Kensington residents will be talking trash June 9 when the (KPPCSD) holds a hearing on whether to grant a 6-percent rate increase to the town’s refuse contractor.
Technically the board is holding a "Proposition 218 Hearing" on Bay View Refuse and Recycling’s request for a rate increase. According to KPPCSD head Charles Toombs, it’s not just a hearing — it’s a board meeting. After residents have had a chance to offer opinions, the board may take a vote.
They could approve the rate increase request, or deny it, or make suggestions for changes in the rate schedule.
Like everything in Kensington, there’s a long backstory here, which has its beginning in 1997 when the current trash removal contract was negotiated. That document detailed what the town expected as well as the rates Bay View could charge, and allowed for an annual increase based on the consumer price index (CPI).
Additionally the agreement determined a benchmark profit of 12 percent but only on allowable costs. One example would be the "gate fee" charged to Bay View to dump our trash. Also the contract allowed reopening on the agreement every four years for a rate increase and outlined other extenuating circumstances that might allow for a renegotiation other than at four-year intervals.
Of course, how those clauses are being interpreted is the reason for our 218 hearing. Detailing the arguments on each side would take more space than Patch.com has allocated for my little column.
In fact, the April agenda packet of the KPPSCD meeting devotes well over 100 pages to all the relevant documents. Included are the original contract, the staff recommendation, a letter sent by Bay View outlining their case, and consultant’s reports prepared the last time a rate increase was requested. The issue was also discussed at the May meeting and those minutes are also posted.
The staff recommendation against the rate increase was written by Greg Harman, general manager and police chief.
Every town resident has received the letter from Bay View as well as a follow-up letter from the town outlining the hearing notice and a lengthy explanation of the contract and why the board staff, has recommended turning down the rate increase.
(The staff recommendation against the increase, the Bay View letter arguing for the increase and the existing contract are attached to this column. The agenda for the Thursday night hearing and meeting can be downloaded here.)
Bay View maintained in their letter that they are being forced to seek a rate increase because they will make very little profit for 2010 because too many of us have switched to smaller (20-gallon) trash cans. In case you didn’t know, and I didn’t until I got the Bay View letter, if you use the smaller can, you pay less. The lower rates were allowed as a way to encourage recycling, but now have proved so popular that many people have switched, leading to a drop in the company’s revenue.
In 2009 there were 2110 residential customers in Kensington. That number dropped to 2073 by the end of 2010. Accoring to Bay View about 19 percent of those customers use the smaller 20-gallon can — that's an increase of about 10 percent since 1999. Currently those residents pay $23.59 per month per can while the larger 32 gallon size costs $34.03 per can per month.
Bay View wants to increase the small can rate by 23 percent and the larger can rate by 6 percent, which would return the two rates to roughly the same relative proportion are they were when the original contract was signed.
As Bay View points out, it doesn’t cost them any less to make the collection. Any business major could tell you, that is a recipe for disaster. It seems to me that Bay View is suggesting a larger increase for anyone who has decreased their refuse by recycling more.
It’s the same argument being used by EBMUD, which has been granted a rate increase, in part, because we all did such a good job conserving water that they haven’t sold enough. Or PG&E’s argument that larger electricity users should get a rate decrease and smaller users should see an increase because the smaller users have done too good a job conserving energy.
It’s also the same argument the Postal Service uses for a rate increase, namely that we are mailing fewer letters because of email, texting and a variety of electronic communication methods.
On the other side of the coin, the KPPCSD notes that East Bay Refuse asked for, and was granted a rate increase in 2010, and they have not met the contractual requirements for a new increase. The District notes that the town is not required to give them a guaranteed rate of return.
The town notes there are other changes the company could make, like eleiminating backyard pickup, which would allow them to cust labor costs.
If you read through the board’s April minutes, you can sense that some members are a bit upset that a rate increase was requested after the ink on the 2010 increase was barely dry. There also appears to be some animosity that, rather than continue to meet with the board, Bay View chose to take their case right to the public.
It would seem that Bay View is trying to leverage the very positive image that their employees have created into a higher rate of return. Lewis Figone, the long-time owner, pointedly notes that if he doesn’t get an increase he may have to forgo his contract with Kensington and some other contractor (who is not as kind and benevolent) might take over.
Mr. Figone, whose company also collects trash in Sausalito, points out in his letter that Bay View has served Kensington more than 65 years and that he has been with the firm since 1942.
Most folks just put the trash out the night before their collection day, or in the morning as they leave for work and return to empty containers. Since I work out of my home, I often get a chance to see the waste management specialists as they move down the street, literally running from house to house collecting what we don’t want. They seem to accomplish their work with a smile and a much better attitude than I would have.
There are literally a ton of numbers being thrown around, that both sides are using to justify their arguements. Everything from the pay of Bay View's chief executive to relative rates paid by other communities.
In my view, most of the numbers are being used to obscure the real issue: is there some 'unforseen event' which allows Bay View to seek a rate increase outside the normal 4-year cycle, which happens to be just a year after a new contract with a rate increase was granted.
Personally I have a hard time seeing what has changed in just a year that would justify another increase. Take a minute, download some of the documents and look over the numbers for yourself before you head to the meeting June 9.
The meeting begins at 7 p.m. at the Kensington Community Center, 59 Arlington Ave.