Palm Coast Prepares for New Garbage Contract as Waste Pro starts ‘Inappropriate’ Courtship of Council Members

Last Updated: 6 p.m.

Garbage hauling is a dirty but lucrative business, giving haulers a monopoly and guaranteed income in cities and counties for years at a time. It’s also cut-throat competitive. Waste Pro’s current contract with Palm Coast is a $9 million-a-year business, up from $7 million a decade ago.

When a contract is up in a local government, haulers not only respond to requests for proposals. They also often swoop in with the lobbying and the courting of local officials–if those officials let them.

Palm Coast has previously taken a hard line against those heavy-handed tactics. It’s doing so again, now that its hauling contract is nearing its final year. Palm Coast’s contract with Waste Pro, now 15 years old, expires in May 2022. The city is beginning the long process of analyzing what its residents want from their next hauling contract and what company is best suited to provide it before signing a contract in October.

As if on cue, Waste Pro’s Heather Badger-Felmet, the company’s division manager in Palm Coast, mass-emailed each Palm Coast City Council member on Feb. 3, personalizing each email with the council member’s name (but in a different font). “I know your [sic.] busy but I really just wanted to reach out and see if we could get together. I would love to discuss some of the changes going on around us with solid waste & recycling,” she wrote flatteringly. “I’m trying to focus on some of the new needs that the City of Palm Coast may need. And who better to get this information from but yourself.”

Badger-Felmet then proposed a tour of the facility, a “face-to-face meeting” or lunch, and provided her cell phone number. (In 2011, Waste Pro took a different approach: it attempted to stop Palm Coast from bidding out the contract when it was up for renewal, arguing that since it already had the contract, the city should just negotiate with it only. The city almost did just that.)

“It’s a sales pitch, that’s really what it is,” City Manager Matthew Morton, who in this regard is no different than his predecessor when it comes to bidders’ presumptions, said this morning. He said he was not emailed–though it’s his staff that’s in charge of analyzing contractual needs–but Mayor Milissa Holland forwarded the Badger-Felmet email to him and termed it “inappropriate.” She wanted the email to be part of the record.

Holland “also asked if I had challenged Heather as to the appropriateness of such invitations and emails,” Morton said.

A “deeply disappointed” Morton wrote the Waste Pro manager to that effect. “I am dismayed to learn of several activities WastePro is undertaking and the timing of these activities as we head into a community driven effort to evaluate and publicly bid a contract for municipal waste hauling and recycling services,” he wrote her Thursday afternoon in an email, after noting the importance of the integrity of the city’s procurement process. “More troubling, these activities were brought to my attention by members of the community and the media. I believe these activities undermine the public process and are antithetical to building trust and ensuring transparency.” Morton termed WastePro’s approaching council members improper, as opposed to requesting to speak to them at a council meeting.

Council member Eddie Branquinho also inquired about the invitation. The administration advised strongly against answering or entertaining the email’s propositions, since it’s unethical for elected officials to consort with prospective bidders ahead of a contractual process–including existing contractors, if they are to be part of the bidding process. No company is supposed to have an inside track if the process is to be objective and equal.

Holland, Branquinho and Council member Nick Klufas are not responding to the invitation, Morton said. Council member Ed Danko on Feb. 8 posted pictures of himself posing with Waste Pro personnel at the facility, including Badger-Felmet, calling them “fine, hardworking folks.”

Danko did not disclose having gone on the tour when the council discussed its next hauling contract in a workshop Tuesday. But the WastePro manager after his visit, according to Morton’s email today, singled out Danko for prise, which drew another rebuke from the city manager. “I find it highly inappropriate for a prospective contractor of the City to endorse, over other Councilmembers, as the ‘most active and engaged’ because they chose to visit your site when others declined citing the same ethical concerns aforementioned. The City Council is a deliberative and collegial body of equals,” he wrote. “I have asked the City Attorney to review your activities to determine if you have breached contract or if this rises to the level of lobbying and a violation of Florida Statutes Chapter 112.”

The issues brought up by that email, obtained after this article initially published, may alter the dynamics of the contract negotiations ahead.

That contract could be with Waste Pro again (the county also piggybacks on the city’s contract) or it could be a different company: the trash landscape has changed in the last few years, with recycling becoming a doubtful service as haulers often send their recyclables to landfills because the market for recycling has become too expensive to make it pay, and automation raising possibilities of limiting price increases, but not without concessions from customers, such as changing the frequency of pick-up and the need for standardized garbage cans.

“We don’t have that much time,” Morton said on Tuesday of the window before the current contract expires. The city is analyzing the landscape of garbage and recycling, “what’s happening in the state of Florida, what’s happening nationally,” and understanding what residents want in garbage service in the future. The city hired a consultant, NewGen Strategies, that specializes in analyzing garbage-hauling matters.  Staffers have been meeting with the consultant since January on a weekly basis. (The city is paying up to $25,000 for that consulting contract.)

Cynthia Schweers, the city’s director of citizen engagement, and Jordan Myers, the city’s environmental planning technician, briefed the council Tuesday on what’s been done so far and what’s ahead. “There’s a lot of decisions that need to be made, so what we want to do is make that every resident and council [member] part of that decision making,” Schweers said.

Currently, Palm Coast’s contract with Waste Pro calls for twice a week pick-up or ordinary garbage, once a week yard pick-up, and once a week recycling, for $20.36 a month, or $244.32 a year. That’s not much more than the $239 a year residents paid in 2011. (When the city renewed its contract with Waste Pro that year, prices fell modestly thanks to the company’s switch to natural gas-powered trucks.)

Waste Pro isn’t the only entity making money. The city takes a 10 percent franchise fee off the top, sending 8 percent to the general fund and using it as one of its hedges to keep the property tax low. The other 2 percent remains in the solid waste fund for administrative needs. In 2019, the city made $719,472 off that fee, and last year generated $724,500. It is, in essence, a hidden tax that seldom gets discussed–and didn’t on Tuesday. If that fee wasn’t assessed, it would of course provide a 10 percent reduction in customers’ fees. Other cities’ garbage rates are lower for that reason (see the comparative numbers with Deltona and Debary, for example, below.)

Palm Coast’s garbage rates have not gone up in five years, but there’s been a few changes, including changes in the recycling world, that anticipate higher rates ahead.

The city will be issuing a nine-question survey to Palm Coast residents in March to gauge their preferences for the next contract. The survey will go out through utility bills, on Palm Coast Connect, and will be available at all city locations. The city will also host an online town hall to enable residents to ask their questions more directly, and ask community associations to blast out emails to engage residents. The goal: “How we can make sure that that rate doesn’t increase tremendously,” Schweers said. (See the survey questions in the embedded document below.)

The nine questions gauge residents’ satisfaction with Waste Pro currently, ask about frequency of trash pick-up (would residents agree to once a week pick-up if costs were reduced?), would residents accept a city-provided, wheeled container (which enables the hauler to automate its service, reducing its truck’s personnel from two people to one), ask about yard and bulk waste, and devote four questions to recycling, an industry in flux.

Aside from recycling, the issue typically debated in garbage contracts is whether there should be once or twice a week pick-ups, and whether the hauler should have automated pick-up or not. The city experimented with the once-a-week approach in the B Section several years ago. It entailed a bigger, standardized trash can. “Some people liked it, some people didn’t.” Schweers said, who was part of the pilot and liked it. But with a single person on a truck, it could also leave more litter behind the truck, unseen, and prices would have to be analyzed. (Bunnell uses the single-person, automated approach.) “It’s a good discussion to have until we see our options,” Schweers said.

The dislike of the larger cans also had to do with demographics. Holland noted that older residents have a harder time rolling out larger cans to the curb–and the city, with 30 percent of its population now 65 and over (compared to 24 percent a decade ago) is still aging.

The results of the survey will be presented to the council in April, with a request for proposals set to go by May or June, awarding a contract by October.

“Apparently prices are going to go up,” Branquinho said, with the survey serving as a means of calibrating the contractual decision accordingly. “Are we doing this to save money? Or we expect the prices to go really high? And what is the reason why prices should go that high,” he asked Morton.

