Posts Tagged: privatization


19
Oct 11

“Bargain basement” garbage contract smells a bit fishy

Solid Waste Collection: Current Cost Per District Versus GFL Proposal

The Globe & Mail’s John Lorinc:

A Pickering firm run by a former minor hockey league goalie has emerged as the recommended winning bidder on the city’s controversial garbage out-sourcing deal, city hall sources have confirmed.

An announcement is expected at a news conference scheduled for noon.

GFL Waste & Recycling Solutions was founded by Patrick Dovigi, a one-time Edmonton Oiler draft pick who formed the company in 2007 out of three smaller firms – Direct Line Environmental, National Waste Services and Enviro West — that run several transfer stations and hauling operations.

The firm bid $17.5-million on a contract to provide residential waste collection west of Yonge Street, significantly undercutting three other large competitors, including Emterra Environmental ($23.9-million), Miller Waste Systems ($20.98-million) and Waste Management of Canada ($23.8-million and an alternate bid of $25.6-million).

via GFL winning bidder for Toronto garbage contract | Globe & Mail.

Via Twitter, the Toronto Sun’s Don Peat has reported that Councillor Gord Perks has expressed “serious concerns” about this contract, saying it represents a “below bargain basement price.”

A comparison between the announced figure and the numbers provided by staff (in the April report that kicked off this process) sure seem to back that assertion up. Green For Life is claiming they can pick up solid waste in District 2 — bordered by Etobicoke in the west and Yonge Street in the east — for $105 per household, or $95 per tonne. That’s comparatively less than what the current private contractor charges to pick up trash in Etobicoke. There, the costs work out to $119 per household and $103 per tonne. You can see the full comparison in the chart above.

I’m hardly an expert on solid waste collection, but I think it’s a safe assumption that solid waste collection in Etobicoke — with wide, suburban streets and leafy culs-de-sac — is a hell of a lot easier than it is in District 2, which includes a wide swath of downtown.

In another fun note, Lorinc also reports that the “the city’s recommended seven year contract offer to GFL is actually about $8-million more than what GFL initially bid, due to contingencies, HST recovery and cost of living allowances.” Those extra fees result in a contract that totals about $25.5 million a year, would seem to put the actual year-to-year savings of garbage privatization in District 2 at just under two million dollars.

So, some lingering questions to discuss:

  • Is GFL’s bid so low that it’s suspicious?
  • What is the city giving up — in terms of control and/or quality of service — to achieve potential overall savings that, reportedly, could only amount to $2 million per year in District 2?

22
Jun 11

Executive committee moves to cut out the private sector

The Toronto Sun’s Sue-Ann Levy writes about a decision made by the Executive Committee on Monday following an amendment by Councillor Mike Del Grande:

[Del Grande] proposed that city officials start to phase out the capital loan guarantees once they expire — and not continue to roll them over again. He also suggested once the Waterfront’s Corus building sells and their $128 million outstanding loan is repaid, the maximum of capital loans given out be limited to $125 million in total. Both motions were approved by executive committee.

“We’re not in the business of providing loan guarantees,” Del Grande said. “It is not a core activity… simple as that.”

Added Mayor Rob Ford: “I don’t think we should be in the business of loaning money … we’re here to deliver services, I think that’s what banks are for, to loan money.”

via Toronto’s $449-million loan groan | Toronto & GTA | News | Toronto Sun.

Phasing out loan guarantees would impact the financial situation of institutions like the Evergreen Brickworks, Artscape Wychwood Barns, Ricoh Coliseum and, after 2020, BIXI.

Ford says that the city should not be in the business of loaning money which, actually, is true. The city shouldn’t and is not in the business of loaning money. What the city does is guarantee loans taken out by private companies. It’s like your parents cosigning your apartment lease when you were in college — they’re not giving you any money, but they’re on the hook if, for whatever reason, you skip town and stop paying your landlord.

That Ford and Del Grande are railing against this practice at the same time they have people working on a deal to get the private sector to pay for the Sheppard Subway is a massive contradiction. If the city isn’t going to provide capital loan assistance for a subway project, the prospects of such a plan actual coming to fruition are even dimmer than we thought.


16
Jun 11

Name your price on naming rights

The idea of selling naming rights for transit stations, public parks and other things hit the news again this week, and received the hearty endorsement of the Ford brothers:

Next stop: Spadina-McDonalds station.

