Changes to recycling contract raises new questions in Houston

Ted Oberg Investigates

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Tuesday, July 18, 2017
Changes to recycling contract raises new questions
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The Houston city controller will review recycling process after complaint.

HOUSTON (KTRK) -- Houston city controller Chris Brown and his office are reviewing further the city's selection of a new recycling vendor, the office said Monday.

At the same time, a brand new contract for the proposed recycling company and facility was being looked at just hours before the council is set to discuss the topic that has been the focus of numerous questions. That new deal was finalized by the city last week and is for $8.5 million less than the original amount.

The city council is set to vote on approving the now-$48 million recycling contract with Spain-based Fomento De Construcciones Y Contratas on Wednesday.

Some of the items in question by the city controller's office were forwarded to the Office of Inspector General for review, the office said.

The review began after questions were raised by ABC13 Investigates and some council members about the contract, a spokesman said. The controller's review began July 10.

ABC13 Investigates found the original contract included a $2.4 million loan from the company for new garbage trucks at 11 percent interest. That would add up to more than half a million dollars in interest.

The city can finance its own loans for under two percent, finance officials said. That loan was expected to be removed from the new deal, according to city officials familiar with the revised contract, though the new contract wasn't immediately available Monday afternoon.

The loan option was declined by the city, prompting the change, Mayor Turner's communication director Alan Bernstein said. However, that only accounts for the $2.4 million

"Getting the best deal for the people of Houston is a group effort among the mayor and staff," Bernstein said.

When asked in June, Turner defended the loan, saying the 11 percent interest was part of an overall good deal with FCC. The mayor disagreed when asked if the interest was excessive.

"You're saying exorbitant, but you need to take into account the contract as a whole," Turner said June 28 at a news conference announcing the deal. "They're building a state of the art facility, right here in the city of Houston. They're moving their principal headquarters here to the city of Houston. They are covering glass within this contract."

"Take a look at the contract as a whole, factor all of the benefits included, and on balance, this is an excellent deal for the city of Houston."

The city chose FCC for recycling after working with another company for years on a proposal called "One Bin." The city abandoned its negotiations after spending $1 million from a grant and three years of work on the plan, the company's founder said.

"One Bin did not start with me," Turner said in a June press conference. "One Bin started with the previous administrations. We are under new management now. I am under no obligation to carry forth something that started with the previous administration."

The contract is now planned to come out of the general fund, instead of a special fund designed for recycling, according to city documents.

The new contract comes just hours before council members are set to vote on the plan that has been met with controversy. The city's housing and community affairs committee was scheduled to discuss the contract Tuesday at 9:30 a.m. in council chambers. Late Monday, members of that committee said the new contract wasn't available to them.

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