Republic Gets Answers from U.S. Cities on Recycling Concerns

San Angelo's City Council heard from citizens last night about possible changes to its trash contract with Republic Services.  The public meeting is worth the watch.

Republic has approached San Angelo about needing to rethink a 10-year contract - signed in 2014 - after local processor Butts Recycling quadrupled its price last month. The San Angelo Standard-Times reports that options include raising rates, scaling back the program or cutting it entirely. 

Republic Services employed various strategies in response to recycling changes in Alabama, Alaska, Arizona, Connecticut, Delaware, Idaho, Illinois, Indiana, Massachusetts, Minnesota, Montana, Nevada, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington, and West Virginia.

Arab, Alabama denied Republic Services request for a contract change.  WasteDive reported:

Republic Services asked Arab for a cost increase in June, but after exploring its options, WAFF reports that Arab decided to stay the course. Its contract terms are technically still valid through May 2020.

Alaska municipalities are wrestling with the same concern.

Multiple communities were informed by Republic Services and others that markets for their mixed paper, and in some cases mixed plastic, no longer existed.

Arizona communities experience includes:

Municipalities and MRF operators throughout the state begin reporting more issues, with hints that some material is now being disposed, according to The Arizona Republic. Republic Services tells CBS 5 News that it continues to meet with municipalities about potential contract changes. The town of Bisbee considers cuts to its drop-off program, according to the San Pedro Valley News-Sun, and is landfilling low-value materials.

Arizona Daily Star reports on wide-ranging issues in the state, focusing on a host of potential changes in Tuscon such as reduced collection or higher fees. The city's recycling program is projected to run a $500,000 deficit this fiscal year and local MRFs are reporting high contamination rates. Green Valley News later reports that Republic is still moving material at its local MRF and has even offered skeptical residents ride-alongs to prove recycling continues as usual.

Kankakee, Illinois held Republic to the terms of its contract.

Republic Services, the city’s waste hauler, recently stated the curbside program was being discontinued because so much of the recyclable materials in the containers were not acceptable.

However, the city administration explored the matter and determined Republic would not be living up to the terms of the contract, and after discussions with the company, it was agreed the program would continue as it has for several years.

In Indiana Republic will raise prices.

Republic Services is nearly doubling rates for Indianapolis residents, the maximum allowed under its contract.

St. Lous, Missouri citizens are luckier:

The St. Louis Post-Dispatch reports on cost pressures for the local Republic Services MRF and its regional customers. Mixed paper is reportedly moving at a loss, though Republic said pricing is better than it was a couple months ago and no program changes are currently being considered.

Missoula, Montana restricted the types of plastics that could be recycled:

Republic Services and Garden City Recycling stop taking mixed plastics #3-7 in the Missoula and Lake County area, according to the Missoulian. Glacier National Park does the same, while Yellowstone hasn't made changes yet.

The City of Brotherly Love will pay Republic more while other Keystone state communities have long term contracts with Republic.

Philadelphia's recycling budget could take a $2 million hit this year now that it's paying Republic Services $38 per ton, according to The Inquirer. Others, such as Camden County, may be spared for now due to long-term agreements.

The City of San Angelo has a long term agreement with Republic Services.  Will City Council hold Republic to it, amend the agreement or rebid a new scope of trash/landfill services?

Update 3-4-19:  This video link highlights how City Council caved to Republic Service.

Council to Dot "O" in Trash Ordinance

Everyone expects trash to stink but many San Angelo citizens don't like the smell of City Council's awarding a ten year contract to a vendor that overcharged businesses for over a decade.  A Standard Times poll found readers voting nearly nine to one against council's move.

Former City Councilman Paul Alexander believes the process needs to start over and launched a petition toward that end.

It has but days to work.  City Council will approve the trash fee ordinance this Tuesday.  It's item #8 on the Consent Agenda.

For the first time I saw what Councilman Vardeman referenced in the trash discussion when he said council members had been accused of being on the take by "a blogger."  It wasn't just a blogger, but a member of the public who served on City Council for three years.  The petition language states:

#5 Republic Services officials have in fact offered at least some council members a perk or perks. Some members have refused, but at least one member has publicly been seen with a Republic official playing golf on the same team just days before the final vote to accept the Republic contract with the City. While no member may have been asked to vote one way or another, there is an implied obligation to vote in favor of Republic when accepting perks.  It is a fact that the same council member did speak very positively in support of Republic and voted to approve the contract.  This is not ethical and we do not approve of this practice. 

I stand by my original suggestion that the new contract be put on hold, the city hire an outside firm to investigate this long term overcharge (under city leaders Will Wilde, Ricky Dickson and Shane Kelton) and share the results of that investigation with the public.  What communications occurred between these gentlemen and Trashaway-Republic on unauthorized charges?

Will Wilde's ability to act unilaterally culminated in the unauthorized purchase and installation of over $100,000 in water department furniture without required approvals.  Had he done something similar with Trashaway-Republic on unauthorized fees prior Ricky Dickson's taking over in 2004?

Recently City Council reversed their designated drought level, undertaken in part by advice from Water Chief Ricky Dickson.  Ricky told council he interpreted one section of the drought ordinance as Council "can do whatever y;all want."  The City Attorney did not countermand Dickson's legal prognostication.

Council did what they wanted and reversed it the next meeting, stating they needed to undo an illegal action.   How did Ricky advise Republic on fees under the city trash ordinance?  Was he as cavalier with trash fees as he recently showed with the city's drought ordinance?

A separate track would have the city auditor ask the seven companies who failed to submit a bid why they made their decision.  How many don't want a new $400 million over ten years contract?  Given they all likely desire one, why did they not submit a bid?  What structural aspects of the bid documents favored the incumbent Republic?  

After these investigations council would have appropriate information to act on prior bids submitted or consider undertaking a new RFP process.  The City's rush to approve awarding Republic two contacts, with trash up to twenty year term and the landfill potentially over one hundred years, will be inscribed in ordinance on Tuesday.  Council will dot the "O", which many see as offensive from an ethical standpoint.

Update 7-14-14:  San Angelo Live has information on one City Councilman's  interactions with Republic Services between RFP submission and the final vote on July 1.

Update 1-19-17:   Dickson became aware in 2011 that Republic Services was charging fees outside those allowed by city ordinance.  Rather than investigate the case for wider fraud Dickson had Republic stop billing one account for unauthorized fees.  Documents indicate Dickson was aware of Republic's fraudulent billing and helped sweep it under the rug.

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.

City Landfill/Trash Contract: Serious Questions Need Answering

It's less than a week until San Angelo's City Council will hear the recommended contract with Republic Services/Trashaway.  Council plans to undertake the issue on July 1.

Some citizens expressed anger at Texas Disposal Systems (TDS) for identifying overcharging by Republic for commercial customers since 2000.  Yes, TDS was the only other bidder for the city's trash hauling/landfill operation franchise (that in itself is a concern).  Rather than shoot the messenger citizens should be grateful that someone identified Republic's repeated billing of unauthorized fees per the contract and city ordinance.

It's critical this issue be appropriately investigated prior to signing a long term contract with Republic. 

San Angelo Live reported:

City staff said that they were investigating the suspect charges, and have been since about the middle of April.

City of San Angelo Internal Auditor Steve Mahaffey called this morning to offer more information on the audit of the existing trash contract. He said that all questions have not been answered in the investigation yet, but is anticipating more information to flow from his office. "My ultimate goal is to provide transparency to all of our citizens, including commercial businesses affected by this," he said. "At this point, I have given a brief verbal update on the status of the investigation to the audit committee and to the City Management; there is no official written report at this time."

"I have reviewed several commercial bills, including those provided by Mr. Gregory with his concerns. I have reviewed years' worth of council minutes, watched videos of Council meetings, as well as reviewed agendas, minutes and accompanying background information pertaining to them," Mahaffey said.

I believe it's imperative to review more than several commercial bills.  Because the city received 4% of the unapproved charges, it benefited from the overcharge and retains liability for this portion of excessive fees paid by commercial customers.  At this point an outside audit investigation is warranted.

Mahaffey told the Standard-Times that the audit report would not be made public. 

How does an unshared audit meet the goal of transparency to citizens?  It clearly does not.

City leaders want to put this concern to bed as quickly as possible, thus key events are scheduled for this week.

City Councilwoman Charlotte Farmer said that the audit committee reviewed the findings of the audit of the commercial charges and there will be a press conference held by Republic sometime this week to announce the findings and the resolution. 

Press conference by Republic?  It's the city's franchise to manage.  City leaders are responsible for informing the public of what they found. 

This is the same Charlotte Farmer that motioned for the city to deny another trash hauler's right to use city streets.  After that motion was defeated, Farmer declared a conflict of interest due to having a relative in the trash business.  I never heard her disclose that this conflict had evaporated before motioning to renew Republic's contract for five years, serving on the Trash/Landfill RFP Review Committee or the Audit Committee that heard the Republic investigation unwritten report results. 

Through the thirty six year arrangement with Republic, the city has been responsible for contract oversight.  It's failure to ensure compliance with commercial billing cost area businesses millions ($).  A recent public information request revealed Republic had not submitted complaints to the city for the last five years, as required by contract.

Such discoveries undermine public confidence in city staff's ability to manage a critically important contract for our community.  Vendors had to attest to their ethics and good legal standing in the RFP.  I didn't expect the incumbent company to be at risk of legal proceedings for work they'd already done for the city.  But that is the case.

It seems prudent to extend the Republic contract for six months, have an outside audit investigation, hear those results and corresponding legal considerations and based on those findings consider whether to rebid the trash/landfill contract.  Moving forward with many questions unanswered feels like a rush to renew.  Unfortunately, that would fit with both language and actions by Council and staff the last ten months.

It's time to take a step back, not rush forward.  San Angelo, it's your turn to speak on this issue.

Update 6-26-14:  The Standard Times and San Angelo Live each weighed in. The situation escalated with a class action lawsuit announcement, seeking $9 million in actual damages, which can be trebled if Republic was fraudulent or used deceptive trade practices.

Update 6-28-14:  A Standard Times editorial reached the same conclusion, put the decision on hold until investigation results are revealed.

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.  Apparently city leaders don't view Republic's contractual commitments as something to hold the company to .

City's Increased Fees for Delayed Recycling

San Angelo's City Council talked trash this week.  Citizens learned Republic Services curbside recycling will start in July.  Consider the company's contractual commitment from a July 2, 2014 newspaper article. 

Republic has nine months to implement the recycling program, which will include public education. Recyclable materials include paper products, plastic containers, steel, tin and aluminum. Glass will be accepted once Republic constructs a materials recovery facility in the area.

