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COMMITTEE ON BUDGET AND APPROPRIATIONS MINUTES JULY 8, 1999
ATTENDANCE:
B&A MEMBERS: Wishnie, Abinanti, Carsky, Kaplowitz, LaMotte, Stewart-Cousins, Swanson, Young
OTHERS: C.E.’s Office: Larry Schwartz, Bill Randolph; Law Department: Alan Scheinkman, Jim Robertson, Tami Altschitter; D&B Consulting Engineers: Charles Miles, Ted Pytlar; DEF: Robert Matarazzo; Budget Dept.: Leslie Bennett, Robert Kopenhaver; Finance Dept.: Laurence Rubino; Gannett: Ed Tagliaferri; Citizens: roger Grossman, M. Toolett; Harkins & Hunte: Mary Anne Harkins; BOL: Legislator Ryan, Legislator Bronz, Charlie Pollak, Robert Boland, Chris Chang
Chairman Wishnie called the meeting to order at 11:25 a.m.
DISCUSSION: (There is a tape on file for more detailed information):
· The Committee met for a review, by the Administration, of the proposed agreement with the Westchester Waste Services Company. · The Chairman introduced Larry Schwartz representing the Administration. · The Chairman turned the meeting over to Larry Schwartz to conduct the presentation of the contract. · Mr. Schwartz conveyed to the Board that the Administration was going to allow the current contract with Trott Town to expire and initiate a new contract with Waste Management which the Administration is hoping to have on the Board of A&C Calendar next week. · Mr. Schwartz gave the Board a briefing on the history and chronology of how we got here today: Ø 1998 at the direction of County Executive Spano, an RFP was developed and put together to submit proposals to various trash hauling companies in regard to the county’s transfer station contract. Input from the NYC Waste Trade Commission was received while developing the RFP. Ø Stringent background checks were included in these new RFP’s which were not included in previous RFP’s. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 2
Ø After the RFP’s were put together and sent out, the County put together a Selection Committee. The Selection Committee was made up of Administration people from the Departments of Environmental Facilities, Budget, Finance, Law, Mr. Schwartz, Deputy County Executive Jay Hashmall and representatives of the consulting firm of Dvirka & Bartilucci Consulting Engineers who have had past experience in this area. Ø Four (4) responses to the RFP were received. Ø One of the four responses was determined to be non-responsive by the Selection Committee, then the number of responses was narrowed down to three. Those 3 firms were Trott Town, USA Waste and BFI. Ø Interviews and background investigations were performed on the two lowest bidders. Upon receiving those background checks, intereviews were had with those companies. Ø At that time, at the request of Mr. Abinanti, the process was paused to determine whether the contract could be brought in-house. Dvirka & Bartilucci and Bennett Kielson were brought in to determine if it would be feasible to bring this service in-house. It was found that it would not benefit the County or the taxpayers of Westchester County. The process was initiated once again. The Selection Committee decided to eliminate Trott Town from the process, they were then left with USA Waste and BFI and they were called in a second time. Ø The administration went over with them the conditions that Westchester County was seeking and gave them a deadline in which to respond to those conditions. Only USA Waste responded to that meeting under the time line that they were given. BFI did not respond. Ø Mr. Schwartz referred the Committee to the Summary of the Contract (on file) handed out to all Committee members. Ø Mr. Schwartz stated that through the County Executive’s negotiations we were able to obtain a huge savings for the taxpayers in the refuse district. In addition to that, we were able to get other conditions such as the hiring and the paying for by Waste Management of an independent Personnel Review Officer. We also received guarantees that anytime an Officer or Director the LLC ever changes or any key management employee is ever hired that will be involved in the Westchester operation, all of those individuals will be subject to, and have to pass, stringent background checks at Waste Management’s expense. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES –JULY 8, 1999 PAGE 3
· Mr. Schwartz raised the following issues: Ø As part of the negotiations with Waste Management and BFI it is required that before reaching any final agreement, that a second round of background checks of their Officers and Directors need to be conducted and concluded to the County’s satisfaction. The County hired KPMG to perform these background checks. In the process Waste Management voluntarily gave all their closing documents, at our request, regarding the sale of ASTI to Waste Management. Ø In reviewing the purchase agreement, additional information was brought to light. Mr. Schwartz wanted to emphasize the fact that Mr. Frank Peratti is no longer an owner of ASTI and no longer has any management responsibilities. Ø All of the shares of ASTI were bought out as was written and stated in the January 4th letter from Waste Management. · In reviewing the purchase agreement, using KPMG, there were a number of other issues which Mr. Schwartz wanted to make note of: Ø There was a requirement of Mr. Frank Peratti in order for Waste Management to buy ASTI --- that they agreed to the following things: 1) That they retain him (Frank Peratti) under a contingent consulting agreement which at any time he brought new companies to Waste Management, that Waste Management would decide on their own that they were interested in acquiring that he would get a broker’s fee from that referral. 