Shameless Rate Increases: Chapter One, “A Tale of Two Cities: Palos Verdes Estates & Bell Gardens”

[Read the Introduction and Table of Contents for this series here]

“It’s awful hard to get people interested in corruption unless they can get some of it.” — Will Rogers

Palos Verdes Estates

PVE_CA_sealThe city was masterplanned by the noted American landscape architect and planner Frederick Law Olmsted, Jr.

 

According to the 2010 United States Census, Palos Verdes Estates had a median household income of $152,068, with 2.8% of the population living below the federal poverty line.

-The Pleasant Truth, Wikipedia

The city council in Palos Verdes Estates unanimously denied Athens Services’s request for a trash rate increase, laughing off a proposed 5.6% “but the Puente Hills landfill is closing so we need more money” excuse at their November 12, 2013 council meeting (audio and a full packet of information can be found here).

Athens’s proposal would have made for an annual average increase of 2.7% over the eight years of their contract with Palos Verdes Estates thus far (a total 21.6% rate creep).

Council members in Palos Verdes Estates asked tough, sharp questions about why, since everyone has known the landfill would close for years, Athens didn’t account for the landfill closure when they crafted their current contract in response to the city’s original RFP. They wondered why Athens Services blamed the increase on the landfill closure when Athens had just asked for a separate large increase in August, 2013 that had nothing to do with the closure.

“If it’s going to cost more to go to San Bernardino [than Puente Hills] – then why are you doing it?”

“I’m just not convinced…”

“I’m troubled by this … I’d hate to think that we agreed to a teaser rate for just a year or two years only to see an increase…”

“I’m disappointed to be asked to approve a rate increase that was foreseeable, that everybody saw it coming, and I feel that this is not justified…[suggests that maybe they put it all out to bid again if Athens has to increase rates beyond the agreement in order to do the job, etc]…it’s disingenuous at best.”

“It sort of sours the relationship [between the city and Athens].”

Bell Gardens

Seal_bell_gardens_caBell Gardens is bordered by Bell and Cudahy on the west, Commerce on the north and northeast, Downey on the southeast, and South Gate on the southwest.

According to the 2010 United States Census, Bell Gardens had a median household income of $38,272, with 26.9% of the population living below the federal poverty line. -The Brutal Truth, Wikipedia

On April 14, 2014, instead of putting their trash contract out to bid or negotiating a new contract without passing on enormous rate increases to residents, Bell Gardens gave unanimous approval to an evergreen, 15-year rolling contract with Athens Services. This means that the contract with Athens Services automatically renews every year, forever, without anyone bidding on it. If the city ever decides to cancel the contract they are stuck with Athens for 15 years from the date they cancel it (e.g., if they cancel it in 2020, they are still stuck with Athens until 2035).

710 Freeway, L.A. River, Bell, Bell Gardens

In return for indefinitely signing on to pay Athens Services tens of millions of total dollars without putting the contract out to bid, Athens will gladly give cash strapped Bell Gardens an annual $30,000 “extension fee” plus a onetime payment of $250,000 up front. Bell Gardens will also increase the franchise fee it charges Athens from 10% fixed to 17.75% by the third year of the new contract, and Athens will gladly pay that too.

Some residents implied the $5,000 in campaign contributions that Councilman Jose Mendoza, Mayor Pro Tem Priscilla Flores and Mayor Daniel Crespo each received from Athens in the last election was to ensure support for the contract.

Yah think? I’d love to see campaign contribution totals in Bell Gardens over the last decade from Athens and the Arakelians and their affiliates to all Bell Gardens candidates and committees.

But here’s the kicker. Cash strapped Bell Gardens is giving away the farm for some money up front – we get that. But since they are in a position to negotiate, you wouldn’t think that they wouldn’t significantly up their rates at the same time they give away a juicy, no-bid contract. Well, maybe you would.

Bell Gardens directly sold out all its residents as well as the farm, as this evergreen contract raised residential rates on its residents from $15.88 to $25.08 per month – that’s a whopping 58% percentage increase – by year three of their new contract (the first year it goes up a mere 20%).  Normal CPI increases for the first two years will be deferred until year three, so the actual increase in year three will be even greater than 58%. And in year 4 and beyond CPI + 1% for good measure will be in effect, slowly ratcheting up the rate even further.

Read the staff recommendations/report, and then read the contract with Athens and weep.

Mario Beltran Back In The Day

To his great credit, although politics are definitely in play, former Bell Gardens councilman Mario Beltran was one of the few people who “took issue” with the deal and he was the only one cited in the press mentioning the rate increase. Mario is no angel – he’s currently barred from running for office for misuse of campaign funds and is serving as embattled Ron Calderon’s spokesman, which is itself a matter of controversy. But let’s just say some of the current city council members in Bell Gardens might not be angels, either.

While the article by Nancy Martinez I cited above mentions the rate increase, the increase was glided over by the city in the agenda (Item No 11, p. 9), minutes (Item No. 11, p. 6) and staff recommendations/report (this you have to request – it’s not sitting online for you to find) concerning the evergreen contract.

In fact, the staff recommendations/report is full of gibberish about the Puente Hills closure, as if that could possibly justify a 58% rate increase. Remember, the same excuse didn’t justify jack squat in Palos Verdes Estates. They just said no. Again, read the current contract with Athens and weep.

bell gardens gang sweep

Ye Olde Bell Gardens Gang Sweep

Beltran rightly took particular issue with the way the rate increase was bundled up with the contract, suggesting the city wasn’t exactly going out of its way to make clear that they were raising rates at all:

“Tell the voters that [fees will go up] and ask them to pay,” he told the council angrily.

He said he respects that increases may be necessary, but told the council to be clear about their intentions.

Ron Saldana, executive director for the Los Angeles County Disposal Association (LACDA), also spoke some honest truth to dishonest power:

[He] urged the council to not enter into the long-term agreement. The nonprofit LACDA says its goal is to promote fair business practices for the solid waste industry haulers they represent.

“Rates are going down, not up,” Saldana claimed. “Waste is becoming a commodity … there’s really no reason for [a 15-year contract].”

Independent haulers have taken several hits in recent years, as more cities move toward limiting trash-hauling services to a single provider, giving independent contractors less leverage during contract negotiations.

Pretty much.

In Redondo Beach, as we’ve discussed, the council fought Athens over a 10% increase proposal and negotiated it down to a 4.52% increase: and even that 4.52% increase was enough to trigger a hearing for residents to have their say in accordance with Proposition 218, which requires notifying residents of fee increases and letting them potentially just say no. In Bell Gardens no one except for a few opponents at a city council meeting even mentioned a 58% rate increase, Proposition 218 be damned.

Conclusion

The residents of Palos Verdes Estates get nothing but normal CPI increases when they see their trash bill this year.

OLYMPUS DIGITAL CAMERAIf they are paying attention, they get to rest assured that their council protected them, shrugging off Athens Services naked request for more money on the basis of the smallest of  fig leaf excuses.

What do the residents of Bell Gardens get? They get screwed. If they are paying attention, they get to rest uneasy that their council sold them out to a 58% rate increase while locking their city into a potentially eternal contract that will always take at least 15 years to get out of via a no-bid process.

Bell Gardens Resident

(EGP photo by Nancy Martinez)

“Why don’t you just give them the city right now,” said Bell Gardens resident Joaquin Madrigal in a raised voice.

“You’re doing all of this on the backs of us, the residents,” he said angrily.

Yes, yes they are. Yes, yes they did.

And that’s the way it goes.

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