Can Kansas City turn its trash problem into an opportunity?
Tonya Davis lingers at a stop sign just east of where the Paseo meets 49th Street, looking left and right for lawbreakers. They’re easy to spot on this cloudy Friday morning. Davis, a longtime employee in the Kansas City, Missouri, Public Works Department, has the heat cranked up to Saharan temperatures, but her voice is cold.
“See? Just from right here, you see a violation there,” she says, pointing down the block at a 4-foot-high junk pile atop old carpet and stacked high with busted furniture and several televisions dripping electronic guts.
“And there’s tires up here,” she says, pointing up the block, where discarded auto parts are set next to open cardboard boxes coughing up old baby clothes.
“That’s trash that’s not prepared properly,” she says, still idling at the intersection, pointing to another mound of debris languishing at the curb. “And look — there’s just loose litter everywhere. You can literally, on one street, look on both sides and see multiple violations.”
Davis is part of Kansas City’s new campaign to cite and fine residents who violate city garbage ordinances. But this is only the front line of a larger battle.
At City Hall, trash is consistently among the top three reasons that citizens call 311. On a recent Tuesday afternoon, Mayor Mark Funkhouser told Davis’ department, “I hear more about trash than I ever imagined.” He’s not the only one. The Metropolitan Mayors’ Caucus — a regional council of city leaders convened by Funkhouser — has made trash its primary issue to tackle.
As Davis continues to follow this Friday trash-collection route, she cruises through Brookside, where trash bags have neatly been set next to blue recycling bins. Block after block goes by without a violation. On a well-groomed street, she backs up to make way for a collection truck painted with the Deffenbaugh Industries logo. A single worker drops from the back, darts from side to side, and tosses the paper and cardboard into the back of the creeping machine. A few moments later, another truck rumbles through, this one without the Deffenbaugh name. Two men in bright-yellow vests chat as they work opposite sides of the street and hoist trash bags into the mouth of their compactor.
This division of labor plays out across the city.
Deffenbaugh picks up the recycling at every home but hauls trash from only 60 percent of Kansas City’s households. The other 40 percent is handled by city crews. But new pressures are emerging. Landfill space is shrinking fast. And while the city can barely afford to keep police officers on the street, Deffenbaugh, now owned by a distant Swiss company, is raising its prices.
Dennis Gagnon, a spokesman for Public Works, is along for Davis’ ride. The two agree that the city does a more efficient job of dealing with residents’ garbage, and the data back them up. The problem is, the city has relied on Deffenbaugh for 35 years.
“Sometimes a vendor has you in a corner,” Gagnon says.
Kansas City is hoping to elbow its way out of the company’s grasp — and make some money doing it.
The Deffenbaugh trash empire spreads across 850 acres at the edge of Shawnee. You can just glimpse the property from Interstate 435 — the flash of a dump truck cresting a hill, a ring of forest-green Dumpsters at the edge of a field.
At the entrance to the Johnson County Landfill, hulking trash trucks move along a steep, curving road. Past small structures that look like tollbooths, the pavement turns to rutted dirt. The face of the landfill, where the newest trash is folded into the earth, is tucked away, past a ring of metal Dumpsters — hundreds of green containers heaped in disarray like a huge train derailed. It’s past the long gray warehouses where trucks are fueled and serviced and past the parking lot where some of the company’s 450 vehicles rest.
Around another bend, the landscape bottoms out in a grimy canyon. At the far side of a 180-acre expanse is an earthen wall that took two years to build. Along the floor of the wide pit, machines continue to quarry the massive hole. A metallic crack bites the silence, and the small charge exhales a plume of dust floating up over the black-plastic liners. At the bottom of the trough, the dumped trash is a patchwork of bright colors. It’s impossible to make out individual items, but the stench of rotting food wafts past the persistent flock of crows that congregates around the buffet of garbage.
“This used to be the middle of nowhere,” Deffenbaugh spokesman Tom Coffman says.
The landfill swallows 5,000 tons of trash every day. Trucks heave up and down the main artery 24 hours a day, seven days a week. The process never stops.
“Dump, compact, cover,” Coffman says. “Dump, compact, cover.”
