Santa Rosa approves deal with new garbage hauler slated to increase rates

Santa Rosa signed off Tuesday on a new 15-year garbage contract with a San Francisco-based company that is slated to sharply raise rates for 55,000 homes and businesses while pledging to improve customer service, safety for its workers and practices to benefit the environment.

The City Council unanimously approved the new contract with Recology, which is in the process of buying the city’s current hauler, The Ratto Group, the North Bay’s dominant garbage contractor.

The new deal calls for rate increases starting at 58 percent for most residential customers, as well as hikes of more than 200 percent for some businesses. The increases gave council members pause and have raised alarms among residents.

“It’s a big step,” Councilman Ernesto Olivares said. “It’s gonna be a bit of sticker shock for most, but we have to do it. We don’t have any other choice.”

Betty Rowell, 67, a resident of northwest Santa Rosa, estimated that her bill - currently reduced through a discount for seniors that will be eliminated - is set to soar 92 percent. The increase “really blows me away,” she told the council. “Ninety-two percent is a big difference to me and my household!”

The council directed staff to explore ways to reduce rates for low-income residents and seniors.

Overall, however, most council members expressed certainty that, following an exhaustive, six-month-long selection process, the city was getting the best deal possible.

“I feel very confident in this contract that we are going to get a high level of service from a responsible company that’s fair to its workers that going to allow us to hit our diversion rates,” Councilman Chris Rogers said, referring to the amount of recycling and salvaged material kept out of landfills.

The deal kicks in Jan 1. The new contract with Recology is valued at $49 million per year, or $735 million over its life. The company will pay about $7 million in fees per year to the city, or $105 million over the full term.

Councilman John Sawyer, who served on the review panel, called it “probably the largest and most important contract any council member can vote on.”

Aside from the sharp rate increase, many other changes in service may not be immediately apparent for customers. Recology is purchasing all of Ratto’s existing trucks and will use them initially.

It takes about nine months to get new garbage trucks built and delivered to California, Recology president Mike Sangiacomo said.

The city granted Recology an extension allowing it to get the 50 new trucks and tens of thousands of new carts - an estimated $20 million investment - into operation by the end of May 2018.

One of the key provisions of the contract calls for the diversion rate, which currently stands at 36 percent, to increase to 60 percent by 2029.

The company says it plans to have an aggressive education component, including six dedicated recycling staff members focusing on reducing the amount of garbage sent to the county landfill. Councilman Tom Schwedhelm said he hoped the company would get to that level well before then.

A number of labor and environmental activists showed up to support Recology’s bid and to argue for a nexus between a unionized workforce, which the company has, and communities working toward a “zero waste” goal.

Matt Myres stressed the importance of keeping green waste out of the garbage stream because it generates the potent greenhouse gas methane.

“We can no longer place that garbage out on the curb and say ‘Out of sight, out of mind,’?” Myres said.

Recology vice president Ed Farewell said the company is interested in bringing back composting to Sonoma County. The service has been outsourced since 2015 after a lawsuit forced closure of the compost facility atop the county landfill west of Cotati.

The city has various ways to assure compliance with the contract, including options to shorten the deal to 10 years, assess fines and conduct audits.

Deputy City Manager Gloria Hurtado vowed the city would be keeping a close eye on the new company. “There are a number of ways that we’ll be managing the contract; certainly much more diligently than it might have been managed in the past,” Hurtado said.

For the past several years, The Ratto Group has tussled with regulators over its unpermitted Santa Rosa recycling center and fallen out of compliance with the city over its aging fleet of trucks. Both resulted in the company paying millions of dollars in fines.

Garbage and recycling service to schools is not included in the Recology contract. The Ratto Group provided that service for free, which company officials valued at more than $700,000. Those districts will have to negotiate directly with Recology for that service going forward, city officials said.

The Santa Rosa contract is the most lucrative hauling deal for Recology as it seeks to complete its acquisition of The Ratto Group, which has served Santa Rosa since 2003. That takeover, however, won’t be complete unless all 13 jurisdictions Ratto serves in northern Marin and Sonoma counties agree to the switch. Sangiacomo said those talks are just beginning and he expressed confidence they would go smoothly.

The financial terms of the sale have not been disclosed.

You can reach Staff Writer Kevin McCallum at 707-521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat.