From: C L <[email protected]>
Sent: Sunday, January 19, 2025 1:58 AM
To: [email protected] <[email protected]> Subject: Restated Franchise Agreement for Solid Waste Handling Services with E.J.
Harrison & Sons, Inc.
Dear Councilman Trembely:
As a City resident, I am writing to raise several concerns regarding the annual rate adjustment tied to the City’s agreement with EJH, specifically its impact on ratepayers, the potential for over-adjustment, and the benefits to the City and the waste hauler. City Council Agenda Item J.
Annual Rate Increase
According to the City’s agreement with EJH, the annual rate adjustment allows for up to 100% of the CPI increase (capped at 4%) (Section 12.3.1).
Impact on Ratepayers
Higher Bills: Ratepayers will face significant increases in their waste collection bills tied directly to the CPI. In fact, they already experienced a 9.17% rate hike on July 1, 2024, with approximately 3% of that attributed to CPI. Despite this, the staff report notes that there have been no CPI-based rate adjustments from FY 2021 to FY 2025. If inflation persists, future CPI increases could result in substantial hikes to monthly waste management costs, further burdening residents and businesses.
Variable Costs: Even with a cap at 4%, waste service costs will still fluctuate with inflation, making it difficult for ratepayers to predict and plan for future costs. A consistent 4% increase, even in years of moderate inflation, can still feel burdensome, and residents and businesses will find it challenging to budget for these unpredictable increases. Essentially, ratepayers will be subject to variable, yearly rate hikes, with little control or certainty.
Economic Burden: The impact on lower-income households and small businesses—who may struggle to absorb these constant increases—could be particularly harsh. For residents in economically strained areas or business owners (especially considering the City's supposed "business-friendly" stance), these rising costs could lead to financial hardship, difficulties with bill payments, and reduced access to essential services.
Potential for Over-Adjustment: In times of high inflation, a 100% CPI increase could result in 4% annual rate hikes year-over-year, even if those hikes do not align with the actual operational needs of the waste hauler. This could easily be perceived as rate gouging, regardless of CPI, adding to the burden of ratepayers.
While it seems that the City and the waste hauler are reaping the rewards of this arrangement, one must question if City staff and the committee members have properly considered the direct and damaging impact this will have on ratepayers. It appears that the deal is structured to benefit both the City and the waste hauler, while leaving residents and businesses to shoulder the costs.
Benefit to City Coffers
Increased Franchise Fees: The City stands to gain financially through increased franchise fees as the waste hauler’s rates rise in line with inflation. These fees will directly strengthen the City’s finances, potentially helping to cover salaries and benefits. However, this financial gain comes at the direct expense of the ratepayers, who are burdened with escalating waste service costs. The City staff, by prioritizing these financial gains, seems to overlook how these rising costs will continue to financially strain residents and businesses.
Moreover, there is no transparency regarding how the City utilizes these franchise fees. One could surmise they are used to cover City salaries and benefits, especially since the City outsources solid waste services and does not invest in waste management infrastructure itself.
Benefits to the Waste Hauler
Without limitations on CPI increases, the waste hauler stands to benefit from consistent, inflation-driven rate increases, which could reduce their incentive to focus on efficiency and innovation. The hauler may feel less compelled to adopt new technologies like route optimization, waste sorting systems, or more fuel-efficient vehicles since they can simply raise rates in response to rising costs.
This lack of pressure to improve operational efficiency may hinder the adoption of new, cost-saving measures. The waste hauler could become complacent, relying on rate hikes to cover rising expenses instead of investing in innovations that might ultimately reduce long-term operating costs and improve service quality. In the short term, the hauler benefits from higher rates, but in the long run, they risk missing out on opportunities to enhance service delivery and reduce operational inefficiencies.
The City staff's approach to solid waste franchise agreements appears to prioritize short- term financial gain at the expense of ratepayers. By allowing for 100% CPI increases, the City and waste hauler secure guaranteed revenue increases, but residents and businesses are left to bear the rising costs. The City staff and committee members seem to have neglected their due diligence in considering the real, long-term impacts of this deal on the people they serve. The outcome is clear: the City benefits financially, but at the direct cost of its ratepayers, and the waste hauler may lack the incentive to improve efficiency and service delivery.
Of note, there are numerous gaps throughout the agreement, which appears to not bode well for the residents.
1. Section 6.2.1 discussed contaminated materials however, it states that green waste and organic waste go in the green waste container. This is inconsistent with how service is outlines for the SFD, MFD, and commercial accounts which discuss a four-container system.
2. Bulky items discusses 4 on-call services for SFD however, it does not discuss the quantity or limitations to the collection.
3. Section 10.2.1 discusses container colors. The colors for Green/organic waste is stated to be green however the Agreement reads that the organic container is for food which would require the organics container to be brown as it would function as a food collections container.
4. Additionally, Section 10.2.1 lists a “Food Scrap Cart, Bin, and Roll-off” this is the first time a “Food Scrap” container is mentioned and the term for Food Scrap Container and Brown container are not in the listed definitions.
According to the city staff report, the City is receiving one-third of the total $1.44 per account service fee from customers. This raises the question of whether the City is double- dipping, especially since the City is already set to be reimbursed for costs incurred beyond two hours per week.
10.5.3 Reimbursement of City Costs. Contractor acknowledges that the City is not responsible for taking, responding to, or resolving customer questions, complaints, or disputes. If the City chooses to address any such issues, the Contractor must reimburse the City for costs incurred in excess of two (2) hours per week.
I look forward to your response. Additionally, it would be helpful for the public to have access to committee staff reports. I can’t comprehend why the City does not post them with the agenda. I don’t think the City is trying hard o hide anything, but the optics of not including the report makes it appear as if there is something to conceal.
Thank you,
CL