WILMINGTON, MA — In a rare divided vote, Selectmen voted, 3-2, to voluntarily increase the town’s payment to Russell Disposal, Wilmington’s trash and recycling collector, to help share in the increased tipping fees for recyclables (up to $40 a ton) from April 1 to June 30. Selectmen Mike Champoux, Mike McCoy, and Ed Loud voted in favor of the Town Manager’s recommendation, while Selectmen Greg Bendel and Kevin Caira were opposed.
Selectmen were united, however, in requesting additional information prior to making any decisions concerning FY19 (July 1-June 30).
On January 1, China stopped taking recyclables from America and Europe. Previously, America had been shipping approximately 50% of its recyclables to China. This change has resulted in an international crisis — with many recyclables being buried, burned, or stockpiled — and the cost of recycling skyrocketing.
“Where Russell made a mistake is they did not put in an escalator clause for their recyclables in their contract with us. Their number was solid. It was a great deal for us. They gambled that things would click along just fine. The highest they ever paid for recycling was $14 per ton. Now they’re paying $89.50 per ton,” explained Wilmington DPW Director Mike Woods. “Russell is a small company that serves just 7-8 communities… They’re now between a rock and a hard place. Small companies don’t have the ability to burn, bury, or stockpile. I can appreciate a hard stance, but Russell will go out of business. We will have to go back out to bid. The cost will be far higher. We’re going to wind up in worse shape.”
“Russell Disposal simply cannot continue to bare their tipping fee cost on an ongoing basis without ceasing to operate,” stressed Town Manager Jeff Hull. “They’re requesting that the town share in the cost of the tipping fee for next year and even for balance of this fiscal year.”
“There’s no question it’s an untenable position all around,” explained Hull. “If no action is taken and the town holds the line on the contract, and doesn’t contribute at all to this escalating TIP fee, it seems highly likely that we may be in a position where Russell goes out of business and we’re in a mode where we have to (1) contract with another firm, (2) pay a higher prevailing wage rate, (3) pay a higher cost for doing business, plus (4) accept an escalator, the very thing we’re trying to avoid by not voluntarily participating in an escalator clause.”
Hull cautioned Selectmen that the town could have very limited options if Russell Disposal suddenly folds, noting it would not be negotiating from a position of strength.
“I’m not sure of the number of firms out there, but clearly Waste Management is one of , if not the largest outfits,” continued Hull. “We wouldn’t want to contact with another firm like Russell because they’re too small to absorb the shock of this problem. When you look at options, you’re talking about a Waste Management and firms that are comparable in size, and I’m not sure how many outfits there are that are comparable in size.”
“Waste Management is the only company that could come quickly and take over for Russell, but they will only do so with a multi-year contract,” added DPW Director Mike Woods.
In response to a question from Selectman Caira, Hull clarified that while Russell is only struggling financially on the recycling side of the business, both sides of the operation is folded into the same company. If the company were to fold, the town would be looking for a contractor for both recycling AND trash.
Another consideration Selectmen weighed is the fact that the town is still on the hook to Russell Disposal for much of the costs of the trash and recycling barrels purchased several years ago. Russell would be owed more than $600,000, even if they declare bankruptcy, confirmed Town Counsel.
“For now, we should stick with Russell,” recommended DPW Director Mike Woods. “Big companies, like Waste Management, can ride this out for awhile. Small companies, like Russell, cannot… If things are not looking any better [in the fall], we can go to bid and see if we get a better price. But if we move now, we’re looking at an increase of hundreds of thousands of dollars under a new contract, plus the $610,000 on the barrels we owe Russell.”
At least two of the eight communities Russell services — Belmont and Walpole — have already agreed to share in the cost of the TIP fee — one by 50%, the other by 60%. Hull is proposing Wilmington agree to no more than 50% in sharing of the TIP fee.
Woods noted that he’s been speaking to his colleagues in nearby communities. Those going out to bid are seeing “big increases” when compared to previous contracts. He pointed specifically to the towns of Belmont and Burlington, which saw an immediate $300,000 increase.
Woods repeated that, under any new contract, a recent $4-an-hour increase in the prevailing wage would have to be honored.
“It’s gotten under my craw that the materials the good people of Wilmington is putting into their big green bins were ending up on barges sailing to Asia. A lot of that stuff is sitting in huge landfills in China. So, we really weren’t decreasing our carbon footprint,” said Chairman Selectman Mike Champoux. “And now DEP is authorizing some disposal companies to incenterate recyclables, thereby increasing our carbon footprint. This irritates the crap out of me.”
“The whole thing stinks, pardon the pun,” added Champoux. “There’s nothing good about this. If we hold tight to the principle [that a contract should be honored], my concern is we’re cutting off our nose to spite our face. And all we’ll wind up with is our principles, a big bill, and trash in the street.”
“I’m totally opposed to an increased fee. We have an agreement. They ought to live up to it. We should try to do business with someone else if they don’t want to live up to it. The residents shouldn’t have to absorb any of these fees,” argued Selectman Greg Bendel. “How many other Russell communities will [voluntarily pay more]? If the other seven sign on, will they really go bankrupt without an increase from Wilmington?”
“I’m not included to vote this evening,” added Bendel. “Let’s expand the research and see more options, find out what other Russell communities do, and get a better sense of where Russell is at financially, but I’m not inclined to raise rates. Shame on them for not having the foresight to have an escalator clause.”
Selectman Mike McCoy’s position appeared to evolve during the discussion, highlighting what a difficult decision the board is grappling with.
“[Russell has to to live by their commitment… They sound like Tony Soprano, [threatening to go out of business],” began McCoy. “It really bugs me that we got to go this route. We had a contract. They should stick by the contract. That’s how it should be.”
“I’m old school. Once you have a contract, you should honor it, but I get the big picture,” McCoy later said after listening to Woods and Hull. “I don’t want to cause a disruption [in trash and recycling service to residents]. Maybe it would be smarter to stick with Russell for the time being and the decision could benefit the town in the long run.”
“I wouldn’t want to disrupt this town for a few months for such small money,” McCoy said further into the meeting. “We need to take care of the folks right now.”
“To me, it’s a no-brainer,” said Selectman Ed Loud. “If Russell closes its doors, we’re going to pay a lot more than we’re already now, not just for recycling, but also for our trash. Why not split the TIP fee at 50%, but max out contribution at $50 per ton?… That’s $125,000 vs. $300,000-$500,000 more if we go out to bid. That’s the way we should look at this…. Let’s hedge our bets looking forward.”
While noting he “wouldn’t wash trash piling up in the neighborhoods,” Selectman Kevin Caira emphasized throughout the discussion that he wanted additional information before casting a vote. He asked Woods to talk with other trash and recycling disposal companies to see what Wilmington’s options would be.
Woods cautioned the Selectmen that if he issued an an RFP and solicited bids, while under contract with Russell Disposal, the current contract could be voided by Russell. He will follow up with Town Counsel to confirm, but his position is based on past first-hand experience.
“You don’t need to go out and get an RFP and make it so official,” suggested Caira. “You can still talk to individual companies and receive more definitive information to help us make a decision.”
“[Hull and Woods] will confirm with Town Counsel that making informal inquiries won’t cause any contractual offenses. And then they’ll get more data to provide to the board,” summarized Champoux at the end of the hour-plus discussion.
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