A mid-July start is three and a half months past Republic's promise to recycle by the end of March.  The city's website stated:

The San Angelo City Council on July 1, 2014, approved solid waste contracts that will result in new curbside recycling and bulk trash pickup services

Recycling will start over a year after the City approved the deal.

The glass situation also changed.  Republic contracted with Butts Recycling for the materials recovery facility.  The equipment they're installing does not handle glass.  Part of the delay involved Planning Commission approval for Butts' expanded facility.  This included a waiver for their street, which is unpaved.

This is surprising San Angelo, where a few steps forward come with a few steps back, usually in management and communications.  Nothing's perfect but corporate promises and contractual agreements are legal commitments.

Councilwoman Elizabeth Grindstaff spoke directly to Republic's failures in implementation.  Public comment produced information that Republic and Butts began working in earnest on recycling in October of last year.

Councilwoman Grindstaff said she would've preferred if this happened in August.  It did not because Republic needed to settle a decade of charging commercial customers unapproved fees.

Republic Services will begin issuing refund checks to San Angelo commercial and industrial customers in October — in excess of $6 million.

“Republic is voluntarily refunding certain fees paid by affected commercial and industrial customers in San Angelo, going back to Aug. 1, 2004,” the release stated. “This 10-year period covers the full term of Republic’s prior contract with the city.”

Just as commercial customers paid ghost fees for a decade, San Angelo citizens paid higher rates for the elusive promise of curbside recycling.  Both the city and the company created the nine month expectation.  How will they make citizens whole for fees paid for service not provided?  It's disturbing pattern with the City and its trash contractor..
 

On August 1, 2015 trash fees will go up 2.9%.  Citizens have paid $15.12 a month for a level of service not provided.  That fee will rise to $15.56 just as the overdue service comes on line.  What service recovery will Republic undertake for their recycling delays?  What action might the City, consider, with its designated employee focusing on contract compliance? 

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.

Republic Freed to Review "Incorrect Fees"

The Standard Times and San Angelo Live reported that Republic Services issued a press release on "corrections to billing statements affecting commercial customers."  The City of San Angelo granted Republic an exclusive franchise for commercial waste hauling under a 2004 contract.  The City failed to review Republic's compliance with city ordinance specifying approved fees and aspects of the contract, including annual submission of complaints to city staff.

This investigation is the City's to conduct.  Republic's sole role should be a willing provider of complete information.  As the city has a 4% liability for any overcharges, it also could want this to disappear.

City Council serves in a governance role and should ensure a third party investigation is conducted.  That investigation should go beyond a review of accounts and amounts to be refunded.  It needs to explore internal documents related to unapproved fees, at Republic and within city staff.  Ricky Dickson supervised trash collection and the landfill in his former role as Operations Director.  He and other key staff should be interviewed, as should Republic Services' leaders.

Once the investigation is complete and made public, Council will be in a position to make an appropriate decision about a long term landfill operation-trash collection contract.  The City has been "hands off" the Republic contract for far too long.  Allowing Republic to conduct the investigation and determine refunds would be yet another abdication of responsibility.

Open and honest leadership isn't easy.  It means seeking an outside opinion when governance isn't in a position to assess as the city itself has a portion of any liability and staff have proven their ineffectiveness.  Any accounting should be forensic in nature.  City Council should engage the investigating firm and directly hear its report, later sharing that with the public.

Republic Services current language is that of minimization.  Their statement frequently cites "incorrect fees."  Other words that could apply, based on investigation results, include unauthorized, unapproved, illegal or fraudulent. 

"we apologize for any inconvenience that this situation may have caused for our commercial customers"

How is long term financial harm an inconvenience?

The issue came to light in April and Republic hadn't stopped charging these fees as of their last billing cycle.  The press release failed to mention the company's current stance on fees not approved by City Council and not in compliance with city ordinances.  Will they continue to be billed or has Republic stopped them?

City Council's allowing Republic to take the lead and investigate itself is a failure of leadership.  Like the Furniture Fiasco it doesn't pass the smell test.  That hapless investigation should not be a model for this grave issue.  The stakes are much higher, $9 million vs. $100,000.  In both cases parties exceeded their legal authority.  A prior council tried to bury the first.  I hope this one does better.

Republic's Expert Forensic Accountant Is Decade Off

The Standard Times Mike Kelly defended Republic Services audit of unauthorized billing of commercial customers over a decade's time.  Mr. Kelly posted Republic's audit on his personal Scribd account, which has a total of 7 documents listed. 

Republic Waste Services

Expert Report of Gregory A Shanabrook

SCOPE OF ENGAGEMENT
1. I have been retained by Republic Waste Services of Texas, Ltd. (“Republic”, “Defendants”) inconnection with the case between Acme Iron & Metal Company, Mayfield Paper Company, Inc., and those similarly situated (collectively the “Plaintiffs”) and Defendants.

2. In 2004, the City of San Angelo (the “City”) solicited proposals to provide solid waste management services for a future term. During that process, questions arose regarding Republic’s past charges to commercial and industrial customers. Republic determined to make a refund of the fuel recovery fees and environmental recovery fees charged in excess of the fuel fees expressly stated in City ordinances (referred to herein as “refundable fees”).

Expert forensic accountant Shanabrook needs to correct his report to 2014, not 2004, and resubmit it to the court.

The city did not conduct an internal investigation as to how this unauthorized billing occurred over the terms of Will Wilde, Ricky Dickson and Shane Kelton. These three gentlemen had operational responsibility for monitoring Republic's performance and compliance with contract provisions. The city did produce a one page investigation which concluded Republic billed and collected unauthorized fees on a long term basis.

