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Why Palm Coast Doesn’t Want To Lower Your $239 Garbage Rate and Bid Out the Contract

| August 10, 2011

The city council rained on its administration's parade in favor of Waste Pro on Tuesday. (© FlaglerLive)

The city council rained on its administration's parade in favor of Waste Pro on Tuesday. (© FlaglerLive)

There’s a dirty and not-so little secret controlling the dynamics of Palm Coast’s $7.7 million contract with its garbage hauler, which expires at the end of the year: the city has no incentive to lower the contract’s cost. It has no incentive to lower the price you pay for garbage pick-up: $239 a year, even though many other cities get the service at a lower price, and garbage haulers may propose to provide it here at a lower price, if the contract was allowed to go to bid–something City Manager Jim Landon is resisting.

If anything, the city’s incentive is to keep the cost level or increase it, because the city skims off 10 percent of the contract’s value for its own uses–a legalized kick-back called a “franchise fee” that local governments across the country use to supplement their revenue.

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On Tuesday, Landon recommended that the city council allow him to negotiate a five-year extension with Waste Pro rather than bid out the contract, and repeatedly talked down the benefits of bidding, going so far as speaking derisively of a $1-a-month saving if poorer service was the result. One doesn’t necessarily follow the other, but Landon never mentioned that every $1-a-month drop in cost for residents would translate to a loss of $38,000 in revenue for the city.

Even those amounts matter to a city nickel and diming its budget: The city is planning to close Frieda Zamba pool for the winter to save a little bit more than that amount.

The city makes $700,000 off of its contract with Waste Pro. About $500,000 of that goes into the general fund. Most of that $700,000 goes into the $26 million general fund, subsidizing the fund and helping to keep property taxes lower. Essentially, residents’ property taxes stay low but they’re taxed in other ways: the median household’s garbage bill in Palm Coast is more than two-thirds the equivalent of its city property tax bill.

If, say, the contract was lowered to $5 million a year, which is a possibility (if the city allowed bids), the city’s annual take would fall by $200,000, and the revenue would have to be made up through the property tax. Keeping fees higher enables the city to maintain the pretense that its keeping taxes low, because few residents object to rising fees the way they object to rising taxes.

At no point did any city staff touch on the franchise fee Tuesday when Landon recommended to the city council not to bid out the garbage contract, and negotiate a five-year extension with Waste Pro instead. At no point did city council members raise the matter of the franchise fee, either, or the consequence of getting a cheaper rate for customers.

Which may explain why, to hear Landon make his recommendations to the council during an 80-minute discussion, you’d think going out to bid was a toxic waste hazard.

The Haulers’ Proposals (Never Presented to Council):

“If you go out to bid you still may get Waste Pro,” he said. “You also could get a low bidder, and I can tell you that some of these, we’ve already dealt with, you don’t want in the community in our opinion. You don’t want their total lack of—so then if they come in low bid and we tell you they’re going to be a real pain to deal with for five years, you want that low bid?”

And: “By doing this, we think we can get the price down, or keep it, at least not have it go up,” he said, speaking in favor of re-negotiating.

And: “I can just tell you from experience, if you have a good thing going when it comes to a service like trash, and you think you can get a fair price, saving $1 a month but having constant problems, I’m not so sure that $1 savings is worth it.”

And: “Going out to bid has some very, very serious, inherent risks.”

There’s no question that Landon may be right on every count: that’s true of every contract with every company in every town, though it doesn’t invalidate the bidding process. And he was presenting a truncated picture to the council. For all that, the council was not convinced. But Bill Lewis and Mary DiStefano were uncomfortable with skipping the bid process. Frank Meeker hedged. Holsey Moorman was non-committal. Mayor Jon Netts wanted to renegotiate without bid. But clearly, the council was not ready to do what Landon was recommending: give him the authority to renegotiate.