It’s the biggest landfill in Kansas and one of the largest in the nation. The company dates back to 1957, Coffman explains, when 16-year-old Ronald Deffenbaugh put $25 down on a 1948 Chevy pickup and slapped some siding on so the garbage wouldn’t fall out. He secured a route in what would become Overland Park and started cobbling together patches of land on the outskirts of the county to dump his hauls.
Meanwhile, Kansas City was in the midst of a major transition. Through 1954, city trash was collected by George Bennett Construction, a private hauler that disposed of the garbage at a hog farm — a practice eventually outlawed to prevent the spread of disease. In 1955, the city purchased 36 trucks and took over the service.
The city picked up “garbage” — food scraps, empty containers, basic household refuse. Bigger items, such as furniture, the city called “trash.” To remove trash, residents had to pay private haulers. In poorer neighborhoods in the urban core, residents burned their debris.
When the state outlawed trash burning in 1969, debris started to pile up. Residents complained of roaches, rodents and snakes. A protest on the steps of City Hall during the summer of 1969, described in The Kansas City Star as “emotional and occasionally profane,” ended in the arrest of four activists. The city stepped in: A 1970 increase to the earnings tax funded free trash collection. The areas that the city couldn’t cover with its own force, it put out for bid.
In 1972, Kansas City signed its first contract with Deffenbaugh, for collection from 3,358 dwellings. The city paid just $7,051. By 2001, Deffenbaugh served 75,000 Kansas City homes. In 2008, the city’s payout to Deffenbaugh was more than $9.5 million to pick up all the city’s recycling as well as the trash from more than 90,000 households. Those contracts make up nearly 50 percent of the Solid Waste Division’s annual budget.
That heavy reliance on Deffenbaugh is starting to make city leaders nervous. New ownership and an aging landfill make up a difficult equation for Kansas City taxpayers.
“When they were excavating, I swear you couldn’t see the bottom,” Coffman says, gesturing at a capped dump that once was a chasm. “Now it’s that mountain.”
As his pickup truck barrels down the hill to the parking lot and fuel center, he adds, “This here will be gone, filled with trash. This is the end of the line.”
In July 2008, a crush of phone calls jammed the lines at City Hall. Hundreds of residents complained that their typically reliable trash haulers had suddenly begun leaving garbage to rot at the curb.
Local officials hadn’t expected the spike. In a recent citizen survey, trash collection had earned the sixth-highest satisfaction ranking of any city service.
The reason was a significant shake-up at Deffenbaugh. Eight months earlier, the local business had been purchased by DLJ Merchant Banking Partners, a subsidiary of the international banking giant Credit Suisse. Deffenbaugh was now part of a $138 billion portfolio of assets that included movie studios and insurance companies.
Coffman will speak only vaguely about how the transaction has changed the 50-year-old company. “They put an emphasis on things that weren’t emphasized before,” he says of DLJ. The new owner has sunk $35 million into a new fleet of trucks with GPS tracking and cameras and has streamlined the collection process, slimming crews from three workers to two.
Last summer, the new routes and smaller crews led to a chorus of complaints in Kansas City. “We were catching a lot of flack,” Public Works spokesman Gagnon says. “It was not a pretty time.”
“They basically tried to reduce their costs to make the contract more appealing,” Michael Shaw, Kansas City’s director of the Solid Waste Division, says of the changes. The city swung back with nearly $175,000 in penalties for the botched service. Since then, the complaints have declined. But it was the opening volley in a new climate.
“Everything’s very bottom-line now,” Gagnon says. “The previous ownership was smaller, local, and tended to view things with a community component. Now it tends to feel as if their investors want a return on their investment. Their decisions are much more clear-cut. Unfortunately, business isn’t compassionate.”
Kansas City is ripe for the kill. For decades, the city’s collection rates have been cheap — very cheap. Kansas City spends significantly less than comparably populous cities, including Washington, D.C., and Louisville, Kentucky. The city is rock-bottom when it comes to regional comparisons, too.
The city has kept Deffenbaugh’s rates low by making city costs the benchmark. If municipal crews collected curbside garbage for $5.11 per house per month, then Deffenbaugh didn’t overstep that figure by more than a few pennies. Shaw says the relationship worked because Ron Deffenbaugh didn’t want to lose a key contract.
