TFC hopeful of agreement with city

Published 10:08 pm Friday, January 10, 2020

Editor’s note: This is the first story in a series about recycling in Suffolk.

The owner of Tidewater Fibre Corporation Recycling said Thursday that while he wants to work with Suffolk to resolve its concerns about renewing its recycling contract with the company, the city is overstating its concerns about the costs.

Michael Benedetto said in an interview at TFC’s Chesapeake facility that the company is hopeful to work out a new five-year agreement with the city to provide for its recycling service.

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However, with the demand for recyclable materials taking a nosedive in recent years, especially in China, Benedetto said it has increased TFC’s cost of doing business.

That is why TFC is asking for a higher rate to provide recycling services to the city. Before the contract between TFC and the city expired Oct. 6, Suffolk residents were paying TFC $3.10 per household per month, which is taken out of the $21.30 per month the city charges residents for trash and recycling services.

Benedetto, while declining to say specifically how much the company would charge in a new contract, said it would still amount to less than $5 per household per month.

“The cost at $5 a house a month is still the cheapest bill you’ll get every month from the city,” Benedetto said.

He said it didn’t seem like a big deal when Suffolk raised its refuse collection fee to the current $21.30 per month, so he said TFC raising its rates by less than $2 shouldn’t be as big a deal to the city. According to the adopted budget for fiscal years 2019-2020, the monthly refuse collection fee went up from $19.50 to $21.30 “to address cost requirements of trash disposal at the regional landfill.”

“It wasn’t a big conversation, but a dollar, less than two dollars, all of a sudden becomes, ‘Oh my gosh, we might have to cancel recycling,’” Benedetto said.

City Manager Patrick Roberts said, however, that the city needs to balance TFC’s expressed need to increase the rate it charges the city with its concern about costs imposed to residents.

“It’s a valid point,” Roberts said. “I agree with him, but everybody involved has to understand that the staff and the City Council are very sensitive to the cost of services and what we have to charge our residents. And so, recycling is just a part of that.”

When the city put a new contract for recycling services out for bid, only TFC responded. The request for proposal by the city noted that it would be for a five-year term that would run from last Oct. 7 through Oct. 6, 2024. TFC has serviced the city for the past 10 years under two contracts of five years each.

Public Works Director L.J. Hansen said last month that TFC’s next five-year contract price came in at 60 percent more than what the city had been paying previously, with unknown escalators in price, and additional measures to handle contamination issues that the city feared would not work well.

City Council would have to approve any rate increases. The city currently spends about $1.5 million for TFC’s services, or about 16 percent of the refuse fund budget.

The cities of Norfolk and Chesapeake are having similar issues, Hansen noted back in September, though Norfolk is now in the first year of a new five-year agreement with TFC for recycling services, according to Benedetto.

Suffolk and TFC have agreed to two extensions since the end of the contract in October, but Roberts has said there has been no further extension of the program, and without that, the program will be suspended when the current extension ends Jan. 31.

Roberts said Friday he expects to know within the next week whether there would be an extension to get the city through its budget deliberations.

The city is currently deliberating on whether to issue a second RFP and how it would be worded.

“If we put an RFP on the street like we’re thinking about,” Roberts said, “our intent would be to give the city and any business a whole lot more flexibility to propose something different.”

He said the first RFP was tightly worded to reflect the service the city currently has.

“The short-term decision on the extension will influence exactly what we’re asking for in the RFP,” Roberts said.

During the first extension, TFC imposed a surcharge of $95 per ton of recycling per month, and when it was extended through Jan. 31, the surcharge went up to $110 per ton. Hansen said the city usually totals between 400 and 550 tons of recycling per month. The city is paying for the cost increase out of reserves in the city’s refuse fund and now is having to go into one-time funds to pay for additional costs.

Benedetto said the company has no choice but to raise rates, given steep increases in its health, labor and insurance costs as well as what he calls the “China syndrome” that has resulted in a decreased market for recyclable materials. Also, the value of the material it recycled used to be greater than the processing costs. Now, it is not, he said.

Hansen said that if the program lapses without a short- or long-term recycling deal, city refuse trucks would begin collecting blue cans that are placed on the street and deliver them to the Southeastern Public Service Authority for it to handle. The city is also planning, in the absence of an agreement, to increase the number of recycling events, identify possible sites for convenience centers and develop a list of other resources.

City officials and Benedetto say they hope it does not come to that. Both the city and TFC have praised each other for the good working relationship they have, and both sides have expressed hope to continue working together.

“With the city, we’re hopeful that we can come to an agreement, and we will do our best from our side to make that happen so recycling continues and residents can get the service that they want,” Benedetto said.