New trash pact on table
Published: Friday, November 2, 2012 at 12:59 p.m.
Last Modified: Friday, November 2, 2012 at 12:59 p.m.
The city council has postponed its decision to sign a new 15-year contract with its current garbage hauler that would offer the city an additional $750,000 a year and increase rates by about 4 percent, until Nov. 19.
The contract offer from The Ratto Group-owned Petaluma Refuse and Recycle is a far cry from the 10 percent rate reduction and free school service offer that the city turned down just two years ago.
In 2010, Petaluma Refuse took over hauling the city's garbage from San Jose-based company GreenWaste, who was awarded a 10-year contract in 2005 following a protracted selection process. Upon taking the reigns, Petaluma Refuse offered local residents a 10 percent rate reduction if the city would agree to extend the contract for an additional five years through 2021. They also offered free service for local school districts. But because the city's charter prohibited renewing contracts before they were in their final year, the council voted against the extension.
Then, in November of 2011, the city found a way around the charter's restrictions by amending the city code to allow for non-competitive bidding specifically for garbage contracts. Today, if the city were to sign a new agreement with Petaluma Refuse, it would void its current contract and begin a new 15-year contract.
But the new contract under consideration does not resemble the ratepayer-friendly offer that Petaluma Refuse floated two years ago, and would instead put more money into fixing streets, making it attractive to city officials in light of Petaluma's flagging tax revenue. Council members seemed pleased with the idea of an annual $500,000 general fund payment from Petaluma Refuse and a $250,000 increase in vehicle impact fees, which will bring the company's annual vehicle impact fee payments to the city to just over $1 million. While the yearly $500,000 payments — totaling approximately $8 million through the life of the contract — would come out of Petaluma Refuse's pocket, the company could pass on the $250,000 impact fee payment to ratepayers in the form of rate hikes in the future.
Public Works Director Dan St. John said that through the life of the contract, which would last through 2027, the city would net $12.4 million more than it would with its current contract. City Manager John Brown said that the $500,000 general fund payments could be leveraged to borrow money to fund street repairs immediately and suggested that the first $500,000 payment go directly to the city's general fund reserves, which have been almost completely wiped out in recent years.
While rates would increase by approximately 4 percent beginning in July, city staff pointed out that rates haven't increased since 2009. Petaluma Refuse, based on its contract, has been entitled to rate increases each year since 2009, but has held off, thereby saving ratepayers approximately $440,000 per year. In the future, rate increases would be tied to the industry standard that has averaged approximately 3 percent annually. Currently, Petalumans pay competitive rates compared to neighboring cities, according to the city's consulting firm that recently finished analyzing Petaluma Refuse's performance.
Brown added that the city's current fiscal struggles have forced city staff to search for nontraditional ways to fund street maintenance and that one of the benefits of the new garbage contract is that it generates new money for street repairs.
While the city's performance audit found that Petaluma Refuse has mostly been operating in compliance with its contract, it also showed that the hauler is falling short on its recycling rate. The garbage hauler's contract with Petaluma requires that the company maintain a 50 percent diversion rate, but it is currently only at 47 percent and has been below the target rate every year since the contract began. Petaluma Refuse is working on a food waste compost program that would allow meat and cheese to be composted at the Redwood Landfill and would help the company meet its 50 percent diversion requirement.
But before the council can make any decisions on a new garbage contract, city staff must finish analyzing a 150-page protest submitted by lawyers for the Petaluma River Council and the No Wetlands Landfill Expansion, who are demanding the city perform a full environmental impact review before signing a new contract.
According to the complaint, filed last month, an environmental review is required since garbage contracts affect the environment. According to David Keller, former city councilmember and current member of the Petaluma River Council, the California Environmental Quality Act requires that all new contracts affecting the environment undergo a full CEQA review. He cited the hauler's inability to meet recycling rates as a reason for an environmental review.
“We have outlined a series of things that should be reviewed and addressed before a contract is signed,” said Keller. “It's that simple and it's unfortunate that the city hasn't already done this.”
The protest also points out that the new contract has a clause requiring the hauler to be free of litigation before entering into contracts with the city and that Petaluma Refuse's parent company, The Ratto Group, is currently in litigation, ironically with the same group filing the protest of the contract. The pending litigation against The Ratto Group is for alleged violations of discharge leaking into the Petaluma River and the Laguna de Santa Rosa and was filed in 2010.
St. John said city staff had originally been unaware of the lawsuits and that they are working hard to address the concerns of the protest. He added that staff recommendations will be unavailable until Thursday. “We take this group very seriously and we are working hard to be thorough,” he said this week.
The council has postponed its trash vote until the Nov. 19 city council meeting.
(Contact Janelle Wetzstein at firstname.lastname@example.org)
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