Pleasant Hill Garbage: padding waste recycling rates is a hidden tax

The City of Pleasant Hill, in a rush to pass new waste recycling rates, has scheduled a public meeting at 6:00pm on Tuesday, May 1 to seek public input about its trash and recycling franchise agreement with Allied Waste Services. Pleasant Hill is interested in reaching agreement this year on a new contract to continue through July 1, 2025. A possible expansion of Allied’s services to include street sweeping and graffiti removal is also under discussion. But the current agreement has been in effect since December 15, 2003 and expires on three years from now on July 1, 2015. So what’s the rush?

Currently Allied Waste has about 10,000 customers in Pleasant Hill, over 90% of them residential. In addition to trash and recycling pickup, the company provides yard waste disposal and related services.

Current residential rates in Pleasant Hill are as follows:

Garbage Container Size

Service includes two

64-gallon carts for

recycling and yard waste

Monthly Cost

Eff. 1/1/2012

Annual Cost

Eff. 1/1/2012

20 gallon

$20.19

$242.28

32 gallon

$23.36

$280.32

64 gallon

$31.88

$382.56

96 gallon

$47.81

$573.72

Franchise Relationship Dates Back to the 1970’s

 The City’s association with Allied Waste and its predecessor company, Pleasant Hill Bayshore Disposal, dates back over 40 years. Review of city records shows no evidence that trash and recycling services have ever been put to competitive bid during the city’s 50-year history.

It’s also noted that franchise arrangements are an oddity. They are not a direct purchase of services, thus are not covered by the City’s purchasing policy. Consequently franchise agreements are not subject to competitive bidding requirements that govern City purchasing.

When making franchise decisions the City Council must balance the competing interests of the City organization – which seeks revenues and free or discount services – with those of individual residents and business owners who foot the bill.

What’s the Hurry?

It is unclear what is driving the City’s apparent urgency to renew its contract with Allied Waste years before the 2015 expiration date.

And it’s tough to know whether the long-term relationship between the City and its garbage franchise has been beneficial to Pleasant Hill residents. Direct comparison of rates with other cities gives an incomplete picture due to each city’s unique calculation methods, operating conditions and services. More importantly, comparing rates with other cities is less relevant than the company’s actual costs for delivering the service.

It’s like when you’re buying a new car: Unless you know the dealer’s true cost (without holdbacks), it’s impossible to gauge whether the price you’re offered is a good deal.

Last December the City hired a consultant – whose $30,000 fee is paid by Allied Waste – to evaluate rates, customer satisfaction and to assist in contract negotiations between the City and Allied.  This report should provide some answers. The consultant, Newpoint Group of Sacramento, is expected to issue its report before the May 1 meeting.

Garbage is Big Business

Make no mistake:  Garbage and recycling is a multi-billion dollar industry.

Allied Waste Systems is the second largest (behind industry leader Waste Management, Inc.) non-hazardous solid waste management company in the nation, with annual revenues over $5 billion and assets of nearly $14 billion.

Without a competitive bidding process it’s unclear whether Pleasant Hill ratepayers could get a better deal from another company.

A Familiar Tale

Franchise agreements grant a company a right to provide services in a certain local area, typically as an exclusive provider. Garbage franchises are a lucrative source of funds for perennially cash-strapped cities. In Pleasant Hill the City receives a franchise fee – totaling $820,000 last year – in exchange for garbage/recycling franchise rights.

Given the size and profitability of the garbage business, it’s no wonder government agencies seek to squeeze companies to gain as much “community benefit” as possible.  Likewise franchise companies have strong incentives to ingratiate themselves with government officials, staying in good graces with franchise decisionmakers.

In Pleasant Hill the franchise contract obligates Allied to provide the City with such services as “free” trash pick-up for public buildings; sidewalk and bus stop trash cans; clean-up after a growing list of community festivals, parades and other special events; and repair of roads impacted by the wear and tear of heavy garbage trucks.  The value of these services is likely considerable.

There’s a reason this plot sounds familiar — we’ve heard it before: “Free” is just another way of saying an expense was buried in the rates, hidden from ratepayers.

No Free Lunch

Because there’s no free lunch, the “free” services provided to the City by Allied Waste are paid for by its customers: Pleasant Hill residents and businesses. Likewise the company’s generous support of community events and even its political contributions to ballot measures and candidates – including Pleasant Hill City Council members – are also bankrolled by customers.

Allied Waste didn’t become a multi-billion-dollar business success by giving away its services.

No one objects to paying a fair rate for an essential service. But it’s misleading to ask ratepayers to support City operations through concealed charges in garbage rates instead of directly via the City’s budget process.

Call it what you wish, but padding garbage rates is a hidden tax. And a new tax is the last thing most residents and businesses want right now.

No One Likes Hidden Surprises

Ratepayers deserve to see a breakdown of Pleasant Hill garbage rates showing what portions are attributable to company giveaways including:

  • “Free” services to the City
  • Sponsorships of various community groups and events
  • Political contributions
  • Other company expenses unrelated to delivering residential and commercial service

Given the state of today’s economy there’s likely to be public resistance to paying higher garbage bills in order to subsidize services provided to the City.  This is especially true for service expansion into ancillary services such as street sweeping and graffiti removal, in the absence of competitive bidding for these discrete services.

In discussing its franchise agreement plans, City officials are well-advised to address concerns directly, clearly and in a manner easily understood by all.  Doing anything less risks changing the City’s decades-long relationship with its garbage company into a political liability.

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Comments

  1. Wendy Lack says

    On Monday, June 18th the PH City Council is scheduled to maintain the status quo with another no-bid contract extension with Allied Waste:

    http://www.ci.pleasant-hill.ca.us/DocumentCenter/Home/View/9839

    The staff report makes it clear: Exploring alternatives by going out to bid is such a hassle — why bother? And what would be the point, anyway, since the relationship between the City Council and Allied is so gosh-darned cozy and comfortable.

  2. says

    Which of the obscenely overpaid members of the PH Management Team (e.g. City Manager, City Attorney, etc.) actually live in PH and, thus, will be required to pay these fees (and any other fees, taxes, costs, etc. that the PH Management Team imposes on hardworking residents of PH)?

  3. primo says

    As with most,if not all, of PH Government activities,this garbage issue doen not quite pass the smell test. Just 1 more political group that does not give us full disclosure but does gives us a hidden agenda.
    Votors/taxpayerers/residents BEWARE (again)

    • Wendy Lack says

      @primo:

      Concerned residents and business owners are endeavoring to fill the communications void, since no information has been provided about this issue on the City’s website meeting announcement:

      http://www.ci.pleasant-hill.ca.us/CivicAlerts.aspx?AID=286

      It’s important for everyone interested in this issue to attend the meeting in order to get their questions answered.

      Please encourage your neighbors to do so.