Public Comment

Why Not to Outsource Berkeley’s Resource Management System

By Mary Lou Van Deventer and Daniel Knapp
Wednesday June 15, 2011 - 10:16:00 AM

It's an illusion that outsourcing Berkeley’s City-owned and -operated resource management system would help the City’s budget problems. No robotic cost-of-living rate escalator would work satisfactorily, either.

The recent Refuse Fund deficit is a new problem resulting partly from errors in capital expenditures and partly from previous attempts at outsourcing. Many of these errors have never been acknowledged or discussed. The effects of internal mistakes on the budget deficits have not been analyzed.

This is a problem with multiple causes. It needs to be corrected in thoughtful delicate ways, not with a meat cleaver. A subcommittee of the Zero Waste Commission is already well into a professional-level review of the structure of services and rates. These are good people, smart and committed. Their work should be encouraged, not sidestepped.

Now staff wants approval to spend money it says it does not have to pay yet another outside consultant to do the same work. Besides being duplicative, this is directly undermining the Zero Waste Commission’s efforts. 

It’s important to notice that the Refuse Fund deficit is almost the same as the amount Berkeley spends on street sweeping, paid for by the Refuse Fund. Take street sweeping out of the Enterprise Fund budget, and the fund is at a breakeven level.  

Outsourcing would be a bad choice because: 

1. It would increase the City’s support for the waste management profession’s ideological prejudice to replace labor with machinery whenever and wherever possible. It would support more trucking, landfilling, and international shipping that downgrades the resources (“downcycling”) for export to “developing” countries like China, who are thriving on our cheap scrap, which they make into products we import, and we borrow from them to do it. 

2. The garbage giants require long-term contracts, reducing future system flexibility at a moment of major expansion in the recycling industry. 

3. The garbage giants routinely downgrade resources to increase profit. Salvaging for reuse is banned or truncated on their sites, and construction materials (C&D) are destroyed and smashed up by rough handling. Then chopped and finely screened C&D materials are applied to landfills as “alternative daily cover” (ADC). Waste company lobbyists have ensured that anyone generating ADC can get recycling credit from the State by layering it over less finely chopped garbage. Berkeley doesn’t count ADC as recycling for its own calculations, but the downgrading still happens. 

4. Outsourced fees embed high corporate salaries and dividends for wasting companies’ shareholders, which leave town and don’t contribute to this community. 

5. Outsourcing recycling would kill off one local nonprofit and seriously damage another. These organizations were founders of recycling internationally and are extremely efficient financially because their products are cleaner than the garbage giants’. 

6. It would sacrifice the City’s income from recycling revenue sharing, which is currently included in recyclers’ contracts and brings the City up to $200,000 annually from recycling scrap sales. 

7. It would hurt Urban Ore by barring us from salvaging, reducing incoming materials and the jobs, low-cost merchandise, and sales tax they generate. 

8. It would eliminate all or most jobs now held by Berkeley’s SEIU collection staff and maybe transfer station staff. 

9. It would forego income that could be generated by changes in current operating methods such as extending hours. 

10.It would still require finding other funding for street sweeping. 

11.It would prevent developing local discarded resources for local income and instead encourage the City to sell its nine-acre site at 2nd and Gilman to big developers, choosing short-term asset liquidation over long-term asset development. 

For a thumbnail background of how the Refuse Fund and the resource management system work, see the “Background” section later in this document. 


ISSUE: Recent rate increase didn’t increase revenue.  

This was actually a predictable effect, although the consultant missed it (different consultant than the one who did the 2005 plan). Recycling collection has been embedded in the garbage fund’s rates as a “free” service. Any trucking and labor will always cost something, and scrap revenues seldom pay enough to cover the cost. So when the garbage fund’s rates were raised to cover projected deficits, users wisely downsized their garbage cans to save money. They recycled more. The work simply shifted from garbage to recycling, but the fund revenue went down because the underlying rate structure provides users inaccurate feedback. Fixing this problem doesn’t call for outsourcing the whole system. It calls for rate rebalancing, community education, and an entrepreneurial outlook. 

ISSUE: High service rates overall.  