Yet at next Tuesday’s meeting, the council will have a resolution Landon drafted giving him the authority to do just that. “I would suggest that we go ahead and put this on the agenda for next week and actually finalize that,” Landon said, “and kind of anticipate a split vote on this one and let people just decide.”

“We’re not voting on anything yet,” Netts said. “By putting it on the agenda we’ll let the public have an opportunity to weigh in.”

“Right, exactly, and then you can all decide whether you’re going to accept our recommendation or just tell us to go out to bid,” Landon said.

DiStefano had made clear why she was uneasy with renegotiating at a time when low prices matter to residents: she would, in the same meeting, be adamant about not raising the stormwater fee $1 a month—that $1 a month Landon referred to derisively in the context of a garbage contract—because residents were stressed enough. “In the first months we had Waste Pro, we had problems, we had a lot of problems, so keeping that in my mind, I really don’t want to go to a new one, OK? But on the other hand I have to get the best price, and how do I know I have the best price if I don’t go out to bid?” As she spoke, a Waste Pro truck was outside the council chambers, hauling trash.

An exchange between Lewis and Netts was instructive about the sensitivity of the issue, though it has received virtually no attention beyond the council.

“My problem still is, how do I know you gave me the best” price Bill Lewis asked.

“You don’t know, you don’t know,” Netts said.

Lewis: “So you can’t come back and tell me that OK, we sat down with Waste Pro and here’s what they’re going to do—”

Netts: “Of course I can tell you that.”

Lewis: “Well, you can tell me that, then you come back and say, council, this is a good deal. Well, it may be, but—”

Frank Meeker: “Compared to what?”

Lewis: “Compared to what?” Lewis said.

“Gee, wouldn’t it be nice if life came with guarantees,” Netts said. “That’s why we’re elected, to make the best possible decision.”

But the council wasn’t given the tools to make the best decision, nor choices between haulers.

As contract manager Dianne Torino explained to the council, on May 4, the city sent out letters of request for information to trash haulers. Only three responded, including Waste Pro. “If we do go out for a request for proposal, we’re going to get more than three. We’re going to get at least five or six,” Torino said.

The three haulers were invited to make 30-minute presentations each to the five-member administrative committee, plus Landon, on July 6. Those presentations were never forwarded to the council. Haulers were barred against having contact either with the council or with staff, other than for minor follow-ups prompted by the staff. Even on Tuesday, the council didn’t see—nor did it ask—what the substance of those presentations were. All it got was a large-print, 10-page powerpoint presentation that only highlighted the advantages of re-negotiating with Waste Pro, without listing a single negative. The other two trash haulers’ information (Waste Management and Republic Services, the nations first and second largest trash haulers) was excluded, and when they were referred to, it was usually derisively: Landon spoke of the 60 jobs that would be lost in Flagler County if Waste Pro lost the contract, of Waste Management operating out of Volusia County, of Republic offering bulky, 96-gallon trash cans in exchange for one-day service, and so on.

The administration’s presentation to the council, in sum, was complete regarding neither the haulers nor the city’s revenue from the franchise fee.

It was 64 minutes into the discussion before any of the council members even asked what the contract itself was worth. The question was posed by Meeker. He was told: $7 million gross, plus the city’s share.

By putting out the resolution next Tuesday to re-negotiate with Waste Pro, as it intended all along, the administration is betting that the issue will draw little public reaction, given the intricacies of the garbage contract and the bidding process, and that even a divided council will tip over to the administration’s side in the end.

15 Responses for “Why Palm Coast Doesn’t Want To Lower Your $239 Garbage Rate and Bid Out the Contract”

  1. stinkytrucks says:

    How does the City know about their complaint record? When I have called to complain, someone at WastePro, not Palm Coast, answers.

  2. Johnm says:

    We elected these people to look out for the best interest of our city, so why aren’t they doing it. How will we know we are getting the best deal, unless we look at what others can offer? Comparison shopping is always the way to go.

  3. Mjohnson560 says:

    What does Mr. Landon have against the other companies? The first and second largest haulers in the nation are probably going to give pretty good service.