Republic Services had two different accounting systems during their decade of unauthorized fee billing.

The city never caught this and once informed let Republic clean up its fraudulent mess. It has run away from internal review and management scrutiny at every turn.

I trust Mr. Shanabrook to correct his honest mistake. His was in one line of a report not over 5,900 customer accounts, ten years, three city leaders and two accounting systems.

City to Hold "Unauthorized Trash Fee" Cleanup

San Angelo's City Council will cleanup years worth of unauthorized commercial collections by trash hauler Republic Services-Trashaway.  They will do so by executing a series of moves.

First, Republic has the opportunity to identify "incorrect charges" that occurred over a decade and refund those amounts to commercial customers.  It's the city's responsibility under the contract to ensure Republic lived up to its promises and legal obligations.  Estimates of Republic's unauthorized commercial charges are as high as $9 million. 

Second, City Council will entertain a ten year contract with Republic for the city's trash hauling franchise.  Using the example in the draft contract Republic's fees will go from $10.30 to $14.47 for basic residential service, an increase of $4.17 per month.  This 40.4% increase doesn't include City Sales Tax, currently 85 cents on top of the $10.30.

Third, Council will likely award Republic a contract to operate the landfill for its remaining life.  Republic leases the landfill and operates it as a regional profit making venture.  The company's profit grew by putting more trash in our regional landfill, consistently reducing its projected life.  Last meeting Council approved construction of a new landfill Cell 11A at a cost of $445,000.  Republic will purchase Cell 11A's airspace, not to exceed $1.3 million.  The annual landfill lease payment is roughly $575,000 a year for ten years.

Fourth, the City's legal department stands behind the first three moves.  Items 2 and 3 were approved by Legal on 6-27-14.  A common risk management move is to act like nothing is untoward and admit nothing publicly.  This is why the city has an unwritten internal investigation that will not be shared.  This morning a Standard Times editorial found this lack of transparency odious.

Fifth, after approving new contracts for trash collection and landfill operation Council will wipe out the old fee ordinances, including dropping the language "commercial rates" for "non-residential service charges."

The City of San Angelo bears responsibility for its proceeds from unapproved fees, 4% of any total.  The City awarded the franchise to Republic, later providing little to no oversight in key areas.  Language and actions along the way indicated the City's determination to retain Republic.

The final move in that strategy should come Tuesday with a well coordinated Republic cleanup.  The only thing that might get in the way is the will of overcharged commercial, I mean non-residential customers.  It should be an interesting meeting.

Update 6-30-14:  San Angelo Live pegged the monthly trash collection price increase at 48%.  With property valuations soaring and a water rate increase on the way, citizen's pocketbooks could take a hit on multiple fronts.

Update 7-1-14:   The cleanup is complete with all five strategies executed by City Council in a 4-3 vote.

City Sits on Hands while Republic Refunds

The City of San Angelo contracted out its trash and landfill franchises to Trashaway-Republic Services for the last two decades.  Republic's overbilling of commercial customers came to light during the RFP evaluation process, which would determine the trash and landfill operator for the next ten years.  The City abdicated its oversight role, yet again, allowing Republic to audit bills and issue refunds.  At no time dig City leaders call for or conduct an internal investigation into how Republic promulgated these unauthorized fees.  Will Wilde, Ricky Dickson and Shane Kelton all "oversaw" Republic's contract with the city.

Since the city has been hands off Republic can say things like:

All the amounts to be refunded were charged in good faith.

Possibly in good faith that Republic's profits would be maximized, but they did not conform to contract or city ordinance.  The unnamed international accounting firm isn't on record with their findings.  No letter has been made available to the public as to the scope and methodology of their work.

The city failed to explore how this overcharge in excess of $6 million occurred.  No investigative body is exploring the long term bilking of commercial customers.  It's all packaged for public consumption for Halloween, which is symbolic given Republic tricked commercial customers for ten years.   

A class action lawsuit is all that remains between Republic and clear skies.  Republic's legal response to the lawsuit closed with prayer.  Or is it prey-er?

Update 12-7-14:  The Standard Times reported trash customers reaction to the refund and higher trash fees.

Trash Contract's True Value for City of San Angelo

San Angelo Live reported:

The City of San Angelo negotiated higher prices for trash pickup last year than the winning bidder, Republic Services of Texas, originally proposed.

Republic proposed $11.54 per month for residential curbside trash pickup with recycling.  In negotiations the city took that amount up $2.93 per month to $14.47.  Most negotiations have the vendor giving on price or throwing in extra services.  This went the opposite way.  Why?

City Council minutes from November 2013 stated:

Mr. (Shane) Kelton noted this process would allow staff to know the true value of the City’s asset and what is best for citizens. He noted upon review, the proposals maybe rejected and staff may renegotiate the contract with Republic Services. 

Was Republic's bid of $11.54 per month rejected and then the city renegotiated the contract with Republic for $14.47?  Don't count on a clear answer from city officials.

The City of San Angelo colluded with Republic to hide how unauthorized charges were foisted on commercial customers over a decade's time.  The City never released its investigation as to how these charges occurred, i.e. who knew what within City Hall.  It's was the city's responsibility to ensure Republic was compliant with contract terms.

The "true value" of the City's trash franchise came via large upfront cash payments in the renegotiated contract.  The parties colluded to charge 32,200 customers more over the contract period so the city could obtain $8.7 million upfront.

