In what has become an , the Mill Valley City Council approved a nearly 3 percent garbage rate increase request from waste management firm Mill Valley Refuse Monday night.
The increase was lower than the 4.3 percent hike Mill Valley Refuse had sought and was far lower than the , respectively, approved by the council in 2010 and 2011. In 2010, the company cited its addition of composting pickup for the hike, and followed that up a year later by arguing that its revenue had taken a hit because customers had increased their recycling and composting use and thus had reduced the size of their garbage cans.
The rate hike will result in an increase of around $1.03 per Mill Valley household, with the cost of a typical customer’s package of a 32-gallon garbage can, along with recycling and compost service, rising to $37.64, the city said.
But while the 2012 garbage rate hike was a low 2.8 percent, several councilmembers said they were concerned at the fact that Mill Valley Refuse’s rate hike requests had become a regular event.
“How do we get to a place where we can set rates so that this is not an annual hit to the consumer?” asked councilmember Shawn Marshall. “It’s tough to do this year after year.”
William Schoen of R3 Consulting Group, which conducted a review of Mill Valley Refuse’s financial data and its rationale for the rate hike requests, replied that most cities wanted more frequent rate hike requests that were less high as a result.
“You get less of a rate shock,” he said.
Mill Valley Refuse cited a number of factors for the latest hike, including rising franchise fees and rising employee-related costs for health benefits and pensions.
Councilmembers said they weren’t seeing the company taking the same steps as some public agencies – offering tiered structures whereby newer employees contribute more to their own health benefits and pensions, for instance. Mill Valley Refuse pays for 100 percent of its employees’ health benefits.
“That’s been a tough one to start taking back but it may be the one place where we really need to,” Mill Valley Refuse Principal Jim Iavarone said. “The reality is that this can’t go on anymore. Obviously times change and we and they (union employees) have to change with them.”
Mill Valley Refuse serves approximately 14,000 households in Mill Valley, Almonte, Strawberry, Alto, Homestead Valley, Corte Madera, Tiburon and Belvedere.
Although it has the ability to seek a rate hike every year, Mill Valley Refuse operates under rolling 10-year contracts with most of its municipalities, meaning that is a city wants to terminate the deal and look elsewhere for garbage service, it has nine years to go on that deal.
In 2011, Iavarone agreed to sit down with city to renegotiate the contract, and a subcommittee of councilmembers Stephanie Moulton-Peters and Marshall are on it. One issue could be the length of the deal, while another will likely be what is dubbed a “fair rate of return,” or profit, for Mill Valley Refuse to expect from the deal each year. The rate is currently at 10 percent, and the parties are in the midst of revisiting that clause for future years.