On Tuesday night, the council went ahead with their plans for a Davis Waste Removal (DWR) transfer, despite the Utility Rate Advisory Commission (URAC) recommendation “that the City Council defer action on the DWR transfer” in order to have a third party analyze “the benefits and costs of a city acquisition of the DWR property versus the current plan to transfer the property and business to Recology, including the three sources of ratepayer value identified by the URAC task group.”
Matt Williams went further during public comment, stating that the actions by council “do not comply with express provisions of section 54956.8 which restricts closed section topics regarding purchase sale, exchange or lease of real property to price and terms payment.”
He noted the staff report stated: “There is no fiscal impact at this time for the Franchise assignment and agreement.” He read that “staff, in conjunction with a consultant, prepared information addressing Council concerns and questions associated with the proposed assignment of the solid waste franchise.”
Mr. Williams argued that “the only place these policy decisions by council can have been made by staff is in one of the eight noticed closed sessions between September 19, 2017 and April 3, 2018. Because the price and payment terms of the real property transaction do not directly or indirectly impact the rates, the fiscal impact information prepared by the consultant does not qualify for 
closed session under the provisions of 54956.8.
“Staff’s refusal to report either the name of the consultant or the consultant’s rate analysis is also a violation of section 54957.1,” he said.
He informed council that he has retained counsel to deliver a cease and desist letter to council. He argued, “Council’s review of the written and video documentation, some of which is only available within the last 12 hours, also identified violation of the California Public Records Act.”
He indicated that the letter would be delivered within the next 48 hours to the city.
He indicated that “the staff report that has been provided to (the council) for item 9 is fruit of a poison tree.”
According to Matt Williams, as of yesterday evening the city has yet to be served with the complaint regarding the Brown Act and Public Record Act violations.
During Item 9, Mayor Robb Davis asked if they were taking a risk discussing this matter, knowing that there were citizens planning to sue them regarding these proceedings.
City Attorney Harriet Steiner offered, “No.
“Earlier this evening, Matt Williams suggested that we had violated the Brown Act in holding closed sessions related to this matter,” she said. “Council obviously did have closed sessions on this matter. They dealt with price in terms of payment related to the transactions. At some of those meetings, council may have asked questions. Questions may have been answered outside of closed session. They did not deal with the issues before them during closed session which were solely price and payment.”
She said, “At this point we have nothing other than a threat that was made right here at the meeting. That doesn’t impact your ability to move forward at all.”
She said, if they do get a letter asserting that the council has violated the Brown Act, “the Brown Act provides for a cure and many public agencies decide that it’s appropriate to cure, just because they would prefer to do that than to go forward in litigation.”
She indicated that “all we can do at this point is move forward – there is no reason to stop at this point based on the threat made earlier at public comment. There is no legal reason not to move forward.”
Mayor Robb Davis expressed “frank frustration over some of the things that have been said here tonight.”
He said, “I sat through every URAC meeting when this franchise agreement was being discussed.” He said that Elaine Roberts Musser “had to tell me to back away from the table as a councilmember because I was too engaged. It was supposed to be for URAC members.”
He said, “I was told by the URAC and I was told by the NRC… that this was an outstanding contract that we should be proud of. In that contract was the right of first refusal. In that contract was the means to transfer the franchise agreement to another entity. At that time, not a single URAC member, not a single NRC member ever said we need to change the language in there so that if and when it’s sold we will demonstrate that we want to exercise our right of first refusal and we want to acquire this business.”
Mayor Davis said that there are concerns that Recology will suddenly and unilaterally increase rates. He responded, “I think we have enough information tonight to realize where the rate increases are likely going to come from.”
He said the $3 to $5 million for equipment for the MRF (materials recovery facility) is “probably going to happen” and “was probably going to happen before.”
In 2015, he said, that there were no concerns that someone could come in and unilaterally increase the rates in the city. “To suggest then that we have not listened to these bodies really offends me deeply.”
He added, “Another reason I’m offended is that I don’t know what I’m hearing from the URAC or its individual members.” He argued that he is getting conflicting statements about what they should do. “What is the model that I’m supposed to be approving and moving forward?
“For those who say we’re not respecting process, I would say, that’s exactly what this is about,” he said. He said if we want to be our own utility moving forward, then we need a process to determine the models and approaches – a means to get there. “Acquiring a MRF is not an end, it is a means.
“I reject the notion that we are not respecting process,” he said.