“Whatever. If it brings in revenue, I honestly don’t believe anyone cares,” Councillor Doug Ford quipped Tuesday afternoon.

via TTC looking at renaming stations – thestar.com.

The Toronto Standard has blessed us with two good articles on the issue. The first, by Tabatha Southey, takes the idea to its logical extreme and imagines a Toronto where everything is named after something corporate:

Ten years ago, in 2015, most of us in Toronto and Firkin accepted the suggestion that we attempt to “build relationships” with the private sector with good grace. The motion passed at the somewhat expanded Pizza Pizza City Council 967 to 11, with 11 abstaining, as every motion must now pass in order for the heat to stay on in Telecity Hall through the winter, if you take my meaning.

via All the Names | Toronto Standard.

Ivor Tossell, being a bit contrarian, penned a follow-up, which essentially reminds us that we have to name our roads, parks, subway stations and buildings after something, so maybe this isn’t a big deal.

And I agree, mostly, that it doesn’t have to be a big deal. I don’t think there’s a reasonable argument to be made that Nuit Blanche is a lesser cultural event because it’s called Scotiabank Nuit Blanche. These sorts of sponsorship arrangements, at the very least, support events that likely wouldn’t receive enough government support to survive on their own.

So, yes, there’s nothing wrong in principle at looking at the idea of naming rights as a way to offset construction or management costs. But I did have a few objections to the tenor of the discussion regarding naming rights this week.

First, there’s this idea that naming rights represent a massive pool of untapped revenues. This is unlikely to be true. Steve Munro points out that our crumbling subway stations might not appeal much to image-conscious corporations. It’s also hard to imagine much value coming from renaming a park — how many local parks can you recall the names of, off the top of your head?

Which brings me to my second objection, which is a matter of standards. From all the comments in the media this week, it’s clear that everyone believes certain things are off-limits for renaming. “We’re not going to call it Doritos City Hall,” Doug Ford assured the National Post. But why not? Can anyone define why some city-owned properties are up for renaming and others aren’t? What’s the differentiating factor? Is it heritage? Political importance? Tourism and culture? A gut feeling?

This goes for revenue standards too. Obviously there’s a point at which the revenue from naming rights is too small to be worthwhile. If Company X offers us $5,000/year for naming rights to Spadina subway station, we’d rightly dismiss the offer out of hand. But, again, why? No one seems to have any clue what fair value for naming rights is.

We’re working blind here. We don’t know what’s on the table and what the value of the table is. If, at the very least, this debate can help define a concrete policy for the sale of naming rights, it will have been somewhat worthwhile.

Lastly, and most critically, what corporations would be after with so-called “naming rights” for transit stations — not to mention other pieces of infrastructure — could very well go beyond slapping their name and logo on a TTC sign. Would they be looking for permission to use the transit station as a showroom or glorified retail space? Would people be okay with vendors trying to process riders’ credit card applications at platform level?

Much of this probably sounds like needless panic at this point, but the city has a sad history of brokering bad deals with the private sector. The street furniture contract with Astral Communications is a sad example of the city willingly getting screwed by a private partner. They got free advertising on city streets, where we got free garbage cans that don’t work very well. (Sometimes they catch on fire.)


16
Jun 11

Arena deal reveals downside to contracting out

The National Post’s Natalie Alcoba:

The City of Toronto is looking to take over a new four-pad arena in Etobicoke that is dangerously close to defaulting on loans guaranteed by the municipal government.

Lakeshore Lions Arena, also known as the Mastercard Centre for Hockey Excellence, was built to replace an ageing single-pad facility run for some 55 years by the not-for-profit Lakeshore Lions Club. It’s the home of the Etobicoke Dolphins, the Faustina hockey club house league, and most notably is used as practice space by the Toronto Maple Leafs and Marlies.

via City looks to take over debt-troubled Etobicoke hockey arena | Posted Toronto | National Post.

Though the venerable Toronto Sun’s Sue-Ann Levy tried to spin this story as a lingering failure left by the David Miller administration, I’m really not sure that holds up to any kind of scrutiny. If anything, this works as an example of how contracting out a service to the private sector can sometimes not turn out as well as governments might hope.