The Zero-Waste Commission’s rate subcommittee is working hard comparing rates and creating a rebalanced rate structure that provides accurate feedback and incentivizes recycling. The commissioners report to City Council. The Commission meets monthly at 7:00PM on the fourth Monday in the North Berkeley Senior Center and – unlike big garbage companies – wants to hear from citizens. Send email to them through the commission secretary, Recycling Coordinator Andrew Schneider, at 

ISSUE: Landfilling costs are too high.  

The City has now issued a Request for Proposals (RFP) for competitive bids on a new long-term contract for landfilling. But Council and citizens should expect landfilling fees to continue to rise because landfills poison the Earth. Current landfills are either in wetland areas or in upland canyons that are headwaters of creeks that drain downhill to the Bay or the Estuary. Trying to control the pollution is both expensive and, in the end, unlikely to work. The Environmental Protection Agency says all landfills will inevitably leak. Landfill companies are generally responsible for cleanup costs only for 30-50 years after the landfill closes. Cleanup methods are imprecise at best. Our collective fingers are crossed that the next generations will think of something. 

ISSUE: Wages and retirement obligations are too high.  

Personnel costs won’t go down with outsourcing. Garbage giants’ union workers, mostly Teamsters, make as much as or more in both wages and retirement benefits than the City’s SEIU staff. Berkeley ratepayers won’t save by simply switching unions. Regarding management, the wasters’ corporate executives earn more than the City's top bureaucrats, and they're in Texas, so their income doesn't even add to the local economy. Regarding administrative costs, big garbage companies typically make 15% profit or more, often up to 35% profit, and that money is embedded in fees. It also leaves town. 

Sometimes garbage companies make their rates look attractive by offering low introductory rates that escalate over time according to contract. 

Regarding staffing cost overall, the City has proposed changing from two-person truck crews to one-person truck crews for some routes. This change would reduce staffing cost while requiring capital expenditures to buy new one-person trucks. 

ISSUE: Jobs.  

The increased automation and reduced staffing the City proposes would eliminate some of the SEIU’s jobs. The workers and union are unhappy. This issue hasn’t yet been resolved. It won’t help simply to outsource the enterprise; that would eliminate all the SEIU’s jobs. It won’t help to ask the SEIU to take over Ecology Center’s and CCC’s jobs; that would simply swap job loss. Redeveloping the facility, however, would require more workers to handle the materials for higher and better use, and if good entrepreneuring principles were used, the labor would pay for itself in increased revenues from resource sales, with lower current expenses and lower long-term liabilities from wasting. 

ISSUE: Management and business-model efficiency.  

There have been serious questions about the effectiveness of the Refuse Division’s upper-level management in the last five years. But the problems stem in part from expecting old-style garbage thinking to meet today’s resource challenges – and opportunities. Today’s Zero-Waste goals, pollution prevention requirements, and resource management opportunities generate very different business models from the old vision of well, garbage just happens, and the job is just to keep it off the streets. Today understanding of vanishing wilderness, depleted minerals and forests, and resource-laden discards create a new environment for the business model. Resource management is no longer suitable for the maintenance-oriented Public Works Department and would be more appropriately located in a new entrepreneurial Resource Management Department reporting directly to the City Manager. The enterprise can be envisioned as similar to a Port Authority or Airport Authority, which reliably generate income for their community. 




Refuse Fund 

Berkeley’s Refuse Fund is an enterprise fund. It pays for all resource management services including garbage, recycling, and street sweeping. The current deficit is new. For decades the fund has generated substantial surpluses, and the City has often raided it to support social programs. The Refuse Fund brings in money from several sources.  


