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Report card: Lockport’s garbage savings submerged in budget woes

LOCKPORT – The city’s privatized garbage and recycling program, inaugurated almost three years ago, has been an environmental success, but a Buffalo News analysis shows that city taxpayers never saw the tax savings that were promised because of other financial circumstances that have plunged the city’s fiscal picture into turmoil.

City Clerk Richelle J. Pasceri, who as an alderwoman was one of the leading voices pushing for a recycling and garbage program based on user fees and city-provided totes, says taxes would be even higher if the city hadn’t made the move.

“It’s saving you 12 percent on the property tax,” Pasceri said of the tote system. In other words, garbage costs were 12 percent of the tax bill before the system was changed.

But at the same time it rolled out the totes, the city carried out a revaluation of property, which raised assessments for many residents.

And the savings from “taking refuse out of the property tax,” as it was phrased at the time of institution of the new tote system, failed to show up in residents’ wallets because there were major increases in health insurance and state-mandated public employee pension costs.

“The 12 percent was eaten up somewhere else,” Pasceri said. “It took away from the success of the program … I would have loved to have rolled it out in a different year.”

In 2010, the last full year of the old system, the city levied $10.1 million in property taxes. For 2011, thinking the new system would begin early in the year, the Common Council cut the tax levy to $9.7 million.

As it happened, the privatized program didn’t begin until October 2011, and the city had to stick all property owners with an extra $147 bill to pay the unfunded costs of an extra eight months of city garbage collection.

With the cost increases Pasceri mentioned, the tax levy for 2012 jumped to $10.57 million, significantly higher than before privatization, despite the deletion of garbage service from the costs used to calculate taxes.

This year’s property tax levy was just under $10.65 million, so taxes continue to rise despite taking refuse costs out of the tax budget, and despite layoffs of seven firefighters and several other employees.

Recyclable sales low

The sale of recyclable materials hasn’t paved a road to riches for the city, either. Since October 2011, the total amount the city has received is $27,338, which isn’t enough to pay for even one month of Modern Disposal’s service.

The city combined privatization with a user-fee system designed to force tax-exempt properties to contribute to garbage costs for the first time. The fee, collected twice a year, is supposed to pay for the cost of Modern’s service and the cost of the roughly 17,000 two-wheeled garbage and recycling totes the city bought for about $50 each.

Pasceri said the city has two years left on the bond issue it floated in 2011 to pay for the totes, which costs the city $177,000 a year in debt service. Only $5,000 of that figure is interest, Pasceri said.

The user fee is pegged to the size of the totes. Residents were allowed to choose from three sizes for their weekly garbage tote: 35, 64 or 96 gallons.

The price every six months is $67.75 for the smallest totes, $81 for the medium size and $97.75 for the biggest size.

In addition to the garbage tote, residents were given a 64-gallon recycling tote, whose contents are collected every two weeks.

Wednesday, because of rumors that the city is sitting on an enormous pile of unused totes, a reporter visited Harrison Place, where the spare totes are stored.

Of the 17,000 originally bought, a reporter counted 135 of the 64-gallon totes and 59 of the 96-gallon totes in storage, although the city hasn’t ordered any since October 2011. The only 35-gallon totes in the building are 22 that were traded in by residents who needed larger sizes.

There also are 13 of the 64-gallon size and 10 of the 96-gallon size that were traded in, along with a total of 44 totes damaged in use, which the city can use for parts or return to the manufacturer for a credit. The city has about 8,700 parcels of property, almost all of which received totes except for a few businesses. Some users needed more than one garbage tote and paid extra.

The city also keeps a supply of blue and yellow lids so the 64-gallon models can be used for garbage or recycling, as needed. Blue lids are for regular garbage and yellow ones mean recycling.

Environmental benefit

From an environmental standpoint, the program has been an unquestioned success.

