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Hurricane-ravaged U.S. cities hit by rising cleanup costs

[September 23, 2017] By Rod Nickel

HOUSTON (Reuters) - Communities in Texas and Florida, each swamped by a hurricane within two weeks of one another, are rewriting debris removal contracts and paying millions of dollars more to lure trucks, as subcontractors say costs have jumped.

The willingness of communities to renegotiate such contracts in the aftermath of hurricanes Harvey in Texas and Irma in Florida shows the limits of pre-planning for events as unpredictable as back-to-back hurricanes.

Higher fees, however, may not be covered by the Federal Emergency Management Agency (FEMA), even after these huge storms brought intense public pressure to clear millions of cubic yards of rubbish from streets and damaged furnishings from flooded homes and businesses.

In Texas, Houston is considering a 50-percent increase in pay for haulers and Harris County, which encompasses the city, is also offering incentives to recruit more trucks. In Florida, the City of Miami hiked its rates for debris removal by as much as double to DRC Emergency Services, CrowderGulf LLC and Ceres Environmental Services Inc, city documents show.

Local officials are rewriting contracts to attract subcontractors from other regions and businesses such as logging and dirt-hauling, citing a shortage of trucks to cart debris away because fleets are stretched across two devastated states. The removal business relies on networks of subcontracted trucks when disasters strike.

DRC's subcontracting costs have jumped by at least 30 percent, said John Sullivan, president of the Galveston, Texas-based disaster specialist, shrinking margins to "almost nothing" as the company has to pay more to attract truck owners.

"It's not a renegotiation, it's a necessity," Sullivan said. "The increase that we're getting is all going to (pay) costs."

Subcontractors often include out-of-state operators lured by the opportunity for a financial windfall.

Johnny Helaire, owner of Crossroads Trucking Service, said the Houston cleanup offers steady work at a time when his dirt and gravel business is slumping.

Each of Helaire's 12 trucks earns on average $800 gross per day more in Houston than they would loading dirt, not counting hotel and food expenses, he said, while directing workers through a headset like a football coach.

Across the Texas Gulf Coast, Harvey left as much as 200 million cubic yards (153 million cubic meters) of trash that must be removed, the state has estimated.

Much of that still lines local streets. Houston's director of solid waste management, Harry Hayes estimated that just 5 percent of the city's debris had been cleared by Sept. 20.

"Houston ended up being ground zero. A thousand-year rain event is going to generate a wider field of debris, considering our population," than in smaller Texan cities, Hayes said.

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The contents of a flooded home are moved to the street in the aftermath of tropical storm Harvey in Katy, Texas, U.S., September 8, 2017. REUTERS/Mike Blake/File Photo

The city wants to increase its debris-hauling rate to $11.84 per cubic yard from $7.86, an amount that would help it get 200 more trucks from contractors, he said. Houston now has about 330 in service.

DRC expects to handle 2.5 million cubic yards in the Houston area alone. On that basis, Houston's pay increase would amount to $10 million more.

Officials delayed a vote on the rate increase on Wednesday as they sought more information.

Harris County, one of the most populous U.S. counties, is offering incentives worth an additional $3 to $5 per cubic yard because small trucks cannot profit at the rate for trucks with bigger capacity, said county engineer John Blount.

Paying more for trucks is critical to recruiting more away from their normal businesses, said Glen Nelson, owner of DNR Group, which specializes in disaster clean-up. Even so, he said he is earning half of what he did for Hurricane Katrina cleanup in 2005.

RAISING FEES "SMELLS"

Bruce Hotze, treasurer of Houston watchdog group Let the People Vote, said offering to increase payments to disposal companies "smells."

"If they needed prices to go up it should have happened before the hurricane," he said.

Texan cities Rockport and Corpus Christi, both near where Harvey made first landfall, said they will not pay more.

"You hold those contractors accountable to provide what they said they would provide for you," said Mike Donoho, Rockport's public works director.

Alabama-based CrowderGulf has not asked communities for higher pay because of the risk that those fees will not be reimbursed by FEMA, said Chief Operating Officer Ashley Ramsay-Naile. Some of its contracts state that CrowderGulf will not get paid for amounts that FEMA does not cover, she said.

FEMA reimburses 90 percent of debris expenses, and covers pay above contracted rates only if municipalities show it is justified, said FEMA spokeswoman Barb Sturner.

(Reporting by Rod Nickel in Houston; editing by Gary McWilliams and Marcy Nicholson)

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