Residential customers paid 25.4% more than Republic's original proposal, while commercial customers paid 17.7% more than the original bid.  These dramatic increases funded the city's nearly $9 million cash back option.  Think about that the next time you pay your integrated utility bill.

Update 4-29-15:  Trash is a major subject in San Angelo's Mayoral race.   Texas Disposal Systems President and CEO Bob Gregory felt a need to weigh in.  It's worth the read.

Update 9-19-18:  Winning bidder Republic Services wants to back away from its recycling contractual commitments.   City staff and Republic will host public meetings on possible changes.  Might this open the door for TDS to submit a bid for San Angelo's trash franchise?

Trash Audit: War of the Words

Investigative journalist Wayne Dolchefino traveled to San Angelo to ask officials about the internal audit conducted on unauthorized fees charged by Republic Services, formerly Trashaway.  The unauthorized fees impacted commercial clients beginning in 2004.

Two city officials referenced the audit in June 2014.

Mahaffey told the Standard-Times that the audit report would not be made public.

City Councilwoman Charlotte Farmer said that the audit committee reviewed the findings of the audit of the commercial charges and there will be a press conference held by Republic sometime this week to announce the findings and the resolution. 

San Angelo's Public Information Office Anthony Wilson officially started on September 1, 2012.  At the time he told the Standard Times:

"We have a responsibility to inform our citizenry what we're doing and why we're doing it. While I believe we deliver an extraordinary level of service, we don't always effectively share that story with the public we serve. We'll aim to tell that story through every available means."

Dolchefino wants answers on the 2014 internal city audit referenced by city officials, the one conducted before Republic hired an accounting firm.  In the video Wilson talks trash audit, the one conducted by a forensic accountant on behalf of Republic Services after the city effectively re-upped their contract.

Forensic Accounting:  the use of accounting skills to investigate fraud or embezzlement and to analyze financial information for use in legal proceedings.

Wilson said Republic's forensic audit is available via the fraudulent billing lawsuit filed in Tom Green County Court, a case in which the city has no part.

That means the city has no audit at all, neither the one referenced in June 2014 by the city's internal auditor and Councilwoman Charlotte Farmer nor the forensic accounting audit conducted on behalf of the city's longtime trash vendor.  It does have a one page investigation, which can hardly be construed as an audit.

The Standard Times, San Angelo Live and this blog advised city officials, elected and paid to conduct an investigation and share it with the public before acting on a long term trash/landfill contract.  I wrote in June 2014:

It seems prudent to extend the Republic contract for six months, have an outside audit investigation, hear those results and corresponding legal considerations and based on those findings consider whether to rebid the trash/landfill contract.  Moving forward with many questions unanswered feels like a rush to renew.  Unfortunately, that would fit with both language and actions by Council and staff the last ten months.
 
 It's time to take a step back, not rush forward. 

In July 2014 I reiterated:

I stand by my original suggestion that the new contract be put on hold, the city hire an outside firm to investigate this long term overcharge (under city leaders Will Wilde, Ricky Dickson and Shane Kelton) and share the results of that investigation with the public.  What communications occurred between these gentlemen and Trashaway-Republic on unauthorized charges?

City leaders chose to go ahead with promises to hold Republic accountable.   I don't believe the city can be more hands off in a potential fraud case perpetrated by a sole source vendor over a decade's time.  Republic gets to clean up their mess while city officials stick their heads in the sand, pulling it out every now and then to admonish those asking questions. 

It's the city's opportunity to effectively share how public officials ever audited Republic with those they serve.  Wilson's latest video is way off target.

City Intent on Recycling Trashaway-Republic Contract

The City of San Angelo offered two main reasons for Trashaway-Republic's bid being selected for a negotiated contract.  The first:

Republic was the only vendor to offer a plan to align with San Angelo’s three existing recycling collectors. The City Council has expressed an interest in such an arrangement to ensure that those enterprises are not put out of business.

This was not in the overall RFP or the subsection on Waste Collection Specifications, nor could it be found in the Landfill Lease and Operations Specifications.  It appears vendors were uninformed of what became a distinguishing criteria for the city to choose Trashaway-Republic.  How did Trashaway-Republic become aware of this criteria?

What if the city chose a distinguishing, unspecified criteria that won't come into play?  RFP Addendum #1 Appendix D states:

a.  When will the City decide whether to include recyclables material collection under an exclusive contract?

Response: City Council has stated they currently do not wish to include recyclables in an exclusive contract.

 
On to the second stated reason for choosing Trashaway-Republic:

Also, TDS’ proposed rate for residential trash pickup (including the recycling component) was 64 percent higher than Republic’s proposed rate.

TDS's response to this came from CEO Bob Gregory:

While TDS has no idea what Republic Services has offered the City for residential trash and recyclables collection or any other service in their RFP response, and cannot know if this is a true statement, it is important to note that TDS responded to the RFP with seven different options and rate plans for residential trash and recyclables collection.  The service level that the City staff chose to publicize (weekly collection of both trash and recyclables with separate carts) was the highest rate that we provided.  TDS offered options for every other week single stream recycling which lowered the monthly rate substantially.  Every other week single stream recycling service is considered the standard service level in most parts of the country.  This is because the size of the recycling cart is large enough to be serviced every other week, instead of weekly.  This option also significantly reduces truck traffic on City roads. Were any of the other TDS proposals considered in the evaluation, or was only the most expensive once weekly recyclable collection service option evaluated?  None of the other TDS options were mentioned in the briefing or in the published statements of the PIO. Given the City staff’s mention of Republic’s alignment with recycling collectors, I wonder whether the City staff is comparing a full blown single stream recycling program with a program allowing a local subcontractor to collect recyclables with or without an additional charge to residents.  Nevertheless, City staff should have acknowledged whether its price comparison is for comparable service. 

