Privatizing city recycling legal, but may not be wise: arbitrator

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“The wrong signal will be sent if the city moves forward” with privatizing city recycling, according to an independent arbitrator. | Al Podgorski~Sun-Times library

Updated: September 29, 2011 12:28AM

Mayor Rahm Emanuel is legally free to privatize household recycling, but doing so would “stifle any realistic chance” to forge the partnership with organized labor needed to confront Chicago’s $1.2 billion-a-year structural deficit, an independent arbitrator has ruled.

“Although the city has the right to do so, actually moving forward with privatization of the blue cart recycling program . . . without engaging the unions in serious dialogue will be the ‘shot across the bow,’ ” arbitrator Edwin H. Benn wrote this week in a 28-page ruling obtained by the Chicago Sun-Times.

The arbitrator noted that 100 city jobs would be lost to private recycling contractors, but “potential privatization” of all refuse collection is “looming in the background,” potentially putting 1,000 city employees on the street.

“The wrong signal will be sent if the city moves forward. . . . The labor unrest caused by any immediate move by the city to privatize the work in this case . . . will pale in comparison to what is on the near horizon,” Benn wrote.

Under fire to deliver suburban-style curbside recycling to 359,000 Chicago households without it, former Mayor Richard M. Daley chose Waste Management to provide the service in four of six designated zones.

The two remaining zones would go to Metal Management and Brackenbox, supplier of giant dumpsters used to replace hired trucks.

The seven-year contract — with a pair of two-year extensions — was put on hold after Local 1001 took the matter to arbitration and submitted a competing bid that came in at $13.3 million-a-year, nearly double the price offered by private contractors.

The union subsequently argued that Daley’s plan would saddle homeowners with hidden costs, collection fees and late-night pickups while depriving the city of millions of dollars in revenue from the sale of recyclables.

Benn shot down virtually all of the union’s arguments. He concluded that the market for recyclables is too volatile to count on and that the savings promised by private contractors cannot be ignored.

But the arbitrator questioned how private contractors “could realistically expect to produce the same level of service” with one-employee crews working 28 routes, compared to 45 routes with two-employee crews currently used by the city.

“There is a potential for a public relations nightmare if this privatization does not provide the same level of service now provided by city crews,” he wrote.

But Benn noted that the pending contracts are nothing like the 75-year, $1.15 billion deal that privatized Chicago parking meters.

“If any or all of the contractors do not perform up to the city’s requirements, try to impose additional fees, make pick-ups at [inconvenient] times — even if the market for recycled materials steadily careens upward making use of city crews more profitable because the city can keep the revenues — the city can immediately terminate the contracts,” he wrote.

Lou Phillips, business manager of Laborers Local 1001, said he’s disappointed, but still holding out hope that Emanuel will heed the arbitrator’s warning that privatizing recycling would be tantamount to a declaration of war against labor at a critical time.

On June 30, an agreement that required unionized employees to take furlough days and substitute comp time for cash overtime is due to expire. Emanuel has challenged the unions to come up with $16 million in savings built into Daley’s budget, but not yet negotiated.

“It would be a declaration of war by myself and Mayor Emanuel against unemployment if we stay in-house,” he said.