Multi-million dollar refund likely for local trash-disposal service Multi-million dollar refund likely for local trash-disposal service (December 22, 2004)

** Local cities pressing for more than $11 million from garbage company after learning of special deal.

By Renee Batti

Almanac News Editor

It was a solid relationship that almost soured over the discovery of a sweetheart deal.

But now, it appears that garbage-collection company Browning-Ferris Industries (BFI) is about to patch it up with the wounded party. It is close to striking a deal with the joint powers authority that negotiates BFI's garbage-collection contracts for Menlo Park, Atherton and a number of other Peninsula cities -- a deal that is likely to lead to the refund of millions of dollars the authority claims BFI unfairly charged to dump trash at Ox Mountain landfill.

The contested charges were calculated at $11.6 million when a recent analysis was completed, and they have been rising since, said Mike Garvey, San Carlos' city manager and chair of the joint powers authority, known as the South Bayside Waste Management Authority.

The trouble began when officials of the South Bayside authority discovered that BFI charges the South San Francisco Scavenger Co. far lower rates -- by 28 percent -- for dumping trash at BFI-owned Ox Mountain than it charges South Bayside.

"When we heard about it, we were ... quite angry," said Mr. Garvey. Noting that South Bayside is BFI's largest customer, with member cities and unincorporated areas collectively dumping 62 percent of the garbage BFI hauls to Ox Mountain, he said, "We want the lower rate, effective four years ago, when South San Francisco (Scavenger) got their contract."

Mr. Garvey noted that it is not illegal for BFI to charge its customers different rates. But "we're their biggest customer ... and we're asking them to make their biggest customer happy."

The South Bayside authority is pressing BFI for the $11.6 million-plus refund as the two parties negotiate a possible three-year extension of BFI's contract. Mr. Garvey said that any refund from BFI would not be disbursed among individual customers, but would be used to hold customers' rates down.

Mr. Garvey said the contract with BFI expires in about two years, but explained that a long lead time is needed to either extend the contract or find another service provider. But, he said, there are many advantages to remaining with BFI, which provides all three levels of necessary services -- from curbside collection to sorting at a transfer station to hauling and disposing at a site that it owns.

"I do think we'll work something out," Mr. Garvey said, adding, "We hope to have it all resolved by the end of January."

So do BFI officials. "I can't comment on what the specifics (of negotiations) are," said Stacey Wagner, BFI's community relations manager. "But I can tell you we're very close to an agreement."

Ms. Wagner said that BFI's former management negotiated the lower rate with the South San Francisco company. "It was done on a former management's watch."

As soon as it was brought to the current management's attention, she added, BFI was willing to negotiate new terms. And the matter "absolutely ... will be resolved."

Mr. Garvey said he and other South Bayside officials became aware of the rate discrepancy when the city of Millbrae began feuding with South San Francisco Scavenger, which provides that city's trash-collection service. Millbrae's rates had been set by the scavenger company based on a county-determined maximum fee that BFI could charge for dumping at Ox Mountain, he said.

But Millbrae officials somehow learned of the lower-rate deal struck between BFI and the scavenger company several years earlier, and realized the scavenger company had not passed its savings along to the city. "It touched off a pretty hot debate," Mr. Garvey said.

In addition to Menlo Park and Atherton, the South Bayside authority is made up of the West Bay Sanitary District, East Palo Alto, Redwood City, San Carlos, Belmont, San Mateo, Burlingame, Hillsborough, Foster City, and San Mateo County.

The West Bay district oversees the trash-collection program in unincorporated areas located within its boundaries, covering much of the southern portion of the county.

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