“The former owner was all about market share,” Shaw says. “The new company is about normalizing the market.”
Deffenbaugh Industries isn’t going to keep collecting Kansas City’s trash for $5 when people in Lee’s Summit are paying $14. Coffman declines to discuss contracts or rates, and he shrugs off the suggestion that Deffenbaugh sees major profit potential in raising local prices to regional and national standards.
Across the region, though, Deffenbaugh is already pressing cities to pay more. Many are just emerging from long-term contracts, with rates established a decade ago. That being the case, Julie Coon, a Solid Waste Management staffer for Johnson County, says increases should be expected. But that doesn’t diminish the sticker shock.
In Mission, the rate for trash and recycling is up 47 percent this year. Leslee Fonseca, the city’s Neighborhood Services director, says the city shopped around for other contractors but stayed with Deffenbaugh for its environmental approach and the addition of yard-waste collection.
In Wyandotte County last year, Deffenbaugh increased its rate 56 percent to add curbside recycling to a 20-year contract. Michael Tobin, deputy director of Public Works for the Unified Government, says he expects a tough price hike when the county’s contract is up in 2013.
Kansas City is already staring down that dilemma. The contract for recycling expires next month; the trash contract is up in a year. Negotiations have already started, and Deffenbaugh is asking for a 90 percent increase.
“Deffenbaugh is raising prices in every city they operate in and raising them significantly,” Shaw told the mayor at a recent meeting. “The question becomes, in an already tight budget year and tight budgets moving forward, how much are we willing to pay.”
Another question worries Shaw. Moving forward, Deffenbaugh’s control will only tighten. It controls a commodity that gets more valuable with each load of trash. Kansas City and its neighbors are running out of space to bury their debris, and Deffenbaugh has the biggest hole in the region.
“This is a huge, huge, major issue,” Shaw says.
The landfill in Wyandotte County closed in 2006 — three years earlier than expected. The permit for the Lee’s Summit facility runs out in 2014, at which point millions of pounds of its trash will be buried in Johnson County. Deffenbaugh’s landfill permit expires in 2027; at the rate that garbage is pouring in right now, the dump may only last another 10 years. After that, the only remaining space in the metro will be Courtney Ridge in Sugar Creek, Missouri.
In the meantime, the price to dump locally, where space is shrinking, could skyrocket. “It’s a simple supply-and-demand issue,” Shaw says. “As landfills continue to close, the rates are going to go up because there won’t be anywhere else to take it.” To plan and build a new landfill takes at least 10 years. Each acre of development can cost as much as $1 million.
Right now, Lee’s Summit is looking at seven potential locations for a new site. Coffman says Deffenbaugh has plans for when the Johnson County site closes, but he won’t specify them.
“We’re in the landfill business and we’re going to stay in the landfill business,” he says.
Deffenbaugh is in the recycling business, too, which recently sparked a monthlong arm-wrestling match with Kansas City officials.
Crunching through a patchwork of advertising inserts and office documents at Deffenbaugh’s recycling facility, Coffman shows off a giant contraption half hidden in the shadows of a sprawling warehouse.
To a layperson, the brown machine looks like an enormous square furnace. To Coffman, it’s an expensive, high-tech gadget, a $1 million device imported from the Netherlands. The vendor had to send an employee to assemble the Bollegraaf sorting system on-site.
What looks like a mostly empty warehouse in need of serious sweeping is actually the hub for the vast majority of the region’s recycling. And it cost Deffenbaugh millions.
Outside in the parking lot, front loaders and backhoes buzz back-and-forth, corralling material and heaping recyclables. Long, thin, hip-high rows of office paper and newsprint hug the side of the building. A collection truck angles into a space and squeezes out a tightly packed load of recyclables.
Inside, paper flutters from a vent on the wall and collects in a wide pool on the concrete floor. Kitty-litter containers, milk jugs and every kind of soda bottle are heaped into a pile that nearly grazes the ceiling. On a raised platform, workers pick through the stream of paper and plastic, sorting the materials before they’re compressed into tight cubes and stacked like industrial hay bales.