  4. Snow Bird says:

    Folks please realize the Jon Netts and Jim Landon are joined together.

    Do you recall in a previous article Jon Netts stated that the city manager does what the town council directs him to do.
    There are no surprises Landon is acting on direction.

    I read comments from all of the councilors except Holsey Moorman. Did he attend or was he just silent on this critical issue?

  5. palm coast concerned citizen says:

    If they can get the contract reduced by $2.00 a house hold, that is a savings of about 1.2 million a year. That is more than their franchise fee, and they can still skim off the top of that. If they get it by $4.00 that is 2.4 million. That is a lot of money.

  6. PJ says:

    The city needs to put it out to bid. Landon is misinformed. There are at least five companies that will bid. we have a good chance to save money. Landon is lazy and over paid. This is just another bad plan coming out of this City Manager. Netts and the rest of the board with exception to Lewis and Meeker do not have a clue.

    Waste Management and republic are the top two companies. Our complaints never make the city because Waste Pro gets them first. So how do you know when there is a service issue. Once again Palm coast can’t even manage the contract likely palm coast don’t even check the calls.

    Ok here how it really goes. The city thinks it gets no calls. Hence no issue with the current garbage company. Bad management on the city to think so. Landon your lazy and if you think you clean this contract off your rardar screen you’ve pulled another one over the residents and the board. Man up Landon. Earn your money!

    If you get your way on this one you will have proved to the readers of Flagler Live that you streer the board to your liking..

    Another good reason why change is good for the board. Now if a good board gets elected the next big change is your contract Landon. No bid, no raise and no job. You need to find another City that you can send into the basement.

    You’ve done enough in palm coast with your over inflated salery. Once again simply put it out to bid! don’t spend my money more than you already do.

    Put it out to bid, let your staf do their jobs. They and you are clearly not doing your job. How much time and money did you waste on this RFI? You have noting to show from it. The only companies that got in the presentations were the top two companies because this is what thay do. Pick up Garbage!!!!

    Put it out to bid!!!!!!!!!!!!!!!!!!!!!!!!!


    Who is working for who?
    The town’s business is to account & look out for every penny of our tax payers tax dollars. The bid process has a purpose and should be adhered too….when are these government people going to get it?…’s not their money…GO OUT TO BID! and stop this foolishness now!

  8. John Boy says:

    One kickback on the table, could there be more under the table? I always say, follow the money……

  9. flagler beach native says:

    I remember waste managment they throw your cans around and leave garbage on the ground .or if you are luck they will put the can in the middle of the driveway so you cant get in .at least this company has been the best that i have seen in palmcoast and i have been in my house since 1990 . i would pay more to keep them .

  10. Mjohnson560 says:

    City Council, please listen to the people you represent and put this out to bid!! Please make sure that we are getting the best deal we can. PUT THE CONTRACT OUT TO BID!!

  11. Doug Chozianin says:

    All the Palm Coast City Council incumbents need to be term limited… STARTING WITH THIS ELECTION! It will only take a moment to vote them all out of office. The new Council members can then focus on getting rid of our expensive tax-payer-insensitive City Manager, Jim Landon.

  12. Kendall says:

    Time to see if Netts and Moorman are willing to go to the mat for the citizens or if we need to vote in their challengers.

    This needs to go to bid and Landon needs to go to pasture.


    GO OUT TO BID and ask for both once a week pick up rates & twice a week pick up rates…

  14. Gale says:

    Just like the mayors job, it should be up for bid. Look at the company that bids and make a decision. If you don’t like thier pitch or business practices, give the public a reason why you don’t want them. Do some homework, when we vote, we will do ours, (homework). Homework = better decisions.

  15. Raul Troche says:

    I wonder if Landon had a large job to do on his house would he get more than one bid? If not that would be pretty darn stupid. Of course since it’s our money, not his he has no problem with no bidders as long as the kickbacks keep coming in.

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