The City Council took the first step this week toward awarding an exclusive franchise for commercial trash hauling without competitive bidding.
A franchise could increase costs to businesses but bring nearly $600,000 to the city in fees and nearly $6 million in business for the contractor.
The council Tuesday night ignored a staff recommendation not to award a commercial refuse-collection franchise and voted 5 to 2 to ask interested contractors to submit statements of their qualifications.
The statements, which would outline the company's ability to perform the work but not include rate schedules, are expected to be brought back to the council in 30 days.
14 Trash Collectors
Residential trash pickup provided by the city for single-family homes and duplexes would not be affected, but a staff report warned that a franchise for commercial refuse collection could lead to one for residential trash collection. That could mean higher costs to residents.
There are now 14 private refuse haulers, most operating one or two trucks, competing for more than 7,000 businesses and apartment complexes.
A staff report said that more than 150,000 tons of solid commercial waste is collected by private haulers per year. Estimating that it costs a private hauler about $35 a ton and adding a 10% profit, the report said annual gross rubbish collection fees would be about $5.8 million under a franchise system.
Garbage franchising fees in other cities range from 3% to 10%, depending on who does billing and collection. If the city imposed a 10% fee, it could collect $580,000. The city currently collects about $14,000 in business license fees from the 14 private haulers.
The staff report recommended against the franchise because it said the city would end up with less control. "Through contract terms, a city can outline services to be provided and monitor quality of service, but is realistically unable to establish rates or set limits on rate increases," the report said. "The myriad costs associated with refuse collection lend themselves to manipulation, especially where business activities are not restricted exclusively to solid waste collection."
The report said many small refuse collectors could be put out of business if an exclusive franchise is awarded. Under state law, however, businesses that had been providing trash pickup for at least three years would be allowed to continue for five years after the franchise had been awarded.
The report also cited a trend that when a city implements a commercial franchise, residential refuse collection ultimately becomes franchised to the same haulers.
"Frankly, it will never be my intention to have franchised residential refuse collection," said Councilman Dan Walker, who introduced the motion for the commercial franchise. "One does not have anything to do with the other."
Walker said he introduced the motion because of numerous complaints about the many commercial haulers using old equipment, having oil spills and breakdowns and picking up trash too early in the morning. Contrary to the staff report, Walker said he believed a single franchise would give the city more control.
He also argued the city could use the extra money the franchise fee would bring. "In the recent budget hearings the Police Department was fighting for an additional sergeant and we didn't give it to them because we didn't have the money," Walker said.
Council members Katy Geissert and Bill Applegate voted against the motion, saying it would hurt the small trash haulers and increase trash-hauling costs for businesses.
"It's another step further, without justification, in regulating private industry," Geissert said. "We are closing in on the rights of businesses to deal with a firm they are most comfortable with and at the best prices."
Geissert added that the city is not in such "dire straits that it warrants this action" and said she is opposed to awarding a franchise without competitive bidding.
City Atty. Stanley Remelmeyer said a franchise could be awarded without bids under the state government code. He said a recent court test also determined that an exclusive franchise without bids is not a violation of antitrust laws.
Awarding a franchise without bids would allow the city to select a contractor much sooner and chose a contractor based on services and not just costs, City Manager LeRoy Jackson said.