BY GARY PERILLOUX
The Tupelo City Council chose Waste Management in June for four more years of garbage collection in the city, but contract negotiations - including possible cost increases - are continuing up to Thursday's deadline.
Waste Management wants Consumer Price Index increases midway through a 4-year pact that would begin Aug. 1 and again if the city exercises a 2-year option beyond 2007.
The CPI increases couldn't exceed 3 percent each time and would total about 40 cents a month on top of residential bills expected to fall between $9 to $10 a month.
But commercial Dumpsters also would be subject to the cost increase, sometimes referred to as COLAs, or cost-of-living adjustments. The largest commercial users could see an $18 increase each time on monthly bills of $596 for 8-cubic yard containers picked up six times a week.
"We're seeking to protect ourselves against inflation, basically," said Albert Ott, Waste Management district manager. "And the Consumer Price Index is the typical manner in which this is accomplished. That's what we're asking for."
Some city officials support Waste Management's bid for inflation protection. Others disagree with the mid-contract adjustment and the manner in which it has surfaced.
Mayor Larry Otis said he'll likely call a special council meeting to take up the contract before Wednesday.
"We'll have to set the billing rate after we know the final terms of the contract," said Otis, who doesn't want a cost increase after the second year. In the current contract, Waste Management didn't get a CPI hike until a council resolution was passed near the end of the contract. "I would be comfortable with a cost-of-living increase at the end of the fourth year and that's what I thought we had agreed to. ... But to insert a cost of living (increase) in the second year will deplete the garbage fund at a much faster rate."
Three competing bidders helped drive down Waste Management's monthly residential charge per household to $6.50 for the new contract, down from $7.26. The difference between the $10.40 billed to homeowners and $7.26 paid to the company covers landfill disposal and special pickups by city crews.
Council President Danny Barrows said the CPI increases are a valid trade-off.
"I think an adjustment tied to the CPI is a fair way to write the contract myself," he said. "We're not going to accept a fuel surcharge from them. That's another reason for letting them have a CPI adjustment. I think we'll end up being out a lot less money (than if a fuel adjustment were included).
Councilman Dick Hill disagrees with the way the cost adjustments are being handled.
"I'm willing to be fair as long as we're fair to the other competitors that came in here and offered proposals," he said. "Now, we're negotiating after the fact, it seems like to me. I think for four years - all of that should have been negotiated on the front end."
Otis Tims, the attorney advising the city on the waste contract, said extensive negotiations after the RFP, or request for proposals, process identifies a vendor isn't unusual. Waste Management was chosen June 3.
"The type of procedure is set out in state law," Tims said. "What the city did in this case is it received four proposals and ... Waste Management's proposal was the one they wanted to select. Having made that determination, they directed our office ... to develop a contract and send it to Waste Management for their comment and enter a typical contract negotiation."
Ott, the Waste Management manager, said he received the first complete draft of a contract at midday Thursday. But earlier drafts had apparently been circulated - one spelling out only commercial CPI increases, while a later one added residential CPI increases.
Not all the council had seen a draft by Friday, including Councilman Bill Nesmith.
"As far as I know, we're close to signing a contract," he said. "I don't anticipate us agreeing to anything we didn't have spelled out in the RFP."
Although the CPI increases weren't spelled out before the June vote, Hill said there's not much - with the exception of striking the mid-contract COLA - that the council can do about changing their choice of a contractor.
"It's too late to ask another waste hauler to come in and offer a contract (with CPI clauses), because they don't have time to buy Dumpsters and trucks and set up now," Hill said. "We're pretty much bound to go with Waste Management now, but by the same token we don't need to be (renegotiating the terms)."
Councilman Perry Smith said a Tuesday decision by the Tupelo School Board didn't help the city's contract discussions. The school board selected Waste Services of Mississippi to haul the Tupelo district's garbage.
That company had been unsuccessful in gaining the city contract but now will pay a $105,000 permit fee to the city that will enable it to compete with Waste Management for lucrative commercial accounts.
"I wish the school system had stayed with Waste Management instead of going with Waste Services," Smith said, "because they're going to be taking our taxes and everything else and taking it back to Pontotoc instead of leaving it here in Tupelo."
Smith said he's in favor of giving a mid-contract COLA to Waste Management.
"I think Waste Management has served the city of Tupelo very, very well," he said. "I think we owe it to them to let them have the CPI at the end of two years."
Hill and Otis said the additional $105,000 from Waste Services would reduce what residents must pay, possibly lowering the monthly home bill to $9 if a new CPI increase isn't added. That company also will take commercial waste to the Three Rivers landfill in Pontotoc County, which is partially owned and funded by Tupelo.
Waste Management takes residential waste to Three Rivers but hauls commercial waste to the Prairie Bluff Landfill the company owns near Houston.
"Everything has worked out well for the citizens of Tupelo and the business community and the entire region," said Hill, who said the city can better fulfill its commitment to Three Rivers now. "That's a step in the right direction."