HomeMy WebLinkAboutBOARD MINUTES 12-03-87
187
MINUTES OF THE REGULAR BOARD MEETING
OF THE DISTRICT BOARD OF THE CENTRAL CONTRA
COSTA SANITARY DISTRICT HELD ON DECEMBER 3,1987
The District Board of the Central Contra Costa Sanitary District
convened i n a regul ar meeti ng at its regul ar pl ace of meeti ng, SO19
Imhoff Place, Martinez, County of Contra Costa, State of California, at
7:30 p.m. on December 3,1987.
President Clausen called the meeting to order and requested that the
Secretary call roll.
I.. ROLL CALL
PRESENT:
Members: Boneysteele, Dalton, McNulty, Carlson, Clausen
ABSENT:
Members:
None
II.
PUBLIC COMMENTS
None
III.
HEARINGS
1.
CONDUCT A PUBLIC HEARING TO CONSIDER THE REQUEST FOR APPROVAL FOR
THE ASSIGNMENT OF THE FRANCHISE AGREEMENT WITH VALLEY DISPOSAL
SERVICE, INC. TO SAWDCO, A SUBSIDIARY OF WASTE MANAGEMENT, '. INC.'
President Clausen indicated that the purpose of this public hearing
is to receive publ ic comments regarding the request by Val ley Disposal
Service, Inc. for the consent of the District to the assignment of its
refuse collection franchise agreement to SAWDCO, a subsidiary of Waste
Management, Inc.
Mr. Roger J. Dolan, General Manager-Chief Engineer, indicated that a
voluminous packet was distributed to the Board with the agenda. ~n
addition, a large amount of information was distributed on November 19,
1987,. Staff has asked a series of questions of Valley Disposal and
solicited information from other sources to try to get a complete picture
of the Waste Management organization and the transaction between Valley
Disposal and Waste Management that has been executed pending Board
approval.
Mr. Dol an introduced Mr. Paul Morsen, Deputy General Manager, who
provided background of the request for transfer of the franchise from
Valley Disposal to SAWDOQ, a subsidiary of Waste Management. Mr. Morsen
stated that copies of correspondence were included in the Board packet.
Since the packet was compiled, four additional letters have been received
and copies have been provided to the Board. Mr. Morsen reported that
staff conducted an extensive study of Valley Disposal and Waste
Management, posing numerous questions. In those areas where responses
were unclear; where disagreement with District policies was indicated; or '
where it appeared that Waste Management took issue with the ,franch,ise
agreement, the Board requested staff to seek clarification or additional
information. Responses and additional information were received and have
been presented to the Board for consideration. Mr. Morsen highlighted
the more important questions and responses. Finally, the District and
the City of Wal nut Creek surveyed 42 jurisdictions to determine thei r
experience with Waste Management subsidiaries. The results of the survey
were generally favorable.
Mr. James L. Hazard, Counsel for the District, advised the Board
that in this situation the Board has discretion to look at the normal
issues as well as the underlying integrity of the organization and both
the qual ity and the level of service. Legal ly, there is nothing that
woul d proh ibit the assignment of the franch ise. However, there is no
legal requirement for the Board to assign the franchise.
At 7:42 p.m. President Clausen opened the public hearing~
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21.
22.
23.
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President
correspondence:
Clausen
noted
receipt
of
the
following
written
1.
Letter from Doug Offenhartz, Mayor of the Town of Danvil le, dated
November 19,1987.
2.
Letter from Ernie Parti, Mayor of the City of Lafayette, dated
November 2S, 1987.
3.
Letter from Mrs. Helen S. Sizer, 2101 Pine Knoll #13 Ent 3, Walnut
Creek, dated November 1987.
4.
Letter from N. J. Borelli, 818 Luz Ct., Danville, dated November
1987.
S.
Letter from Mrs. Burton H. Marliave, 67 Grandview Place, Walnut
Creek, dated November 17,1987.
6.
Letter from George F. Wagner, 272S Ptarmigan Dr., #8, Walnut Creek,
dated November 19,1987.
7.
Letter from Mrs. Al ice L. Wagner, 2724 Ptarmigan Dr., #8, Wal nut
Creek, dated November 19,1987.
8.
Letter from Ms. Eda R. Davis, (Address unknown), dated November 19,
1987 .
9.
Letter from F. Owen Pearce, 2037 Ptarmigan Dr., #4, Wal nut Creek,
dated November 20,1987.
10.
Letter from Ms. El eanor Briggs, 877 Revere Rd., Lafayette, dated
November 20,1987.
