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I serve as the lead government affairs representative in Los Angeles County for CR&R. [Your] article takes provisions of the proposed agreement out of context.
The City has been involved in the process of seeking a new trash hauler for the past 5 years, there was a need to move forward with a quick transition, as the old contract terminates in early November of this year.
CR&R competed in a rigorous process with six other companies. Rather than pay over $100,000 to an outside consultant, the City developed a form of franchise agreement that served as the basic “bidding” specification. Those companies who asked to participate in the process then provided input on their ability to meet such requirements. Once responses were received, other questions were asked of participants, eventually resulting in negotiations of a final contract with the successful company.
Also, the $2M paid to the City is an additional franchise fee that comes at no additional cost to the rate payers. The $2M comes from CR&R’s internal profit margin and is not a charge to the City or its residents. The proposed agreement also contains a provision to reduce fees and can be triggered by the City at any time.
The truth about rate hikes: The speculation that the payment of the advance franchise fees will lead to a rate hike is just that – speculation without merit.
The final contract preserves current residential and commercial trash rates. The speculation that rates will immediately go up in order to fund the financial enhancements offered to the City is unfounded as well, which assertion is either a misreading of the agreement or a complete fabrication intended to stop the award of the franchise to CR&R. In compliance with the City’s stated objective to “maintain the current rate structure for residents and businesses”, CR&R agreed to lock rates at current levels, with the opportunity to petition the City for an increase only once every two years, beginning in 2017, for CPI based rate adjustments that would be capped at an amount not to exceed four percent (4%) per year, or eight percent (8%) biennially. In contrast, the expiring contract has no such rate adjustment cap whatsoever.
Even more preposterous are the allegations that the monies to be paid under the contract to the City are going to the City Manager. Again, the allegations are based upon a lack of knowledge of how such contracts are negotiated. Given the length of the process and the work involved in the 100-page contract (and the number of drafts), not to mention negotiating simultaneously with seven (7) separate companies, City staff and attorney costs for preparation of the franchise document are very substantial and the $350,000 will be used to defray these heavy costs. Any successful company would have been asked to pay such costs. Similarly, a fee for participation is not unusual, meets legal requirements and would have been asked of any successful company.
I hope this information brings clarity and truth to your readers on this very important matter.
If you have questions or comments, please do not hesitate to contact me at [email protected]
John A. Telesio
Government Affairs CR&R Incorporated
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