|Richmond OKs Hefty Waste Pact
February 13, 2003
22-year garbage contract locks
residents, businesses into high fees
RICHMOND - The city has handed its waste removal provider a 22-year contract extension with automatic raises and no rate review, locking residents and businesses into fees far above most Bay Area cities.
Republic Services, Inc., which owns Richmond Sanitary Service, Inc., will use the federal consumer price index to automatically adjust its rates through the year 2025.
The company will allow the city free use of its landfill, and add 2.5 percent of its profits to the 2.5 percent franchise fee the city collects. The City Council lowered that fee three years ago from 5 percent to 2.5 percent.
"That 2.5 percent for the general fund does not begin to compensate the ratepayers for their high rates," said former Mayor Rosemary Corbin, who advocated that the city put the contract out to bid when it expires in 2007.
"You are giving up your right to examine their books with this franchise agreement," Corbin told the council on Tuesday night. "When you give a monopoly to a company, you have an obligation to regulate that company."
Councilmen Tom Butt and Jim Rogers questioned the fiscal wisdom of the agreement, which was swept in nevertheless on a 7-2 vote.
"The action has been touted by the administration as a win-win opportunity for the city to increase its general fund revenue in the face of looming devastating cuts in state funding," Butt said. "But you've got to understand that five out of nine of us saw this information for the first time Saturday morning. We've got to make sure we fully understand all the data we've read."
The council rejected Butt's request to continue the matter for three weeks.
"This locks us into a bad deal for many years to come," Rogers said. "We're surrendering without firing a shot."
The city's franchise fee will increase to about $380,000 from approximately $190,000, based on a gross annual collection revenue of approximately $7.6 million, Butt said. In return, Republic would receive a guaranteed rate increase through the year 2025 based on Consumer Price Index adjustments of current fees.
Republic is the third largest waste management company in the United States, with 151 collection companies in 24 states and Canada, 55 landfills and more than 80 transfer stations.
"You'll never find two cities with identical rates, but yours are on the high end of the spectrum," said Steve Devine, executive director of the West Contra Costa Integrated Waste Management Authority.
Richmond residents pay $19.75 per month for a standard 32-gallon weekly service, 17 percent higher than the Bay Area average of $16.90 and higher than 73 percent of the cities in the Bay Area.
Rodeo bid competitively on its refuse collection, and landed commercial rates of $119 a week, compared to Richmond's $258, Devine said.
Councilwoman Maria Viramontes said the city can't put the contract to bid, having signed its current 25-year agreement three years ago. Its only option would have been to review rates in 2007.
She also said that by rejecting the agreement, the council would have burdened ratepayers with the 2.5 percent franchise fee increase.
That would be "a tragic thing," she said. "I want to get that 5 percent back."
Richmond officials have pegged the company's 25-year franchise at about $392 million.