The MENDOCINO COUNTRY Independent 7/5/10

            On June 29, the Fort Bragg city council voted for a resolution stating it would not agree to allow a massive, controversial and extended privatization of the six county solid waste transfer stations passed by supervisors the  previous week. It was a defiant push-back against what most coastal residents perceive as county neglect of their interests and concerns.

            On June 23, the Mendocino County board of supervisors voted 3-2 to sign contracts giving Solid Waste of Willits an extension of its curbside collection franchises throughout the county as well as operational control of its transfer stations in Caspar, South Coast, Albion, Laytonville, Boonville and Potter Valley until 2024.  The deal was contingent on Fort Bragg’s approval as the city co-owns half the Caspar station which accounts for more than half the waste stream in the six transfer stations. The refusal of the city to particpate throws into question all the contracts in the package deal.

             SWOW would pay the county only $1 per transfer station annually as a lease fee, and absolutely nothing for the franchise extension. This gift of public resources represents a tremendous asset to this local private company owned by Jerry Ward, which was $7 million in  debt two years ago.

            Under the agreement, Ward could have increased gate fees at the transfer stations by 25-30% on a one time basis, as well as the fees annually on curbside collection by a complicated formula  as often as once a year.

            It represents a breathtaking downsize of county government, engineered by supervisors McCowen and Pinches who crafted the final deal as an ad hoc committee.  In the end, first district supervisor Brown joined in voting with them to approve the contracts over the irate disapproval of  Colfax and Smith.

            If Mike Delbar and Jim Wattenburger had still been on the board the vote would have been the same, but it would have lacked McCowen’s competence and perseverance in negotiating the  fine points.

            Mendocino Solid Waste Management Authority director Mike Sweeney also was involved in negotiating the contracts, and presented the changes to the board in a summary document on the day of the vote. He will be primarily responsible for supervising SWOW’s compliance.

            According to the agreement, Ward agreed to cap his profits at $50,000 per year, with the remainder going to reduce gate fees on recyclable green waste and metal. In addition, he would fund a $400,000 upgrade to the South Coast transfer station at the county’s discretion, something that may become necessary if the Annapolis landfill closes.
    The  issue comes back before the BOS on July 13.

Not One Penny

            Sweeney, McCowen and fourth district supervisor Kendall Smith who is extremely critical of the deal attended the two hour long discussion by the council. Jerry Ward told the press he was unaware the council would bring up the matter so soon, and did not attend the meeting.

            Fort Bragg city councilman Dan Gjerde was the most vocal opponent of the contracts, stating that under the arrangement Ward would be overcharging Caspar users – 25% of whom are Fort Bragg residents – to subsidize operations at the other five facilities. While Sweeney answered that $1 per cubic yard would be held in trust for capital improvements at Caspar or a new station in Fort Bragg.

            Gjerde replied that he didn’t want a single penny from Caspar to benefit anywhere else in the county, citing numerous examples of how the county has denied funding for coastal facilities but now wants revenue from the coast. The county recently closed the Fort Bragg animal care shelter.

            Gjerde had previously written a memo demanding that SWOW pay all the post closure costs of the Caspar landfill beginning in 2012, a requirement Sweeney said was a deal killer. Presently, Fort Bragg and the county share those costs.

            In a note posted on Facebook, Gjerde was triumphant: "Let's see ...inland supervisors abandon Mendocino Coast priorities: walking away from the Coast Animal Shelter, stonewalling actions to reduce GHG emissions, you name it….Now inland supervisors want Fort Bragg City Council members to rubber stamp a contract that unnecessarily and unfairly raises fees at the Caspar Transfer Station? Nope. Not gonna happen. Fort Bragg Council Members rejected the contract...Now it's time for the County's administration to work with the Coast. The County's road to privatization runs through the Fort Bragg City Council, and we said the deal was unfair to Caspar customers.”

            McCowen characterized the contracts as “solving all the county’s solid waste problems,”  and pointed out that if the contracts were not approved five county transfer station wrorkers would be laid off at the end of July, whereas Ward was obliged to retain them at their county wage level under the contracts.

Ward was Positioned:

            People opposed to the new contracts urged the county to continue to operate the transfer stations, charging the increased gate fees themselves.

            But according to proponents, one major advantage to the county in letting Ward take over the 6 transfer stations comes from the fact that SWOW has five year agreements with the county to haul the material from those stations to Protrero Hills landfill where it enjoys a favorable tipping fee that no other hauler could enjoy.

            If the county retained management of the transfer stations, Ward would be able to really ding them in the next round. But as a condition of the new agreement, all those contracts would terminate.

            The CEO’s office estimates that the county general fund loses some $600,000 a year operating the transfer stations.

            The transportation department which has been performing solid waste functions until now recently gave six transfer station attendants 30-day layoff notices. Under the new deal, they plus two more county employees would all be hired by Ward at their current salaries.

            Another argument is that the locally owned SWOW was the sole respondent to an RFP to provide franchise collection services issued several years ago by the county.

