Good Evening Everyone,
On April 1, 2014 a majority of the Commission passed a Motion to direct the Manager to
proceed with Contract Negotiations with Waste Pro to outsource (and therefore dismantle)
our Sanitation Department.
They will be making their final vote to out-source on Tuesday, May 6, 2014, at which point
they will theoretically have a negotiated contract to approve, as well as an estimate to
keep Sanitation in-house.
As an architect and contractor, I review and qualify bids and budgets on a regular basis,
and I felt that some important facts have not yet been conveyed to the public. My analysis
is based on available public facts and my own experience, and my purpose is to share my
observations of the data - even though there are still questions left to be asked and
answered. Anyone (including our Commissioners) could have come up with this analysis
if they chose to, and I have provided the source material at the end of this email... as
always, I am willing to make myself available by phone or email to articulate further any
part of this analysis.
I would apologize for the length, but it’s a complex issue, and a lot is riding on the May 6,
2014 vote… the following is my assessment of why I think it’s a very bad idea to out-source
our Sanitation Department:
#1 – Qualifying the Bids:
a. WASTE PRO BID
In the simplest of explanations, the Waste Pro Bid is $388, 932. (1)
Subtract from that the following hard costs:
Tipping Fees (2) $183,340
Recycling (3) $ 46,728
Gas & Oil (4) $ 16,620
The Subtotal for these items that
must be paid, no matter who does it is: $246,688
The difference Bid and hard costs is: $144,244
Therefore, Waste Pro says that they will perform their Contract (not including the above
hard costs) for $144,244. This amount must cover Employee Costs, Management,
Overhead, AND profit, not to mention a CEO's salary.
b. BP SANITATION COSTS
The total BP Sanitation Enterprise Fund Budget is $733,178. (5)
Subtract from that an “Administrative Fee” $145,522 (6)
(I’ll get to this later)
Subtotal for Total Budget: $587,656
Subtract from that the following hard costs:
Tipping Fees (2) $183,340
Recycling (7) $ 35,000
Gas & Oil (4) $ 16,620
The Subtotal for these hard costs: $234,960
The difference Budget and hard costs is: $352,696
c. ANALYSIS:
Waste Pro will supposedly do for $144,244 what BP has been doing for $352,696.
This is $208,452 (about 40%) less than what we’ve been doing for years.
The cost for our 7 full time employees ALONE is $264,688. Waste Pro says they will hire
our employees and give them raises and better benefits, but how can they do that with only
$144,244 to spend on employees plus overhead plus profit?
d. Other Bids (1):
There were a total of 3 bids for the option to retain current services:
Waste Pro - $388,932.
Southern Waste Systems - $383,013,
Republic Services - $534,257. This is $145,325 more than Waste Pro and $53,400 less
than BP’s Budget without Admin Fees.
Which is more realistic, Waste Pro’s savings of $208,452 or Republic’s savings of $53,400
on an adjusted total of $587,656?
#2 – Administrative Fee ($145,522 or $189,936):
a. Current “Admin Fee” Amount - It’s $145,522 (6), and it’s a pretty big chunk of money.
Supposedly it’s to ‘pay back’ the Village for various Administration time. In reality, it’s just
a thinly veiled means to transfer money from the Sanitation Enterprise Fund (which is
supposed to be "Money in, Money out) to the General Fund. When it first was proposed in
2009, it was $50,000 (7) and it has only grown from there… because it’s probably legal,
as long as we provide a half-way reasonable breakdown of what it’s for – which
Administrator puts in how much time for how many Sanitation workers, etc. (8)
b. Proposed “Admin Fee” Amount: - It’s shown as $189,936 in the Proposed In-House
Estimate (9), an increase of $44,414. Is this because after out-sourcing, our Administrators
will somehow be doing MORE work to Administer Sanitation? Of course not, it’s part of the
plan to shift money from our Sanitation Fund to our General Fund.
If we outsource, we no longer pretend that there can legally be an “Administrative Fee”.
Which means we lose that $145,522. Or that $189,936. And for what? For a Franchise Fee.
