Garbage hauler Ratto Group seeking rate hike to cover recycling losses

Sonoma County’s dominant garbage and recycling company is seeking temporary rate increases of about $1 per month to offset what it says are millions in expected losses from its troubled recycling business.

The Ratto Group is trying to convince local leaders to allow the company to boost garbage rates between 4 percent and 10 percent for its 145,000 residential and commercial accounts in eight Sonoma County cities and the unincorporated county areas.

Though the increase is small, it comes on the heels of a significant rate hike in April related to the recent takeover of the county landfill by Republic Services.

If approved, the various increases would raise more than $4.5 million in additional revenue for the company, money it says it desperately needs because the bottom has fallen out of the market for recycled materials.

“We need a little help for a year,” said Eric Koenigshofer, the former county supervisor who represents the company. “Something has happened outside of our community that has had a very significant impact on the financial arrangements we have for providing services to our community.”

The move is in response to what the company says are three major challenges facing its recycling programs.

One is the deeply depressed pricing worldwide for bulk recycled materials, such as the huge bundles of mixed paper, crushed soda cans and cardboard the company ships overseas.

Another is shipping challenges caused by major disruptions at West Coast ports, particularly Oakland. The huge backlog of material created by the work stoppages prevents delivery overseas and depresses prices further. The company’s recycling facilities are literally overflowing with mountains of recycled material that it can’t ship until the logjam is cleared.

Finally, there has been a marked increase in people thoughtlessly contaminating the recycling stream with raw garbage. The problem is more than a little peanut butter stuck to the side of a jar or cheese clinging to the top of the cardboard pizza boxes, company officials said.

“We’re talking about bags of straight garbage, from baby diapers to birthday cakes, being thrown into, and in some cases hidden, in the blue bins,” said Steve McCaffrey, director of government affairs for Redwood Empire Disposal, the recycling arm of the Ratto Group.

The contamination reduces the amount of recyclable material fit for resale and increases labor and other costs to remove the material and dispose of it properly, McCaffrey said.

The challenge was self-evident at the huge sorting line at the company’s recycling facility on Standish Avenue just south of Santa Rosa. The crew of workers pulled all manner of garbage from what was supposed to be a stream of recyclable material, including food scraps, pieces of luggage and a tangled garden hose.

The problem is on the rise in part because as more people trade down to smaller garbage bins to save money, they sometimes find the smaller bins too small and decide to throw any overflow into the blue bin, McCaffrey said.

Since 2010, the company has seen the use of its smallest bin, the 20-gallon size, grow by 138 percent, and use of the next largest size, the 32-gallon model, increase by 36 percent. Meanwhile, use of the 64-gallon bin has dropped 4 percent over the same period, according to company figures.

It’s something the rate structures are designed to encourage.

The 64-gallon model costs $23.67 per month in Santa Rosa, but the 32-gallon model is just $14.77 per month, $9 less. That’s $107 annual savings for residents. But it’s also a further revenue hit to the company.

Seeing all three trends going against it, the company began approaching the cities and county individually earlier this year. So far, the response has not been positive. Windsor and Rohnert Park rejected the initial requests. Other cities are awaiting additional information.

Windsor said its contract didn’t allow garbage rate increases for labor disputes, which is what is driving the port disruptions. Rohnert Park told the company that rate increases related to changes in the recycling materials marketplace weren’t permitted under its contract.

The company responded with a five-page mailer to its customers titled “Blue Can Blues.” It features the company’s mascot, a cat named Unicycler, looking dejected as he outlines the challenges facing the company.

The mailer says the prices for recycled materials like mixed paper and rigid plastic have plunged by 95 percent in the past year.

The company now plans to ramp up its conversations with all nine jurisdictions in the coming weeks, providing them with additional information and asking to take the matters to their city councils, or the county Board of Supervisors, for action.

McCaffrey and the company’s local lobbyist, Herb Williams, met last week with Santa Rosa City Manager Sean McGlynn and Dave Gouin, the city’s director of economic development and housing, to discuss the proposal.

Gouin said the city is awaiting additional information from the company and will consider its request in due time. He noted that it is budget season and city staff and the council are set to grapple with several major issues in the coming months, including trying to take action on homelessness.

“We realize that this is a difficult course for the cities to do this,” McCaffrey said. “That’s why we feel it’s important for us to come forward with as much verifiable information as possible.”

The company went public not to try to put pressure on politicians but to be straight with its customers, McCaffrey said.

“We want to be as transparent as possible so people don’t think this is a backroom deal,” he said.

The timing of the request may not be the greatest, however. Garbage rates just went up significantly in April to account for Republic Services’ recent takeover of the county landfill. And they are set for another hike soon to cover the millions of additional dollars needed for lawsuits and increased operational costs related to wastewater compliance issues at Sonoma County Waste Management Agency’s troubled composting operation atop the landfill.

Ratto’s proposed increase is causing confusion among residents who’ve just seen their bills go up by 17 percent, said Dana Anderson of Santa Rosa. The 65-year-old retired banker said he was surprised to see the size of the recent increase and turned to social media for answers. There, he found a number of his neighbors had similar questions and concerns.

“I just think people are not exactly sure what’s going on,” Anderson said.

While he thinks it’s “the right route” for the company to publicly explain its challenges, there is “a lot of confusion” about the various increases, he said. Some assumed (incorrectly) that the Ratto increase might be contained in the April rate bump, he said.

McCaffrey said such confusion is understandable, but the company can do little more than direct its customers to other entities, like Republic Services at the dump or individual jurisdictions, to explain the rate increases and how they trickle down to the customers.

“It is very clear to us that it will be very unclear to the residents when they see the impact of all this stuff happen at the same time,” McCaffrey said.

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