11.
Letter from William S. Lovell, 824 Luz Ct., Danville~ dated November
21, 1987.
12.
877 Revere Rd., Lafayette, dated
Letter from George M. Briggs,
November 22,1987.
13.
Letter from Ms. Doreen Topham, SSS Kismet Ct., Walnut Creek, dated
November 23,1987.
14.
Letter from Ms. Leslie Meyer, 1232 Leisure Lane, Walnut Creek, dated
November 23,1987.
IS.
836 Luz Ct., Danville,
dated
Letter from Ms. Ma rtha J.
November 23,1987.
Cook,
16.
Letter from Mr. & Mrs. George A. Hicks, 851 Luz Ct., Danvil le, dated
November 23,1987.
17.
Letter from Ms. Mavis Schirle, (Address unknown), dated November 23,
1987 .
18.
Letter from Mrs. Ida M. Chan Chu, 876 Revere Rd., Lafayette, dated
November 23,1987.
19.
Letter from Ms. F. A. Gardner, 809 Contada Circle, Danville, dated
November 24,1987.
20.
Letter from Thomas E. Morris, 811 Luz Ct., Danville, dated November
24, 1987.
Letter from Ms. Eileen Lucy Graves, 3S9 Westcliffe Circle, Walnut
Creek, dated December 2,1987.
Letter from Ms. Vivian L. McIlnaith, 407 Castello Rd., Lafayette,
dated November 30, 1987.
Letter from Ms. Carol
November 28,1987.
dated
831 Luz Ct.,
Danv 11 1 e,
Iantuono,
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189
24.
Letter from Nancy and Dick Anderson,
November 30, 1987. .
(Address unknown),
dated
Mr. Sanford M. Skaggs, representing Valley Disposal Service and
Waste Management, addressed the Board stating that the Board and the
publ ic can expect the level of service to remain the same since SAWDCO
will assume the franchise and must perform in the same way as Valley
Disposal. Waste Management has indicated some disagreement with some of
the procedures of the District, that does not detract from Waste
Management's agreement to abide by the franchise. Although we feel the
9S percent operating ratio is overly stringent, we do not challenge the
Di strict's authority. Waste Management brings extensive experience in
both the collection and landfill areas. Waste Management will retain the
current Valley Disposal Management and advocates local control and
decentralization. With reference to the alleged Waste Management
1 itigatio!1' Mr. Skaggs stated that most of it is antitrust al leged or
pled guilty to. Those legal actions did not involve franchised
operations and did not involve SAWDCO. The antitrust issues involved
division of territory. Mr. Skaggs stated these incidents do not
represent Waste Management pol icies. When such incidents occur, the
company acts decisively to make it clear that the behavior is
unacceptable. The fear that the company will be non-responsive is
unfounded and contrary to the facts as shown by the survey. The fear
that assignment of the franchise to Waste Management could have an effect
on rates is unfounded as well. The CCCSD Board has the authority to set
and control rates. The survey also showed that rates did not increase.
For the above reasons, Mr. Skaggs requested the Board's favorable
consideration of the assignment of franchise.
Mr. Gino Scopesi, Assistant Western ,Region Manager for Waste
Management, Inc., thanked the Board for the privilege of addressing the
Board and stated that he looked forward to .working in Contra Costa
County.
President Clausen stated that Waste Management's business ethics
pol icy appears to be very compl ete. President Cl ausen asked if any
employees have been disciplined or terminated for violating the policy if
they have not been i nd i cted or prosecuted? Mr. Scopes i answered that
they had been. In addition, Waste Management conducts internal audits.
President Clausen asked if potential claims under the agreement are
covered by the purchase or still Valley Disposal's responsibility? Mr.
Skaggs stated that if the incident occurred and was not disclosed in the
sales agreement, it is Valley Disposal's responsibility. If it was filed
or disclosed with the sale, it is Waste Management's responsibil ity.
From closing of the sale forward, Waste Management takes all Valley
Disposal's responsibil ities under the franchise agreement with Central
Contra Costa Sanitary District.
President Cl ausen asked if the insurance pol icy is an occurrence
policy and not a claims made policy? Mr. Skaggs stated that is correct
and the District is named as co-insured.
President Cl ausen asked if separate accounting procedures will be
maintained by SAWDOO covering the Valley Disposal area so the accounting
documents may be audited for the purpose of rate setti ng sepa rate from
Waste Management? Mr. Scopesi answered that they would be. Mr. Skaggs
stated that the franchises would be kept separate within the Valley
Disposal area as well.
