The City of Reno and Waste Management are sending notices to customers of the disposal company’s competitors in the Reno area demanding that those customers stop using other waste hauling services.
The actions mark an effort to solidify Waste Management’s exclusivity as the area’s waste hauler.
It’s a move supported by an outside legal review in 2016 of Waste Management’s franchise agreement with the City of Reno.
A Las Vegas law firm determined that smaller waste haulers cannot charge service fees for containers and for collecting excluded recyclable materials.
Kendra Kostelecky, spokesperson for Waste Management, praised the review’s findings.
“We are pleased with the results of the independent legal review commissioned by the Reno City Council,” she said. “The findings align with both the City’s and our understanding of the franchise agreement. We look forward to the franchise agreement being followed by all of the other haulers and enforced by the City of Reno.”
City Notices Threaten Fines, Jail Time
Enforcement of the agreement by the City of Reno with citations has been in limbo — until now.
Business owner Mark McKinnon said he was surprised when he received not one, but two letters — a notice of violation from the city and a cease and desist letter from Waste Management’s local law firm — demanding that he stop using the company Green Solutions for his business park’s recycling.
City of Reno spokesperson Matt Brown said that Waste Management requested the city cite violators, so “the city sent out courtesy letters to a number of businesses that have been in violation of the franchise agreement.”
He said those letters were followed by notices of violation if a response was not received. City code enforcement officer Joe Henry issued to McKinnon a notice of violation on Oct. 13.
“(Your) property is in violation of … Reno Municipal Code,” Henry wrote. “To avoid further fines, you must correct the violations by … November 10, 2017.”
The city’s notice threatens jail time of up to six months and a $1,000 fine for non-compliance. Should McKinnon appeal the notice, he’ll have to pay the city $50.
“I never agreed to have one choice for trash service, (and) I like that there are options,” McKinnon posted on a now viral thread on Facebook. “Green Solutions recycles everything. If you allow a monopoly to happen like this, the company who benefits from it gets slack. This is unacceptable.
“I remember in the ‘90s we had … had competition. Green Solutions is a fantastic company. I want to know everything is being recycled. They hand sort (recyclables) and do all the things that are necessary.”
“I’m just asking for options. Do I literally spend time in jail for choosing a trash service that the city is telling me I can’t use?”
McKinnon posted the notice on Facebook and a storm of comments followed, most criticizing the city and Waste Management. McKinnon said he was contacted by Mayor Hillary Schieve, whom he said was sympathetic to his situation.
Waste Management’s Kosteleky said that it periodically sends cease-and-desist letters.
“(These) notifications have been issued to customers over the past several years,” she explained. “In sending the letter, Waste Management is attempting to notify the customer that they are in violation of the franchise. In some cases customers are unaware of the franchise agreement.
“In other cases, the customer has been led to believe using a non-franchised hauler is not a violation of the franchise agreement. These letters are designed to inform businesses of the violation, and encourage them to contact the City for further clarification. The customer’s current waste hauler is irrelevant to the intent of the letter.”
Green Solutions has pending litigation against Waste Management and the city over this issue.
Waste Management: City Loses if Agreement Not Enforced
Reno City Councilman Paul McKenzie, a vocal critic of Waste Management, said he’s been repeatedly frustrated by the situation.
“There’s a clause in the agreement that allows Waste Management to arbitrate if the City fails to enforce the franchise agreement,” he explained. “The City’s trying to show that it is enforcing (the agreement), but it’s a bigger issue because I don’t really think the spirit of the agreement’s been violated by the other recycling business.
“The agreement provides that a person can have excluded recyclables that they can sell for market rate to anybody. The agreement that Green Solutions has entered into is based on that clause as an offset to pick up the recyclables.”
The 16-year franchise agreement spells out that businesses must use Waste Management for waste collection, but McKenzie is critical of how the contract was enacted in 2012 by the previous city council and staff.
What is in the agreement is not what was discussed during council meetings when the agreement was being negotiated, he maintained. “It was poorly done and now (we’re) married to it.
“City staff were in such a hurry to get the franchise agreement done that certain promises made by Waste Management didn’t end up in the final agreement. It’s going to affect the citizens of the city for years to come.”
The company accused the City last year of not following its part of the agreement.
“My client is being harmed by the city’s inactivity,” said Waste Management attorney Mark Simons. “We’ve notified you multiple times of this improper conduct. You’re causing my client substantial harm.”
Simons also said that the city loses $40,000 each year. The franchise agreement with the city means the company pays 8 percent to the city, which helps cover the free collection services provided to the city, such as city buildings, police stations, fire and more, said Kostelecky. The other waste haulers, which do not have the same agreement, do not pay franchise fees.
“The City of Reno, in creating the rate structure decided that commercial rates would off set residential rates in order to keep bills low for residential customers,” she said. “If the city does not enforce the franchise agreement with the rate structure they approved, it is difficult to sustain the low rates secured by residential users.”
Councilman: City Attorney’s Office at Odds With Council
McKenize said that city staff are reluctant to go against the company.
“They’re a multibillion-dollar company, they have a fleet of attorneys and are willing to sue,” he said. “Our legal staff believes Waste Management is right, so they started sending out these enforcement letters.”
McKenzie said that he was not notified by the city attorney’s office before the notices of violation were sent to businesses, however.
“I heard about it on a post on Facebook,” McKenzie remarked.
City spokesperson Brown, however, said that the council was notified in April with “an official update on ‘enforcement of solid waste agreements.'”
Councilman McKenzie said a five-year review of the agreement, tentatively scheduled for November, could change the situation — but probably won’t.
“Staff is so much on the side of Waste Management, they’re not going to go against (the company),” he said. “We have had a majority of the council direct staff to do something, and they won’t do it.”
One official, speaking on the condition of anonymity, said “our hands our tied. Waste Management owns the transfer stations and the landfill. It takes a lot of time and money to build a landfill.”
For its part, Waste Management has attempted to initiate mediation with the City.
“(We have) requested to the city that we initiate the dispute resolution clause (11.8 b) in the franchise agreement,” Kostelecky said. “Representatives from WM met with the City Manager and the City Attorney.
“The meeting was followed by a letter, sent Oct. 24 requesting mediation, and suggesting retired Judge Brent Adams as the mediator. At last check we have not yet heard back from the City regarding their decision on mediation.”
The City’s Matt Brown said that there are no plans to discuss the franchise agreement during a council meeting in the near future.
UPDATE (10/31/17): The article was updated to note when the franchise agreement was enacted and how much Waste Management pays to the city as part of the agreement.
CORRECTION: Waste Management said that annual loss of $40,000 is actually a loss to the city, not Waste Management as originally reported. This has been corrected in the story.