Garbage contracts stink

StoryImage( ‘/Images/Story//Auto-img-110917505714765.jpg’, ‘Graphic by Jeff Havens’, ”);
StoryImage( ‘/Images/Story//Auto-img-110917507414765.jpg’, ‘Graphic by Jeff Havens’, ”);

Lack of verification and comparison processes for residential garbage may cost cities big money

Research conducted by The Rock River Times suggests significant problems with the City of Rockford and Loves Park’s garbage contracts that may be costing taxpayers and residents big money. Exactly how much is not possible to calculate under the existing system.

Both cities have no way to compare and verify that the municipality is receiving the lowest possible rate for collection and/or disposal of garbage, as stipulated in the contracts.

Instead, Rockford has to trust that contractor Winnebago Reclamation Inc., is charging the city for the correct weight of garbage that is dumped into its landfill, Pagel Pit, which opened July 17, 1972. The reason the city has to trust Winnebago Reclamation is because no government employee is on site to verify the source and weight or number of trucks of the residential garbage, as was once done by a “scalemaster” in the 1970s.

The scalemaster was responsible for weighing trucks and verifying the trash was from residential routes in Rockford, not commercial trash or residential garbage from other municipalities. The scalemaster position was eliminated sometime between the late 1970s or early 1980s.

Although Rockford’s capital improvement and sanitation programs have similar annual budgets of about $7 million to $8 million, the city has no sanitation supervisor, but does have a capital improvements supervisor.

The capital improvements supervisor monitors projects such as road construction and installation of sidewalks. However, Rockford has no sanitation supervisor to perform functions such as that of a scalemaster.

As a result, residents, taxpayers and city officials in both Loves Park and Rockford have no way to verify they are receiving the favored collection and/or disposal rates.

Both cities have contracts with subsidiary companies of William Charles Inc., which is headed by political heavyweight Charles J. Howard, who is also president of Winnebago Reclamation.

Rockford ‘s residential contracts are with Winnebago Reclamation for garbage disposal and Rock River Disposal Services Inc., for trash collection. The City of Rockford charged each residential unit $11.20 per month for garbage service beginning in July 2003.

Owners of Loves Park residential units that did not sign up for the senior citizen discount were charged a flat-rate of $10.82 per month in 2004 by Rock River Disposal to collect and dispose of its residential waste. Unlike Rockford, Loves Park’s contract mandates that residential units be billed directly by Rock River Disposal for their services, instead of the city.

Rockford renegotiated its collection and disposal contracts in early 2003, and extended the contracts until Dec. 31, 2013. The renegotiation was in response to Ald. Frank Beach’s (R-10) questioning of the disposal contract in September 2002, and an Oct. 9, 2002, article in The Rock River Times concerning the same topic.

Instead of calling for the collection and disposal contracts to be put out for bid, Rockford City Council members, including Rockford Mayor Doug Scott, were content to renegotiate the contracts after Winnebago Reclamation and Rock River Disposal representatives agreed to contract talks.

Sources asserted Rockford may have been able to dump its trash at Orchard Hills Landfill in New Milford at a cost between $14.75 to $25 per ton if bids were sought. Chris Peters, general manager for Orchard Hills, did not return a message to confirm the sources’ assertion.

Instead, Rockford taxpayers were charged $31.72 per ton last year for disposal of their refuse into Pagel Pit.

In addition, during the 2003 contract negotiations, city officials apparently overlooked mandating a provision to independently verify the weight and source of the garbage that is billed to Rockford taxpayers.

Like Rockford residents, Loves Park citizens are also supposed to receive the lowest possible rate for collection and disposal of their residential garbage. The problem with both contracts is it’s impossible to independently verify that either municipality is receiving the lowest rate without a scalemaster.

Rockford pays the contractors in dollars per ton, while Loves Park citizens pay Rock River Disposal in dollars per house per month on a quarterly basis. Such reporting of units appears irreconcilable for comparison purposes without a weight and source verification system.

Loves Park mayor responds

During an interview Feb. 9, Loves Park Mayor Darryl F. Lindberg admitted it wasn’t possible for residential owners to determine if they are receiving the lowest rate. He also said he was “very happy” with the level of service Rock River Disposal has provided since the five-year contract went into effect Jan. 1, 2003.

In addition to difficulties in verifying the favored rate clause of the contract, Loves Park is not receiving the required monthly reports from Rock River Disposal for the “volume or weight of materials collected for each service,” as required in the contract, which further complicates efforts to verify favored rates.