There being no further comments from members of the public,
President Clausen declared the public hearing closed at. the hour of 8:07
p.m. Member Carlson commended staff, Valley Disposal, and Waste
Management on the excellent job they did in, gathering information and
presenting all the issues. Member Carlson stated that his questions with
regard to the franchise and operations have been satisfactorily answered.
Member Carlson stated further that he believes the current level of
service will be maintained and that it could even improve with the
technology available to Waste Management that may not have been available
to Valley Disposal. Also Waste Management should be able to provide
expertise in the area of recycling.
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Member McNulty agreed with Member Carlson stating that the
documentation was extremely thorough. Member ,McNulty expressed interest
in reviewing alternatives to the 95 percent operating ratio method
currently used in the rate setting process.
Member Boneysteele
prepared:
Advantages:
read
the
following
statement
which
he
had
WASTE MANAGEMENT PROS & CONS
1.
Record of efficient operations and innovative procedures.
2.
Record of actually impl ementi ng comprehensive recycl i ng and
resource recovery operations.
3.
Great financial strength.
4.
A corporation whose record for success coul d not permit it to
let the Contra Costa dump crises to continue.
s.
Record of good community
community concerns.
relations
and
responsiveness
to
Disadvantages:
"1:2
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Discussion:
1.
1.
A profit driven company. The continuing pressure for profits
will test the District's present regulatory procedures.
2.
Some of Waste Management's local operating divisions have
engaged in collusion with competitors and in the corruption of
local government' officials, indicating a possible corporate
culture,encouraging unethical activity.
3.
A 1 a rge nati ona 1 corporati on whose 1 oca 1 d i vis ions must cope
with possibly conflicting headquarters directives and policy and
local concerns and conditions.
Valley Disposal Company is up for sale. Would any other buyer have
the successful operating record or the financial strength that Waste
Management has?
2.
Would a local purchaser with the experience to qual ify it as a
purchaser also have a record of responsiveness to the concerns of its
franchising authorities that our and the City of Walnut Creek's
surveys i nd i cate Waste Management has demonstrated in other
communities?
3.
Would a local purchaser have the drive and financial capability to
insure that the area will find an adequate waste disposal site, or
woul d its inadequate technical strength and financial capabil ity
compel it to continue as a party to the continuing festering disposal
site crises.
4.
Would a local purchaser have the will and ability to institute a
viable recycling and resource recovery program?
Will our present regulatory procedure of confining our investigation
to an office review of reported financial statements be adequate to
deal with Waste Management's drive for continuing increases in
profit?
s.
Waste Management is a profit driven company. Its earnings per share
have shown a consistent and dramatic ten fold increase from $0.30 in
1977 to $3.S2 in 1986. Similarly its dividends have increased fran
$0.049 to $0.054. <There was a 2 for 1 spl it in 1987. The 1987
indicated dividend on the,.'new stock is $.09 a quarter, or $0.72 on
the old basis.) Value Line Survey shows a net profit margin of 11%
since 1981. Its answers to the District's questionnaire indicate
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that Waste Management intends to strive to increase Valley's profit
margin.
6.
Should the unfavorable ethical record of some of Waste Management's
middle managers disqualify it as a purchaser of Valley Disposal?
A profit driven company pl aces its' middl e management under great
pressure to perform and to meet increasing profit targets. Waste
Management has a decentralized corporate structure. A decentralized
structure, coupled with a drive for profits, can tempt local managers
operating autonomously to meet their profit goals by colluding with
competitors and, by corrupting local officials. Since Waste
Management would be operating under a franchise in a monopoly
situation, potential anti-competitive collusion is not likely to be a
factor in Central Contra Costa County. To deter improper activ ity,
Waste Management has a comprehensive ethics policy that provides for
dismissal of employees so engaged. In addition there is a deterrent
of prosecution of company personnel and of local officials involved.
The penalties for corruption in California are severe. Waste
Management has indicated that it intends to retain Valley's local
management, in whom we have conf i dence. The members of thi s Boa rd
and of the two local city councils are the local officials who would
be subject to corruption. To al low a concern for unauthorized,
discouraged, and unlawful corruption to be a consideration in this
transfer would be reflection on the integrity of the managers of
Valley Disposal, on ourselves, and on our colleagues on the two city
counc 11 s.
Member Dalton concurred with Member Carlson. Member Dalton stated
further that this is not the first merger the Board has been asked to
consider, although this one is the largest. Member Dalton expressed his
support of the assignment of the franchise.