Mayor Davis also rejected the notion that they are not listening to their commission, but stated, “We do not always agree with you.”
The mayor added, “Arguably we are entering this transfer with a better agreement than what we had when we signed with DWR.”
He said, “It started with a gift of public funds as an accusation, now we’re being accused of a Brown Act violation. It just shows me that when people in this community don’t get what they want, they immediately go for the jugular and accuse of wrongdoing, they accuse of illegal activities.”
He said, “So far, every time we’ve been sued, we have won – because we do our due diligence, we do what’s right for the community. Go ahead, trash every revenue measure – do what you need to do.”
He said, “We have done our due diligence to move this forward based on a contract that we were told by our advisory bodies was a great contract we can have confidence in.”
The council unanimously approved the staff recommendation.
—David M. Greenwald reporting
And the city is thinking of taking over our electric utility and high speed Internet?
What could possibly go wrong?
I don’t know that there’s anything to this. But the complaints here are all procedural anyway. The Valley Clean Energy is underway. The irony is that your comment is exactly what Matt Williams and the URAC want – municipal ownership of waste removal.
David, your statement is 100% incorrect. The URAC has very clearly NOT recommended municipal ownership of waste removal. URAC has recommended that the operations of waste removal continue to be completed under contract with a private firm … one that has the skills, experience and resources necessary to successfully handle all the requirements of waste handling.
URAC specifically recommended that the City should NOT purchase DWR in its entirety.
URAC did recommend that the City should get an independent expert to evaluate the fiscal and risk issues associated with the City purchasing the 7-acre site at 2727 Second Street, and then lease that facility to Recology for the duration of the solid waste contract (10 years with a 5 year extension) for Recology’s continued operation of the DWR waste handling franchise.
URAC recommended nothing more, and nothing less.
The model proposed by the URAC (private operation of a publicly owned facility) is exactly what has been done very successfully with the Woodland Davis Water Project. The 2 cities (through their Joint Powers Authority) own the water treatment plant and it is operated by a private firm. The URAC simply recommended that the City exercise its right of first refusal to acquire the 2nd St. Receiving Station and that Recology lease it back and operate it. And the URAC did very detailed financial analysis to show how this would be economically justified and self-sustaining for the City. But this analysis was never seriously considered by the Council or Staff because they were all hell-bent on just moving the transfer ahead and getting it off their table.
Plus, by owning the 2nd St facility ourselves, the City can negotiate with any entity to operate it when the contract runs out in either 12 or 17 years,. We do not become beholden to Recology because they own the only Receiving Station in town capable of receiving our recycling and waste. By foregoing our right to acquire the 2nd St. facility, we have just handed Recology a defacto monopoly on our waste handling extending many years into the future beyond this current contract’s expiration. It is absolutely incredulous to me that our Council and senior Staff and legal counsel did not fully understand this impact of their ill-advised decision. It really speaks to their general lack of understanding of how business operates.
This might not be so bad if Recology was a company that operated in a responsible manner for the good of all parties. Instead, they have a predatory history of acquiring operations in California cities and doubling rates over the following 10 years. What would this mean to Davis is that our $10,000,000 +/- that we annually pay for waste handling services would double to $20,000,000 per year. Can anyone with a sound mind really think that sucking this extra $10,000,000 out of our local economy and sending it to this San Francisco firm would be good for Davis.
The URAC members are mostly all very sophisticated and quantitative experts in public utilities of various types. Their members fully understood and quantitatively analyzed the huge long term implications of this proposed transfer. But they ran into a stone wall trying to explain the financial considerations to Staff and Council who simply did not have the requisite degree of financial sophistication to understand what was being presented to them. The simple reality is that none of our Staff or Councilmembers have any real-world operational experience at all with utility management. Now we were told that the City had their own consultant advising them behind their closed doors but then they refused to say who was the consultant so their credentials could even be evaluate. Wow. Talk about dealing behind closed doors. This does not come close to satisfying the sniff test of openness and transparency.
To try to lead the horse to water, though, the URAC posed a set of questions to Staff and Council in an attempt to get them to consider the enormity of the financial and contractual implications of Staff’s recommended option before them. Almost unbelievably, Staff and Council did not even bother to address or answer a single one of these questions and these points raised by the URAC.