The private sector is not and has never been the magic elixir that automatically makes government smaller and reduces costs.

This arena deal still seems like something the current administration would salivate over. A private, not-for-profit company assumes responsibility for building and managing the arena — which provides a tangible benefit for local residents — keeping it out of the hands of the city bureaucracy. The city is only the hook to back a loan issued to cover construction costs.

What’s not to love? It’s hockey without bureaucracy. And they even sold naming rights to Mastercard to sweeten the deal. Conservatives love selling naming rights.

But it didn’t work. Sometimes these things don’t work. Construction costs went up as the arena was constructed, requiring the city to increase their loan guarantee. Once completed, commercial space in the complex didn’t lease. Something had to give.

Mayor Rob Ford told the Toronto Sun’s Don Peat that he’s “furious” about the arena’s financial problems, which have led to a staff recommendation that would essentially in-source control of the facility:

“(The arena) is completely mismanaged,” Ford told reporters at City Hall. “I’ve voted for it and I regret doing that.”

via Ford ‘furious’ over arena bailout | Toronto & GTA | News | Toronto Sun.

And okay, fury is an acceptable emotion, but the revelation of this scenario isn’t that Ford and the previous council were wrong to vote for the deal — on the surface, it was a pretty good deal — but that, with contracting out, you inevitably give up something that’s incredibly valuable: oversight.

That’s an important thing to consider as council continues down this road of contracting out everything not nailed down.


3
Jun 11

Ford’s approval rating down, weak support for Sheppard subway

The Toronto Star’s David Rider has details on a Forum Research poll regarding municipal issues:

Asked if Ford is doing a good job as mayor, six months after his upset victory, 57 per cent agreed, down from 60 per cent in a late-February Forum Research poll. An early-May Toronto Real Estate Board survey pegged Ford’s support at 70 per cent.

As a whole, the new results aren’t great news for Ford, said Bozinoff, who said he did the poll independently to gauge opinions on civic issues.

“Ford’s support appears to have plateaued and these trial balloons being floated on how to solve financial problems, like road tolls and cutting the number of police, have no real support,” he said.

via Road tolls to pay for Sheppard subway a non-starter, poll finds – thestar.com.

A 57% approval rating is actually remarkably low for a sitting mayor less than a year into his first term, especially because Ford hasn’t had to make any unpopular decisions.

The big news springs from the two questions asked about road tolls. When asked if they would support road tolls to reduce traffic congestion, 43% of people approved. (With a strong majority of 58% in Toronto & East York.) On the other hand, when asked specifically about road tolls to pay for the Sheppard Subway, support drops to 35%. A loser of an idea anywhere in the city, apparently, as the mention of the subway doesn’t even draw increased support for road tolls in Scarborough, where the new subway line would go.

The full report detailing poll results is available as a PDF. Other findings:

  • Privatizing garbage collection is still popular with residents, with 52% approval. This is down 2% from Forum Research’s last poll, in February. I’m still surprised that this doesn’t poll higher. Interestingly, a majority opposes privatization of garbage in Scarborough.
  • The five cent plastic bag fee enjoys a majority of support with 52% in favour. Not sure how this squares with the populist mayor continuing to push the idea that people hate paying a nickel for a bag.
  • A strong majority — 57% — oppose “reducing the police force to help freeze property taxes.” We are unlikely to see either a property tax freeze or a reduction in the number of police officers this year.
  • A whopping 72% of people support “physically separating bike lanes from car lanes.” I wonder if this question is too vague, however. Phrased as “adding a new, fully separated bike lane on Richmond Street”, would the results differ? Either way, this is an encouraging result.
  • In the most ridiculous question in the poll, 65% express support for “having public festivals, marathons, marches and walkathons in city parks, rather than closing city streets and expressways.” This would appear to suggest that moving, say, the Toronto Marathon to High Park is feasible when, of course, it isn’t. These events don’t happen on the street just for the hell of it, but rather because they require the space.