#3 – Franchise Fee ($60,000):
Not included in the Waste Pro Bid, but what will likely be included in the Contract is a
Franchise Fee. This is a fee that Waste Pro will charge our Residents, that will then be add
ed to our General Fund Revenue. It’s legal, and it’s common, and it’s a
less-than-transparent way to get Residents to pay more into Village General Fund
Revenues.... and you will pay every penny of it, so it’s not like Waste Pro is gifting it to us.
So how much is it worth? The Document handed out at the Workshops (10) says it can be
between 10 and 20% of the Contract, so if we use a 15% rate, we’re talking about $60,000.
(388,932 x .15 = $58,339).
#4 – Math:
A $60,000 Franchise Fee is much less than a $145,522 Administrative Fee, and even
more less than the proposed $189,936. If we outsource, we can get the Franchise Fee,
but what about that larger Administrative Fee?
#4 a– Math for Non-Sanitation Funds:
According to page 16 of the Workshop Document, there’s a line item for one option called,
“Reserve For Future Stormwater, Roads & Other Capital Projects”, in the amount of
$163,548. It seems to be a way to balance out the current rate of $572 per resident per
year, and might be done as an additional fee to the residents.
What this does is maintain the existing yearly resident Sanitation fee, because of the
supposed savings of Waste Pro's low bid... but if those savings don't materialize, the
amount would go lower. I do not know how the mechanism would practically be done, or
even if it is a yearly fee, but it might be as a special assessment that theoretically could be
done with or without out-sourcing Sanitation.
#4 b – Recycling/Environmental Math
As long as we keep our own Sanitation service, we have the ability to increase our
Recyclables at no extra charge, which reduces the tipping fees for ourselves. What we
have now (with the proper education and procedures) can be good for the environment
and good for our pocket book. I do not know if Waste Pro offers us that same opportunity.
#5 – Real Numbers:
Because Waste Pro’s bid shows they will do the same work, INCLUDING Employee costs,
Administration, Overhead AND Profit for $144,244, as compared to BP’s $352,696,
someone (Waste Pro) is either very low, or the BP Budget is very high.
Or, more likely, we are looking at both - Waste Pro is likely low to win the bid, and the BP
Budget is higher that it should be.
a. What’s the problem with a low bid?
Have you ever hired a contractor because he gave you the lowest price, but it later turned
out that he couldn’t perform the work for the price he had quoted -- after you’ve committed
to him and spent money to hire him? What happens if the service is substandard (because
of their lowball bid)? What if we can’t afford the next bid? What if Waste Pro, knowing we
have no choice, decides to terminate our contract for a better one, or if they get bought out?
Once we out-source, we lose our facility, our employees, our equipment, our trucks…
never to be created again. This puts us at the mercy of the contract fees from other Waste
companies, including Waste Pro.
b. What’s the problem with a high budget?
We’re seeing it right now. It’s being used as an excuse to out-source, even though a close
look at our budget shows costs that aren’t being used for Sanitation, and not enough
Maintenance expenses to keep up our trucks and equipment. It’s bad business to inflate
numbers, just so the General Fund can be increased.
Here’s a simple bit of math that doesn’t add up: In 2009, the total Sanitation budget was
$738,190, with the Admin Fee being $50,000. Five years later, the Sanitation budget is
$788,178, and the admin fee went up to $145,522. Why did the budget increase by only
$50,000 while the Admin Fee increased by about $100,000? Clearly, because it was an
artificially high budget.… and yet there’s no money set aside to maintain and repair
the trucks.
Keep that in mind that when the numbers come out to show "how much higher" keeping
our Sanitation service in-house and intact will be... and remember that what was artificially
high before will continue to be artificially high, maybe even to skew the data into proving
that we 'must' outsource. As it is, we already know that the new Admin Fee is set to be
$189,963, or $44,414 more than it currently is. (9) Why?