The city has been silent to date on Mr. Gregory's questions. 

It would be odd to exclude a vendor based on a service not specified and another service that's unwanted.  There are other interesting tidbits in the RFP documents, but I'll save those for another post. 

Unauthorized Billing Characterized as Bidder Animosity

The Standard Times news team boiled legitimate concerns about Republic Services' unjust enrichment from commercial customers as animosity from a sore loser.  In contrast the paper's editorial staff called for a delay in approving the new trash/landfill contract so long term, unauthorized billing concerns could be properly investigated and addressed.

City Manager Daniel Valenzuela anticipates contract approval tomorrow.  Daniel believes Republic can investigate itself and will do the right thing. 

There is no evidence the city ever audited Republic's bills to insure they were in compliance with the contract and city ordinance.  

The city lacked contractually required documents on complaints made to Republic for the last five years.  The contract specified this information would be submitted annually.  

I expect tomorrow's council meeting to be like Daniel's first, which included the unauthorized purchase of over $100,000 in furniture for the Water Department.   That act violated city purchasing policies and state law.

Valenzuela promised a thorough investigation which did not include interviewing two of the major players in the Furniture Fiasco, Interim City Manager Michael Dane and former Assistant City Manager Elizabeth Grindstaff.  Both will be in council chambers tomorrow for the trash/landfill contract decision.  City Councilwoman Grindstaff will vote on the matter.

Nearly two years ago Council decided they were in a tough spot and needed to approve the furniture purchase to help the local vendor,as the furniture had been delivered and installed. Similar charity has the city, which owns the commercial waste franchise, allowing Republic to investigate itself and refund overcharges, seemingly without penalty.

The City failed to ensure Republic Services lived up to their expiring contract, yet they deserve a new ten year deal?

Both waste collection and the landfill are city's franchise to govern.  Staff proved their unwillingness or inability to hold Republic to their obligations, therefore City Council should.

That may be a different level of animosity, seen in City Councilman Rodney Fleming's interaction with Valenzuela two meetings prior.  Might that have been over Republic's long term overcharging of commercial customers?  Some think so.

Fireworks could come early this year.  Look for them in Council Chambers on July 1, especially if overcharged commercial customers turn out in droves.  They may wish to do business with someone who didn't overcharge them over a fourteen year period.  And they may not trust the city that allowed that to happen.

Trashaway-Republic Deal: Considerations from TDS

Texas Disposal Systems posted information on its web site regarding the City of San Angelo's bleak trash situation.  The City needs to act quickly at a time when measured thought would be preferable.  San Angelo's contract with Trashaway-Republic expires in July.

TDS submitted an unsuccessful bid to provide trash collections for residential and commercial customers for the City of San Angelo.  It also proposed to operate the City's landfill, which is rapidly running out of space.  Add that winning bidder Trashaway-Republic billed commercial clients for unauthorized charges for years and things get more bizarre.

San Angelo Live reported:

The first tack is to finish negotiations on the new contract from the RFP selection with Republic, and the second is to fully investigate the suspect Environmental Recovery Fees (ERF), equal to approximately 32% extra on commercial trash collection bills, that Republic has been charging for at least a decade. To date, the City has announced no finding of specific legal authorization for Republic to charge San Angelo's commercial customers the ERF.

Since the 2004 contract is involved in the executive session description, this may be related to the ERF issue. City staff may be poised to offer Council options on how to proceed with the second pathway described above.

Wednesday, the City said the contract negotiations would not be completed in time for the May 6 council meeting.

City Manager Daniel Valenzuela is distancing himself from being involved in the actual trash decision by assuming the role of researcher and facilitator for Council. Once his staff has completed their negotiations and research, the decision on how to proceed will rest almost completely upon Council’s shoulders.

The irony of the matter is the City is discussing litigation with a vendor at the same time it’s negotiating a long-term, multi-million dollar contract.

Possible litigation is on City Council's agenda for Executive Session this Tuesday, June 3, 2014.  However the Trashaway-Republic contract for trash collection and landfill operation is not on the public agenda.

Last November City Council hardly seemed visionary in its discussion of whether to request RFP's for trash collection/landfill operation.  TDS' website provides a rich source of information for interested citizens, as does the City of San Angelo's purchasing department. 

Stay tuned for future developments, which will likely involve a multi-million dollar settlement with Trashaway-Republic and new long term contract.  The process already left a bad taste in many mouths.  In most cases long term unethical behavior would disallow a vendor from bidding at all.  In Surprising San Angelo it's a detail to work through.

Also, if a City Manager is not making a firm recommendation, coaching staff and shaping the process, then San Angelo has a leadership problem.  The buck stops at the City Manager's office.  If there's no professional management/leadership then City Council has to slog through a staff driven hodge podge on any issue.

City Knew in 2011 of Unauthorized Republic Fees

San Angelo Live reported city leaders knew trash hauler Republic Services charged fuel fees above those allowed by city ordinance.  Operations Director Ricky Dickson investigated a commercial complaint in August 2011 that should've caused concern that Republic wasn't complying with the contract and city ordinances in place at the time. 

