City ought to trash its rotten garbage deal
The city of Sacramento is having second thoughts about the garbage contract it signed with BLT Enterprises less than a year ago.
Given its cost, its duration and its importance to the city, this deal urgently needs to be re-examined.
Sacramento's new city manager, John Shirey, complains that the 20-year garbage pact, approved months before he arrived at City Hall, is too long. Solid waste is a volatile business, affected greatly by new regulations and technology. For the city to lock itself into a 20-year deal with no reopeners was imprudent.
Even worse, the cost of the deal is extraordinarily high.
Under it, beginning late next year, when the city stops trucking its garbage to Nevada for disposal and shifts to the county-owned Kiefer Landfill instead, Sacramento's cost of disposal will jump to $55.85 a ton, the highest of any municipality in the region. City officials can reduce that fee if they are able to direct more garbage into BLT's Fruitridge Road transfer facility in south Sacramento. But that is far from a sure thing.
To make that happen, the city will have to negotiate a franchise deal with commercial haulers that forces them to deliver refuse they collect from businesses to the BLT facility. Commercial haulers are up in arms about that possibility. Many of them own their own dumps. The franchise deal being contemplated would force them to deliver garbage to a competitor's facility at a higher cost, likely increasing garbage collection rates substantially for city businesses.
Not only is the cost of disposal extraordinarily high under the BLT contract, the amount of money that the city gets for its recyclables is ridiculously low.
Before the amended deal was signed last November, the city sold its recycled commercial waste on the open market to the highest bidder. The city was getting between $60 and $100 per ton.
After the deal was signed, the recycled commercial material, mostly white paper and cardboard collected from government buildings, had to go to BLT exclusively.
Sacramento received just $10.77 a ton for its commercial recyclables in December and January, the first two months of the amended BLT contract. The price has drifted recently to just over $19 a ton net, but is still far below the rate the city had been receiving.
Finally, there is an obscure provision in the amended contract. Under the old deal, the city had the right to deny BLT's ability to assign its contract with the city to another entity. Under the new contract, the city can deny assignment only if the denial is "reasonable."
In negotiating that change, did BLT know it was going to sell its transfer facility and its contract with the city to garbage giant Waste Management, as it now proposes?
Shawn Gutterson, the BLT Enterprises vice president who negotiated the deal, told The Bee's editorial board Tuesday that "Waste Management has approached BLT about purchasing our facilities a number of times over the years … but those discussion had no bearing on our negotiations" with the city.
Gutterson also said that in early October, before the final city and BLT amended contract was approved, "Waste Management outlined a proposed transaction under which it might be willing to buy the facility." That is, the transfer station and BLT's contract with the city.
BLT's failure to disclose that proposal to city negotiators raises questions about whether BLT was negotiating in good faith. Depending on the answer, those questions may be enough to set aside the city's costly deal with BLT.
If at all possible, that's what Sacramento needs to do.