The Galt District Chamber of Commerce met at the Comfort Inn on June 12 to discuss resolutions to the waste removal rate hikes raised up to 600 percent on some local businesses with many business owners fired up over the issue.
Bonnie Rodriguez, chamber president, told the gathering that the chamber has hired a law firm to look for a resolution with Cal-Waste and the city. Shortly after her opening statements, a Cal-Waste team headed by Dave Vaccarezza, owner, headed into the meeting, being members of the Galt chamber. The Cal-Waste team was ready to defend the new contract.
“This was not a position we elected to put ourselves into,” Vaccarezza said. “I am not the one that instigated these rates. It was done by R3.”
Local builder Mike Guttridge was clearly upset with the comments and threatened Cal-Waste with a lawsuit. He said he now has to pay $8,000 per month for garbage service.
A Cal-Waste’s representative read a statement that further explained early negotiations.
“Cal-Waste submitted a proposal with a balanced approach in meeting the revenue required to meet all the new state and federal mandates,” the statement read. “On March 18, 2018, Cal-Waste submitted to council, commercial rates that were substantially lower than were ultimately approved. In the same proposal, Cal-Waste submitted residential rates that were substantially higher than were ultimately approved. In short, commercial rates were much more competitive and the residential rate was higher, yet competitive for equal service provided.”
Rodriguez told Vacarezza that a reasonable solution was all the chamber was asking.
Vaccarezza gave the March 18, 2018 proposal binder to Rodriguez, which had been submitted to the city. It did call for a 64-gallon container to go from $25.72 per month to $55 on residential customers. A two-cubic-yard bin would be raised from $165.21 to $223.19 per month for commercial customers. Vaccarezza said these submitted rate adjustments were rejected by the city.
Vaccarezza also stated that the city charges his company $40,000 just to do business in Galt and tacks on $1.12 on each bill just for billing expenses.
David Herburger of Herburger Publications asked Vaccarezza if there was a way to work things out. This question was also asked by a number of business owners at the meeting.
“I have over $20 million invested in this community,” Vaccarezza said. “I felt I wove myself into the heart of this community. I can’t even sell my business. If I do, the city gets $8 million. The barn door is open and the cows are out. There’s no way to get them back in.”
Keeping Cal-Waste operating takes the backing of a bank, Vaccarezza said, and that money is contingent on keeping the contract he now has.
Some of the chamber members voiced concerns over re-hiring R3 again as a consultant.
Interim City Manager Tom Haglund was asked about the role of R3 and how commercial customers ended up with the high rate hikes.
“To be clear, based on what I know to date, R3 did not negotiate the franchise agreement, nor were they charged with doing so, said Haglund in an email. “City staff served as chief negotiator. The city, not R3, set forth the primary goals of what the franchise agreement was to accomplish, based on initial program proposals from Cal-Waste. Cal-Waste set forth a very clear picture of what they were proposing.”
Haglund further clarified by stating, “The direction on behalf of the city would have been the ultimate responsibility of the city manager.”
Business owners said being mandated by the city to only use Cal-Waste is adding to the problems.
Haglund said many municipalities have exclusive contracts, including Lodi, for both residential and commercial, and Elk Grove for residential customers.
“It is not at all uncommon for a jurisdiction to issue an exclusive franchise for solid waste services,” Haglund said. “Most solid waste franchises are exclusive and are authorized under California law. Typically, though not in every case, communities that do not issue an exclusive franchise operate their own municipal trash collection services. I have experience with both types of communities. An exclusive franchise is normally issued out of recognition of the significant investment by a waste hauler in equipment, labor, land and facilities to collect, process, dispose and recycle waste that has been collected. The exclusivity allows the waste hauler to recoup, over time, the capital and operational cost of running the collection program.”
When asked why the city did not disclose the details of the commercial rate hikes before the Council voted on the new contract, Haglund said the city did prepare and distribute a press release.
“The city did disclose the rates prior to approving the new franchise agreement on Sept. 4, 2018,” Haglund said. “The city issued a media release on Aug. 27, 2018 that carried the heading ‘New Expensive Refuse Disposal Rules Taking Effect Soon.’ The media release notes the date and time for the meeting and the materials were placed on the city’s website.”
The press release did not state specific rate increases but referred to the hikes in general terms.
“However, the costs to meet the current and pending requirements will require increases to both residential and commercial/industrial customer rates,” the August statement read.
The statement also said that the city developed a new long-term contract to meet the new regulatory challenges “in as cost-effective a manner as is practical.”
Haglund said further information was mailed to all customers.
“Additionally, the city operated a Proposition 218 review process that included mailers to residential class customers and commercial class customers inclusive of the rate schedules for each,” Haglund said.
The first mailer that included all commercial rates was not sent until November 2018 after Councilmembers Lori Heuer, Curt Campion, Paige Lampson, Tom Malson and Mark Crews approved the rates, starting the Prop. 218 protest period.