Instead, the Council decided to blindly take Staff’s recommendations to allow the transfer without even bothering to generate and share an alternate financial analysis on their own. As a crumb, Staff recommended that they (Staff) work with the URAC over the next two years to discuss the possibility of the City building their own new Receiving Station at the end of the current contract term in 12 or 15 years when this contract runs out. This is functionally equivalent to shutting the barn door after the horses are out. If Council’s decision was not so tragically misinformed and short-sighted, it would be comical.
What could go wrong? There’s no evidence in this reporting that anything has gone wrong. There’s only speculation about what happened in closed session. Good luck with that.
But what does failure to adhere to the Brown Act for open/ closed session meeting have any bearing on the issue of running a municipal utility?
David, as I said above, the URAC very clearly did NOT recommend the City should run the solid waste utility. URAC has recommended that running the operations of waste removal continue to be completed under contract with a private firm … one that has the skills, experience and resources necessary to successfully handle all the requirements of running a waste handling utility.
URAC specifically recommended that the City should NOT RUN its own solid waste utility, and specifically should NOT purchase DWR in its entirety.
URAC’s recommendation focused 100% on land ownership. That recommend clearly stated that the City should get an independent expert to evaluate the fiscal and risk issues associated with the City purchasing the 7-acre site at 2727 Second Street, and then lease that facility to Recology for the duration of the solid waste contract (10 years with a 5 year extension) for Recology’s continued operation of the DWR waste handling franchise.
URAC recommended nothing more, and nothing less.
Purposefully bypassing an opportunity for the city to gain ownership of the land seems ill-advised.
Matt’s efforts are appreciated.
“Seems”… said by someone who has little/no knowledge of solid waste operations, nor legal/practical implications or ownership… ‘priceless’… you seem to know more, better expertise/judgement than the public works director, other PW staff who have been advising the CC.
Yeah, those professionals are ‘fools’ and you and others have superior knowledge/insights… right…
Liberal arts majors should be our oracles (?)… Matt has made it clear that he (and Commissions) are not recommending “operation”… now we’re down to ownership and oversight… default value, under the law, is there is the presumption that the property owner (particularly a public entity) is ultimately responsible for liabilities, including toxics, if something goes horribly wrong… no lease, no agreement, relieves the property owner from that.
Fact. Ask any experienced/competent attorney.
Relax, it’s just Ron’s opinion, he allowed that just as you are also allowed to voice your’s.
Thanks, Keith. As is often the case, it apparently touched a nerve for Howard. (You know that’s the case, whenever he brings up the “liberal arts major” insult – whoever that refers to.) 🙂
Regarding getting sued for toxics, that apparently isn’t deterring private private companies from pursuing ownership of the land.
Howard said … “Matt has made it clear that he (and Commissions) are not recommending “operation”… now we’re down to ownership and oversight… default value, under the law, is there is the presumption that the property owner (particularly a public entity) is ultimately responsible for liabilities, including toxics, if something goes horribly wrong… no lease, no agreement, relieves the property owner from that.”
Howard is 100% correct in his statement about risk. The question that exists with that risk is what is a fair dollars-and-cents actuarial estimation of that risk? The URAC took the time to quantify the dollars-and-cents estimation of the value of the land transaction. That URAC estimate was $16 million. Brett Lee asked a question, which resulted in the estimate rising to $17 million. The question I personally have, and many (but not all) of the URAC members have is how does that $17 million value compare to the value of the increased risk?
When Will Arnold and I got together on Tuesday morning, we both agreed that if the value of the risk was something like $12 million, then the net of $17 million minus $12 million was not sufficient to take on the risk. With that said, if the value of the risk was/is low, then the estimated $17 million savings for Davis ratepayers is worth seriously considering. Unfortunately, no effort was made to come up with a dollars-and-cents actuarial estimate of the value of the risk.
It is what it is. The Council has made its decision. Nothing is going to change that.
There will be no litigation. The Brown Act provides for “cease and desist” going forward, not a cure. The action of the Council can not be made null and void in this particular Brown Act violation. The purpose of the cease and desist letter is to formally put the City on notice that they can’t hide policy decisions behind a cloak of secrecy. They chose to play Wizard of Oz and pull levers behind the curtain.
Has the CC actually adopted any decision? Was not evident in the narrative. Any adooptive action must be noticed and done in public session… until then…
Howard P, the URAC membership collectively has as much expertise as the Public Works staff on these types of issues, including on rate setting. Davis is in a unique position to have citizen volunteers on many commissions that are more knowledgable than staff on the issues that are being discussed. Do not blindly support the staff because you believe that they have superior expertise. That simply is not factually true.