Empire Waste Management, accused of shorting Santa Rosa $340,000 in franchise fees, agreed Tuesday to pay the debt as part of a deal to sell its garbage hauling contract to North Bay Corp.

To secure city approval of the sale, Empire Waste also agreed to forgo retroactive rate increases it claimed it was owed.

The agreement, which was approved by a 5-0 City Council vote Tuesday, allows North Bay, which had been scheduled to assume the Santa Rosa garbage franchise in 2006, to take over as soon as Feb. 1.

The city claimed the franchise fees were owed on nearly $8.1 million in debris box revenue that Empire Waste had failed to report to the city since 1995.

Rohnert Park is suing Empire Waste for fraud for underreporting debris box revenue. The company, a subsidiary of the world's largest trash hauler, blames both undercounts on sloppy bookkeeping and Y2K computer software problems.

Tuesday's settlement avoided a potentially costly and time-consuming lawsuit while clearing the way for North Bay to buy the last three years of Empire Waste's contract with the city.

Sources indicated North Bay paid $10 million to $15 million for the contract.

The transition will mean slightly lower trash rates and several additional benefits: weekly yard-waste pickup, single-stream recycling, and an annual $300,000 donation by North Bay that the city can use for unspecified social and civic purposes.

"We're getting new services and the rates are going down," Assistant City Manager Marc Richardson, one of the city's chief negotiators, told the council.

While North Bay's early purchase will result in lower rates now, rates will be higher in 2006 than the Santa Rosa-based company promised in its bid for the 10-year city contract that takes effect in three years.

Still, Richardson said the move is a better deal for residents in the long run.

Richardson said North Bay would have been entitled to simply adopt the rates Empire Waste now charges, potentially add retroactive rate increases Empire Waste claims it is owed and calculate in its own costs to buy the contract.

If that had occurred, Richardson said, current rates would have jumped about 20 percent until April 2006, when the rates North Bay contractually agreed to would kick in.

To avoid that dramatic fluctuation for the city's 40,000 ratepayers, Richardson said North Bay was being allowed to "blend" the two rate periods, resulting in slightly lower rates now and higher rates in 2006.

Richardson said a financial analysis indicated blending will save ratepayers $1.1 million over the 13 years North Bay will have the franchise over what it would have cost to allow Empire Waste to keep the contract for the next three years.

Council members agreed that allowing North Bay to change the rates from what it had promised for 2006 may be confusing to ratepayers and expressed concern about the public's perception of the changing rates.

Among them were Council Members Mike Martini and Bob Blanchard, who urged Richardson, along with North Bay, to undertake a program to inform ratepayers that the public good is served by the deal, both in terms of better long-term rates and a greater variety of services.

Councilwoman Noreen Evans, a member of the ad hoc garbage committee that helped with the transition issues, agreed.

"We are avoiding a rocky and potentially confusing transition to get new services and avoid litigation. People can differ on this, but I think it is the best way to go for our ratepayers," she said.

Press Democrat

-- Anonymous, January 29, 2003