Before the tote system, the city collected only newspaper and cardboard at the curb for recycling. Anyone who wanted to recycle cans and bottles needed to drive them to a public drop-off Dumpster parked at the Niagara County Refuse Disposal District landfill on the Lockport Bypass. Very few did so.

As of Oct. 11, 2011, that all changed. The results were instant and drastic.

The city’s monthly tab for disposing waste at Modern, at a “tipping fee” of $30.73 a ton, was $29,422 in September 2011, the last full month of the city-run service.

In November 2011, the first full month of privatized collection with full curbside recycling, the city paid Modern only $18,700 for landfilling trash.

Since then, the monthly tipping fee has topped $20,000 only seven times and has never reached as high as the May 2011 record of $34,834. In July 2013, the month in which many city residents were emptying basements after the June 28, 2013, flash flood, the tipping fee was $32,802. The city did pay an extra $20,713 for an additional recycling pickup after the flood.

The contract also requires the city to pay a monthly charge for Modern’s services over and above the tipping fee. Modern charges $52,033 per month for the regular garbage collections and $17,302 per month for the recycling collections.

In June of this year, the garbage system cost the city $90,229, with a $20,894 tipping fee added to the fixed monthly charges.

For the year 2013, the city paid Modern $1,088,997. But City Treasurer Michael E. White said the city billed $1,265,936 in user fees, of which $1,198,042 was paid. Delinquent user fees are added to the following year’s property tax bills.

“In 2010, it was costing the city $1.4 million to $1.7 million to collect the garbage,” Pasceri said. That took into account the disposal costs, all the salaries, benefits and pension costs of the workers, who were reassigned instead of being laid off, as well as fleet maintenance and fuel costs.

The city sold all but one of its garbage trucks after privatization and was paid about $100,000, Pasceri said.

Modern’s tipping fee was supposed to rise by 50 cents a ton to $31,23 this year, according to Pasceri, but so far the company is continuing to charge $30.73. Additional 50-cent increases are slated for the fourth and fifth years of the contract. Modern officials did not return calls seeking comment on the pricing structure.

Little payback

Dawn M. Timm, Niagara County’s environmental science coordinator, keeps tabs on the recycling performance of all county communities.

In 2012, she reported, the city recycled 1,963 tons of refuse, or 22 percent of its total, which is the sum of landfilled waste plus recycled waste.

In 2013, Timm said, Lockport’s recycling was 2,091 tons, or 20 percent of the total. The recycling percentage went down even though the amount recycled went up because of the large trash pickups after the flood, Timm said.

However, the city hasn’t been able to cash in big on the recycled material because of declining market prices that resulted from a glut of supply caused by increased public recycling.

Only once has Modern sent Lockport a quarterly recycling check of more than $3,000. That was in the first three months of the new system, the fourth quarter of 2011, when the rebate check was $4,299 for recycling 441 tons of waste.

The figures examined by The News show that the average market value of a ton of recyclables, which was over $97 at the end of 2011, had fallen to $55 by March of this year. When that market price falls below Modern’s cost for processing the material, which is currently $65 a ton, the city is paid the contractual minimum of $5 a ton, and that’s what has happened frequently.

When the market price exceeds Modern’s processing cost, the city receives more money, based on a formula set up in the city’s contract with the Lewiston disposal firm.

Since 2012, the payments have been between $2,200 and $2,900 per quarter. From the fall of 2011 through the first quarter of this year, the total paid to the city for recycling is $27,338.

The contract, which lasts five years with an option to renew for another five years, also required Modern to provide some kind of incentive service that was supposed to produce higher recycling participation.

Modern’s competitor, Waste Management, has an exclusive contract with RecycleBank, a company that offers small prizes to residents for meeting recycling goals.

Modern’s attempt to work out something similar with an email-based system was a flop, Pasceri acknowledged.

Now, the disposal firm designates a local charity and makes a contribution pegged to the amount of recycling in Lockport. Pasceri said those contributions neither reduce the city’s share of the recycling sales nor push up the cost of the service.