$12-million recycling center opens as Cedar Rapids loses millions in landfill costs

Problems with bidding on the Sinclair project reason why FEMA denied funding, official said

Rick Smith
Published: January 13 2014 | 5:00 pm - Updated: 29 March 2014 | 2:03 am in

MARION — Few ribbon-cuttings come with such unfortunate timing as the event on Monday in which the Cedar Rapids/Linn County Solid Waste Agency opened its $12-million Resource Recovery building at the agency’s Site 2 landfill at County Home Road and Highway 13.

The facility, which the agency calls the "premier recycling center in Iowa," opens just a week after news surfaced that the Federal Emergency Management Agency will not reimburse the city of Cedar Rapids for $6.5 million of the total cost that the city fronted to a contractor to demolish and dispose of 136,000 tons of debris from the former, flood-and-fire-damaged Sinclair meatpacking plant.

Much of what the city paid and for which FEMA will not reimburse it ended up in the account of the Solid Waste Agency as payment to place the Sinclair debris in its Site 1 landfill, which is called Mount Trashmore.

FEMA now has concluded that it could not reimburse the city for the landfill’s special fee — $90 a ton for Sinclair’s asbestos containing material instead of the agency’s typical $38-a-ton fee — because FEMA could not determine if the fee was reasonable. FEMA said the city of Cedar Rapids provided an "intentionally inaccurate representation" of the scope of the Sinclair demolition work, which FEMA said was designed to limit competition and so prevented FEMA from determining if the agency’s $90-a-ton fee was fair.

The Solid Waste Agency is an independent, multi-jurisdictional entity, but the Cedar Rapids City Council controls six of the nine board seats on the agency board.

At the time of the bidding in early 2010 on the Sinclair contract, both the Solid Waste Agency board and the City Council participated in separate pieces of what became the city contract for the Sinclair demolition and disposal project. It was the Solid Waste Agency board, though, that set the $90-a-ton cost for the Sinclair bid, which is an amount that FEMA now has refused to pay.

On Monday, Cedar Rapids Mayor Ron Corbett, who is one of the six Cedar Rapids council-appointed Solid Waste Agency Board members, did not rule out the possibility that the city of Cedar Rapids will ask the Solid Waste Agency to cover some of the $6.5 million in unreimbursed costs to dispose of the Sinclair debris in the agency’s landfill.

"We’re going to keep all of our options at this point in time," Corbett said at Monday’s ribbon-cutting for the Solid Waste Agency’s new recycling center. "Right now, the city manager and the city finance director are putting together some options for the City Council on how to fund the FEMA shortfall for the demolition of the Sinclair property. Some will be politically feasible, and others may not be."

Corbett said the Solid Waste Agency did see an increase in its revenues as flood debris and flood-recovery demolition debris ended up in the agency’s landfill.

In total, the agency took in a total of 430,000 tons of such debris, and about $25 million in revenue, Karmin McShane, the agency’s executive director, said.

"But I wouldn’t say that this building (the new Resource Recovery facility) was built exclusively from revenue from the demolition of the Sinclair site," Corbett said.

Both he and Cedar Rapids council member Justin Shields, who is the current chairman of the Solid Waste Agency board, said the agency had planned for some years to build the new recycling center and had set aside money over time for the project.

"Those reserve funds were just accelerated because of the increased revenue from flood debris," Corbett said.

Shields said he wasn’t inclined to ask the Solid Waste Agency board to help pay for landfill disposal fees that the city of Cedar Rapids ended up paying expecting reimbursement from FEMA. FEMA paid most of the fees that the Solid Waste Agency ended up receiving to dispose of flood debris.

Linn County Supervisor Brent Oleson, the Solid Waste Agency board member in position to be named its new chairman later this month, in recent days dismissed out of hand any suggestion that agency funds should be used to reimburse the city of Cedar Rapids for what it won’t get from FEMA.

"Absolutely not," Oleson said.

He said the agency has assumed additional future costs and liabilities because it took in so much flood debris and, in particular, because it took in so much asbestos containing material from the Sinclair site.

Back in 2010, Oleson was one board member who thought the agency should bill $120-a-ton for the Sinclair debris, not the $90-a-ton that the agency board finally settled on. Some on the board thought the price should be $75-a-ton and $60-a-ton also was suggested.

Last week, he said the city’s problems its bidding on the Sinclair project, not the size of the agency’s landfill fee, was the reason for FEMA to refuse to pay some of the city’s costs.

In the longer term, the Solid Waste Agency’s new $12-million Resource Recovery building may have other questions to face as Maryland-based Fiberight LLC plans to break ground this spring a few miles away in Marion on its own recycling facility.

Charlie Kress, Marion’s representative on the Solid Waste Agency board, on Monday said the Fiberight facility, if built, will compete to a degree with the Solid Waste Agency’s facility.

"It creates an issue, but I think it’s a solvable issue," Kress said.

The agency’s McShane on Monday said there was "no fear" that a Fiberight facility would make the agency’s new center less relevant.

Cedar Rapids council member Shields said the Solid Waste Agency has planned for its Resource Recovery facility for years, and he said the agency can’t sit around and wait for other ideas to gain a foothold.

"We thought we would do a lot of things with garbage we never had done before, and that’s why will built it," Shields said of the agency’s new building. "That was our hope and our aspiration. We got to really base our decisions on known facts and what we can do for Linn County."

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