2) Certain business fees that he would incur in that capacity would be reimbursed. 3) He would continue to be covered by health insurance. 4) In addition to that, it was required that based on the sale of the company that they would hire his son, David Peratti. 5) The last requirement was that they lease certain properties owned by ASTI back to the real estate management company that Mr. Peratti’s company owns. · Mr. Schwartz then brought the Committee up to speed on the status of the aforementioned issues. Once they were brought to the County’s attention: Ø Waste Management voluntarily agreed to terminate the consulting agreement with Mr. Peratti and that no longer exists. Ø They also agreed to voluntarily terminate the business expense agreement and the health insurance agreement. Ø They have also agreed that there would be a full vetting of David Peratti. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 4
· The leases are not a precedent in the trash hauling business. It has been done in NYC, it has been done by Waste Management in NYC and we have a number of examples in which they have had to make lease arrangements in terms of buying out other companies in Westchester County. · Mr. Schwartz said in conclusion he does not think that in the history of the County that such due diligence had been done to give confidence to the people of Westchester County and to the Board of Legislators that the contract negotiations that were reached in principle will be good for Westchester County. · Chairman Wishnie asked where the representatives of the company were. Mr. Schwartz informed the Committee that the representatives were not in attendance due to the short notice of the meeting, however, they are available to answer any questions of the Committee by phone. · Chairman Wishnie then opened the meeting up to questions by the Committee. · Legislator Abinanti asked how many years the contract was for. Mr. Schwartz replied by saying that it was a five year contract with three (3) 5 year options (at the County’s option). · Legislator Abinanti noted that the annual cost for the 1st year is 10.9; and asked what happens after the 1st year. Mr. Schwartz responded that there is a ¾ CPI, in the former contract it was a 100% CPI. So each year we’ll be saving more money than existed in the old contract because the annual increases would be less. · Mr. Abinanti asked if there are add-ons or any other things that they could charge us for. Mr. Schwartz replied no, in fact we are receiving more services than in the old contract. · Mr. Abinanti asked if there were any cancellation clauses for any reason. Mr. Robertson replied yes and referred the Committee to page 2. · The Chairman asked if there were any clauses regarding financial difficulty of the company. Mr. Scheinkman said that if the Committee looked at the end of the document that the parent company guarantees this and there is a $3.2 million dollar performance bond. · Mr. Abinanti asked who we are contracting with. Mr. Scheinkman replied, Westchester Waste Services Company, LLC (WWSC, LLC). Mr. Abinanti noted that Westchester Waste Services Company, LLC is a separately formed corporation for the purposes of this contract. Mr. Scheinkman agreed with Mr. Abinanti and added that this was a typical method of doing business in this industry. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 5
· Mrs. LaMotte asked for clarification on the names of the company. Mr. Robertson responded by saying that there was a merger last year. USA Waste issued sufficient stocks to take over Waste Management but USA Waste took the Waste Management name. Now the new name is Waste Management Technologies (WMT), that is the entity that will own all the affiliates. · Mr. Abinanti asked if this contract is subject to attaining a license if under a new law we change the law. Mr. Scheinkman replied by saying yes. · Mr. Abinanti asked if any sub-contractors are permitted. Mr. Robertson answered by saying yes with the permission of the County. · Mr. Abinanti asked if there were any conditions on the sub-contractor. Mr. Robertson said that the sub-contractor has to meet the same stringent background checks as does the primary contractor. · Mr. Abinanti noted the contractor is going to handle three County district transfer stations. He further noted that at one point there were more than three transfer stations; if the County decided to go back to four (4), five (5), or six (6), would they automatically have the right to run all six or would we have to amend the contract or could we go to outside sources? Mr. Scheinkman said we would have to amend the contract. · Mr. Abinanti inquired as to whether any audits would be required. Mr. Scheinkman said that they will. Mr. Abinanti asked who will incur the expense. Mr. Scheinkman replied that typically the company responsible for the audit. · Mr. Robertson noted that operational audits are conducted everyday with our people and is separate from the financial audit. · Mr. Wishnie asked if the contract was a $40 million contract. Mr. Scheinkman said the contract is roughly $11 million. The first year it is 10.9 and then it increases based on 75% of the CPI over the additional term of the contract. · Mr. Robertson said that the $3.2 million is basically to cover the emergency service we need and time to rebid. · The Chairman asked how we came up with $3.2 million. Bob Matarazzo replied by saying that we take 50% of the items in the contract that we deal with each year. There are also some costs included like Household Cleanup Days. · Mr. Kaplowitz inquired as to the current cost for this year. Mr. Matarazzo said that we still haven’t completed all of the four days but he estimated $100,000 for all four. · Mrs. LaMotte asked if the County was in the process of trying to establish a permanent site for household cleanup days. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 6
