FV Trash Fee Hike — Past Time for a Competitive Bid

Last May, the Fountain Valley City Council did the right thing by notifying city residents of an upcoming increase in trash hauling fees, partly by long-time provider Rainbow Environmental Services.  On paper, it didn’t seem much — $18.16 to $18.84 (+3.7%) for a single-family home. Their last increase was in 2011, but there might be some pushback in this normally quiet and well-run community as the Council also recently approved a not-insignificant hike in water rates.  The total annual value of only residential trash hauling for Fountain Valley is estimated at $3.3 million.

Rainbow’s not run by dummies — they’ve likely mitigated the increase to keep peace, cover landfill hikes, protect their “evergreen” arrangement with the city and avoid the few good-government malcontents who believe that competitive bidding is in order to see if another hauler can do a better deal. Nowhere in the Staff Report or the Public Notice is open competition for the business mentioned or listed as an alternative for the city to consider — a major failing in staff work. The City Council will hear the issue Tuesday next at 6pm at their regular meeting at 10200 Slater Ave.

Rainbow’s actual increase is only 25 cents, said to be through 2015, but the city will also increase its “administrative fee” by an unjustifiable 43 cents — no explanation offered in the available documentation. Fountain Valley has a very stable but aging population (many on fixed incomes), is hardly growing as it’s land-locked and fully developed, and has an almost adequate combined billing system for trash and water. They had, but no longer, allowed direct debiting of consumer checking accounts for payments which would have been saving considerable handling costs, and there’s no evident reason why this can’t be re-introduced. Rainbow does their own billing for non-residential and commercial collections — that revenue amount is unknown.

But like Huntington Beach, the FV City Council rarely sees a staff report they don’t like.  In this case, the city staff helpfully included (p. 31) the table below which ranks FV’s place in the County trashosphere:

Well, 12th most expensive isn’t bad — but it’s not 34th either — or as impressive as Irvine’s costs even though 1) their politicized City Council is in turmoil over the +$200 million Great Park that never got built (atop the Marine Corp’s Airport they stole from the rest of us), 2) Councilmember Agran/Krom’s corruption and 3) the generally recognized incompetence of their city manager.  12th place, or 15th, is above the mean and the average of $17.53, and THAT MEANS Fountain Valley can do better.

The table above might have been obtained or updated from Teri Sforza’s excellent OC Watchdog article in the Register November last. Her lead,

Half of Orange County’s cities signed up with their garbage haulers 40 or 50 or even 60 years ago, and have never sought to learn if they could get a better deal for the residents and businesses who pay the bills. A review of thousands of pages of documents by The Watchdog found that Orange County governments have awarded more than 40 exclusive contracts worth some $4.5 billion to private trash haulers – most without ever opening the process to competitive bidding – even though local experience and scholarly studies show that competition can dramatically slash rates. The overwhelming majority of that trash business – some $3 billion worth – is tied up in what’s poetically termed “evergreen” agreements. These agreements never really expire and can renew into perpetuity, guaranteeing haulers a constant flow of dollars and millions in profits, virtually worry-free.

There’s ABSOLUTELY NO REASON why Fountain Valley canNOT bid this business to the major local trash haulers like Rainbow, Waste Management and Ware Disposal which each now serve multiple cities in Orange County.  In this case, the Request for Proposal (RFP) is easy to write — Rainbow has long documented history with the city and a credible service level that’s readily detailed — most importantly the statistics and current costs are known and easily included in the bid document. This is a slam dunk, even for a government employee.

As well, this is a great opportunity for Fountain Valley to show those 17 OC cities (per Sforza) that still use Evergreens that it’s about the residents and not the vendors and their often significant political campaign contributions.  Setting an example with competitive bidding for a multi-million dollar fixed term contract means the city’s being properly run and not bending for any favoritism. The stockholder-owned American corporations where I’ve spent my career operate like this any time they’re procuring services or assets.

The table above also illustrates just how competitive this business can be — there’s a 225% difference between the highest and lowest rates. An RFP could also uncover the unknowns and financial mysteries of recycling if certain questions were asked — just how much is our separated trash really worth?  What does a hauler make from newspaper, plastic and cardboard?  Can we draw conclusions from this information that recycling is really worth the trouble and expense, or is it just feel-good sophistry like HB’s Plastic Bag Ban?

I have no issues with Rainbow Disposal, but as a 27-year FV resident, NOT competitively bidding this opportunity to a group of referenceable vendors is bad business, unprofessional and unfair to tax and fee payers.  Per the Sforza piece, “lower rates are paid by folks in cities where haulers recently duked it out, including Los Alamitos ($11.80), Orange ($12.30), Mission Viejo ($12.65) and Lake Forest ($14.18)”.

The Evergreens need to stop — they are unfair to city residents, anti-competitive and lazy — and the city can get a better deal.