Out back, bales are perched on a loading dock. There’s just one truck, its engine silent, with a few bales of plastic pushed to the back of the bed. From this tiny port, the recovered plastic and paper will be sold to international manufacturers and businesses. “We can put it on a flatbed that goes straight to the West Coast and then onto a boat to Asia,” Coffman says.
Peddling shredded paper and smashed plastic bottles wasn’t part of Deffenbaugh’s original business plan, Coffman says. In 1989, Lenexa passed an ordinance requiring that its trash haulers provide recycling services. To keep that city’s contract, Deffenbaugh entered the business of material recovery. The company purchased new vehicles and invested $10 million into its own recovery facility.
Two decades later, it’s one of only two area facilities taking in curbside recycling. Deffenbaugh has pretty much cornered the local recycling market.
“They own the only place to deposit it regionally,” Gagnon says of the metro’s recycling stream. “So we’re at their mercy on that end of it. One way or the other, they’re in control.”
Not that Kansas City, Missouri, is keeping pace with its peers when it comes to recycling. Last year, only 18 percent of the city’s residential refuse was diverted from the landfill. The national average is 34 percent.
Still, Deffenbaugh makes a buck from the curbside bins. Coffman says the residential loads, with their jumbled mounds of food containers and beauty magazines, don’t yield nearly the revenue of the cardboard and office paper retrieved from the commercial sector. The city’s data beg to differ. Under the current contract, Deffenbaugh kicks back a sliver — 4 percent — of the revenue from Kansas City’s processed recyclables. Last year, Deffenbaugh made $2.3 million. Kansas City got about $90,000.
Shaw thinks it’s time for Deffenbaugh to give the city a bigger share. “We would think that, with the amount of revenue they do receive for our recyclables, plus we’re paying them to collect it, that would be fair,” he says.
Coffman bristles at the suggestion that the arrangement is unfair. “We’re the ones with the risk. We’re the ones with the insurance. We’re the ones with the workers’ comp,” he says. He adds a litany of other costs the company bears.
Negotiations with Deffenbaugh since the start of the year haven’t gone smoothly. Deffenbaugh presented a 27 percent hike in the city’s recycling rate — jumping from about $4 million to $5 million for weekly curbside service. Shaw’s department couldn’t afford that bump. Deffenbaugh countered that it could offer curbside pickup every other week for $3.6 million. Shaw balked at that, too. “Our drivers can continue curbside for $3 million,” he said in late March.
But trash collection is an expensive operation. Just one truck can cost a quarter of a million dollars. Right now, the city’s fleet is a meager 18 trucks — compared with Deffenbaugh’s hundreds. Shaw is already trying to bulk up his crews to shoulder more of the burden. Even in a brutal budget year that has dealt deep cuts to popular programs, Public Works is spending nearly a half-million dollars to increase its trash armada.
Still, Coffman was confident that the two sides would come to some agreement. “They’ve got their interests, and we’ve got ours,” he said last month. “But they’ll synch up. They always do.”
Coffman was wrong. For the first time in three decades, the two sides couldn’t reach an agreement.
By mid-April, it had become apparent that Deffenbaugh wasn’t going to back down. “They were just dragging their feet,” Gagnon says. “It kept getting worse and worse.” The trash hauler agreed to $3 million, Gagnon says, but it was a package deal that would have tied the city’s hands when it came to the next trash contract. That was a deal breaker. Just three weeks before the contract expired, Kansas City put the whole thing out for bid.
“We’re crossing our fingers that there are other players that are small, but maybe, in this economy, they have an interest in working with the city,” Gagnon says.
There are. This week, the City Council will likely agree to a contract with Town and Country Disposal, which will keep weekly curbside recycling for a price the city can afford. Because Town and Country recently opened the only other commingled material-recovery facility in the area, Kansas City recyclables won’t have to go through Deffenbaugh’s warehouse to be sold, either. That’s just the first step toward making Deffenbaugh — and trash as people now know it — nearly obsolete.
The new vision for the city’s trash started with the Climate Protection Plan, a document approved by the Kansas City City Council in 2008 to slash the area’s global-warming pollution.
Within that document is a goal that, at first glance, seems unattainable. It doesn’t start with power plants or tailpipes or energy-efficient lighting. According to the CPP, Kansas City needs to flip its current model when it comes to trash. Instead of dumping 80 percent in the landfill and recycling the other 20 percent, the plan calls for residents and businesses to bury 20 percent and put the rest to use — within the next 10 years.