It was moved by Member Carlson and seconded by Member Dalton, that
assignment of the Agreement for Collection, Removal, and Disposal of
Garbage (franchise agreement) with Valley Disposal Service, Inc. to
SAWDCO, a subsidiary of Waste Management, Inc., be approved. Motion
unanimously approved on the following roll call vote: '
AYES:
Members:
Carlson, Dalton, Boneysteele, McNulty, Clausen
NOES:
Members:
None
ABSENT:
Members:
None
Following discussion, it was moved by Member McNulty and seconded by
Member Ca rl son, that methods of rate setti ng be ca 1 enda red for Boa rd
discussion at a future Board Meeting. Motion approved on the following
roll call vote:
AYES: Members: McNu 1 ty, Carl son, Boneysteele, Dalton, Clausen
NOES: Members: None
ABSENT: Members: None
Mr. Dolan indicated that the 19ffi Price Waterhouse report will be
distributed and an analysis of the report and written alternatives will
be solicited from the collectors and other franchisers for consideration
by the Boa rd.
Mr. Dolan commended Messrs. Paul Morsen, Jim Hazard, Walter
Funasak i, Steve Elsberry and Valley Di sposa 1 and Waste Management for
their efforts on this matter.
President Clausen declared a recess at the hour of 8:30 p.m.
President Clausen reconvened the meeting at the hour of 8:34 p.m.
IV.
CONSENT CALENDAR
It was moved by Member McNulty and seconded by Member Dalton, that
the Consent Calendar consisting of six items, be approved as recommended,
resolutions adopted as appropriate, and recordings duly authorized.
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1.
Resolution No. 87-199 accepting an easement at no cost to the
District from TREAT COMMONS LTD PARTNERSHIP, Concord area (Job
4221 - Parcell), was adopted and recording authorized.
'Moti on unanimously approved on the following vote:
AYES: Members: McNulty, Dalton, Boneysteele, Carlson, Clausen
NOES:' Members: None
ABSENT: Members: None
2.
Resolution No. 87-200 was adopted initiating proceedings to
formally annex ten separate areas under the title of District
Annexation 102.
Motion unanimously approved on the following vote:
AYES: Members: McNulty, Dalton, Boneysteele, Carlson, Clausen
NOES: Members: None
AB SENT: Members: None
3.
The contract work for the Concord Revenue Meters Proj ect COP
20013) was accepted and the filing of the Notice of Completion
was authorized.
Motion unanimously approved on the following vote:
AYES: Members: McNulty, Dalton, Boneysteele, Carlson, Clausen
NOES: Members: None
ABSENT: Members: None
4.
Resolution No. 87-201 confirming that publ ication of District
Ordinance No. 16S, repeal ing Chapter 6.30 and adopting a new
Chapter 6.30, Schedule of Fees, was adopted.
Motion unanimously approved on the following vote:
AYES: Members: McNulty, Dalton, Boneysteele, Carlson, Clausen
NOES: Members: None
ABSENT: Members: None
S.
Adoption of Resolution No. 198 honoring Craig Z Randall on his
retirement from Contra Costa Water District, was confirmed.
Motion unanimously approved on the following vote:
AYES: Members: McNulty, Dalton, Boneysteele, Carlson, Clausen
NOES: Members: None
ABSENT:
Members:
None
6.
The revised class description for the Engineering Assistant was
adopted effective December 4,1987.
Motion unanimously approved on the following vote:
AYES:
NOES:
McNulty, Dalton, Boneysteele, Carlson, Clausen
Members:
Members:
None
ABSENT:
Members:
None
CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER
None
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193
V.
ADMINISTRATIVE
1.
ADOPT A RESOLUTION APPROVING EXHIBIT A, DESIGNATED POSITIONS AND
DISCLOSURE CATEGORIES, OF THE DISTRICT CONFLICT OF INTEREST CODE
It was moved by Member Boneysteele and seconded by Member Carlson,
that Resolution No. 87-202 approving Exhibit A, Designated Positions and
Disclosure Categories of the Central Contra Costa Sanitary District
Conflict of Interest Code, be adopted and that the Secretary of the
District be authorized to submit a copy of said code amendment to the
Contra Costa County Board of Supervisors for approval. Motion
unanimously approved on the following vote:
AYES:
Members:
Boneysteele, Carlson, Dalton, McNulty, Clausen
NOES:
Members:
None
ABSENT:
Members:
None
VI.
ENGINEERING
1.