  • Residents pay to have garbage and recyclables picked up at the curb – curbside collection. Larger garbage cans cost more. In the past, recycling service has been advertised as “free” although it actually costs money, and its costs have been embedded in the garbage rates. For most ratepayers, the bill for all services is included with the property tax bill. This billing is only for ratepayers’ convenience; the services are not taxes. Some ratepayers are billed separately. Nobody has a clear explanation for why there are different billing methods. The Zero Waste Commission’s rate subcommittee is analyzing different approaches to these rates and billing methods. It’s important for ratepayers to have accurate feedback on what their money pays for, as well as incentives to reduce wasting, to increase recycling, and to achieve the City’s Zero Waste goal.
  • Some businesses pay the City to pick up their garbage as a commercial collection service. Again, commercial recycling is “free.” Unfortunately, businesses can have “free” recycling collection even though they pay non-City collectors for garbage service. Other businesses pay non-City haulers to collect garbage, and the haulers pay the City a franchise fee. So the City brings in income from its competitors. The Zero Waste Commission’s subcommittee is analyzing the franchises and their fees.
  • Transfer station users pay $126 per ton to dump at the City-owned and -operated facility. This facility is one in a string of pearls composed of regional operations located every few miles around the Bay. Berkeley’s facility has enjoyed historically stable usage because it has good geographical positioning and attracts resources. The City contracted with a for-profit designer and operator for two years in 1983 to design, build, and operate the facility but took back the operations. The per-ton dumping (“tipping”) rate is competitive, neither the highest nor the lowest.
Recycling and garbage operations 

The Ecology Cente collects residential recyclables at curbside. For years it has shared the industry-wide problem of reduced collection volumes because of poachers. But Berkeley’s new split carts make poaching more difficult and have substantially reduced the problem. So tonnages collected are rising at the same time scrap prices are rising. The Ecology Center turns its resources over to CCC, which shares revenue with the City. The Ecology Center is a 501(c)(3) nonprofit founded in Berkeley. It was one of the founders of the international recycling industry and one of the first curbside collection operators in the nation. Its recycling revenues help support its other environmental work, including education and farmers’ markets, and it provides recycling information not paid for by its collection contract. Its union is Industrial Workers of the World (IWW - the Wobblies). 

The Ecology Center delivers clean materials to the processor because of its dual-stream split-can system. This is a very important part of system configuration. 

Community Conservation Center (CCC)processes and sells all curbside materials collected in Berkeley, and it runs The Buyback at Second and Gilman. It not only pays users for their containers, it also usually returns up to $200,000 a year to the City from its materials sales. This revenue sharing crashed when the worldwide scrap markets fell, but the markets are again returning to near-historic highs. CCC is a 501(c)(3) nonprofit founded in Berkeley. It spun off from the Ecology Center in the 1970s. Its union is also the IWW. 

CCC’s materials are much cleaner than other cities’ because Berkeley collects in two streams, not one. Single-stream systems crush glass into paper, seriously downgrading the paper sent to market. Therefore CCC’s resources bring the best prices and, in a down market, can always be sold for income while other recyclers including garbage giants have to pay the markets to take their downgraded materials. 

Urban Ore salvages reusable goods and scrap nonferrous metals from the transfer station. Users pay $126 per ton to dump, and the City pays Urban Ore $40 per ton to salvage. For every ton Urban Ore takes, the City keeps $86 for no further expense. Then when Urban Ore sells the salvaged goods, it collects sales taxes that the State shares with cities. It also pays users for some goods delivered to its Ecopark. Urban Ore is a for-profit social enterprise whose staff are non-union. 

City staff collect commercial recyclables, and yard debris and food scraps from residences and businesses. They also collect all residential and some commercial garbage in Berkeley. They deliver their recyclables to CCC and their garbage and yard debris with mixed-in food scraps to the City’s transfer station. They operate the transfer station, collecting user fees, managing the discards on the floor, and trucking them to landfill or C&D recycling. They oversee the pickups of mixed yard debris and food scraps to be composted. City operations staff belong to the Service Employees International Union (SEIU). 

City resource management facility  

The nine-acre site at Second and Gilman houses recycling and wasting, occupied as shown and discussed above. It can and should be redesigned to recover more resources and generate more City income. 

The site was designed piecemeal in 1983 after the citizens voted not to build a garbage incinerator there. It has always been inefficient. By 2005 it was obsolete and rundown. A consultant hired to write the City’s plan to achieve 75% diversion from landfilling recommended redesigning the site to improve recovery and overall efficiency in pursuit of the City’s Zero Waste goal. 

Urban Ore, which has designed more than 30 Zero-Waste facilities, donated a design (at least a $50,000 value, likely two or three times as much) that could recover most of the materials now wasted, turning it into feedstocks for manufacturing. City income could also increase substantially by changing some operating practices. 

The City’s former Public Works Director accepted the 2005 consultant’s plan to achieve 75% recycling but didn’t adopt the plan, and also ignored Urban Ore’s site design.