 


18
May 11

The mayor’s bad day

At The Grid, Edward Keenan writes a great summary of yesterday’s garbage vote. Most media outlets ran with the “big victory for Ford” story today, but I’m more and more convinced that it was a very bad day for Rob Ford and his allies:

By day’s end, the mayor’s main item passed, yes, by a large majority. But the effect of the amendments, in my opinion, is that it will make it very difficult for staff to craft a bid request conforming to council’s demands that will also stand up to a lawsuit. (And note: if the city is tied up in litigation with potential or wannabe bidders, they will likely be unable to award a contract—though, of course I’m not a lawyer…)

They also place some unattractive restrictions on the contract for potential contractors, and ensure that the whole thing has to come back to council for another fight later (if and when a winning bid is identified), and the bid has to bring with it actual numbers that show that the contract will save as much money and be as environmentally sound as Ford and staff have claimed it will be. The result of that possible vote is very much an open question.

via The Grid TO | Rob Ford gets trashed.

Royson James has a decent summary as well: “The vote, coming just six months into the mayor’s term, shows he may have to compromise more than he imagined. This was supposed to be the easiest service to privatize, and yet it took so much effort.”

The bottom line: the changes Ford will need to make — be they cuts, or privatization, or sales of assets — to successfully balance the coming budget will be far more contentious than what was debated on Tuesday.


18
May 11

Why don’t Etobicoke residents recycle?

One of the more common arguments brought up at yesterday’s council meeting against the mayor’s plan to contract out garbage collection was the idea that, apples to apples, public service may be cheaper. Councillor Gord Perks illustrated this point with numbers pulled from a recent report by accountant Al Rosen — commissioned, it must be noted, by the union — that show that, when you factor in revenues from recyclable goods, the net cost per tonne in contracted-out Etobicoke is actually higher than the cost in publicly-serviced Scarborough.

From the report, the relevant table:

District 4 (Scarborough, publicly serviced) is the fairest comparison to District 1 (Etobicoke, privately serviced), as the other two district contain vast stretches of the old city. (20% of homes in Districts 2 and 3 are detached single family homes, versus almost 40% in the other two districts.)

Etobicoke residents recycle far less than their counterparts in Scarborough, sending approximately 0.32 tonnes/household to the recycling plant versus 0.40 tonnes/household in the east end of the city. The report speculates that this could be because of “lower program compliance by District 1 residents, lower diversion rates by the private contractor, or diversion by the contractor of valuable materials.”

I guess it’s possible that Etobicoke residents just suck at putting things in the blue bin, but that seems a little simplistic. More likely is that something is happening after the blue box hits the curb that is resulting in much lower reported diversion rates.

Maintaining and increasing these diversion rates isn’t just an issue for tree-hugging environmentalists — it’s also a matter of dollars and cents. If the mayor’s plan to contract out garbage collection were to result in the city’s diversion rates for recyclable goods falling to the level we currently see in Etobicoke, this whole thing would become an unmitigated financial disaster. On a cost per tonne basis, the city would lose money.

Thankfully, Councillor Josh Matlow successfully passed an amendment last night requiring that “diversion targets [of bidders] must meet or exceed current City standards and may not be reduced from the present targets. If the City increases diversion rates east of Yonge Street then a private firm will be required to also meet the increased diversion rates west of Yonge Street.”

The mayor, of course, voted against.


17
May 11

Council moves to take out the trash after 32-13 vote

We are now moving ahead to outsource garbage & will save #Toronto taxpayers $8 Million #TOpoli #TOCouncil #FB
@TOMayorFord
Mayor Rob Ford

The Toronto Star’s David Rider and Paul Moloney, whose article is accompanied by a great picture:

Mayor Rob Ford has won his biggest victory since storming into office, setting the stage for a new era of privatization with a garbage contract that slashes 300 unionized city jobs.

“We’re getting this city turned around,” Ford crowed Tuesday night after council voted 32-13 to start a bidding process that, if it unfolds as predicted, could see a private waste hauler collect garbage from 165,000 households between Yonge St. and Etobicoke’s eastern edge.

via Toronto votes to contract out garbage pickup – thestar.com.

Ford’s spinning this as a hard-won victory for his administration, but I’m not sure I buy it. What happened tonight was not a vote to contract out garbage collection, but rather a step towards receiving quotes from qualified bidders. Council will have another opportunity to review and debate before awarding the contract for private delivery of service sometime in 2012.

The proposed process was always my biggest problem with this item, so I’m happy to see that Ford and his allies made a concession on this one.

