Petaluma may extend its agreement with the city's garbage hauler for 15 years in exchange for an extra $750,000 a year toward the general fund and street maintenance.

The council on Monday night was set to possibly act on the proposed agreement with Petaluma Refuse & Recycling, but a last-minute submission by lawyers for environmental groups put the brakes on any decision until next month.

Petaluma Refuse & Recycling is part of the Ratto Group, which through various subsidiaries has the garbage hauling contracts for eight of Sonoma County's nine cities and the unincorporated areas.

The company took over Petaluma's contract from a San Jose hauler in 2005.

In the years since, the city has seen its budget cut by about a third to about $32.5 million, forcing city staff to explore "nontraditional" funding for city services, such as street maintenance, City Manager John Brown said.

When Petaluma Refuse & Recycling sought a contract extension last year, it sparked a complete overhaul of the agreement, which would lock in the company's exclusive hauling agreement with Petaluma and help the city fund critical services.

That required a change in city law to allow non-competitive bidding for such franchise agreements. The existing agreement expires in 2016.

"Been there, done that, don't want to do that again," Mayor David Glass said of the contentious 2005 council struggle to choose a garbage franchisee.

On Monday, a majority of the council appeared happy with the proposed new contract, particularly a $500,000, no-strings-attached annual payment to the city.

Garbage rates would increase about 4 percent on July 1, the first time since 2009. In the future, they would be tied to a consumer-price-index type of industry standard that has averaged around 3 percent annually, the city's consultant said.

The new agreement would include $500,000 in annual payments to the city totaling $8 million over the term of the contract, including an extra payment in the first three months of next year. The cost cannot be passed on to ratepayers, according to the agreement.

It also increases the "vehicle impact fee" charged the company by $250,000 a year. That cost, which can be passed on to ratepayers, would be earmarked to the city's street fund to offset some of the wear and tear large trash trucks cause to city streets.

Councilman Mike Healy suggested the $500,000 also go toward street maintenance, and Brown said it could even be leveraged to borrow more money to fund specific street repairs.

Brown also suggested the first $500,000 be dedicated to the city's general fund reserves, which have been virtually exhausted in the past few years, leaving the city financially vulnerable to unforeseen expenses.

Public Works Director Dan St. John said that over the 15-year agreement through 2027, the city would net $12.4 million more than the current contract.

Less than two hours before the meeting, Doug Chermak, a lawyer representing the Petaluma River Council and the No Wetlands Landfill Expansion, submitted a 15-page letter urging the council to postpone any changes and to conduct a full environmental review of the contract.

He also said the company's failure to meet recycling goals and a federal environmental lawsuit naming the parent company should forestall a new agreement. An attorney for the Ratto Group dismissed the concerns.

City staff and attorneys will analyze the legal issues and report back to the council on Nov. 5, when a vote could be taken.

You can reach Staff Writer Lori A. Carter at 762-7297 or lori.carter@pressdemocrat.com.