Dickson and Trashaway dropped the unauthorized fees from one customer's bill.  That move set the stage for Republic to say it owed $6.5 million in refunds for customer over payments.

Fraud:  wrongful or criminal deception intended to result in financial or personal gain.

City Manager Daniel Valenzuela should have known this information after April 15, 2014, when the public became aware of unauthorized fees Republic charged commercial customers.  The city's internal investigation cited Republic's Environmental Recovery Fee, which had never been authorized by Council.

What happens when city leaders uncover fraud but turn the other way like Ricky Dickson?  A mere five months later Valenzuela created a new Executive Director of Public Works job for Dickson, waiving the Professional Engineer requirement for the second time.

At the time of Dickson's promotion in September 2014 I wrote:

Frankly, I wonder what price the community will pay ten years from now from the leadership combination of Valenzuela-Dickson.  I expect it to be significant.

The city hired Ricky's son Brandon as Assistant Director Water Treatment Plant last summer.  This upgraded position is roughly $37,000 higher in annual pay and comes with the potential for two $5,000 bonuses for certifications required to be considered for the position.  Brandon's pay started at $92,950.  Oddly, Ricky told a reliable source that Brandon would return to city employment in January 2016, before the search process began.

Republic perpetrated a $6.5 million fraud against commercial customers.  The unauthorized fees investigation provides evidence of Ricky Dickson's choosing to support a vendor vs. acting in the wider public interest.  The investigation came from outside City Hall.  These two facts should be concerning to the public and elected officials. 

Update 2-17-17:  Investigative journalist Wayne Dolchfino and San Angelo Live continue asking questions about the city's work in this arena.  City Public Information Officer Anthony Wilson produced a defensive piece that ignored the issue raised in this post as to why the city only refunded one customer in 2011 when responsible leaders learned of the unauthorized billing.   

Trashaway-Republic Contract Coming Soon

The City of San Angelo extended its trash hauling/landfill operation contract in 2004 for a ten year period.  With less than a year left City Council considered re-uping with Trashaway-Republic.  Two months later Council directed staff to seek competitive bids.  City Council minutes stated:

General discussion was held on whether to have an exclusive or open market contract and whether to base the contract term on the life of the site or fixed term. Mr. Kelton suggested separating the landfill and collection function as two separate contracts with the same term to maximize negotiations. In conclusion, Council directed staff to conduct a request for proposal. Mr. Kelton noted this process would allow staff to know the true value of the City’s asset and what is best for citizens. He noted upon review, the proposals maybe rejected and staff may renegotiate the contract with Republic Services.

It took four more months to get the RFP posted and bids in.  A committee found Trashaway-Republic's bid far superior to Texas Disposal Systems.  The group essentially had less than five business days to do their work, given the two weekends between March 21 and April 1.  Roughly one month after their decision City leaders held a press conference to explain their logic to citizens. 

It became a tougher sell after news broke that  Trashaway-Republic included unauthorized charges in bills for its commercial customers, part of the franchise awarded by the city.  I wondered what the city had done over the years to ensure Trashaway-Republic lived up to the terms of its contract.  Had they audited any bills over the 37 year period for contract compliance? 

This trash deal started under Will Wilde, shifted to Ricky Dickson and now is under Shane Kelton.  Will didn't have to answer to anybody.  Dickson and Kelton look continually surprised that their answers are less than complete and informative.

The process focused on renewing Republic from square one.  It hasn't been open and transparent, despite recent efforts by city leaders.

There's usually more to discover when good ole boys operate laissez faire for decades.  We'll see what else crawls out from under the landfill cover. 

Trashaway-Republic Contract Performance: No Adults in Room

PIR for Trashaway-Republic Complaints from jepysdad

One has to wonder what the city did between 2004 and 2014 to monitor Trashaway-Republic's compliance with its City of San Angelo contract.  The public learned there was no authorization for special charges Trashaway-Republic charged commercial clients.  In addition the city conducted no billing audits to ensure Trashaway complied with contract terms regarding allowable charges.

Add another omission to the list, the required reporting of complaints to City officials by Trashaway-Republic.  The contract language states:

2.1.5 COMPLAINTS

Contractor agrees to respond within a reasonable time to any complaint from the City or any citizen regarding services.  Contractor shall maintain a written log of the source, date and nature of such complaint, the resolution thereof, and shall provide to City a written report of such complaints at least twice annually.  

Texas Disposal Systems, Trashaway-Republic's competitor, sought access to the complaint lists for the last five years. 

On May 22, TDS submitted an open records request to the City of San Angelo asking for copies of the Contractor reports required under section 2.1.5 of the contract.  The City responded with the attached letter, which states the City does not possess the records and that the documents are not in existence at this time.  

This is the department our current water chief ran for eight of the last ten years?  No billing audits, no complaint logs (as required by contract), what else did the City not do.  I find it amazing how the city abdicated its responsibilities to Trashaway-Republic.  It's as if there were no adults in the room, just boys, the good 'ole variety.

(The letters referred to above are embedded in the Slideshare document at the top of this post.)

Republic Snubs Overcharged Commercial Customers

Legal cases often show a company's true colors.  Consider Republic Services defense of a decade of overcharges to commercial customers.

Republic issued a general denial of owing anything at all, at least to the plaintiffs. The response said:

1. Plaintiffs’ claims and the relief sought are barred in whole or in part by the applicable statutes of limitations.
2. The voluntary payment doctrine precludes Plaintiffs’ claims and the relief sought.
3. Plaintiffs’ claims cannot be maintained as a class action on behalf of the putative class alleged in the Petition.

