Los Gatos Weekly-Times

Los Gatos Weekly-Times file photograph by George Sakkestad

Garbage is dumped at the Guadalupe landfill.

GREEN VALLEY WANTS TO RAISE TRASH RATES IN THE WEST VALLEY

Proposal based on disputed profit margin structure

Lawsuit continues in courts

By Clarence Cromwell

A little more than a year after Green Valley Disposal Company more than doubled its pickup rate in Los Gatos, the company is applying to increase rates again, this time by more than a third. In Monte Sereno, the proposed rate represents an 87 percent increase.

Meanwhile, Green Valley is still embroiled in a lawsuit with West Valley cities over the rate structure on which its profit is based.

Green Valley General Manager Gerard Wen said the increases are necessary to ensure the 5 percent profit guaranteed in its franchise agreement, an argument that echoes the company's lawsuit. Officials in Los Gatos and Monte Sereno told the Los Gatos Weekly-Times that the proposed fees are too high and don't follow guidelines approved by their councils.

Green Valley's 20-year contract makes it the sole provider of trash pickup services for Los Gatos, Saratoga, Monte Sereno and Campbell.

The company asked for a 37 percent increase in Los Gatos residential pickup rates. The increase would boost the cost for a single can, within five feet of the curb, from $15.75 to $21.62 per month. Residents who put additional cans at the curb would pay $6 more per can on their monthly bill, under the proposal.

It was just a little more than a year ago that Green Valley more than doubled rates in Los Gatos, from $6.25 to the current $15.75. At the time, justification for the rate increase was the need for the town to meet state-mandated waste reduction requirements.

Los Gatos commercial rates would rise 5 percent under the proposal.

"Frankly, it's way off," Monte Sereno City Manager Carolyn Lehr said. "I think what we're going to do is make a decision and offer some alternative rates to the council."

Lehr said she expects the Monte Sereno City Council to consider the rate application some time in May.

Under the contract, Green Valley can charge customers for its costs, such as payroll and equipment, plus 5 percent more. In theory, the company should use customers' payments to pay its own bills and have 5 percent left over.

The disagreement arose when cities exercised the right, buried in the franchise agreement, to exclude profit on individual items.

In Los Gatos' case, the Town Council decided not to let Green Valley earn a profit on disposal surcharges imposed by state and local governments. The decision followed rapid increases in such charges, including San Jose's landfill business tax that grew from a few dollars a ton to $13.

Other cities forbade profit on different items; Monte Sereno also nixed profit on tipping fees charged by the landfill and on city franchise fees. All four municipalities forbade profit on state and local surcharges.

The company, Wen responded, simply wants to make the 5 percent profit--or an equivalent sum. He emphasized that the four municipalities originally agreed to the profit on the dumping surcharges, then changed their minds.

If the municipalities don't want residents to pay a percentage on taxes, he said, they could allow a higher percentage to be charged on other items, to make up for the profit taken away. "It's kind of a give-and-take," Wen said.

The rate review committee, consisting of one staff member from each municipality served by Green Valley, hasn't accepted the application, claiming it wants more information.

A suit filed in August 1995 in Santa Clara Municipal Court against Los Gatos, Saratoga, Monte Sereno and Campbell asks the court to award Green Valley $788,000. The suit alleges that the current rate structure only provides the company a 2.5 percent after-tax profit, despite the agreement guaranteeing the company 5 percent.

Also disputed is the fee Green Valley pays to Guadalupe Rubbish Disposal Co. for accepting trash at its landfill. Cities want to pay $38, but the landfill is currently charging Green Valley $47.48 per truck, Wen said.

The Town Council is expected to review Green Valley's request at its May 6 meeting.