Garbage agreement pits rates against open market
Jul 14, 2008 | 272 views | 3 
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Tribune/Debra Reid - Tribune file/Debra Reid
Steve Duque, operations manager and owner of Castaway Trash Hauling, spoke under public comment at Monday’s City Council meeting. Duque was concerned that the franchise agreement under consideration would limit his ability to collect trash in Sparks. Duque services 93 commercial/industrial customers in Sparks.
The city is considering entering into an exclusive franchise agreement with Waste Management of Nevada. This agreement could either raise residential collection rates by 38 percent or push third-party trash collectors out of a segment of the market, depending on which version of the franchise agreement the city chooses to adopt.
The council must decide on one option or another at its July 28 meeting.
“We have a monopoly on one hand or a 38-percent rate increase on the other,” Councilman Mike Carrigan said. “I do feel like I have a gun to my head.”
The council was presented with two options. The first would extend the previously existing franchise agreement that the city held with Waste Management of Nevada to cover all waste generated in Sparks, with some limited exceptions.
The council’s second option is to limit the franchise agreement with Waste Management to only the collection of garbage. All other types of refuse — typically dry waste — could potentially be collected by third-party trash hauling companies.
The root of the meeting’s contention was that the first option was believed to grant Waste Management a monopoly, essentially pushing small businesses out of the market. The second would, according to Waste Management, force the garbage collector to raise residential rates by about 38 percent, or $5.41 per month.
Waste Management representatives said that the rate increase would be due to a necessary budgetary restructuring due to potential loss of their customer base to competition.
"There is a whole system that we put numbers into when we figure out what our rates need to be,"Justin Caporusso, a Waste Management spokesperson said "It is very technical and complicated. They calculate everything in that you can possibly think of."
Waste Management currently serves 1,600 commercial and 162 industrial customers in the city of Sparks. According to Caporusso, they estimate that number will shrink to 500 commercial and 42 industrial customers if the franchise did not regulate all solid waste. As a result of the lost business they would have to raise their rates, Caporusso said.
The storm of 23 comments from the public extended the meeting to four hours.
“I look at my power bill and my phone bill and I have a choice,” Bob Nemitz said under public comment. “I can close my windows or turn off my lights. Here I have no choice. I would gladly pay the (extra) $5 just to have an option.”
After the public comment, council members discussed their preliminary stances on the two options for the franchise agreement.
“There is some value to franchise agreements,” Councilman Ron Schmitt said. “I am not in favor of raising rates.”
Councilman John Mayer said that he would like to see an open market structure when considering garbage collection in Sparks, not an exclusive franchise.
Mayor Geno Martini said he did not support rate increases.
“I want to see the market opened up,” Martini said. “But at the expense of the citizens of Sparks, I can’t support it.”
Carrigan, with much hesitation, voiced his preliminary support of the exclusive franchise agreement.
“I do feel that the needs of the many are greater than the needs of the few,” Carrigan said. “As much as I hate it, I will have to go with option A.”
Councilman Ron Smith asked if an extension could be negotiated in order to continue talks.
“I would ask you to ask Waste Management for an extension,” Smith said. “Being in business, I can understand why Waste Management wouldn’t want to give an extension so that we can talk to the competitor, but I think we need to make it fair.”
City staff has been negotiating between interested parties since early in the summer of 2007 when the original franchise agreement ended. Since then, the agreement has been extended due to pending Supreme Court cases and continuing negotiations. According to the council’s staff report on the matter, “two decisions by the Nevada Supreme Court have affirmed the right of local agencies to franchise as much of the waste stream they deem necessary.”
Chapter 7 of current Sparks municipal code allows the city to enter into an exclusive contract for the hauling and disposal of all garbage.
The city collects a 5-percent franchise fee from Waste Management’s gross revenues for all accounts located within the city of Sparks. According to staff materials, franchise fees collected for the fiscal year 2006 to 2007 were $630,674.
The extension for the current agreement reaches its ultimate end on July 21.
No matter what the council decides at the July 28 meeting, city-owned property and residential customers will use Waste Management for all their service.
Note: This version of the story was updated to include additional information on July 15 at 10:45 a.m.
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comments (3)
« Buzzy wrote on Tuesday, Jul 15 at 12:18 PM »
I think that everyone is entitled to free enterprise, and I think everyone needs to relaize why Waste Management lost any of the business in the first plact, they were not servicing the customer's needs. I don't think that strong arming the city is fair, I think that Waste Management should step up to the plate realize that their lack of service is what lost the customer base in the first place. If the franchise is signed what will encourage them to improve upon their service? Why should they they will have it ALL!! I think many people can admit that they have had service issues, or billing issues of one type or another with Waste Management and once they control the market what will the people do? They will have no options, not just the residents but the businesses of sparks as well!!
« Mary E wrote on Tuesday, Jul 15 at 06:32 AM »
Waste Management wants to be the other gargage collector in the City of Sparks. The City of Sparks has its hands tied. I for one would would prefer to pay more to wast management if I went with them rather than have a monopoly.
« zulu775 wrote on Tuesday, Jul 15 at 04:22 AM »
Isn't free enterprise part of what made America great? Isn't free enterprise and competition suppose to be good for the consumer . . . apparently when you are dealing with big business like Waste Management and the City of Sparks, rules of basic economics don't apply.
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