AUTHORIZE THE GENERAL MANAGER-CHIEF ENGINEER TO EXECUTE AN AGREEMENT
WITH JOHN CAROLLO ENGINEERS. APPROVE AN ALLOCATION OF $166,000 FROM
THE COLLECTION SYSTEM PROGRAM CONTINGENCY ACCOUNT FOR DESIGN' AND
EASEMENT ACQUISITION 'FOR THE I680/SR24 SEWER RELOCATIONS PROJECT (DP
4428) .
Mr. Dolan, General Manager-Chief Engineer, stated that the proposed
Sewer Relocations Project will accommodate the Caltrans I680/SR24
Interchange expánsion. It is estimated that Caltrans will bear
approximately $1 mil 1 ion of the estimated total project cost of $1.4
mill i on.
It was moved by Member McNulty and seconded by Member Dalton, that
the General Manager-Chief Engineer be authorized to execute an agreement
with John Carollo Engineers and that allocation of $166,000 be approved
from the Co 11 ect i on System Program Conti ngency Account for des i gn and
easement acquisition for the I680/SR24 Sewer Relocation Project, DP 4428.
There being no objection, the motion was unanimously approved.
VII.
APPROVAL OF EXPENDITURES
1.
EXPENDITURE LIST DATED DECEMBER 3,1987
Member McNulty, member of the Budget and Finance Committee, stated
that she and Member Dalton have reviewed the expenditures and found them
to be satisfactory.
It was moved by Member McNulty and seconded by Member Dalton, that
the Expenditure List dated December 3, 1987, including Self-Insurance
Check Nos. 100168-100174, Running Expense Check Nos. 36074-36320, Sewer
Construction Check Nos. S104-S143, and Payroll Check Nos. 'l167S-11939, be
approved as recommended. There being no objection, the motion was
unanimously approved.
VIII.
EMERGENCY SITUATIONS REQUIRING BOARD ACTION
None
IX.
REPORTS
1.
GENERAL MANAGER-CHIEF ENGINEER
a. Mr. Dolan, General Manager-Chief Engineer, introduced Mr. Robert
A. Baker, Deputy Chief Engineer, who presented an update on Tri-Val ley
Wastewater Authority (TWA) alternatives for wastewater disposal under
consideration. TWA is currently pursuing the East Bay Dischargers
Association (EBDA) alternative and the East Bay Municipal Utility
District (EBMUD) alternative. The EBDA alternative has an estimated cost
of $120 mill ion. However, no proposal has been submitted to date. The
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194
estimated cost of the EBMUD alternative is $113 million. A proposal has
been submitted. The next TWA meeting is scheduled for December 16,1987.
b. Mr. Dolan reported on the program' for cooperative purchasing of
vehicles available through the State of Cal ifornia. Research indicates
that the Di strict coul d save $1,000 to $2,000 per veh icl e. The State
requires a resolution of interest from the District. If the Board has-no
objection, staff intends to put such a resolution on an upcoming agenda.
Passing such a resolution does not preempt the Board from making specific
decisions approving or disapproving vehicle purchases duri~g the
Equipment Budget review process.
c. Mr. Dolan announced that on December 2, 1987, the District held
a simulated chlorine escape exercise. Plant Operations Department and
Headquarters Office Building personnel participated. Our neighbors were
invited. Mr. Charles Batts, Plant Operations Department Manager, told
them about Central San's safety program and chlorine safety procedures.
d. Mr. D9lan announced that we are in the process of nitrifying to
eliminate ammonia as part of the treatment process because of the
potential for water reclamation. Some process complications have
developed. Chuck Batts and Plant Operations personnel are working on the
probl em.
2.
COUNSEL FOR THE DISTRICT
None
3.
SECRETARY OF THE DISTRICT
Ms. Joyce McMillan, Secretary of the District, commended the
Engineering Support Section on the speedy production of the graphics work
for the resolution honoring Craig Z Randall.
4.
BOARD ME~ERS
None
X.
ANNOUNCEMENTS
President Clausen requested that the election of officers and
reorganization of the Board be calendared on the December 17, 1987 Board
agenda.
XI.
CLOSED SESSION
None
XII.
ACTIONS RESULTING FROM DISCUSSIONS IN CLOSED SESSION
None
XIII.
ADJOURNMENT
There being no further business to come before the Board, President
Clausen adjourned the meeting at the hour, of 9:03 p.m.
,
COUNTERSIGNED:
,1 u ¿,fnlJ
Sa r ary of the Central Contra
sta Sanitary District, County
of Contra Costa, State of California
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