#6 – Resident Requests:
By a margin of about 24 to 4 at the last Commission Meeting, residents were against
out-sourcing. The Commission voted to proceed anyway. It may be a tradition for
Commissioners to ignore requests from Residents, but why do it when the math doesn’t
prove it, and the Residents are so clear about it? How many will show up AGAIN, to
express their displeasure? Seriously, how many times does someone have to take the
time to go to a public meeting, only to be ignored, before they stop going? And when they
don’t show up at the final one, the Commissioners will look around and say, “gosh, no one
is opposed to this”, let’s out-source. Or Annex. Or anything else that most people don't
want, but not might be aware of or don't have the time to continue attending meetings.
#7 – A Working, Appreciated Service :
Ask yourself if you’ve had any problems with your garbage and trash pickup. Ask your
neighbors. As a Commissioner, I can recall only one or two complaints, and they were due
to the timing as proscribed by the Commission, not the work our men did. Ask our
employees if they are confident that after they are hired by Waste Pro they will be able to
stay longer than the time it takes for the ink on the Contract to dry. I've heard some 'concern'
from those that want to outsource that Waste Pro will pay them more, treat them better,
give them better benefits... but how, if the math doesn't allow it? In any case, our
employees are very much not in favor of not working for Biscayne Park directly, so the
concern you're hearing ought to be taken for what it is - one more push to out-source.
Because our employees have been loyal and watchful for many years, and that loyalty
equates into a feeling of community and safety. And if (or when) our employees get fired
from Waste Pro, there will be less loyal, less capable, less caring people (that are not hired
to our standards) are coming into our Village and our backyards.
And that's not even mentioning Hurricane Cleanup - if we have our own forces, we know
clean up is at least partly within our control... will Waste Pro guarantee that Biscayne Park
will be a priority?
#8 – A Real Analysis:
If you get a chance, ask those Commissioners who voted to proceed with Contract
Negotiations if they did their own analysis of these bids before they voted. If they are
willing to put in writing that they want to charge you an Administration Fee for an outsourced
Sanitation program, or for Road and Storm Water through a Sanitation fee. Ask if they did
the math, and looked at the downside of out-Sourcing. Because this seems pretty much
like their approval to Annex – only looking at the upside, denying there’s any
downside. Just ask them why they think Waste Pro can do a decent job for $200,000 less
us, when the next highest bidder is $150,000 more than theirs.
Do we need one or two new trucks? Should we buy outright or lease/purchase or borrow
for 5 years or 10? Do we count both new truck costs and depreciation? Do we have the
proper number of employees? According to that Admin Fee, there's a whole lot of money
going to non-Sanitation salaries, what happens we no longer can charge Sanitation fees?
There's been no real analysis or budget discussed yet, and to approve a contract now is
more than premature.
#9 – The Sky is NOT falling:
If you got this far, you will see that outsourcing will likely COST the Village General Fund
Money, even though those pushing so hard to do this claim it will MAKE the Village Money.
This is why they want to do this, to bolster the Village General Fund. They aren’t doing
it because we don’t like our Sanitation Service, or that people are complaining about our
rate of $572 per year… it’s pure money. And why?
a. We’re Going BROKE!!! No, not necessarily, that’s just what you’re being told. The data
has not once been publically revealed, and the sources and assumptions made are as
equally secret. What I was shown by the Manager is that in 5 years, we may have about a
$150,000 deficit. No sources, no references, no data as to why, just a chart showing that
number. But you know what? Our budget (11) is $2,329,231. So saying that in 5 years we
will be down $150K is like saying that we’re losing 6.4%, or 1.3% a year. And this is based
on non-proved sources… so why are we moving forward with Annexation and Dismantling
our Sanitation for 1% a year? If this was your household budget, and someone told you
(without a shred of proof) that you’d be bankrupt in 5 years unless you sold off your assets
today, would you do it without a full analysis? How about if all you had to do was find 1%
of your income in savings each year…. would you still do it?
b. Our Reserves are dwindling down to nothing!!! Again, not really. You’ve heard this,
but you’ve never been shown it. You’ve never been told WHY our reserves have gone
down… an important part of any financial analysis. I’ve asked, and haven’t gotten an
answer, but I can say that as a Commissioner for 4 years, the only reasons we’ve spent
reserves is due to old Worker’s Comp claims, not operational funding. So this Commission
moves forward with Annexation and Out-sourcing, but hasn’t addressed those old
Worker’s Comp Claims? Do they even know what we’ve spend the reserves on?
c. There are many options available - if we outsource, if we don't... decisions still must be
made, but they must be made with facts. Will outsourcing be less expensive? Maybe, at
least in the short term... but is that the long term view our long term residents want? Can
we reduce the yearly resident fee without hurting our General Fund? Can we be assured
that our leaders have taken both the good AND the bad into account?