Lindberg emphasized that the contract was approved by a committee and negotiated by City Attorney Paul S. Nicolosi, who did not return a message for comment about the contract.

State records show Lindberg received a $1,000 contribution to his campaign fund from William Charles on Dec. 23, 2004, and $250 on Oct. 29, 2004, from Larry M. Lyons, president of Rock River Disposal.

Rockford’s history of garbage woes

John Strandin, communications coordinator for the City of Rockford, said Feb. 18 that Rockford officials would not be able to comment about this article in time for publication.

State records show that in 2004, Mayor Scott received a $1,000 contribution to his campaign fund from William Charles on May 18, and an additional $2,000 on Nov. 30. Gary Marzorati, president of another William Charles company, Rockford Truck Sales and Services Inc., contributed $250 to Scott’s campaign on May 28, 2004.

Problems with Rockford’s garbage services are not new.

In March 1975, the Rockford Police Department issued a 37-page report titled “Investigation of grand theft by deception,” which concerned Rockford’s collection and disposal contracts. Five months earlier, Winnebago County State’s Attorney Philip G. Reinhard, criticized Rockford officials by saying they “failed to set up appropriate procedures to accurately check and monitor all refuse tickets and billings” for Rockford’s garbage services.

Reinhard is now a federal district court judge for the U. S. District Court for Northern Illinois.

According to the 1975 Rockford Police report, during the spring of 1973, the city had a “scalemaster” at Pagel Pit to verify the weight and source of garbage that was being charged to the city. The police investigation was prompted by Rockford Ald. Dave Johnson’s (R-8) concerns that there may have been violations of the city’s contract with Browning Ferris Industries Inc. (BFI), which was also known as Rockford Disposal Service Inc.

However, Reinhard declined to pursue criminal charges when he stated at a Nov. 13, 1974, press conference: “We have found no evidence to warrant criminal offense at this time. …We strongly recommend a complete review by the City of Rockford of the terms of the contract and the accounting and billing statements from the inception of the contract with BFI,” which was in effect from Jan. 1, 1971 to Dec. 31, 1974.

Consumer Price Index

It has been suggested that garbage collection and disposal contract rates should be adjusted yearly using 80 percent of the Consumer Price Index for all Urban Consumers (CPI-U) instead of the entire CPI-U. Housing costs should be subtracted from determining the yearly rate increase because housing expenses don’t apply to operating garbage-related businesses.

Escalation agreements, such as garbage contracts, often use the CPI-U to adjust payments for changes in contractors’ expenses.

Rockford’s collection and disposal rates increased 3.3 percent this year rather than 2.64 percen

t, which is 80 percent of 3.3. In other words, city officials used the entire CPI-U rather than the 80 percent of the index. The difference between the two percentages could cost taxpayers tens of thousands of dollars this year, depending on how many tons of trash are collected and dumped into Pagel Pit.

Loves Park negotiated a flat 3 percent increase for each year of its five-year contract. Most Loves Park residents will pay $11.14 per month this year for a total of $137.67 for garbage services in 2005.

Lucrative business

Garbage hauling and dumping appears to be an increasingly lucrative business.

Even after adjusting for inflation, comparing Rockford’s collection and disposal data from 1972 and 2004, suggests contractors have increased their haul of money by about 22 percent (see Table 1 above, left).

The data suggests contractors Rockford Blacktop Construction Co. and Rockford Disposal received an inflation-adjusted $3,955,294 in 1972 for collection and disposal. Last year, the data suggests Winnebago Reclamation and Rock River Disposal were owed $4,819,744 for collection and disposal of residential trash.

At the same time, the tons of residential trash generated annually per residential unit hasn’t changed much from about 1.1 tons per household in 1972 to approximately 1.2 tons per household in 2004.

According to Al Schumaker, street supervisor for Madison, Wis., his city generated only 0.66 tons of refuse per residential unit in 2003, in which 66,569 residential units produced 43,802 tons of refuse.

In comparison, note Rockford generated 1.1 tons of refuse per residential unit in 2004, in which 50,230 residential units were reported to have produced 55,527 tons of refuse.

Factoring in Rockford’s recycling program, it should be interesting to see what city officials’ answer is as to why each household in Rockford produces almost twice the amount of garbage as is generated by each household in Madison.

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