In addition to that, Team Ford were also on the losing end of six votes relating to amendments on the item, including:

  • A recommendation by Josh Matlow that would see the City manager provide annual progress reports relating to the contract
  • A recommendation by Matlow that staff not accept any bid from the private sector company that recently hired former General Manager of Solid Waste Management for the City of Toronto, Geoff Rathbone
  • A pair of recommendations by Matlow that that require any bidder to meet or exceed existing and future diversion targets for solid waste, and to essentially guarantee a minimum level of savings
  • A recommendation from Josh Colle that the City ask the Auditor General to perform a post-implementation audit on the awarded contract
  • A recommendation from Ana Bailão that will require the City manager to “conduct an independent review of both the bid/contract numbers and the cost for identical services provided by the City”

Council also ended up deadlocked, tied 22-22, on three other amendment votes. Ford’s whip proved to be less effective than ever tonight, which is certainly something that can be seen as a victory for his opponents.

Of course, the vote that mattered wasn’t even close. I feel that most councillors — especially suburban councillors — could not ignore the fact that contracting out garbage is a massively popular idea with many people in this city. In addition, now that the contract will return to council, there will be another chance to review the numbers and make a more informed decision. (I suspect this is why councillors like Shelley Carroll and Raymond Cho ended up voting in favour.)

So what happens next? Seemingly not a whole lot, at least for a while. The union will hope that the bids that come in don’t show savings at the level the mayor anticipates — and some of the amendments passed today will make savings challenging –, while Ford and his allies will continue to not really care about the numbers, because for them this is primarily about revenge.


17
May 11

VIDEO: Rob Ford opens garbage debate, declares “people are sick and tired of tax and spend socialists”

Kicking off this week’s City Council meeting, Mayor Rob Ford rose to introduce the debate on his key agenda item: the contracting out of solid waste collection in the district west of Yonge Street. His speech struck an immediate divisive tone, declaring “we [ councillors] are going to divide ourselves into two groups … we’re going to have the left or you’re going to have the right.” He also struck a Sue-Ann Levyish tone with his use of the phrase “tax and spend socialists.”

I’ve embedded two videos, a short version of his speech (above) that includes only the most inflammatory section, and a longer, uncut version. The long version (below, past the cut) includes a fun section wherein the mayor lays out what he believes to be his administration’s greatest accomplishments thus far. The list includes things like building subways and bringing the UFC to Toronto, among other less dubious claims.

Interestingly, despite having a rare opportunity to ask the mayor direct questions — the last time this happened, it was really fun — , councillors passed and move directly to asking questions to city staff. As one councillor expressed on the floor: why ask questions when you’re not going to get an answer?

Continue reading →


11
May 11

Trash of the Titans

Councillor Josh Matlow held a debate on the merits of garbage privatization last night, pitting Councillor Denzil Minnan-Wong against economist Hugh MacKenzie. I liked both John Michael McGrath’s coverage at Toronto Life and Carly Conway’s piece praising moderator Steve Paikin above everything else at Torontoist.

The truth of the matter — and this is the reason I think the event was only lightly attended — is that council will essentially be considering two items related to garbage privatization next week: outcome and process. The question of outcome is boring. I suspect most councillors believe that their constituents favour the outsourcing of trash collection. That’ll be enough to push them toward supporting the idea.

The process, on the other hand, is the far more interesting — and complicated — question. Councillors need to really dig deep and consider whether city council should authorize staff to approve the winning bid without oversight. Should Toronto really award a very very rich private sector contract with no input from elected officials?

It seems, at least, that even privatization-booster Minnan-Wong isn’t so sure the staff-recommended process is a good one. From the Toronto Star’s David Rider:

Minnan-Wong (Ward 34, Don Valley East) also revealed that he’s “struggling” with a staff recommendation that council approve the bidding process but then let a staff committee award the final contract potentially worth $150 million.

He voted, along with three other public works members, in favour of that recommendation plus others put forward in a privatization report by senior works staff.

But asked about the clause, amid news that the manager who authored the report is moving to a private-sector firm expected to bid on the contract, Minnan-Wong voiced reservations.

Staff said the delay caused by taking the recommended bid to council will cost the city millions in possible savings, he noted, adding: “I’m struggling with this.”

The issue will be hashed out on the floor of council, he said.

via Gender rights a new wrinkle in trash debate – thestar.com.

It’ll be interesting to see how this plays out during the council meeting next week.