San Juan Capistrano

CR&R Contract Amendment: An Attempt to Avoid Prop 218?

By Clint Worthington
       CR&R was back in front of the City Council at the December Council meeting. This time City staff stated the main reason was to eliminate the “evergreen” clause which allows the continual renewal of the CR&R contract without the contract ever going out to bid. This clause has allowed CR&R to serve as the City’s trash hauler since 1997 without ever having to bid for the multi-million-dollar-per-year contract.

It is worth noting that CR&R paid the City Attorneys to rewrite the amendment to the contract. Now if CR&R is paying our City Attorneys to do the work, whose best interests do you think will be represented - CR&R’s or the residents’? A review of the amendment might help to answer that question.
The new amendment to the Contract says that customers can now choose to “self haul” their trash to the landfill. Sounds good - until you read that you must do so in a vehicle approved by the City Manager.

Section e). states: "Self haulers must obtain all equipment, including containers and collection and transportation equipment, at a fair market value that does not include any hauling services, ‘free’ or otherwise."

So, let me make sure I understand this correctly. Any trash container for a self hauler must be paid for at “fair market value”? Who determines what fair market value is? Who enforces it? This verbiage in the contract seems to me either silly, or worse; perhaps designed to make sure that no one will meet the undefined definition of “fair market value”.

Even more questionable though, is whether this move by CR&R was done to get out from under the provisions of Proposition 218. The Municipal Code requires every real property owner to pay for trash services whether you receive them or not. Because of this requirement, it falls under Proposition 218. Prop 218 states that providers of certain mandatory municipal utilities can only charge customers for the actual cost of the service they are receiving. A number of residents have expressed concern at City council meetings that residential customers in SJC are unfairly charged to haul (or at least to subsidize the hauling of) stable waste to a processing facility out in Rancho Cucamonga

We cannot be forced to pay for a service that we do not receive. The City was recently reminded of this when the OC Superior Court ruled that our water rates were illegal; one reason was that each resident was being charged for recycled water it did not receive. In the case of CR&R, part of the cost of the trash service to each resident is the transportation of horse manure to a facility in Rancho Cucamonga. The problem is that each resident is being charged for that service even though you do not receive it.

I asked a local attorney his opinion about whether a trash hauler can charge residential customers to haul stable waste if they do not own horses, or whether residential customers can be charged to subsidize the hauling of commercial waste. In his opinion, residential customers cannot legally be charged for services they are not receiving.

CR&R is the same trash hauler that was required to refund money to all SJC customers after resident Ian Smith pointed out that our trash rate was being calculated incorrectly. When it was brought to the attention of City staff that the contract also requires that CR&R must pay City staff time for this miscalculation, CR&R made an agreement with the City to pay an annual Administration Fee of $30,000 to the City. When some of the residents demanded an audit of the contract, it was found that CR&R owed the City thousands of dollars in late payments to the City for a 5% “Franchise Fee” due to the City. The 5% franchise fee is a tax the City charges CR&R to do business in our City. CR&R simply passes that tax on to the residents. Dean Ruffridge of CR&R stated at a recent City Council meeting that the residents’ trash bill could be lower if the City eliminated the Franchise Fee.

CR&R’s proposed amendment will come back to the City Council for approval. Let's hope this time, there is something in there for the residents, like removing the 5% Franchise tax, oops, I mean fee.

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