Public input sought on Santa Rosa garbage contract

How garbage, recycling and yard waste is collected in Santa Rosa, by whom, and how much rates will increase are all questions the city begins wrestling with at public meetings beginning this week.

Before soliciting bids from companies interested in landing its lucrative garbage contract, Santa Rosa is holding two meetings to find out what kind of garbage services its residents and businesses want.

The first takes place at ?9 a.m. Thursday in the City Council chambers. The second will be held Sept. 7 at 7 p.m. at the Finley Community Center, Cypress Room, 2060 W. College Ave.

Following a scathing audit of its current operator, North Bay Corp., the City Council decided not to renew the company’s contract, which runs out in 2017. The agreement has given North Bay the exclusive right to haul waste for the city’s 50,000 residential and commercial garbage customers for more than a decade.

The meetings will give residents the chance to say what kind of hauling and street sweeping services they want from their next contractor, as well as to say how much they are willing to pay for it, Mayor John Sawyer said.

“We are known as a thoughtful community when it comes to the environment and this is a piece of that,” Sawyer said.

The next garbage contract will need to strike a balance between the community’s goals of reducing the amount of garbage it sends to the landfill and the cost of achieving those goals, including greater community education.

“At the end of the day, everything is going to have to be balanced with the reality that everyone’s rates are going up,” Sawyer said.

While the audit of North Bay found significant flaws in its operation, including running an aging fleet of trucks, having long customer service wait times and failing to meet minimum recycling rates, it also confirmed the company’s rates are significantly below market.

The audit found that unsustainably low rates and poor management probably caused the company to cut corners and fall out of compliance with its contract. The company has said its rates in Santa Rosa - $17 per month for the most common 32-gallon size can - are about half the average for the region.

Despite its financial, operational and regulatory challenges, North Bay intends to bid on Santa Rosa’s new contract when the opportunity arises, said Eric Koenigshofer, the company’s interim general manager.

“I think it’s a healthy discussion to have because it’s important for the community to talk about levels of service and rates,” Koenigshofer said.

The company has long disclosed the financial challenges it faces following a sharp drop in its revenue from selling recyclables on the bulk market. It has largely blamed international macroeconomic forces for that drop in revenue, but critics also point to high contamination levels in its recycling stream.

In addition to the public input meetings, the City Council has established a subcommittee to drill down on the complicated issues surrounding not only the new contract but how to ensure North Bay fulfills its obligations under the existing contract. The subcommittee is made up of Sawyer and councilmen Gary Wysocky and Chris Coursey. Its first meeting is Sept. 7.

Deputy City Manager Gloria Hurtado has said one of the subcommittee’s jobs will be to recommend the amount of penalties on North Bay Corp. for violations of the existing contract. The fines could exceed $15 million if the full penalties were assessed on the company for alleged violations of the fleet age requirements alone.

Sawyer said he intends to take a practical approach as the subcommittee negotiates the terms of the company’s remaining service under its existing contract. Instead of looking for ways to maximize the penalties, he intends to focus on what residents want most.

“We will be looking at measures to bring them into compliance where possible and where it makes sense financially,” Sawyer said. “We’re not going to be asking them to replace their entire fleet for the next 16 months.”

But Wysocky struck a less accommodating tone. The fact that the contract isn’t being renewed isn’t a “get out of jail free card.” He expressed little sympathy for the company’s claim that it is no longer able to profit because the market for recycled materials has collapsed.

“It’s a risk-reward economy,” Wysocky said. “If the recyclables market went to new highs, would they be giving us the money back?”

One open question is whether the company will even be deemed qualified to bid for the new contract. Because of high garbage levels in its recycling stream, the company doesn’t have the appropriate waste permits for its recycling centers on Standish Avenue.

The company has been fined $370,250 to date for not having that permit, and it’s not clear when such permits will be granted. The city will likely require all recyclables be taken to a fully licensed facility, raising the question of how North Bay will be able to compete.

Koenigshofer said North Bay, which is owned by Jim Ratto, is making $2.8 million in upgrades to its sorting line as well as other improvements as it seeks to improve operations.

He said he’s confident the company will find a way to be a qualified bidder for the new contract. If the company can’t get the required permits for the Standish site by the time bids are due, he said it will have a backup plan, which he declined to divulge.

That raises the prospect that North Bay may need to truck Santa Rosa’s recyclables out of the county, much as it hauls the city’s yard waste. Koenigshofer noted that other bidders - none of which has an appropriately licensed recycling center in the county - face the same hurdle.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat.