Garbage service agreement includes $11.6 million refund Garbage service agreement includes $11.6 million refund (February 02, 2005)

** Signing of agreement between BFI and local cities delayed, but almost certain.

By Renee Batti

Almanac News Editor

The signing of an agreement that includes an $11.6 million refund from the area's garbage-collection company to a coalition of Peninsula cities, including Menlo Park and Atherton, was postponed last week because of last-minute changes.

But the deal reached between the company, Browning-Ferris Industries (BFI), and the joint powers authority composed of representatives of nine Peninsula cities, San Mateo County and the West Bay Sanitary District is on track for approval later this month, according to Mike Garvey, San Carlos' city manager and chair of the authority, known as the South Bayside Waste Management Authority.

The agreement, which South Bayside authority members are expected to approve when they meet in late February, would extend three separate contracts now in place between BFI and the authority. But it also includes an $11.6 million rebate of costs the authority claims BFI unfairly charged it to dump trash at the Ox Mountain landfill, which is owned by BFI.

The refund, Mr. Garvey said, would not be disbursed among individual customers, but would be used to hold customers' rates down.

The three-contract agreement likely to be signed this month should leave the South Bayside authority in a stronger position because it will better synchronize the contracts to allow the authority to go out to bid for garbage-collection services in the future, Mr. Garvey said.

Under existing contracts, BFI provides all three levels of garbage-collection service within the South Bayside authority boundaries -- curbside collection, sorting at the authority-owned transfer station in San Carlos, and disposal at Ox Mountain.

Each service is governed by a separate contract, and each contract requires an extension of a specified length if BFI meets certain performance standards, Mr. Garvey explained.

But under this system, problems could arise if BFI were to meet its performance standards in only two of the three categories of service, he said. If that happened, the authority would have two unattractive options: allow BFI to continue its service in an area in which it didn't perform well, or contract with another company for that service.

The latter choice could jeopardize the smooth delivery of the three services now provided by BFI, Mr. Garvey said. "We could have two companies working side by side, and these companies don't get along too well."

The South Bayside authority later this month will be asked to sign contracts with BFI that would:

** Extend the curbside collection service for four years.

** Extend the transfer station operating agreement for four years, conditioned on BFI's commitment to solving identified problems, "the most glaring of which is they're not recycling enough material" from commercial customers, Mr. Garvey said.

** Lock in a low cost to dispose of garbage at Ox Mountain with a 15-year agreement, and require an $11.6 million rebate to the authority. The authority would commit to dispose garbage at Ox Mountain during that period.

The first two elements of the proposed agreement would mean that the collection and transfer-station contracts would expire at the same time. The third element would guarantee that if another garbage company were to win the collection and transfer-station contracts after the BFI contracts expire, the new company would have a locked-in disposal rate.

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