#10 – The Big Picture:
According to this analysis, out-sourcing is a bad idea – it hurts our bottom line, it replaces a
way a known system we all enjoy, and it leaves us no control for the future. If it’s used to
bolster our General Fund, it may fail miserably, and if it’s to save Residents some money
in the short term, it could cost us much more in the long term – because the bids and the
budget don’t add up, literally.
If the goal for all of us is higher property values (and once again, sales are going
significantly up), then in-house service, at least in my opinion, can contribute to that end.
For 23 years, I have enjoyed and appreciated this service, and to watch it go the way of a
more commercial process would be a shame.
But for those that are concerned about the General Fund, here’s my question for you, and
it’s one I’ve been asking for 7 years – if our Sanitation Budget is inflated, isn’t there a very
good chance that our General Budget is also inflated? I don't believe that out-sourcing is
the way to solve our problems, but I know that demanding actual fact gathering, real
analysis and a zero based budget will take us very far.
If we can resist the urge to try to get something for nothing, and if we can budget what
actually is required and not a penny more, we as a Village can come out better and
stronger than we are right now.
Please let your Commissioners know your thoughts, no matter where you stand on this
issue. Or, stay silent, and watch it happen... it's your choice.
Here are your Commissioner's emails:
David Coviello, Mayor
Barbara Watts, Vice Mayor
Bob Anderson, Commissioner
Fred Jonas, Commissioner
Roxanna Ross, Commissioner
Sincerely,
Steve Bernard
Resident
ps Thanks for making it to the end!
(2) BP Tipping Fees - pg 2 of the attached 2013-2014 Sanitation Budget (it’s not online)
(4) BP Oil & Gas costs (if Waste Pro can buy gas for less, it would be offset by the daily
travel to the Village) - pg 2 of the attached 2013-2014 Sanitation Budget (it’s not online)
(5) BP Sanitation Budget - pg 1 of the attached 2013-2014 Sanitation Budget (it’s not
online)
(6) BP Admin Fees - pg 3 of the attached 2013-2014 Sanitation Budget (it’s not online)
Yes, as Steve acknowledges, it's very long. I, for one, did make it to the end. Steve raises
many questions, a few of which are worth answering. He even makes the rare good point.
Steve has expressly formed an opinion about this matter, he suggests his readers should
join him in adopting his opinion, and he advises his now opinionated readers to contact
Commissioners. I thought I would save Steve the trouble, so I reached out to him. He did
not answer the phone, and he did not return my call, although I left a message asking him
to.
Both of the people who sent me Steve's e-mail pointed out the many factual errors and
distortions. Did Steve refuse to talk to me, because he is already confident that he couldn't
have said anything that was not correct? Or does he not want to have to examine the
things he said and the foundations that led him to say them? It appears we won't know.
Steve points out in his e-mail that he has special knowledge and perspective, once having
been a Commissioner himself. Has he forgotten that in a small neighborhood like ours, it
is neither necessary, practical, nor good politics or good judgment to hide from one's
neighbors? I suppose that if I said the kinds of things Steve says, I'd want to hide, too, but
because I know I'd react that way, I don't say those kinds of things.
It's really a terrible shame to have someone like Steve skulking around, spewing
nonsense, and stirring up discord. It's much worse that he likes to do it guerrilla-style. It
would otherwise be funny that Steve so frequently commented that he didn't know or
comprehend one thing or another, while at the same time, he absented himself from every
one of the meetings and workshops that would have given him exactly the information and
understanding he now complains he lacks.
And he can't even bring himself to talk to me about it. Well, he has four other choices
among Commissioners. Maybe he'll talk to them.