“We don’t know if there’ll even be an increase, candidly,” Morton said. “We’re expecting an increase for two reasons: the industrial rate indices and the CPI indices that waste haulers use continue to increase like a lot of business cost drivers,” he said, referring to the consumer price index that measures inflation. “We’ve had no adjustment to either one of those in our contract for multiple years. I think the bigger driver is recycling. There’s a point in time in the not-too distant past that recycling, like a lot of commodity markets, was profitable. At this point recycling is not profitable as a commodity market,” mainly because China stopped accepting over 90 percent of the world’s recyclable materials. “We’re at the point in America unfortunately at this moment in time where it’s cheaper to make new products than it is to recycle existing products, So the real baseline, initial idea behind this survey is informing our residents on some choice versus quality factors. More importantly, understanding what decisions council may want to guide this contract to minimize costs if that’s what the public is telling us, if that’s their primary goal.”

He spoke hypothetically: if automated hauling would offset the projected cost increase, “is that a trade people are willing to make even if they’re not big fans of automation?” he asked. “We really want to try to bring a balance back and let council direct where this process goes by information we’re getting from the community.”

Rates have not increased significantly at all since 2010. Back then, a Palm Coast home paid $19.82 a month for garbage hauling. The current $20.36 charge is a 2.7 percent increase since then, but in inflation-adjusted dollars, the $19.82 fee would equate to $23.93 today. (The cumulative increase in the official consumer price index since 2010 is 19.45 percent.)

In comparison, the city’s own water utility fees and stormwater fees have skyrocketed way beyond inflation since 2010. The stormwater fee was $8 a month for a residential home. It’s now $18.91, a 136 percent increase and a rate almost as high as the garbage rate. By 2024, the stormwater rate will be $23.95, a 200 percent increase from 2010.

The base water rate was $13.31 in 2010. It’s now $18.21 for a single-family home, a 37 percent increase. The sewer base rate was $11.17. It’s now $17.88, a 60 percent increase. Put another way, the typical single-family home was paying $54.64 a month for combined water and sewer in 2012. It’s now paying $79.36, a 45 percent increase, and will be paying $84 a month by 2024, a 53 percent increase.

The bulk of these increases were required in part because the city’s ITT-era stormwater infrastructure was approaching failing-state status while the city’s construction of water and sewer infrastructure last decade overshot population-increase estimates. When housing crashed and the projected population for the following decade did not materialize–the new population base that was supposed to shoulder the larger share of the cost of those projects–the cost was shifted to existing residents. The city had no negotiating room with bond holders, whose demands always supersede those of ratepayers. (Credit agencies rewarded Palm Coast with a higher rating.)

So city officials’ hand wringing over potential increases in the garbage rate is somewhat disingenuous, at least when plucked out of the context of the city’s other inescapable fees–and when compared with the absence, in years preceding Morton’s tenure, of any public analyses, surveys of residents, town hall meetings and consultant contracts whenever water, sewer and stormwater fees go stratospheric. When those increases have been enacted, they’ve been preceded by presentations to council that convey a sense of done-deal inevitability, the implicit message to residents being: suck it up.

And still, what new contracts have been signed in the region in the last few years, at least with Waste Pro, continue to show only modest increases.

In 2019, Ormond Beach renewed its agreement with Waste Pro, ending recycling for glass and seeing its monthly rates increase from $20.31 to $21.55. That year Deltona also negotiated a new five-year contract with Waste Pro, with fees there rising from $14.50 a month to $16.90–after Waste Pro and the city agreed to end the recycling program there, since recycling materials were ending up in a landfill anyway. In 2018, DeBary signed a five-year contract with Waste Pro that saw rates increase almost exactly as they had in Deltona, including recycling.

“We’ll see,” Holland said. “This is the first step of many. It’s going to be interesting to see how the contract changes due to the issues that Mr. Morton has identified.” She said residents should be heard “first and foremost.” She and other council members were especially appreciative of the planned survey–a step not taken in previous such contract renewals.

See Garbage Haulers’ Bids to Palm Coast in 2011:

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