· Jim Robertson responded by saying that the Administration would look into the matter. Mr. Scheinkman also said he believes the reason for the rotating locations was due to the fact that any location, no matter how central it was believed to be would be inconvenient to someone. · Legislator Young asked what assurance the county has that the operational and financial audits will be conducted. Mr. Matarazzo stated that each municipality has a code, so that the scale operator can record the amount of garbage. That information is reported to the central office every day. · Mr. Young continued his line of questioning by asking if there was a report issued either to the Administration or the Board. Mr. Scheinkman said that if the Board would like a copy of these reports that it could be arranged. · Chairman Wishnie noted that these reports should go through the Committee on Public Works. · Mr. Scheinkman wanted to make it clear that these reports are done for a variety of reasons such as IMA’s that contain established limits as to what they can bring and what they have to be charged for. · Legislator Carsky asked if RESCO has any arrangement with Waste Management or vice versa. Mr. Scheinkman stated that RESCO is owned by Waste Management. Mrs. Carsky requested an organizational chart. · Mr. Abinanti asked if this agreement is guaranteed by the parent company. Mr. Scheinkman said that the agreement is guaranteed by a real company with real assets in order to have some recourse if USA Waste defaulted. · Mr. Abinanti inquired about the enforcement provisions. Mr. Scheinkman stated that we have the normal contract rights to bring lawsuits in the event of the breach and collect our money damages. Mr. Abinanti asked if there were any special damages clauses. Mr. Scheinkman responded that there are not. · Mr. Abinanti asked if we have any input as to who their employees are. Mr. Schwartz responded by saying that their employees are rank and file teamsters. The only other provision is that any employee in a policy making or team management position is required to go through a background check. · Mr. Abinanti asked if there was a minimum number of employees required at each facility. Mr. Robertson responded that the County determines if the number of individuals at each facility is adequate. · Mr. Abinanti asked if the County reviews their operation in order to determine if there is sufficient staff. Mr. Robertson responded by saying absolutely. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 7
· Mr. Abinanti inquired if there was any language in regards to their associates; who they acquire; who they could merge with. Mr. Abinanti also asked is they had any requirement to notify the County of any of the aforementioned occurrences. Mr. Scheinkman stated that there is no limitation in this aspect, however, if a merger involves placing persons in any policy making positions, they would be subject to a background investigation. · Mr. Abinanti asked if there are any limitations as to who they can rent from or rent to. Mr. Scheinkman said no, we are just a client doing business with this company, we have control over their dealings with the County, but not with any of their other clients. · Mr. Abinanti asked if they could sub-contract the operation of any of the facilities. Mr. Robertson said they could not without the County’s approval. · Mrs. Swanson asked if there was an affiliation between Westchester Waste Management and BFI. Mr. Scheinkman said no, they are competitors. · Mr. Scheinkman explained that the immediate parent company of Westchester Waste Services, Inc. is USA Waste of New York City. The ultimate parent is Waste Management Technologies. · The Chairman asked if USA Waste of New York City, Inc. goes bankrupt, do we have a direct tie to the national entity? Mr. Scheinkman said no, we would look to USA Waste of New York City. · Mr. Kaplowitz asked if the contract is flexible enough that the County could amend the contract if need be. Mr. Scheinkman responded by saying that the sunset provision addresses that issue. · Mr. Kaplowitz asked if the disposal of yard waste was taken into consideration in the agreement. More specifically, if yard waste, i.e. grass clippings, was prohibited would there be an offset in cost? Mr. Robertson said yes. · Mrs. LaMotte asked what this contract will mean to the residents of Westchester. Mr. Schwartz replied that there will be a savings for Westchester residents because this contract is significantly less than the previous contract that we have had and we have added services. · Mrs. LaMotte requested the estimated percentage of savings to the residents of the County. Mr. Schwartz said the Administration would try to calculate the percentage. · Mr. Abinanti asked if Tully protested the fact that the selection committee found them non-responsive. Mr. Scheinkman noted that Tully will be notified and could protest during the regular A&C meeting if they wish. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 8
