Skip to main content

City looking to privatize transfer station

March 7, 2012

PAWTUCKET — City officials are looking to privatize the operation of the solid waste transfer station at 240 Grotto Avenue in a move they say will substantially cut costs, increase efficiency and possibly generate additional revenue through expanding capacity.
A proposed lease and operation agreement for the transfer station between the city and a contractor, WHM Holdings, LLC., of Starline Way, Cranston, has been drafted by the City Solicitor and is expected to be referred to the City Council's Property Committee and Finance Committee for review. WHM Holdings was the contractor chosen following a competitive Request for Proposals (RFP) process that was initiated late last year. The lease would then go before the City Council for consideration for approval at an upcoming council meeting.
According to city Public Works Director Lance Hill, the city has owned and operated the solid waste transfer station for many years. The facility provides an array of waste management services including receipt, transfer, disposal and recycling for its commercial, industrial and residential customers. He said that prior to his hiring last fall, city officials had decided to lease and outsource the operation of the transfer station to a private contractor for the purpose of eliminating some of its waste management expenditures and creating new sources of revenue through the expansion of its permitted capacity to accept solid waste (as defined under Rhode Island General Laws).
Hill said that the transfer station currently operates at a net cost to the city. Although the city does realize some revenue from commercial waste, it is subsequently charged to dump the commercial waste at the Rhode Island Resource Recovery Corporation facility in Johnston at a rate that is nearly equal to the revenue that is generated, thus making it essentially a “pass-through” cost.
By privatizing the facility, the city would see savings in several areas, including approximately $190,000 per year in salary, benefits and overtime costs for the three to four municipal employees who work at the transfer station. There would also be an estimated savings of $117,000 per year in general operational costs (fuel, oil, equipment maintenance, etc.).
Additionally, there would be a savings of approximately $330,000 per year in transportation costs of trucking the city's waste from the facility to the state landfill in Johnston, as the contractor would now be assuming this responsibility, Hill said.
Hill said that at this point, he does not anticipate losing any city jobs as a result of the privatization. He said there are currently three to four employees being utilized at the transfer station depending on the daily needs of the city and staff availability. He said it is expected that these individuals will be placed in other vacant positions in the city. He added that several positions had been left unfilled in anticipation of this lease agreement.
As a result of the negotiated agreement, several additional revenue streams are also anticipated, Hill said. The contractor, WHM Holdings, would pay a “lease rate” for the facility of approximately $120,000 a year for five years. The contractor would also pay a “per tonnage fee” for commercial waste received in addition to wastes that are generated by the city. This rate varies, but, depending on the amount of wastes generated, the city could anticipate $40,000 to $80,000 per year annually in new revenue, he said.
Hill said the transfer station currently takes in about 100 tons of waste per day and is licensed to accept up to 600 tons per day. He said the contract was written to include “flexibility” for the contractor to expand to as much as 2,000 tons per day, provided that a new access road is constructed from Concord Street and that other permitting and requirements are met and the city signs off on any such expansion efforts.
Under the proposed lease agreement, it is spelled out that Pawtucket citizens shall be allowed to continue dumping at the transfer station within normal operating hours, including, but not limited to, Saturdays from 7 a.m to 11 a.m. Also, the contractor shall not charge Pawtucket citizen permit holders a rate that exceeds a “gross profit margin of 60 percent.”
The agreement outlines that the contractor shall be limited to the use of the facility as defined by the existing transfer station building, paved area and existing composting site, and access will be made by existing roads or by a new access road from Concord Street. It is stated that “any future expansion of the facility on the site shall be made only with the City's prior approval.”
It also states that the contractor will assume the municipal cap for accepting waste that has been negotiated with the Rhode Island Resource Recovery Corporation. However, if there is a plan to expand, the lease calls for the contractor to design and build a new access road to Concord Street. It also holds that the city and contractor shall agree to apply to the proper authorities to expand the existing license to operate the facility as a transfer station from 600 tons per day up to 2,000 tons per day of solid waste, recyclables and construction and demolition debris.
The proposal states that until a new road is constructed and dedicated from Concord Street (abutting the cemetery) to accommodate traffic cause by additional volume, the parties agree to limit total daily volume to 450 tons per day (city and non-city solid waste) of solid waste, recyclables and construction and demolition debris until this new road is complete.
The contractor, WHM Holdings, also runs a facility at Rose Hill in South Kingstown, which is essentially the same type of operation that would be operated in Pawtucket, said Hill. He added that city officials have visited the Rose Hill facility on several occasions to view the operations there.

 

Premium Drupal Themes by Adaptivethemes