            SWOW is to provide various perks to the county as conditions of the deal.  For example if their profits from the transfer stations exceed $50,000 per year, they are to use the excess to reduce the gate fee for green waste and metals.

            In addition, they will establish California Redemption buy-back facilities at the Boonville and Laytonville transfer stations, and if required by the county would invest $400,000 in improvements to the South Coast station.

            One concern is that under the deal, Ward could legally sell the contracts to another waste hauler.

            Another is that his company has consistently violated its previous franchise contracts by raising rates without authorization. Critics of the deal said that the county should not deliver the citizen ratepayers to the mercy of  a  company that could not be trusted to keep its agreements. They called for Ward to repay customers he overcharged before any consideration of the proposed deal.

            Under the final agreement negotiated by Sweeney, SWOW will issue credits against future charges to the previously overcharged customers on a six month schedule.

Ideological Differences:

            Joe Louis Wildman of SEIU said the contracts were a giveaway to SWOW and the company should have been required to pay at least the equivalent of a deputy’s salary. He characterized the privatization of the transfer stations was an abdication of duty to protect the  public interest. Moreover, he said it was unnecessary. If  you solve  the problem of  unprofitable operations of transfer stations  by giving away all solid waste services, “I’d hate to see what you do when you meet a problem you really can’t solve!”

            Supervisors Smith and Colfax – both Democrats – vociferously opposed the contracts.

            Supervisor Smith said that citizens can’t have confidence that SWOW would stay within the bounds of the agreement when it had consistently violated its existing franchise agreement including unauthorized overcharges. She also pointed out that the negotiatiors had not gotten more significant dollars on the table from Ward’s company in exchange for the extremely long franchise extensions. She pointed out that Santa Rosa had gotten $18 million from North Bay, and Healdsburg had gotten $150,000 from Waste Management for much shorter extensions.

            She added that Healdsburg had also gotten a $15,000 annual fee, a 20% discount for senior customers and an agreement to clean up illegal dump sites.

            She pointedly asked Sweeney what Mendocino County had gotten for an extension bonus, and Mike had to answer painfully that there was none, “because it did not result from the negotiations.”

            Smith wanted the question of the franchise extensions to be separated from the transfer station contracts.

            Supevisor Colfax was contemptuous and quickly resorted to his customary sarcasm. “Ludicrous,” “ridiculous,” and “idiotic” were terms he used to discribe the privatization and the ad hoc committee that gave rise to it. “Why regulate anything? Why not just privatize? What the heck, private business is full of young ambitious men and women who can get the job done! Government might as well go out of business!” he steamed. “When in doubt, abdicate! Why not decide we’re not going to do social services, health care!”

            Growing more serious, the professor intoned, “ We have an obligation as the public as county government to do what can’t be done profitably.”

             Unabashedly libertarian supervisor Pinches though it was a “great program,” and noted that Ward had stepped in to provide hauling serviees when the county dumps were closed. Pinches never met a public program that couldn’t be cut.

            Supervisor McCowen had a less ideological approach, gravely intoning that the contracts solve the problem of the county subsidy to the transfer stations and thus “on balance in the public interest."

Flagrant Violations

In April of this year, Sweeney was able to review Ward’s performance under his previous franchise contracts.  Among the more important violations were:

            • Failure to maintain office hours on Mondays.

            • Failure to establish a buy-back recycling center in Anderson Valley.

            • Failure to obtain County approval of public education materials.

            • Failure to provide County with documentation of Customer Service Representative training

            • Redirecting solid waste and recyclables without authorization.

            • Failure to submit a recyclables marketing plan.

            • Failure to remit the MSWMA surcharge on a timely basis.

            • Failure to submit an annual billing review.

            The last deficiency, failure to submit an annual billing review, had wide-ranging consequences.  The billing review is a customer-by-customer check to make sure that each bill applies the correct rate for service.  The franchise contracts require that the County shall approve all collection rates, without exception.

            MSWA conducted its own biling review and found:

            • Franchise Area #1 (North County) customers being charged above approved rates:  164

            • Franchise Area #3 (Anderson Valley) customers being charged above approved rates:  85

            • Franchise Area #4 (South Coast) customers being charged above approved rates: 68, • Customers being given free service:  17

            • Customers being charged for service in categories for which the County never authorized a rate:  79

            In addition, there were service categories were SWOW had chosen to charge less than the authorized rate, in disregard of the County’s right to approve all rates.

            Coincidentally at the same time, SWOW itself discovered that it was being charged only $84.54 per ton to dump at Annapolis Transfer Station, even though it had mistakenly believed that the tip fee was increased to $91.54 on September 1, 2008 and to $100.50 on July 1, 2009.              Based on this misunderstanding, SWOW had obtained pass-through rate increases from the County of Mendocino for all Franchise Area #4 rates.  All 772 customers in Franchise Area #4 are due refunds and the rates should be adjusted back down.

            MSWA estimates is that as of the June 22 meeting, a total 1,021 SWOW customers are due refunds and rate reductions.  This is 53% of all customers.

            Supervisor Smith said that SWOW should be required to demonstrate full compliance with its existing contracts before it is awarded new long-term contracts.