· Mrs. Carsky requested a copy of the bids. Mr. Scheinkman said that he would work with the Legislators that were interested in seeing the material. Mr. Scheinkman noted that the selection committee would be submitting a report concerning the comparative prices during the next Board of Acquisition and Contract meeting. · Mr. Abinanti noted that the current contract specifies three transfer stations, the previous contract with Suburban had six transfer stations. What happened to the other three? We had Thruway, South Columbus Avenue, Brockway, a second one at Brockway, Fox Island and Blind Brook. Mr. Matarazzo replied that there were upgrades at the White Plains Transfer Stations, the others were temporary. The Fox Island and Blind Brook transfer stations are no longer in operation and the two Brockway transfer stations have been consolidated into one. · Mr. Abinanti wanted to clarify that we have three transfer stations and we have the ability to establish more if necessary. Mr. Scheinkman stated that Mr. Abinanti’s statement was correct. · Mr. Abinanti asked who determines the number of transfer stations we have. Mr. Robertson replied that the Board of Legislators has that power. · Mr. Abinanti asked who determines the expansion of the transfer station. Mr. Scheinkman said that once again the BOL has that authority. · Mr. Abinanti asked who sets the terms of operation, the hours, the fees, and the rules and if that is specified in the contract. Mr. Scheinkman said that the terms of operation were part of the contract. · Mr. Abinanti inquired as to who maintains the building, the premises and the equipment. Mr. Matarazzo said that the contractor to be hired will take care of those things as part of the contract at no additional cost. · Mr. Scheinkman noted that the only thing that was not on the budget schedule was the capital repairs because no one knows what that number will be. Mr. Abinanti asked who makes the determination as to whether certain equipment should be repaired. Mr. Matarazzo said that would be part of the contractor’s cost of doing business, he does not bill the County for that. · Mr. Abinanti asked how we make sure they maintain minimum standards regarding maintaining the equipment. Mr. Matarazzo explained that inspections are conducted. · Mr. Abinanti asked who is at the gate of the transfer station checking that the transfer station is only being used by those who have the right to use it. Mr. Matarazzo said that there are DEF employees that are at the stations checking to make sure that only authorized users use the plant. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 9
· Mr. Abinanti asked what is the total capacity of the transfer station? Mr. Matarazzo stated that he would find out and provide the Board with that information. · Mr. Abinanti asked if there was a change in cost if the tonnage is greater or less. Mr. Matarazzo said no, it is a dollar price per ton. · Mr. Abinanti asked if there was any provision in the contract to allow the County or anyone else to utilize excess or unused capacity. Mr. Robertson said absolutely not. · Mr. Abinanti asked who determines what types of material are accepted at the facility. Mr. Scheinkman stated that it is a combination of the language in the IMA’s between each respective municipality and the operator that oversees the facility. · Mr. Abinanti repeated Mr. Matarazzo’s statement that we do not have an overflow problem and the fact that we do have excess capacity for the purposes of making sure that the BOL would not be told that they are prohibited from allowing another entity without an IMA from using the treatment plant. Mr. Scheinkman made it clear that the possible action would not be prohibited by this particular contract but could be by future or other contracts. · Mr. Abinanti asked how many MRF’s are permitted in this agreement. Mr. Scheinkman responded by saying there is only one MRF. · Mr. Abinanti asked who has the authority to set the hours, fees and rules governing the manner of operation of the MRF. Mr. Robertson answered that the district set those things. · Mr. Matarazzo noted that STM, located in the Bronx, takes the overflow from the MRF according to the old contract. · During the discussion of the removal of glass, Mr. Robertson stated that the County gets 80% of the profit of sales. · Mr. Abinanti asked what was the total capacity of the MRF. Mr. Matarazzo said 96,000 tons. · Ms. Stewart-Cousins noted it was her belief that RESCO has total control and that we (being the County) have no input as far as what is permitted. She also noted that some of the smaller haulers were turned away from the RESCO facility. · Mr. Schwartz said that he would make any records he could available to the Board members. He continued to say that he was under the impression that the retro-fitting of the facility caused the problem. COMMITTEE ON BUDGET & APPROPRIATIONS MINUTES – JULY 8, 1999 PAGE 10
· Mr. Scheinkman stated that the contractor bears the cost of hauling the ash to the ash pit but the County handles the cost of maintaining the ash pit.
ADJOURNMENT:
There being no further items for discussion, on motion of Legislator LaMotte, seconded by Legislator Carsky, the meeting was adjourned at 1:20 p.m. |