Republic claims their egregious behavior occurred too long ago to be legally compensible.  They also cite that commercial customers willingly paid unauthorized charges, allowed by lax city staff as they never audited Republic's compliance with contract provisions. 

The City of San Angelo is yet to release their findings on Republic's overcharges under the commercial franchise agreement.   One City Councilmember said contract negotiations were the only leverage the city had on behalf of 2,000 commercial customers.  It appears this person was right in their assessment. 

Commercial Customers Fund City's Trash Bonanza

San Angelo Live reported:

San Angelo businesses received their notices and new trash invoices indicating that the commercial trash rates have increased significantly this month, and they don’t like it.

Rates increased 73%, 92% and 31% for businesses cited in the article.  These are the same commercial customers Republic overcharged for over a decade.  It appears the past is a predictor of the future.

Republic's language is typical nowadays, where no one accepts responsibility for their part:

“The City of San Angelo has adopted a change in ordinance increasing landfill and collection rates.” 

Actually, the City put out an RFP for trash and landfill services, narrowed it down to Republic, negotiated the "best deal" it could on behalf of citizens, then signed contracts establishing landfill and collection rates for customers.  Republic agreed to charge such rates, in part to meet the city's demand for upfront money.

The city will clear nearly $1 million alone from charging landfill Cell 11A back to Republic.  

The July 1 City Council presentation clearly showed the increase for residential customers.

Despite showing four slides of new commercial pricing, not one showed an anticipated increase for typical business customers.  TDS President/CEO Bob Gregory gave public testimony on commercial rates the day City Council approved the contract:

"This contract could be up to and over $2 billion...  It's the biggest contract any council has ever considered...  If you go to Tab 5 you will see a comparison of commercial rates.  It was said in the press conference recently that commercial rates were comparable (between Republic and TDS).  As it turns out that we see rates now, it is not true.  TDS commercial rates are less than the rates proposed in this contract.  They are laid out very carefully.  This is a very significant contract increase for commercial rates coming on August 1."

Heidi Brooks, owner of Cactus Car Washes in San Angelo shared this with City Council before the vote:

"We need to get all the information out on the table, to all small businesses, to all residents."

Stanley Mayfield, owner of Mayfield Paper, offered:

"I urge you to slow this thing down, air it out.  Let the citizens look at it.  Let the business community look at it.  We appreciate your endurance in doing so."

Council did not endure. They approved the contracts.  At the next meeting builders spoke out saying their costs would increase greatly under the new contract.  It turns out they weren't alone.

Update 9-3-14:  A board member for the city's Development Corporation commented on the large increase in his trash bill in their August 27 meeting,  He noted, "It's a doozy."  

Trashaway-Republic Contract Renewal: Failed Checklist

One might expect city staff to go through key contract provisions with Trashaway-Republic Services and assess their performance over the last ten years.  It's clear that didn't happen with at least two sections of the contract, commercial client billing and submission of customer complaints to the city.  This means City Council had only part of the picture when it acted on April Fool's:

On April 1, the council unanimously approved the recommendation of a committee to grant, pending negotiations, the city’s waste collection contract to Republic Services for 10 years.

City staff abdicated their responsibility to ensure commercial clients were charged allowable fees and not a penny more.  They also failed to compel Trashaway-Republic to provide the contractually required listing of customer complaints for the last five years.

These omissions blow a hole in staff's assertion they conducted a thorough analysis.  Assessing contract compliance for the current provider would be a key step in any credible evaluation process.

I appreciate the call for transparency, but it's darned embarrassing when the light of day reveals the city is clueless, unaware.  Republic is in the midst of a charm offensive as it tries to survive its first serious challenge in thirty five years.

This item was due to return to City Council May 6th.  There's no hide nor hair of it yet.

Update 6-15-14:  Target date for this to go to Council is July 1.

Councilman Self's Stinging Defense of Johnny Silvas

One year ago City Councilman Marty Self became the focus of an ethics concern due to a local blogger, Christian Reporter News.  As a result of this experience Self felt the need to challenge a San Angelo Live story which raised concerns about fellow Councilman Johnny Silvas' playing golf with a Republic leader in close proximity to the trash/landfill decision.

Self portrayed the golf outing as a one time event where Silvas showed community leadership by attending a nonprofit fundraiser. 

Would Marty have spoken so eloquently in Silvas' defense if he knew Johnny repeatedly played golf with Republic representatives, both in town and around the state?

Councilman Silvas would have no legal-ethical concerns if he reported any golf outings and associated expenses paid for by Republic.

§ 36.10. Non-Applicable
Section 36.08 (Gift to Public Servant) does not apply to food, lodging, transportation, or entertainment accepted as a guest and, if the donee is required by law to report those items, reported by the donee in accordance with that law. 

I'll venture that no public record exists of Councilman Silvas' Republic golf outings and associated gifts.

Several council members voiced strong support for Silvas and outrage for anyone who'd run such a story.  Yet, Johnny never spoke.  He didn't say who paid for that golf outing, much less the many others Silvas has enjoyed from Republic.

Citizens can look at one golf outing and accept Johnny's silence as innocence.  Others can ask why council offered up nothing but indignation.  The facts, as it stands now, are mostly missing.  That's not unusual in San Angelo's 2014 Trash Saga.