expenditures of about $35.4 million for the next fiscal year, according to city budget documents.
But a report issued earlier this year by an Irvine-based consulting firm recommended a slightly different approach to the division’s budgetary woes.
In July 2010, the city entered into an $84,000 contract with the firm Sloan Vazquez to assess the division and determine possible solutions for consideration by the council as a way to reduce costs.
The firm came back in February with a final report recommending that the city not renew its contract with the conservation center — instead proposing the outsourcing of those services to increase revenue by over $900,000. Additionally, the report recommended terminating the Ecology Center contract to save about $1.5 million annually, among other recommendations.
“What the city was trying to do in the long run was basically reduce costs,” said Councilmember Gordon Wozniak. “Both the (conservation center) and the Ecology Center helped do that, and I think that was a good result.”
In general, the structural deficit faced by the refuse fund exists because costs continue to exceed revenues, according to city officials.
Acting Public Works Director Andrew Clough attributed much of the deficit to the way the division has historically been run.
“If you make no changes, labor costs go up, gas costs go up — all of the costs go up, even if you’re running the exact same operation,” Clough said.
But initial spending is still required to bridge the gap. In order to help overcome the deficit, the division will employ a number of one-person solid waste trucks — originally estimated at around 19, though Clough said the exact number is not yet certain — requiring an investment of about $1.6 million.
Moving forward, Clough said the division may also need to examine its rates, which he said are currently based on garbage can size.
“As part of these operational changes, we also need to evaluate the rate structure and how we charge for garbage and recycling services so we can achieve a sustainable rate,” he said.
J.D. Morris is an assistant news editor.
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