To get there, though, the region can’t rely solely on Deffenbaugh. Shaw wants Kansas City to step into a major role in greening the region’s waste stream. That’s where the proposed Kansas City Eco Center comes in.
The concept turns the idea of garbage on its head. “We have to treat trash like a commodity,” Councilman Terry Riley says. Recent studies back his claim. In 2007, a waste analysis at Deffenbaugh’s landfill showed that 42 percent of the garbage was easily recyclable paper. Another 20 percent comprised plastic, metal and glass. According to a 2008 study from the Missouri Department of Natural Resources, nearly 2 million tons of materials that could be recycled (and sold) are left to decay instead.
“More than $200 million worth of revenue is being buried in Missouri landfills,” Shaw says.
He wants Kansas City to start banking more of that resource.
In 2007, the Public Works Department paid SCS Engineers, a national environmental consulting firm with an outpost in Overland Park, $200,000 to create a long-term, strategic plan for Kansas City’s trash. Across the country, SCS Engineers’ primary business is landfills, and it has made big money partnering with public and private agencies to engineer dumps and implement systems that harvest gases from the decaying trash. Last year, SCS recommended a new landfill for the city of Lee’s Summit. But for Kansas City, the group had a different idea: Take control.
Instead of city crews breaking at midday to drive 20 miles to the landfill, they would haul the 600 tons of trash culled from the curbs of Kansas City each day to a 100,000-square-foot warehouse. There, employees and machines would not only process the content of the blue bins but also rescue extra recyclables from the trash stream that would otherwise be buried. It would serve as a site for glass processing, a drop-off for 10 other materials and a repository for bulky items. Instead of paying Deffenbaugh to bury millions of pounds of garbage, the city would pass on just a small fraction of unusable items.
According to a survey conducted by SCS, nearly 80 percent of citizens polled said they strongly agreed with the prospect of the city operating such a facility. The report pegged a quick return on the investment, too. The sprawling complex would cost an estimated $46 million to build and equip and $8 million to operate each year. But the revenue from bringing in far more material than what Deffenbaugh captures right now would outpace the annual expenses. Based on calculations by SCS, the city could make $1.4 million per year.
That analysis hasn’t kept pace with economic reality, though. With commodity prices crashing to a fraction of the figures in play when SCS finished its report in 2008, the numbers need to be recalculated. But few in the industry doubt that the markets will rebound; it’s just a matter of how soon. And even with the steep drop in commodity prices, Shaw says Deffenbaugh was on track to make at least $1 million selling Kansas City’s recyclables this year.
Other cities that have made the investment are weathering the storm, too. Columbia, Missouri, for instance, spent $2.2 million to build its own facility for processing recyclables in 2002. Running its recycling program for more than 41,000 households cost $837,000 last year. But even at the start of the economic collapse, the city recouped all but $40,000 of that expense by selling the recovered material.
The scale of the facility in Kansas City could allow a much more lucrative return. Shaw says other cities in the region would likely send materials here. Charging those customers at the door would provide extra income and extra material — the kind of volume that appeals to manufacturing and other businesses.
“Therein lies the strategy,” Shaw says. “People will come to you if you have a lot of glass or metal or paper because it reduces their transit costs to go to one place and get a large volume of good material.”
At a meeting last week, Shaw told the mayor that the project could be put out to bid by the end of the year; the doors of the new facility could open by the start of 2012. As at Deffenbaugh’s facility, Shaw sees the city’s eco center loading railcars bound for California and Mexico. He’s not worried about Kansas City being new to the recyclables market. It’s a well-established industry. “It’s not rocket science by any stretch of the imagination,” he says with a smile.
Once the commodity market rebounds, Kansas City’s trash could add money to municipal coffers, Shaw says, rather than be one of its biggest drains. It could bankroll more trash cops, like Davis, patrolling the neighborhoods for mountains of mismanaged garbage. The biggest potential benefit, though, would be the liberation of the city’s trash stream from the uncertain hands of private industry.
“Looking forward,” Shaw says, “we can’t afford not to do it.”
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