SHOCK CLAIM: Republic Services Contract Changes Amount to $10 Million+ Windfall for Trash Hauler

Republic Services’ competitor in West Texas claims the proposed trash service level proposal floated by Republic and city staff will amount to at least a $10 million windfall for Republic.

This story is developing as citizens in Single Member District 5 will determine who will represent them in the July 2 runoff election between incumbent City Councilwoman Elizabeth Grindstaff and challenger Lane Carter. Carter won the May 7 election by four votes, but in the crowded four-candidate field, none earned 50 percent plus one vote, so a runoff election was mandated.

“When I’ve been out campaigning, I can’t find anyone who absolutely loves it (the trash contract),” Elizabeth Grindstaff said. “That saddens me, but [trash] is the number one complaint that I hear from my constituents.”

Grindstaff and her challenger Carter delivered short speeches at yesterday’s Pachyderm Club monthly meeting at Zentner’s Daughter Steakhouse to a packed audience.

Earlier this year, Republic Services proposed to reduce recyclable pickup from every week to every other week in exchange for adding eight more bulk trash pickup days to the annual schedule.

The deal proposed is trading 26 truck pickup runs for eight and proposes to maintain the current pricing structure, including the 2.9 percent annual price hikes and the ability for Republic to collect $0.50 per customer per month as a penalty against trash customers for not collecting the contractually-agreed monthly volume of 500 tons of recyclables. The highest recyclable volume obtained by San Angelo residential customers was 314 tons in March 2016, according to the City of San Angelo. Glass is excluded from the 500-ton minimum.

When the deal to trade services was first floated by Republic and city staff, Grindstaff requested that city staff provide a detailed cost analysis to determine if the trade in service levels was a good deal for the city’s trash customers. City Operations Director Shane Kelton presented at the June 7 council meeting on that subject. Exact figures were not available, he said, because it would reveal Republic’s trade secrets.

Christy Youker, area manager for Texas Disposal Systems, along with TDS’s Ryan Beard from the competing trash company’s Creedmoor offices, met with two city council members Wednesday to explain from an industry perspective how the trade was a great deal for Republic and bad for the City of San Angelo.

Youker said only Councilman Harry Thomas and Councilwoman Grindstaff agreed to meet with TDS. Youker said Mayor Dwain Morrison declined, explaining that the city is already in a long-term business relationship and contract with Republic Services. Councilman Marty Self did not return a phone call or email request for a meeting, she said.

Beard said the proposed service level changes give Republic Services a cost savings, and using the original 2014 TDS bid, should give a “5 to 17 percent savings to residential trash customers.” When added over the eight years remaining on the $260 million, 10-year contract, the savings in what TDS would have charged San Angelo for trash pickup would amount to, at a minimum, $10.4 million.

Beard’s math: $26 million/year x 5% x 8 years = $10.4 million

“On the surface, you can see it’s not a fair deal. Republic is trading 26 truck runs collecting recyclables for only eight added runs for bulk pickup,” Beard explained.

Youker added that as the proposal stands right now, the city will continue to allow Republic to penalize recycling customers $0.50 per month, yet reduce the customers’ opportunity to recycle by half.

“Republic is doing cartwheels over this deal,” Beard explained.

Both Youker and Beard said their intentions for explaining the cost savings the deal offers their competitor are not necessarily to have the opportunity to bid on recyclable and bulk pickup. The city threw out the TDS bid at the beginning of contract negotiations with Republic Services in April 2014. The finalized trash contract was approved by council in the summer of 2014.

Republic sued TDS over TDS’s continued operations in the city collecting temporary trash from primarily construction sites but lost the case in late 2015. Another lawsuit is working its way through the courts where TDS-affiliated Acme Iron & Metal, along with Mayfield Paper, sued Republic for overcharging them over about 10 years for “Fuel charges/Environmental Recovery Fees.” Beard said the plaintiffs in the case will attempt to turn the lawsuit into a class-action later this year and ask other commercial trash customers to join the lawsuit.

“We’re still major players in this market,” Youker said. She pointed out that TDS has the contract to pickup recyclables and trash from Angelo State University and from communities surrounding the city limits of San Angelo, including the City of Mertzon.

Youker said, as a citizen of the city, she wanted voters to understand what a great deal the proposed contract change is for the incumbent trash hauler.

But there is more.

“As many of you know, Republic is going to come to us because there was an oversight in the contract, and they’re not getting the revenue out of the (city-owned) landfill that they want,” Grindstaff said Wednesday.

Grindstaff was explaining what Kelton revealed at the last city council meeting, that after council approves recycling pickup to be reduced by half, Republic will additionally request the city allow them to charge a one-ton minimum for bulk dumping of trash into the city landfill. Right now, Republic can only collect partial tonnage fees for trash loads less than one ton.

“Okay, how is that in the best interest of the city? They can correct that, but we can’t correct other wrongs,” Grindstaff said.

Grindstaff said she wants to use the requested service level changes—effectively a contract renegotiation—to improve other areas of the trash contract her constituents are complaining about.

Carter didn’t directly address the trash contract or the proposed changes, but stated that “Citizens are not happy about how their taxes are being spent; they’re being wasted.”

Carter complained that council and Grindstaff have a “Tax and spend bureaucratic mindset that needs to change.”

“This isn’t in the best interest of the citizens, [the] fact that they have voted to raise every fee,” he said, taking a swipe at Grindstaff for voting to increase fees, like building permits and inspection fees. Mayor Morrison, who opposed the fee increases, claims in his second term, city fees have increased $800,000 annually, equivalent to an approximate 2.5 percent property tax hike. The mayor, who has consistently opposed fee hikes, has been outvoted every time, he said.

Grindstaff said that it’s not in the best interest of all citizens to subsidize some businesses for their construction permits because, in doing so, the city is charging much less than the inspections and permits actually cost the city to implement and execute.

Carter admitted he didn’t have the same education as Grindstaff. “I don’t have a degree in urban planning and I haven’t served on the city planning commission,” he said. Grindstaff has a master’s degree in Urban Planning from Texas A&M University in College Station.

However, Carter said his experience as a landlord rivals Grindstaff’s education and experience. “I pay fees; I pay taxes. Not only do I manage my own household, I manage five others in my real estate holdings,” he said. “I started head-strong young, and I have continued to do so. My work ethic will continue when I’m on council.”