Brief

UPDATE: Angry workers seek answers following decision to privatize Atlantic City, NJ collections

UPDATE, May 19: The first City Council meeting since state officials overrode the local government to approve a new collection contract was largely dominated by angry public comment from sanitation workers, union officials and residents, as reported by the Press of Atlantic City.

The new contract is expected to save the city $1.1 million during its first year and none of the city's 29 sanitation workers will be laid off. City officials plan to have these workers fill open public works jobs instead. Yet the president of Teamsters Local 331 said he wasn't convinced and asked for a guarantee in writing.

State Local Government Services Director Timothy Cunningham confirmed that the state override meant local civil service requirements which would usually protect the sanitation workers' jobs had been suspended. Though he defended the state's decision to award the contract, saying he didn't have confidence that the City Council would have been able to make a decision during the May 17 meeting as required.

 

UPDATE, May 16: New Jersey state officials overrode local officials in Atlantic City on May 15 to award a three-year, $7.2 million collections contract to Gold Medal Environmental, as reported by the Press of Atlantic City.

"Any further delay in commencing the contract will have serious financial and economic repercussions on the city and its residents," State Local Government Services Director Timothy Cunningham wrote in a letter to the City Council that was obtained by the Press. "I cannot allow the city’s residents and taxpayers to be penalized due to further delay in implementing the contract."

This is the first time the state has used powers that were granted in the Municipal Stabilization & Recovery Act passed last year to override the city. The council members and union representatives that opposed approval of the contract still expressed concern about its effects on workers, though proponents of the deal accused them of election year politics. The council's next meeting is on May 17, and further action or response can be expected then.

Dive Brief:

  • Council members in Atlantic City delayed voting on a new refuse and recycling collection contract last week, citing a lack of adequate financial analysis. The three-year, $7.2 million contract would have gone to Gold Medal Environmental of New Jersey, as reported by the Press of Atlantic City.
  • Yet because the city is under state control, it may have lost its window to make that decision. “While we prefer not to take unilateral actions, City Council’s delay in approving a contract that will save the city significant money is concerning,” said Lisa Ryan, a spokeswoman for the state Department of Community Affairs, as reported by the Press. “In short, we cannot let politics impact our work to stabilize the city’s finances.”
  • Atlantic City's mayor maintains that the contract will save the city $1.1 million this year and not require layoffs, but the local Teamsters union isn't convinced and council members say they still haven't seen a detailed breakdown of the numbers. The council's next meeting is on May 17, though state officials have indicated they make a decision as soon as this week.

Dive Insight:

The city has been considering the possibility of contracting out its collection services since last year, but vague financial details and politics surrounding an upcoming municipal election are said to have complicated the process. Because the 2016 Municipal Stabilization & Recovery Act allows state officials to "pass, adopt, repeal, or amend any ordinance or resolution," including those related to contracts, the decision may soon be made for the city without its consent.

Other cities in bad financial situations, such as Detroit and Flint in Michigan, have also made the decision to privatize in recent years. Both cities have continued with this approach, though they may not be directly comparable to Atlantic City in part because the former Rizzo Environmental Services was a potential player in both cases and questions remain about whether the company was offering artificially low prices.

Guidance on best practices when it comes to municipalities outsourcing their collection is available from industry associations, research centers and other sources. While some of their views may differ, a basic takeaway is that pricing is only one of many factors that municipalities should look at when making these types of long-term decisions. 

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Filed Under: Collections & Transfer Regulation
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